Apple has done it again, posting second-quarter profits that left Wall Street estimates in the dust. The Cupertino comeback saw net income of $55m, or $0.38 per share, when the First Call consensus estimate was only $0.17. Revenue for the quarter slipped 12.2% to $1.41bn. The healthier bottom line compares especially well to the year-ago quarter’s charge-laden loss of $708m. The success story of the quarter was fueled by the strong demand for the G3, which accounted for a whopping 51% of total units sold. Unit shipments rose 8% to 650,000. The higher margins for the G3 helped Apple to a gross margin of 25% for the quarter, which rose from 19% a year ago and is its highest level in two years. The margin levels are impressive given that the average system price fell to $2,089 – down 13% from the December quarter and 18% from last year’s $2,540. International sales accounted for 50% of total revenue. North American unit sales rose 9%, while Europe and Japan rose 19% and 6%, respectively. The Asia-Pacific region was the only drag in the mix, with sales down 28%. As for the revenue decline, Apple says roughly $60m is directly attributable to sales of abandoned imaging products and the rest is due to $220m more in PowerBook sales last year stemming from demand for recently introduced models. PowerBooks accounted for only 13% of unit sales this time around, down from 26% last year. Expenses stood at $298m for the quarter, down from $313m in the December quarter, with lower payroll and administrative expenses slightly offset by increased advertising costs from the ongoing Think Different campaign. Total headcount stood at 9,049, down from 9,311 last quarter. Of those remaining at the quarter’s end, more than 100 have already received pink slips and will be gone shortly. Apple finished the quarter with $1.82bn in cash and equivalents, up roughly 25% year-over-year. Looking ahead, Apple sees revenues flat sequentially next quarter and tempered the next two quarters, with product transitions being carried out. The transitions should be complete by the December quarter. In the meantime, the company hopes to maintain gross margins of around 23% for the next two quarters. Six-month net income was $102m on revenue down 20% at $2.98bn, against a net loss of $828m last year. Earnings per share were $0.38 for the quarter and $0.71 for the six months.
