By William Fellows
Apple Computer Inc had its best quarter in almost four years – the seventh straight quarter of profit – reporting a third quarter net income up 101% at $203m including a gain of $89m for the sale of shares in ARM Holdings Plc, compared with $101m last time. Revenue rose 11% to $1.56bn over $1.4bn. Apple beat analysts’ expectations with earnings per share before the gain at $0.69 compared with First Call’s consensus estimate of $0.64. Actual earnings per share were $1.20.
Apple says that all four product lines will be shipping in volume in the December quarter, indicating its long-hyped consumer portable won’t hit the streets in large numbers until at least October. PowerBook, G3 and iMacs are already in volume production. The comments suggest there may be some of those units sold in the current quarter, although there have been various media reports suggesting the consumer portable is behind schedule. Unit and revenue growth will be up sequentially by a small amount this quarter. The December quarter will show strong growth over the current quarter. Revenue for the second half of this financial year and first half of next year will be up on previous periods although the most recent revenue guidance is more conservative than previous forecasts. The company is happy with consensus estimates of $0.76 for the current quarter.
Apple says iMac sales comprised 487,000 or 54% of the 905,000 units shipped in total. It shipped 350,000 iMacs – 42% of ships – in the prior quarter. As usual for this time of year the education market was a big spender on Apple kit and iMac sales to education were up 27% over last time. It claims to have shipped 11.3% of the desktops which went through the retail channel in the quarter compared with 6.3% last year. The numbers were 13.1% over 7% in Japan. Sales in Japan were up 98% year over year, Europe 42%, Asia 33% and the US 28%.
Revenue growth trailed unit growth because of the lower average selling price ($1,683) compared with the same quarter last year ($2,129) before iMac was shipping. Inventory is less than one day. Servers are worth less than 1% of revenue. Having converted $661m of debt into stock by issuing new shares the company is buying back $500m stock to roughly balance the transaction.
Wall Street analysts suggests that Apple share price, which has risen 30% in the last two weeks or so, may get a boost following the expiration of options tomorrow. Options traders need to cover short equity positions they hold against options given the share price rise. Apple shares closed up $2.25 at $55.94 before the quarterly numbers were released. á
