Apple reports higher Q3 sales but lower profit

US$200 million earned in the third quarterPALO ALTO, CALIFORNIA, 21 July 2000 (MaxisNet) - Apple Computer Inc has reported higher third-quarter sales and operating earnings, but said its net income declined because of higher investment gains a year earlier.

US$200 million earned in the third quarter

PALO ALTO, CALIFORNIA, 21 July 2000 (MaxisNet) - Apple Computer Inc has reported higher third-quarter sales and operating earnings, but said its net income declined because of higher investment gains a year earlier.

The company also said that despite overall growth in units sold, sales of its iMac computer were "a bit" below expectations, but said this appeared to be due to the consumers waiting for a newer version of the computer, rather than to any industry-wide softness.

"I don't think we have any evidence that it is an industry-wide slowdown," Apple Chief Financial officer told analysts in a conference call.

Apple said it earned US$200 million or 55 cents per share in the third quarter, compared with US$203 million or 60 cents per share in the same period last year.

Operating income excluding investment gains in the year-ago period had been 35 cents per share.

Earnings in the latest period include a gain of US$37 million or 10 cents per share, from the company's sale of shares of ARM Holdings Inc. Excluding that gain, operating income was 45 cents per share, narrowly surpassing the the consensus forecast among analysts, of 44 cents per share.

The company said sales rose 17 percent to US$1.83 billion.

Chief Financial Officer Fred Anderson said in an interview that the growth was driven by strong performance of Apple's core products, particularly its PowerBook computer, although sales of its iMac computer were "relatively flat."

In discussing the disappointing iMac sales, Anderson told analysts, "We believe the anticipation of a refresh was the primary factor (behind the weaker than expected sales)." In addition, the company's iMac sales were skewed toward the cheaper US$999 models favoured by budget-minded schools.

Still, analysts generally found the results to be very much in line with forecasts, and noted the somewhat disappointing revenues were offset by surprisingly strong gross margins, reflecting robust sales of its high-marging PowerMac.

Anderson also said the company is targeting revenue growth in 2001 of 20 percent and an earnings per share growth rate of 15 percent.

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