US Report: Apple wows 'em in Q2

Apple blew away analysts with a better-than-expected profit yesterday and promised more good things to come - but no permanent CEO anytime soon.

The company posted a second fiscal quarter profit of $55m (£32.7m), or 38 cents per share, well above analysts' predictions of $21m (£12.5m). But despite strong sales of the company's G3 computers, revenues fell to $1.4bn (£0.83bn) from $1.6bn (£0.95bn) last year.

"It's tough to fundamentally argue that Apple has turned the corner," Goldman Sachs analyst Richard Schutte said. "They've got to start showing year-over-year revenue growth." Schutte said he was impressed with the company's increased unit shipments, which grew 8 per cent from last year. He also said the company is doing a better job of managing its inventory and getting its computers into customers' hands. "It's a 'walk-then-run' type of story," Schutte said. "We'll wait and see."

It's the second sequential profit for the company under co-founder Steve Jobs, who returned to the company last fall as interim CEO. Last quarter, Apple made $47m (£28m), or $0.33 per share, on sales of $1.5bn (£0.89bn). And it looks like Jobs could be staying a while. A search for his successor remains stalled. "I would say it's on the back burner. Steve is our leader," said Fred Anderson, the company's chief financial officer. "He's making a difference. For us, it doesn't matter whether he has CEO in front of his title or not."

Speaking to analysts following the announcement of the company's second-quarter earnings, Anderson blamed the flat revenue this quarter on a trend toward falling prices in the industry as well as on lower sales of printers and scanners. What's more, Anderson said consumers were holding off on notebook purchases while they wait for new machines.

Anderson predicted the company would show "meaningful" revenue growth by December, after the company introduced new lines of laptops and consumer desktop machines. He said the introduction of Microsoft's Office 98 for the Mac has been popular with users. He also said the company has convinced more developers to stay with the platform, meaning more software for users in coming months. "We're starting to see some real signs of recommitment to the platform from those who have been wavering," he said.

The company also hopes to make believers out of some of the waverers on Wall Street. First Call consensus expected the PC maker to report a profit of $0.16 per share in the quarter.

So-called "whisper" numbers making their way through Wall Street before the earnings announcement suggested Apple would make a mockery of the First Call number. Louis Mazzucchelli, an analyst at Gerard Klauer Mattison, predicted Apple would make about $0.25 per share. "We knew they were going to surprise people, but not this much," he said. "It's a break-out quarter."

"Apple had a great quarter, no question about it," said Jobs in a prepared release. "We are very pleased with the strong demand for our Power Macintosh G3 computers, which accounted for 51 per cent of all units sold." Apple shares closed up $.0.50 per share to $27.44 (£16.33) prior to the earnings announcement.

"They've streamlined their channel, discontinued losing projects like Newton and are continuing to sell to their installed base," he said. "Steve Jobs, regardless of his title, deserves much of the credit."

Apple's stock has quietly crept back to respectability in the past three months, climbing from a 52-week low of $12.75 (£7.60) per share in December to $28 (£16.70) per share in late March.