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Apple doubles profits year on year

But only by flogging ARM shares and selling a few iMacs

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Apple today announced profits of $203 million on revenues of $1.56 billion, making its most recent third quarter, ended 26 June, its seventh consecutive profitable three-month period. For the same time last year, the company made $101 million on revenues of $1.4 billion. Of course, this time last year, Apple had yet to launch the highly successful iMac, so it's no wonder sales were up. Unit shipments were up 40 per cent year on year, which isn't bad considering the current IDC forecast of 21 per cent growth for the PC industry as a whole, but no great shakes given how poorly Apple was doing until it launched the iMac. And the company's performance wasn't all down to computer sales -- continuing a trend established over the last three quarters, Apple dumped a pile of its stock of ARM Holdings shares, this time raking in $89 million. That's a hefty amount, and Apple would only have made $114 million profit if the stock sale hadn't been made. Again, this performance inflation manoeuvre is consistent with recent quarters and suggests Apple isn't doing quite as well as it might like everyone to think. Sure it's selling more kit, but the bottom line is it's making less money per sale and so has to buoy up the books some other way. We wonder what the Street's reaction will be when the ARM shares run out. This time, Apple met expectations, but whether analysts actually banked on a $89 million sale of ARM shares remains to be seen. That said, the company's stock price continues to rise, so presumably someone, somewhere is happy with the results. The company claimed margins were up year on year from 25.7 per cent to 27.4 per cent, so presumably it's banking on further improvement here to cover its rear-end when the ARM shares dry up. The company once again claimed an ending inventory of one day, less than Dell's but no surprise given the way US channels appear to have been squeezed of kit in the run up to 26 June. Lest anyone assume we're being particularly negative about Apple, the results are by no means bad. Equally, they're hardly as spectacular as the company itself -- and the Mac media -- have made out. Still, if Apple can move up as Compaq plummets, maybe there are grounds for optimism after all. ®

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