Apple Q3 profit down to $111m

Better than expected -- just

Apple has once again pushed up its profits by offloading ARM shares, it emerged yesterday when the company released its Q4 financials. The Mac maker reported a profit of $111 million, a smidgen up on last year's $106 million. However, knock off the $37 million it made from selling ARM shares and a $21 million "favourable impact" and add back the $16 million restructuring charge (or "contract cancellation charges related to previously outsourced services and a previously discontinued business", as Apple put it) plus a stack of other such items and you end up with a profit of just $90 million, not as good as last year but at least a tad higher than Apple had been forecasting. That said, it's a long way off the previous quarter's $203 million, though that figure was considerably inflated by a $89 million ARM share sale. For the most recent quarter, which ended 25 September, Apple's revenues were $1.34 billion, down 14 per cent on the same period last year. In the previous quarter this year, Apple recorded revenues of $1.56 million. Still, if Apple's figures are down this time, the prognosis still remains reasonable for Q1 2000. Apple has blamed its relatively poor showing this time on problems with component supply, but while the quarter saw the announcement of the iBook consumer portable, a revived iMac line and the Power Mac G4, both heralding some good pre-orders, only the G4 has been shipping for any significant part of the quarter, and then in only one of its three configurations. Q4 should see sales of iMacs, iBooks and G4s ramping up, though whether they will reach the levels Apple has previously been anticipating remain to be seen. Unexpected problems with the supply of PowerPC 7400 chips and the effect of the Taiwanese earthquake on Apple's iBook manufacturer AlphaTop could well limit Apple's ability to meet demand. Still CFO Fred Anderson was confident that "with our product transitions during the September quarter behind us, and an order backlog of over $700 million, we're poised for a very strong December quarter". Regarding the quake, Anderson said: "There was no structural damage to any [Apple] production facilities; they are all fully operational... [We] lost one week of production with iBooks and iMacs in the September quarter." For the full year, Apple made $601 million on revenues of $6.13 billion, up from $309 million and $5.94 billion, respectively, in fiscal 1998. The trend here is good, but Apple needs to avoid getting complacent. While the company's profitability has nearly doubled, it's sales rose just three per cent. Profitability is good, but Apple has to work harder to increase sales if it wants long-term viability. ® Related Stories Big Blue backs PowerPC G4 with production deal Apple hit by 'PowerPC G4 can't reach 500MHz' bug Apple demands Web sites kill iMac II pics

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