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Apple achieves anticipated double-digit growth

Units, profits, revenues -- all up in Q1 2000

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Apple CFO Fred Anderson's prediction that the company would achieve double-figure growth during its first quarter of fiscal 2000 proved accurate yesterday when he announced profits of $183 million on revenues of $2.34 billion. Those figures represent increases of 20 per cent and 37 per cent, respectively, on the same period last year. Once again, Apple sold off a heap of ARM shares, though for once the sale did little to inflate the company's net profit. Some $101 million of ARM shares were shifted, offsetting a $6 million restructuring charge and a $90 million "special executive bonus" -- Steve's LearJet, in other words. All that led to a surplus of $5 million, taking the quarter's profit from $178 million to $183 million. During the period, Apple shifted some 1,377,000 Macs, in increase of 46 per cent year on year. The total number of systems shipped includes over 700,000 iMacs and 235,000 iBooks. In other words, 68 per cent of Apple's revenue is nominally coming from the consumer space rather than its traditional professional marketplaces. While that's good for Apple's attempts to remodel itself as a consumer brand, it does mean it's being forced to operate in the toughest sector of the PC market, which probably explains why its gross margins were down from 1999's 28.2 per cent to 25.9 per cent. Increased component costs -- in particular, DRAM -- inflated pre-Christmas air freight charges and weaker-than-expected sales of MacOS 9 were also highlighted by Anderson as factors pulling down Apple's gross margins during the quarter. Apple sold over 350,000 Power Mac G4 machines, thanks to a rather better supply of PowerPC 7400 (aka G4) processors from Motorola during the quarter. That said, sales would have been higher had Motorola fixed the 500MHz speed-limit bug and produced sufficient 500MHz CPUs during the period. Anderson refused to comment on 500MHz G4 availability, so it's still unclear when Apple will ship its proposed 500MHz machine. Meanwhile, the megaHertz gap between Mac and Wintel continues to widen. Looking ahead, Anderson said Apple's recent tie-in with US ISP Earthlink, which will see all US Macs pre-configured to access the Net via Earthlink, should generate $25-35 million of gross profit for the company over the next year. The belated release of the company's next-generation notebook, codenamed Pismo, should grow its professional portable sales. The release of Apple's PalmOS-based handheld should add another new revenue stream to the company's business. ®

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