Apple Q3 profits, revenues up

Quarter growth good despite few product intros - to be remedied later today...

Apple saw profits rise beyond Wall Street expectations (just) yesterday, when it reported Q3 2000 income of $163 million on revenues of $1.825 billion, up 17 per cent on the same period last year.

That income translates to earnings of 45 cents a share, one cent above the Street's 'spectations, according to First Call polls. It amounts to an increase of 43 per cent on the same period last year.

It's also the figure before one-off charges and income is taken into account. Factor in the sale of yet another heap of ARM shares, and Apple's final profit figure neatly rounds off at $200 million, just below last year's after-extras income of $203 million.

Given Apple's keenness to stress the headline figure, it's surprising it didn't sell off a few more shares to bump the numbers up to $205 million.

During the quarter, Apple shipped just over a million units, up 12 per cent on the Q3 1999, including 350,000 Power Mac G4s and 450,000 iMacs, though CFO Fred Anderson admitted later that iMac sales "were a bit below expectations". Certainly resellers had noted a fall-off in sales early spring, but Anderson said that while April iMac sales were down, May and June figures were in line with predictions.

Analysts previously blamed the April dip in iMacs sales on the fact that Apple had not updated the product since the previous autumn. Anderson yesterday promised a more vigorous product update programme, which is due to kick off later today with the company's MacWorld Expo product introductions, expected to include improvements to both the iMac and Power Mac lines.

On the portable side, Apple said its professional-oriented PowerBook experienced particularly strong sales - 113,000 units. Curiously, the consumer iBook received no mention form Apple, suggesting that sales were nothing to write home about - a poor 89,000 units, to be precise. Again, the time is right for an iBook update, and that too may be announced later today.

Certainly leaks from Apple's notebook OEM in Taiwan, AlphaTop, suggest the company is readying upgrades to the iBook line, first with a minor mod. that adds a FireWire port to the portable, and with a major upgrade to follow early next year.

In any case, during Q3 2000, the shift toward higher-margin pro products helped up Apple's gross margin to 29.8 per cent, though Anderson admitted that may fall two to three percentage points during the current quarter.

However, revenue growth will remain in double figures, he predicted. "We're now in the early stages of a strong growth story," he said.

An increase in direct sales also helped fuel margin growth. Apple made a quarter of its sales during the three-month period through its online store. ®

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