Apple announced its financial results for the third quarter 2001 yesterday, posting a net profit of $61 million ($0.17 per share).
The company returned a net profit of $200 million, or $0.55 per share, in the same quarter last year. Revenues for the just-past quarter were £1.475 billion - a 19 per cent drop from the year-ago quarter. Gross margins fell slightly to 29.4 per cent from 29.8 per cent in the same quarter last year. International sales accounted for 44 per cent of revenues.
Although healthy, the results fall short of analyst expectation, with consensus estimates predicting revenues of $1.6 billion.
PowerMac G4 sales have declined 17 per cent since the second quarter and 36 per cent from the third quarter a year ago. PowerBook sales fell by 23 per cent sequentially, and by 9 per cent compared to a year ago. iMac sales inched up from the previous quarter, falling 36 per cent sequentially from the third quarter 2000, Apple said.
Demand for the company's iBook climbed 270 per cent from the second quarter and about 60 per cent from the third quarter a year ago.
Solid state “We’re delivering solid profitability while maintaining lean channel-inventories in a weak economic environment,” said Fred Anderson, Apple’s chief financial officer. “Our balance sheet remains very strong, with over $4.2 billion in cash, and we're targeting a slight sequential increase in revenues and earnings per share in the September quarter.”
The company took a $7 million hit related to the acquisition of PowerSchool. This charge was balanced by a one-off gain from other investments by the company, which accrued $7 million.
Apple shipped 827,000 Macintosh units in the quarter. Online sales accounted for 40 per cent of channel sales, the company confirmed.
Apple CEO Steve Jobs said: "We had a great education quarter, with significant year on year growth, and a great iBook quarter, shipping over 182,000 of these."
Apple currently holds a 27.7 per cent market share for desktops and a 34.7 per cent share for portables in the US education sector, according to International Data Corporation (IDC).
Education turning-point "We've turned the corner in education and believe we can begin to grow it again, just as we have historically," Anderson said.
Anderson confirmed that Apple's first two retail stores have been a success, and reaffirmed plans to open a further 23 in 2001. The company expects ten new stores to open in August around the US, Anderson said.
Anderson said: "Several of our resellers say they feel the retail stores can be complimentary to their efforts. There might be concern from a few of the resellers where the new stores are in their own back yard."
Anderson said earlier this year that Apple's retail operation would break even by this fiscal year's end, and turn a small profit by the second quarter of the next fiscal year. Financial impact from the retail stores did not show up in the third-quarter results, and probably won't have a noticeable impact until the fiscal first quarter in 2002, Apple said.
Year-on-year sales increased 7 per cent, which Anderson attributed to the company's strong leadership, its newly marshalled educational sales force and the iBook's popularity in the education sector.
"When you grow seven per cent in unit sales year-over-year in a tough economic year, we think that indicates continuing favourable results," Anderson said. The company has also reduced its inventory to about two days' supply.
Global performance Worldwide, Apple saw its biggest sequential sales growth in Japan and the Americas. Revenue in the European region, however, declined 23 per cent from the immediate prior quarter and 22 per cent from the third quarter of 2000.
"Europe was the last region to show the effect of the recent economic downturn, if you look at things from a global perspective," said Anderson. "During the quarter, it felt the effects we were feeling 6-9 months ago in the US. However, the region seems to be stabilizing now."
The company expects a slight increase in revenues in its fourth quarter: "We expect a slight uptick in revenue for the September quarter," Anderson said: "But we're expecting a continuation of the weak economic environment."
Apple shares closed at $25.10 yesterday in anticipation of the results. They fell over 10 per cent on the after-hours market, closing at $22.40 after the announcement.
The conference call is available as a QuickTime audio broadcast on Apple's Web site.