Increased operating expenses and flat revenue helped sink second-quarter earnings at

Apple Computer

(AAPL) - Get Report

, the company reported today.

In its quarter ended March 29, Apple earned $14 million, or 4 cents a share, on $1.48 billion in sales. That compared to the year-ago quarter when the company earned $40 million, or 11 cents a share, on sales of $1.5 billion.

Analysts were expecting the company to earn 2 cents a share on $1.46 billion in sales. At the end of its first quarter, Apple had projected it would earn a slight profit on sales that would be comparable with the $1.47 billion it recorded in the first quarter.

Although the company topped those expectations, it did so solely because of interest income. Excluding that income, the company posted a $4 million operating loss, as research and development, and sales, general and administrative expenses swelled.

Research costs increased 7% from the year-ago quarter to $119 million. Meanwhile, sales and administrative expenses shot up 11%.

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The increased operating expenses wiped out improvement on Apple's top-line margins. Despite the drop in sales, Apple's gross margin, which represents the difference between what it charges customers for its products and what they cost the company to produce, increased $9 million from the year-ago period to $418 million. As a portion of sales, gross margin jumped 98 basis points to 28.34%.

Apple expects to post similar results in its third quarter. The company projected that it would post a slight profit in its current quarter on flat sales compared with the just-completed quarter.

Apple shares closed regular trading down 15 cents this afternoon to $13.24. The company's stock has traded down in recent days following

reports that it is in talks to acquire


(V) - Get Report

Universal Music Group. During the conference call the company refused to comment further on the matter.

In a statement issued today, Apple CEO Steve Jobs

denied that the company has made an offer for the music company. Jobs also said that statements attributed to a Vivendi board member that speculated that Apple would make a $6 billion offer for the unit were false.