Apple Tops Estimates, Says iMacs Flying Out the Door

Revenue and margins both rise for the computer maker.

Author:: Rebecca Byrne
Publish date:: Apr 17, 2002 6:51 PM EDT

Updated from 5:02 p.m. EDT

Apple Computer

topped analysts' fiscal second quarter earnings and revenue targets Wednesday amid strong demand for the company's new flat screen iMac.

Apple posted a net profit of $40 million, or 11 cents a share in its second quarter, down from a profit of $43 million, or 12 cents a share in the year-ago quarter.

Revenue rose 4% from last year to $1.5 billion while gross margins hit 27.4%, compared with 26.9% a year ago. The company said international sales accounted for 45% of the quarter's revenues.

Analysts had projected that Apple would earn 10 cents a share on sales of $1.46 billion.

"We've experienced incredible demand for the new flat-screen iMac and shipped 220,000 this quarter," CEO Steve Jobs said in a statement.

The company also raised revenue estimates for the fiscal third quarter but said earnings would be "flat to up slightly" compared with the second quarter. Analysts had called for a profit of 13 cents a share. Executives said they provided a conservative forecast for the third quarter, because of rising component costs, which could push gross margins down 1%.

During a conference call, Apple said it expects DRAM prices to be flat to down in the third quarter but it expects LCD prices to rise.

In March, Apple increased the prices of its three new flat-panel display iMac computers by $100, due to high costs for memory and LCD flat-panel displays.

Despite the price hike, executives said that they have not seen a dip in demand. In fact, Apple has "significant" order backlogs for the iMac and the company said it expects to catch up with demand in the third quarter.

Jobs said the company is making "great progress" on its transition to Mac OS X and that the company has some "remarkable new products in development." He also said he expects to open an additional 20 Apple retail stores by the end of this calendar year.

"We're pleased to have delivered solid results while executing a challenging product transition," added Chief Financial Officer Fred Anderson.

Anderson said the firm's balance sheet remains strong, with $4.3 billion in cash, and he increased revenue estimates for the third quarter to about $1.6 billion compared with analysts' expectations for sales of $1.53 billion.

Apple also said it shipped 813,000 Macintosh units during the second quarter, an 8% increase from the year-earlier period. Still, sales of the firm's MP3 player, the iPod, fell by more than 50% sequentially in the second quarter, the firm said on the call.