Apple ups Q1 revenue, but posts slight net loss

Apple Computer Inc. Wednesday reported a net loss of US$8 million, or 2 cents per share, for its fiscal 2003 first quarter. The results, posted after the close of financial markets in the U.S., compare with a net profit of US$38 million, or 11 cents per diluted share, that the company reported in the first quarter of 2002.

Apple, which just wrapped up its semiannual Macworld Expo last week, said its revenue for the period was US$1.47 billion, up 7 percent from the year-ago quarter. Gross margins were 27.6 percent, down from 30.7 percent during the same period in 2002.

The results included a US$17 million after-tax restructuring charge and a US$2 million after-tax accounting transition adjustment. Excluding those nonrecurring items, the company said it would have reported a net profit for the quarter of US$11 million, or 3 cents per share.

Apple said it shipped 743,000 Macintosh computers during the quarter, which ended Dec. 28. That's about even with shipments in the year-ago period.

One trouble spot for the company was its high-end Power Mac G4 line, for which sales dropped 25 percent from last year's first quarter. The crunched economy is partially responsible for that, said Apple Chief Financial Officer Fred Anderson, but he also pointed blame at Quark Inc., which has not yet released an OS X-native version of its QuarkXPress desktop publishing software.

QuarkXPress is a key tool for the design professionals who comprise a major chunk of the customers for Apple's most powerful desktops.

"I think many are waiting for Quark for OS X before upgrading," Anderson said during a conference call with analysts, adding that Apple hopes to see an OS X version of the software sometime this year.

Anderson declined to discuss any upcoming Apple product plans despite questions from the analysts.

"We have a very strong new product pipeline for 2003, which we kicked off by introducing the two most advanced notebook computers in the industry last week at Macworld," Apple CEO Steve Jobs said in a statement. "We're going to keep investing through this downturn and continue to move our products and distribution channels ever further ahead of our competitors, so that when the economy rebounds we will be positioned for growth."

"We were extremely pleased with our ability to achieve our revenue target for the first quarter while reducing channel inventories by 11 percent within the quarter," Anderson said. "Continued strong asset management enabled us to increase cash to over US$4.4 billion."

One of Apple's key goals right now is growing its market share, and on that count it's seeing strong results, according to Anderson. Half of the customers buying computers in Apple stores this quarter did not previously own a Macintosh, he said, and slightly more than half of the company's 216,000 iPod digital-music player sales this quarter were of Windows units.

Looking ahead, Anderson said the company expects revenue to be flat in the next quarter, although it projects it will report a slight profit.

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