Posted on 01/14/2004 2:07:50 PM PST by HAL9000
Apple Computer beat Wall Street's earnings expectations for the December quarter by 2 cents and reported its best sales in four years, the computer maker reported after the close on WednesdayFor the fiscal first quarter of 2004, the Cupertino, Calif. company earned a net profit of $63 million, or 17 cents a share, compared to a loss of $8 million, or 2 cents a share, a year ago. Analysts polled by Thomson First Call were expecting a profit of 15 cents.
Sales jumped 36% year over to $2.006 billion, a bit better than the $1.932 billion expected by Wall Street.
Gross margins were 26.7%, down from 27.6% in the year-ago quarter.
Shares of Apple were rose 8 cents, or less than 1%, to $24.20 Wednesday. After hours, though, the stock was off $1.61, or 6.6%, to $22.59.
Last week, the company surprised industry watchers by announcing it will supply its popular iPod portable music players toHewlett Packard, which will then resell them with an HP label.
"For Apple, it represents the ability to further accelerate unit growth and gain volume -- which it needs to leverage its cost structure -- by tapping into H-P's massive distribution capabilities," commented Joel Wagonfeld, a principal of First Albany. "However, the fact that Apple has agreed to supply its most successful product to a key competitor on a Wintel platform ? provides an important signal. We think this move reflects Apple's difficulty in driving increased PC penetration via its new non-PC offerings," he said in a note to clients. First Albany does not have a current investment banking relationship with Apple.
Music has been a key to Apple's resurgence. Since the company launched its iTunes music store in April, the stock has shot up nearly 75%. That's true despite Apple's still-diminutive PC share: In 2003, it claimed less than 2% of the global market by units, according to estimates from Gartner Dataquest and Merrill Lynch.
On Tuesday Merrill Lynch -- which had dropped coverage of the stock -- issued a report recommending investors buy the shares . In the note, analyst Steve Milunovich predicted sales will jump 18% in fiscal 2004 to $7.3 billion, while EPS will double to 42 cents. "We think Apple has gotten its act together in focusing on core markets, building a mature management team, and most important innovating again," he wrote. Merrill has a recent investment banking relationship with Apple.
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