Apple Sees Q2 Profit Soar 72 Percent

SAN FRANCISCO (04/19/2000) - Apple Computer Inc. reported a second-quarter profit today of US$160 million before non-recurring items, up 72 percent from a year ago. The company also announced plans for a two-for-one stock split.

The profit increase was driven by strong demand for Apple's more powerful computers, including the PowerMac G4 and new PowerBook notebooks, as well as improved operating efficiencies, Fred Anderson, Apple's chief financial officer, said in a teleconference today with press and analysts.

Earnings per share for the quarter, which ended April 1, 2000, were 88 cents, up 47 percent from a year ago and well ahead of the expectations of financial analysts, who had expected Apple to profit by 81 cents per share, according to First Call/Thomson Financial.

Revenue for the quarter was $1.94 billion, up 27 percent from a year ago, while gross margins were 28.2 percent, up from 26.3 percent from the year-ago quarter, Apple said in a statement issued today.

"We're very pleased to report our second consecutive quarter of strong unit, revenue and earnings growth," Anderson said.

The profit figure of $160 million excludes a $73 million after-tax gain from the sale of 1.5 million shares of ARM Holdings PLC. Including the one-time gain, Apple reported a profit of $233 million, or $1.28 per diluted share, compared with $135 million, or 84 cents per diluted share, a year ago, the company said.

The firm's iMac computer continues to draw new users to the Macintosh platform, Anderson said. About 28 percent of customers who bought an iMac in the second quarter were buying their first computer, while 17 percent were switching from PCs running Intel Corp. chips and Microsoft Windows software, according to Anderson.

Apple sold 1,043,000 units during the quarter, up 26 percent from a year ago.

The sales included about 100,000 PowerBooks and 350,000 PowerMac G4s, Anderson said.

International sales accounted for 51 percent of revenue. Sales in Europe were particularly strong, climbing 36 percent year over year. Sales in the Americas increased 28 percent, while Japan and the rest of Asia climbed 12 and 13 percent, respectively, Anderson said.

Apple is planning a two-for one stock split that will take effect June 21 subject to the approval of its shareholders at the company's annual meeting tomorrow. To qualify, shareholders need to be on record at the close of business on May 19, 2000, Apple said.

The financial results were announced after the U.S. markets closed today.

Apple's shares on the Nasdaq were trading at $121.13 at the close, down $5.75 from yesterday.

Apple's shares hit an all-time high of $150.75 on March 23, but were selling for as little as $109.25 on Wednesday last week in the midst of a broad slump in technology sector stocks which hit rock bottom Friday. IT stocks, including Apple's, have quickly rebounded from the slump this week.

Apple, in Cupertino, California, can be reached at +1-408-996-1010 or at http://www.apple.com/.

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