Apple Fiscal Q2 Sales Flat, Profit Slides 65%

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Cupertino, Calif. - Apple Computer sales were flat in the company's fiscal second quarter, dropping 1 percent, to $1.48 billion from $1.5 billion and profit plummeted.

Even with strong sales of high-end laptops, net profit declined 65 percent in the second three months, down to $14 million, from $40 million in the same quarter a year ago. The company reported a $3 million restructuring charge in the second quarter.

Gross margin for the second three months, however, climbed 90 basis points, reaching 28.3 percent, compared with 27.4 percent in the second quarter a year earlier.

Unit sales of the company's iMac desktop computer dropped to 256,000 in the second quarter, ended March 29, compared with 372,000 units in the same three months the previous year. Dollar revenue for the iMacs declined to $302 million in the second quarter, down from $448 million in the second quarter of 2002.

Apple sold 711,000 Macintosh computers overall in the second quarter, down from 813,000 year-on-year. More than 40 percent of these units were laptops, computers that enjoy a higher profit margin than the company's desktop lineup. This is the highest percentage for laptops ever and well ahead of the industry average, said Apple.

Sales in the Americas, by far Apple's largest market, dropped to $684 million in the second quarter, down from $737 million in the same three months in 2002. Unit sales in the Americas reached 338,000 in the second three months, compared with 401,000 year over year.

Apple posted strong second-quarter growth in its PowerBook lineup, boosting sales to $353 million on 166,000 units, compared with $198 million on 89,000 units in the second quarter of last year.

The average computer at Apple sold for more than $2,000 during the period, the company said. International sales accounted for 47 percent of the quarter's revenue.

For the six months, sales hit $2.95 billion, up from $2.87 billion in the same period a year ago. Net income, however, tailed off to $8 million for the period, down from $78 million in the same six months the previous year.

Looking ahead to the third quarter, Apple expects revenue to be relatively flat, compared with the second quarter. At the same time, it anticipates a slight profit.

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