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Apple beats Street again
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January 13, 1999: 7:50 p.m. ET
Strong iMac sales drive computer maker's 1Q profits
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NEW YORK (CNNfn) - Apple Computer Inc. continued its string of profitable quarters by reporting first-quarter earnings well ahead of Wall Street estimates, powered by continuing strong sales of its iMac computer.
The Cupertino, Calif.-based computer maker earned $152 million, or 95 cents a share, up from $47 million, 33 cents, in the year-ago quarter. Excluding one-time gains, Apple earned $123 million, or 78 cents a share, marking the company's fifth consecutive profitable quarter. Analysts expected Apple (AAPL) to report a profit of 70 cents a share.
Revenues rose to $1.71 billion from $1.58 billion, and Apple's pile of cash and short-term investments rose to $2.6 billion in the first quarter from $2.3 billion at the end of September.
Revenues, profit and PC sales gain
Apple's first-quarter profits represent the first time in three year's the company has posted year-over-year growth in earnings, revenues and unit sales.
This year's results exclude a one-time gain of $29 million from the sale of 2.9 million shares of ARM Holdings Plc.
Apple has received a huge boost from sales of its iMac computer, which sold 519,000 units during the quarter, resulting in 49 percent unit growth from the same period last year. The company has sold 800,000 iMacs since its Aug. 15 launch.
Lower inventory levels
Apple also noted that it reduced its inventory to only two days, versus seven for rival PC maker Dell Computer (DELL).
Fred Anderson, Apple chief financial officer, said the company expects revenue and unit growth to slip in the second quarter due to seasonal declines. He added, however, that revenue and unit growth should be higher from year-ago levels.
Anderson noted that the iMac, which Apple recently made available in five different colors, will continue to be a driving force in the second quarter, as will the company's new line of Power Macintosh G3 professional-level desktop computers.
Despite the iMac's strong sales, Apple still holds only 10 percent of the PC market. Steve Jobs, Apple's interim chief executive officer, told the Moneyline News Hour with Lou Dobbs the company's market share will improve as long as the company remains focused on making quality products.
"I believe very strongly that if Apple pays attention to the quality of its products… market share will follow," he said. "I think we're off to a really good start in 1999."
Anderson pointed out that Apple's 28.2 percent gross margin was the company's highest level in four years, driven largely by strong sales of the G3 line and 1.5 million upgrades to the Mac OS 8.5 operating system.
Apple's average revenue per system, however, slipped to $1,776 from $1,840 in the fourth quarter. First-quarter average revenue per system was well off last-year's $2,400 figure.
Much of that falloff was due to the low-cost iMac. The company recently cut $100 off the retail price of the iMac to $1,199.
Anderson said Apple expects the downward trend in PC prices to continue.
Apple shares finished up 11/16 at 46-13/16 before slipping to 45-1/2 in after hours trade. 
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Apple
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