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Technology Stocks : Apple Inc. -- Ignore unavailable to you. Want to Upgrade?

To: William F. Wager, Jr. who wrote (7373)	1/6/1998 7:03:00 PM
From: Tom Hua	Read Replies (1) \| Respond to of 213173

From Interactive WSJ. Apple to Post Profit for Quarter; Sales Fell, but Margins Improved An INTERACTIVE JOURNAL News Roundup Apple Computer Inc. opened the Macworld trade show in San Francisco with a dose of good news Tuesday, surprising analysts by saying it will post a profit for the quarter ended December. Apple cited strong sales of a new line of computers, cost-cutting and other efforts. The Cupertino, Calif., company said it expects to report earnings of more than $45 million on revenue of $1.58 billion for the fiscal first quarter. In the year-ago quarter, Apple reported a loss of $120 million, or 96 cents a share, on sales of $2.13 billion, meaning Apple's sales in the most recent quarter will be down about 25% from the year-ago figure. Apple will officially report its results Jan. 14. The consensus estimate of analysts surveyed by First Call had been for a loss of around six cents a share. Wendy Abramowitz, an Argus Research analyst, estimated Apple's profit to be about 36 cents a share based on the information in a company press release. "Clearly, a profit is better than what I was looking for," Ms. Abramowitz said. Shares Gain 19% Shares of Apple soared on the news, climbing $3.0625, or 19%, to close at $18.9375 Tuesday on the Nasdaq Stock Market, after a early afternoon trading halt for dissemination of the news. Shares of Apple also advanced last week amid optimism that the struggling computer maker might make some positive announcements at the show. "We are thrilled that our new plans are beginning to work," said interim Chief Executive Steve Jobs. Mr. Jobs announced the projected profit at the end of his keynote speech. Apple said it benefited from strong sales of its Power Macintosh G3 computers, noting that more than 133,000 units have shipped since the G3's November debut, compared with an Apple forecast of 80,000 units. Apple says the machines are faster and cheaper than equivalent PCs based on Intel Corp.'s Pentium II chips. Apple also credited its partnership with retailer CompUSA Inc. In the quarter, CompUSA outfitted 57 of its computer superstores with Apple "store within a stores," boosting CompUSA's Macintosh sales, Apple said. Apple said that Macintosh sales rose to 14% of CompUSA's overall PC business, up from 3%, as a result. CompUSA expects all of its computer superstores to be outfitted with the new Apple areas by February, Apple said. First Profit Since 1996 A profitable quarter would be Apple's first since the period ended September 1996. Meanwhile, Microsoft Corp. unveiled versions of its latest Internet browser and its Office software suite for Apple's Macintosh. The Mac version of Office 98 is expected to be available in March; Microsoft said Internet Explorer 4.0 for Macintosh is available free on Microsoft's Web site and will be included with Office 98. The upgrade for the Mac version of Office is the first in nearly two years, and talk is that it's better than the well-known Windows version in a few ways. For one thing, it can automatically fix problems with files and folders. Apple is also exhibiting upgraded software enabling Macs to run Windows programs and is showing off some applications for Apple's next-generation Rhapsody operating system. The company also plans to unveil improved programs for graphic designers, publishers, artists and photographers, a key market for Apple. Also, Apple unveiled version 8.1 of its Mac OS, and said the updated operating system will be available in February. Mac OS 8.1 also has an improved file system, built in digital video disk, and other features. (Mac OS 8.0 users can download 8.1 free from Apple's Web site or get the system on CD for $19.95.) Possible Sub-$1000 Computer Apple executives also said they are looking seriously at bringing out a low-priced computer to compete in the sub-$1,000 marketplace. Analysts said such a move would indicate that Apple was interested in aggressively pushing back into the consumer market. Analysts were taken aback not only by the news that Apple would make money in the quarter but also by the fact that the company announced its newfound profitability in the middle of the trading day, without warning. "This is not your normal way of disclosing financial information," said Walter Winnitzki, an analyst at PaineWebber Inc. Added Andrew Neff, an analyst at Bear Stearns & Co.: "One always takes into account getting surprised by a Steve Jobs speech." Mr. Neff, who has rated Apple an "attractive" stock since late last summer, said he hadn't expected the company to make money this quickly. "The key for Apple was to stabilize, and step two was to break even: It looks like they're well into step two," he said, adding that the next step is for the company to "develop a growth plan." Tim Bajarin, an analyst at market-research firm Creative Strategies Inc., said one key to the company's performance was the absence of Macintosh clones, which were beginning to erode Apple's sales before Mr. Jobs quit licensing them. Mr. Winnitzki said that although sales appeared to have slowed in the first quarter from the fourth, the magnitude of Apple's cost-cutting and gross-margin improvements "have taken everyone by surprise." Some analysts cautioned that much of the profit didn't represent a fundamental revival in Apple's business. "They did what they had to do to get there," said Jean Bozman, an industry analyst with International Data Corp. "Let's not forget they had to lay off a lot of people." Good News for Loyalists For Apple loyalists, the good news came as a welcome change from a drumbeat of pessimism. In recent weeks, analysts have pointed to Apple's plodding search for a new chief executive officer as a indication of how precarious Apple's situation is. Some recruiting experts have said Apple will have a hard time recruiting top-notch candidates as long as the mercurial Mr. Jobs is around. Apple last month confirmed that it wouldn't have a new CEO in place in time for a Macworld announcement; until the admission, Apple had publicly maintained that it hoped to have a new CEO by the end of 1997. On Tuesday, Executive Vice President Mitch Mandich said the search has not been as easy as the company anticipated six months ago. That difficulty has left Mr. Jobs putting in a 40-50 hour work week at Apple, he added. "He's actually been full-time -- more than full-time." Mr. Jobs showed little patience for the issue in an interview with CNBC Tuesday. When asked if he had ruled out the idea of taking the chief executive post on a permanent basis, Mr. Jobs rose from his seat, removed his microphone and said, "We agreed we weren't going to talk about this."