Apple meets Street expectations

NEWS Apple has managed to match Wall Street estimates with its first-quarter results, but has done little to silence the negative voices questioning the company's strategy. Apple lost $8m, or two cents per share, on revenue of $1.47bn for the three months ended 28 December. That compares with a net profit of $38m, or 11 cents per share, on revenue of $1.38bn for the comparable quarter last year. In October, Apple had forecast that it would post "a slight profit for the quarter before nonrecurring items," with revenue "up slightly" from the $1.44bn in sales from the preceding quarter. However, some analysts were looking for sales of $1.5bn or more. The company said it shipped about 743,000 Macintoshes during the quarter, roughly even with a year earlier. Chief Financial Officer Fred Anderson told analysts that the company is not going to cut back on development to maximise short-term profits. "We are going to keep investing through this downturn," Anderson said. He said the company is currently spending close to $500m a year in research and development, which paves the way for what he expects will be the company's strongest line-up of products in some time. "We have an incredibly strong pipeline of products coming," he said. Despite the new products, some on Wall Street have grown negative about Apple's prospects of late. Most notably, Merrill Lynch relaunched coverage of Apple with a "sell" rating in a report released on the eve of Macworld Expo. Other analysts have expressed concern about the fact that much of Apple's earnings these days come from interest in its cash holdings, with Apple itself forecasting a pinch because of lower interest rates. The company saw revenue from PowerMacs dip by 16 per cent from the preceding quarter and 20 per cent from a year earlier, accounting for $292m in revenue. "Sales of PowerMac G4s continue to be disappointing," Anderson said. "We believe the sluggish economy continues to have a negative impact on many of our creative professional" customers. Sales of the iMac and eMac lines totaled $356m, down four per cent from the preceding quarter, but up 75 per cent from a year earlier - before the eMac and flat-panel iMac were introduced. Sales of the consumer iBook totalled $216m, down eight per cent from the preceding quarter and 11 per cent from a year ago. PowerBook sales were $235m, up 65 per cent from the preceding quarter, but down nine per cent from a year earlier. Peripherals, including the iPod, accounted for $218m, up 13 per cent from the preceding quarter and 21 per cent from a year earlier. Software and other sales totalled $155m, down one per cent from the preceding quarter, but up 25 per cent from the year-ago period. Ian Fried writes for News.com