Stock Watch: Q4 Shortfall, Forecast Sink Apple

Apple Computer Corp. (Nasdaq: AAPL) fell in early trading Thursday, slipping 1 1/4 to 18 7/8 after the company missed analysts’ already-lowered expectations for the fiscal fourth quarter and lowered its forecasts for the current fiscal year.

The Cupertino, California-based computer maker reported income of $170 million, or 47 cents per diluted share, for the quarter ended September 30th, up from $111 million, or 31 cents, in the same period a year earlier. Revenue rose 40 percent to $1.87 billion.

The results include a $62 million aftertax gain from the sale of ARM Holdings stock. Excluding investment gains, income totaled $108 million, or 30 cents per share, up 20 percent from the year-earlier quarter. Analysts were looking for earnings per share of 31 cents in the latest quarter.

Gross margins, at 25 percent, were down from 28.7 percent in last year’s fourth quarter. International sales accounted for 44 percent of revenue in the latest quarter, Apple said.

“We have identified several factors which we believe contributed to our sales shortfall last quarter, and we are taking strong steps to remedy them going forward,” said chief executive officer Steve Jobs.

Jobs warned that the current quarter will be “disappointing” as well, because of the company’s decision to rapidly reduce excess inventory. For the quarter ending in December, the company said, revenue will be about $1.6 billion, resulting in a “slight profit.”

“Our plan is to be back on track for the January quarter, and we remain very excited about our products and programs for 2001,” Jobs said. For fiscal 2001, Apple predicts revenue of $7.5 billion to $8 billion, and earnings per share of $1.10 to $1.25.

Apple shares have fallen from as high as 53 last month, when the company disclosed that results for the quarter would be weaker than thought, in part because demand for the new G4 Cube was not as strong as expected. Analysts had initially expected the company to earn 45 cents per share.

Full-year revenue rose to $7.98 billion from $6.1 billion, while net income advanced to $786 million, or $2.18 per diluted share, from $601 million, or $1.81.