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Apple Sees 4Q Sales, Earnings Gains

Fueled by healthy sales of high-end desktops and notebooks and its iPod digital music player, Apple on Wednesday posted year-over-year revenue and earnings increases for its fiscal fourth quarter and year ended Sept. 27.

For the quarter, the Cupertino, Calif.-based company reported a profit of $44 million, or 11 cents per share, vs. a loss of $45 million, or 12 cents per share, a year ago. Its fourth-quarter 2003 earnings topped a First Call/Thomson Financial consensus forecast of about 7 cents per share.

Sales in the 2003 fourth quarter totaled nearly $1.72 billion, up 19 percent year over year from $1.44 billion. Gross margins rose to 26.6 percent from 26.4 percent over that time period.

Apple said it shipped 787,000 Macintosh computers during fourth-quarter 2003, up 7 percent from 734,000 in the year-earlier quarter. Products showing unit-sales gains included PowerBook notebooks (up 203 percent) and Power Mac desktops (up 26 percent). In addition, the company sold 336,000 iPod units in the quarter, up 140 percent from 53,000 a year earlier, and saw revenue gains in peripherals (up 55 percent) and software (up 13 percent). Unit sales fell for iMac desktops (down 20 percent) and iBook notebooks (down 25 percent) year over year.

For the year, Apple said it generated earnings of $69 million on revenue of $6.21 billion, up from a profit of $65 million on sales of $5.74 billion in fiscal 2002.

"It was a great new-product quarter for Apple," Apple CEO Steve Jobs said in a statement. During the quarter, the company unveiled the next-generation Power Mac G5 desktop as well as faster PowerBook laptops and slimmer iPods with more storage capacity, he noted. "Plus, we're delivering Panther, the next major release of Mac OS X, later this month, and we'll have some exciting news regarding our music efforts tomorrow."

Apple is widely expected to launch a Windows version of its popular iTunes Music Store pay-per-song service this week, and the company is scheduled to ship Mac OS X 10.3 "Panther," its next-gen operating system, on Oct. 24.

Apple noted that its fourth-quarter 2003 results include an after-tax investment gain of $6 million, a favorable accounting adjustment of $3 million related to the company's stock repurchase agreement and a gain on the settlement of the stock repurchase agreement of $6 million. Without those items, earnings would have been $29 million, or 8 cents per share, the company said

"We are very pleased to have exceeded our revenue and profit targets for the fourth quarter," Apple CFO Fred Anderson said in a statement. "Looking ahead to the first quarter of fiscal 2004, we expect a sequential increase in revenues to about $1.9 billion and a slight sequential increase in GAAP earnings relative to the September quarter."

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