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Thursday, January 14, 1999

"You cannot run a business, or anything else, on a theory." -- Harold Geneen

Latest Market Numbers

Apple Tops Estimates

After the bell yesterday, Apple Computer (Nasdaq: AAPL) reported fiscal first quarter earnings of $0.78 (excluding a one-time gain), topping the First Call analysts' mean estimate of $0.70 and more than doubling the $0.33 it earned in the same period a year ago. For the first time in three years, the maker of Macintosh computers reported year-over-year increases in unit, revenue, and earnings growth. During the quarter, it shipped 944,000 units, up 49% from last year, and revenues reached $1.7 billion, an 8% gain.

Driving unit growth were sales of 519,000 original blue iMac computers. The company's ending inventory dropped to $25 million, or two days' worth of inventory -- something Apple executives repeatedly compared with Dell Computer's (Nasdaq: DELL) last reported number of seven days in the earnings press release and the conference call with analysts -- never mind that Dell has consistently delivered on earnings and that revenues at the No. 1 PC direct seller last quarter totaled $4.8 billion. Apple CFO Fred Anderson admitted that the company doesn't expect to maintain two days of inventory and would be pleased with four to six days.

Anderson also said that the company will continue to aim to increase unit growth and market share through sales of the popular iMacs, but that it expects a seasonally slower fiscal second quarter -- its fiscal Q4, ending in September, is typically the strongest thanks to education sales, which account for 30% of the company's total annual revenues. Apple also anticipates a sequential decline in gross margins, which came in at 28.2% this quarter, as a result of lower prices. Last week, the company announced it will begin selling iMacs in new colors and with a faster processor and more memory -- all for $100 less than the original price.

News to Go

Motorola (NYSE: MOT) reported Q4 EPS of $0.26, substantially lower than last year's $0.65 (before charges) but ahead of analysts' expectations of $0.23. Q4 operating results improved over the previous two quarters, largely due to strong sales of digital cell phones, sequential sales growth in semiconductors and cellular infrastructure equipment, and its restructuring and cost-reduction efforts.

Computer processor maker Advanced Micro Devices (NYSE: AMD) missed analysts' estimates by reporting fourth quarter earnings of $0.15 a share, up from $0.09 a year ago and $0.01 in the preceding quarter. Analysts had been projecting EPS of $0.19.

Electronics manufacturing technologies company Solectron Corp. (NYSE: SLR) announced a 2-for-1 stock split, payable on or about February 24.

Sunglass Hut International (Nasdaq: RAYS) said it has acquired privately held shades.com, an Internet site devoted to selling branded nonprescription sunglasses, and SwissArmyDepot.com, which mainly peddles SwissArmy knives and watches, for roughly $2.8 million in cash and $1.2 million in a convertible subordinated note.

Oil and natural gas exploration and production company Snyder Oil Corp. (NYSE: SNY) announced it has agreed to be acquired by Santa Fe Energy Resources (NYSE: SFR) for $13.45 a share in stock, based on yesterday's close -- just a tad higher than Snyder's last close of $13 7/16 ($13.4375). Sante Fe shareholders will own about 60% of the combined company, Santa Fe Snyder Corp., which will be based in Houston.

Natural foods grocery store chain Whole Foods Market (Nasdaq: WFMI) warned that it will miss analysts' consensus estimate of $0.58 a share for the fiscal first quarter due to higher-than-expected expenses. The company anticipates EPS of $0.45 to $0.50.

More Earnings Announcements:

AmeriCredit Corp. (NYSE: ACF) -- fiscal Q2 EPS: $0.26 vs. $0.18 (restated) last year; estimate: $0.26
ATI Technologies (Nasdaq: ATYTF) -- fiscal Q1 EPS: $0.24 (before unusual items) vs. $0.12 last year
First Union (NYSE: FTU) -- Q4 EPS: $1.00 (before charges) vs. $0.77 last year; estimate: $0.99
Eastman Kodak (NYSE: EK) -- Q4 EPS: $1.05 (before charges) vs. $0.75 last year; estimate: $1.15
Unisys Corp. (NYSE: UIS) -- Q4 EPS: $0.42 vs. $0.25 last year; estimate: $0.40

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