Apple Unlikely To Sell Cheaper Computers, Jobs AssertsApple Unlikely To Sell Cheaper Computers, Jobs Asserts

Apple chief executive Steve Jobs on Tuesday said the company is unlikely to start selling low-priced computers, despite the global economic slowdown, and has no plans to enter the emerging mini-notebook market or to build a variety of iPhone models.

Jobs made an unusual appearance at the teleconference the company holds with financial analysts after releasing quarterly earnings. Apple on Tuesday reported that profits rose to $1.14 billion in the fiscal fourth quarter ended Sept. 27, as sales increased 27%, driven primarily by iPhone and Mac computer sales. The company also said that it had surpassed during the quarter its goal of selling 10 million iPhones this year.

In answering analysts' questions, Jobs said the company is prepared for the economic slowdown with a loyal customer base that's likely to delay purchases rather than turn to competitors, a successful product portfolio that offers strong value for the money, and $25 billion in the bank.

While Apple could get "buffeted around by the [economic] waves a bit," Jobs said he was confident the company would do well in the slowdown. "I think this economic downturn will present some extraordinary opportunities for companies with cash," he said.

Asked whether he would consider returning some of the cash to investors, Jobs dodged the question, but indicated that the company would prefer to invest the money in its business during the downturn. "It's not burning a hole in our pockets," Jobs said of the money stash. He also declined to say whether Apple would use the money for acquisitions.

As to selling cheaper computers to attract consumers with thinner wallets in a slow economy, Jobs said that wasn't a strategy the company would pursue, preferring instead to beat the competition on features within the high-end market.

"What we want to do is deliver an increasing level of value for customers," he said. "We don't know how to make a $500 computer that's not a piece of junk, and our DNA won't let us do that."

One new market Apple would stay out of for the time being is for so-called "netbooks," defined as sub-$500 notebooks with displays 10 inches or smaller and running a full PC operating system. Most of the major PC makers are offering such machines as second or third computers for people looking to check e-mail or browse the Web on the road.

"That's a nascent category that, the best that we can tell, not a lot is being sold," Jobs said. "We'll wait to see how that nascent category evolves, and we've got some pretty interesting ideas if it does evolve."

In the meantime, Apple has the iPhone, which can browse the Web from anywhere on a cellular network and fit in your pocket, Jobs said. Asked whether he would consider making a variety of models, like other mobile phone makers do with their products, Jobs said Apple plans to stay with one iPhone and make it a strong platform for software that would differentiate the product from rivals'.

"As far as I know, Babe Ruth had one home run. He just kept hitting it over and over again," Jobs said. During the fiscal fourth quarter, Apple sold 6.9 million iPhones, compared with 1.1 million a year ago, making the company the third-largest mobile phone maker in terms of revenue behind No. 1 Nokia and Samsung, Jobs said. IPhone revenue in the quarter was $4.6 billion.

Mac sales were also strong, rising to 2.6 million units in the quarter. That represented a 21% increase in terms of unit growth and 17% growth in revenue, the company reported. IPod sales rose 8% from a year ago to 11.1 million units, which amounted to a 3% increase in revenue.

As to Apple's plans for Apple TV, Jobs indicated that time isn't right for major investments in the device, which makes it possible to move video and other content from a Mac to a digital TV in the home. "Given the economic conditions and venture capital outlook, I think it will continue to be a hobby in 2009," Jobs said of Apple's plans to play a bigger part in people's home entertainment centers.

Overall, the company's sales grew 27% to $7.9 billion in the quarter from $6.22 billion a year ago. International sales accounted for 41% of revenues. Profits increased to $1.14 billion or $1.26 a share, from $904 million, or $1.01 a share, a year ago. Gross margins rose to 34.7% from 33.6% a year ago. Because of price competition and the need to maintain a strong feature set in its products, company executives predicted gross margins would be about 30% in 2009.

For the current quarter, Apple forecast revenue from $9 billion to $10 billion and earnings per share between $1.06 and $1.35. "Looking ahead, visibility is low and forecasting is challenging, and as a result we are going to be prudent in predicting the December quarter," Apple CFO Peter Oppenheimer said in a statement.

As of the fiscal fourth quarter, Apple added non-GAAP measures to its financial reports, as well as results based on GAAP, which stands for generally accepted accounting principles. Non-GAAP measures often exclude one-time charges another items.