After warning last month that weak September sales would harm earnings, Apple has reported a fourth-quarter profit before investment gains of 30 cents a share, slightly behind analysts' revised expectations. Net profit before investment gains was US$108 million, an increase of 20 per cent from the same quarter a year ago, Apple said. Revenue for the fourth quarter, which ended Sept. 30, was $1.87 billion, up 40 per cent from a year ago and in line with Apple's revised estimates. The above income figure excludes a $62 million after-tax gain from the sale of shares of ARM Holdings, which contributed 17 cents to earnings per share. Including investment gains the company reported a net profit of $170 million, or 47 cents per diluted share, compared with a net profit of $111 million, or 31 cents per diluted share a year ago. "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,' Steve Jobs, Apple's CEO, said in a statement. Apple's stock - already waning from lowered revenue expectations - stayed even throughout the day's trading and then sagged in the after hours market. It lost over 15 per cent to stand at $17 per share, at the time of this report. Apple officials said lower than expected sales of its PowerMac G4 Cubes accounted for over $90 million in missed revenue for the quarter. "So far, in our track record over the last few years, we have only had one product that did not meet our expectations - that was our G4 Cube," Jobs said in a call following the earnings release. "While no transition period can be painless, things are looking very, very good." In addition, the company pointed to educational markets - one area where Apple is traditionally strong - as a low point for the quarter. "We fell short in our educational market revenue figures by $60 million," said Fred Anderson, chief financial officer at Apple. He added that Appla had expected more demand for higher priced dual processor configurations than were realized. Apple missed out on $30 million in that area, he said. The company expects the first fiscal quarter of 2001 to also be disappointing, as it tries to sell off excess inventory in its channel, Apple officials said on the call. "We are targeting only a slight profit in the December quarter," Anderson said. Apple opted to deal with the excess inventory in the upcoming quarter instead of trying to spread the effects over the next few financial cycles, he said. Apple said its recently announced rebate on the Cube, along with the holiday season and past results, signal that heavier sales of the new machines will occur in the coming months. "Some customers have been upset with less than perfection," Jobs said during the call. "In the eyes of our customers, the G4 Cube is simply priced too high." Apple also said it will enact a hiring freeze as an attempt to cut down costs. "Our revised outlook is causing us to pull in the reins on spending," Anderson said. The computer maker said it hopes its finances will be back on track by January. On September 28 Apple warned that earnings for the quarter would be well below expectations because of slower than expected sales in September. In particular, sales of the company's PowerMac G4 Cubes got off to a slow start, and sales to educators, traditionally a mainstay of Apple's business, were slower than usual. The news sent Apple's stock into a tailspin, falling from $53 before the earnings warning to $26 early the next day. The stock has continued to slide since then, closing Wednesday at $20.12, unchanged from the previous day. Wednesday's earnings report was issued after the close of market. Before last month's profit warning, analysts had expected Apple to report a gain of 45 cents a share for the quarter. Those estimates were revised and analysts had expected Apple to profit by 31 cents a share Wednesday, according to First Call/Thomson Financial. Gross margins for the quarter were 25.0 per cent, down from 28.7 per cent last year, Apple said. International sales accounted for 44 per cent of revenue. Last week the company launched a rebate program in the US in an apparent bid to revive the underwhelming sales. Customers who buy a G4 Cube along with a monitor between now and the end of the year can get a mail-in rebate of $300. The company is also offering a $200 mail-in rebate on its PowerBook.