Apple revenue steams ahead on iPod strength

The continued popularity of Apple Computer's iPod music player helped the company to a rise in second-quarter revenue and profit, as compared with last year's second quarter.

Second-quarter revenue was $US1.9 billion, up 29 per cent from revenue of $US1.5 billion in last year's second quarter. Net income was $US46 million, up sharply from the $US14 million in net income posted in the second quarter a year ago.

Apple shipped more iPods in the second quarter than it did Macintosh computers. A total of 807,000 iPods were shipped, but that accounted for only $US264 million in revenue. The 749,000 Macintosh units shipped during the quarter generated $US1.2 billion, and exceeded the 711,000 units shipped in the second quarter of 2003 for $US1.1 billion in revenue.

Sales of PowerMac systems were held back in the quarter as Apple moved to reduce the amount of inventory in its channels, which meant it shipped less systems, executive vice-president of worldwide sales and operations. Tim Cook, said.

Shipments of Apple's Xserve, a server based on a new version of its G5 processor, were also hampered due to problems at IBM, Apple's chip supplier, Cook said.

"We were not happy with the deliveries we got," Cook said. "IBM is working to bring supply in line with demand."

Apple moved the worldwide launch of the iPod mini to July based on the exceptionally strong demand for the product in the US, senior vice president of finance, Peter Oppenheimer, said.

The company expected iPod supply to be constrained in the third quarter based on component shortages, but Apple hoped to catch up in the fourth quarter, he said.

The total number of iPods shipped in the second quarter increased more than ninefold compared to the second quarter of 2003.

The strong increase in iPod shipments was helped by the expansion of Apple's distribution channels, Oppenheimer said. The company opened five new Apple stores in the quarter, and expected to open another 10 stores by the end of the year, including a store in London, he said.

Apple had also increased the number of retail outlets that carry the iPod, especially in markets outside the US, Cook said.

Overall shipments of Apple products increased 7 per cent in the Americas and 4 per cent in Europe, as compared to the second quarter of last year. However, shipments in Japan fell 29 per cent compared to last year's second quarter.

Looking at retail channels only, total shipments of Apple products increased 67 per cent compared to the second quarter of 2003. Apple expects to record $US1.9 billion in revenue during the third quarter, it said.

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Tom Krazit

IDG News Service
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