Mac, iPod sales bring Apple record earnings

Apple on Wednesday reported record quarterly earnings and revenue on significant increases in Macintosh computer and iPod digital media player shipments.

Apple Computer on Wednesday reported record quarterly earnings and revenue on significant increases in Macintosh computer and iPod digital media player shipments.

The company posted a net profit of US$290 million, or US$0.34 per share for its fiscal 2005 second quarter, which ended March 26. That compares with earnings of US$46 million, or US$0.06 per share, in the year-earlier period, the company said in a statement.

In the second quarter, Apple shipped 1.07 million Macintosh computers and 5.31 million iPod players, it said. That's up 43 percent year-on-year in computer shipments and up 558 percent on the iPods, according to Apple.

Revenue for the quarter hit US$3.24 billion, up 70 percent from US$1.9 billion in the year-ago quarter. International sales accounted for 40 percent of Apple's revenue in the quarter, the company said.

The results are records in both earnings and revenue, Apple Chief Executive Officer Steve Jobs said in the statement.

Apple's results beat Wall Street expectations. Analysts had forecast US$0.24 in earnings per share on US$3.21 billion in revenue, according to a consensus estimate from Thomson First Call.

Apple is optimistic about the future, with new products in the pipeline for the coming year, starting with an update to its Macintosh operating system that is to be released later this month. The company predicted revenue of US$3.25 billion and earnings per share of about US$0.28 for its current third quarter.

In the past quarter, 62 percent of Apple's revenue came from its Mac business, which grew 27 percent from the year ago quarter driven by strong Mac, peripheral and software sales, Apple Chief Financial Officer (CFO) Peter Oppenheimer said during a conference call.

The company shipped 608,000 desktop systems during the quarter, an increase of 55 percent from the year-ago level. Combined sales of iMac G5s, eMacs and Mac Minis more than doubled to 467,000 units from the year-ago quarter, and PowerMac shipments totaled 141,000, Oppenheimer said.

Total portable shipments were 462,000 units, up 29 percent from the year-ago quarter. Apple shipped 251,000 iBooks and 211,000 of the recently refreshed PowerBooks, according to Oppenheimer.

Apple's digital music business, which includes the company's iPod music players and iTunes online music store, generated 38 percent of total company revenue and grew 280 percent compared to the year-ago quarter, Oppenheimer said. The iTunes store operates in 15 countries and last week sold its 350 millionth song download, Apple's CFO said.

Shipments of iPods, over six times the year-ago level, were driven by strong response to the new iPod Shuffle, a refreshed 4G-byte iPod Mini and a new 6G-byte iPod Mini, Oppenheimer said. Apple in the quarter also lowered the price of both of its iPod Photo models, he said.

The iPod Shuffle is now the top flash-based MP3 player in the U.S. with a 43 percent market share in February, Oppenheimer said, citing NPD Techworld numbers.

Apple is very happy with the performance of its retail stores. Revenue from its retail segment more than doubled from a year ago to US$571 million and actually increased sequentially, bucking the expected seasonal decline. Apple opened two stores in the quarter, bringing the total number of Apple Stores to 103. The company expects to end its fiscal year with 125 stores, including 10 outside the U.S., Oppenheimer said.

The company's record earnings did nothing to help Apple's shares (AAPL), which ended the day down US$1.62, or 3.8 percent, at US$41.04 on the Nasdaq stock exchange. In after-hours trading the shares dropped a further US$0.40.

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Joris Evers

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