Update - Apple sets records for revenue, income in Q3

The phenomenal growth of Apple Computer's iPod music player was joined by strong growth in Mac shipments during the company's third quarter, leading Apple to the best financial quarter in its history, it announced Wednesday.

However, Apple's guidance for its fourth fiscal quarter indicates that the Cupertino, California, company is not sure whether it can sustain its momentum following the news that it plans to start using Intel's processors next year.

Overall revenue was US$3.5 billion, up 75 percent compared to last year's third fiscal quarter, or the period ending June 25. This exceeded the estimates of analysts compiled by Thomson First Call for US$3.33 billion in revenue.

Net income was US$320 million, up a whopping 425 percent from the year-ago period. This resulted in earnings per share of US$0.37, six cents better than analyst estimates of US$0.31 earnings per share.

"We are delighted to report Apple's best quarter ever in both revenue and earnings," said Steve Jobs, Apple co-founder and chief executive officer, in a press release.

The explosive growth of the iPod is an old story, but shipments of the music players reached 6.15 million units during the quarter, up 616 percent compared to last year's third quarter. This time, the iPod growth was accompanied by a strong increase in Mac shipments, which totalled 1.2 million units during the quarter, a 35 percent increase. Analysts have been waiting for data to provide evidence of an '"iPod halo effect" translating into improved Mac sales.

"I couldn't be happier with the performance of our Mac products this quarter," said Peter Oppenheimer, Apple's chief financial officer, on a conference call following its announcement.

But Apple expects fourth-quarter revenue to be unchanged from the current quarter, and expects earnings per share to decline, Oppenheimer said. Most PC vendors see sequential increases in revenue during the second half of the calendar year.

For one thing, third-quarter sales were higher than usual because of the release of Tiger, the latest version of Apple's Mac OS X operating system, Oppenheimer said. This spurred a lot of upgrades, and the company expects a sequential decline in software sales, he said.

However, analysts have cautioned that Apple might see a slowdown in PC sales as users decide to wait for its first Intel products to come out next year. Apple has laid out a road map for the transition that will allow users to run applications written for either the PowerPC processors the company currently uses as well as Intel's chips, but some users might be wary about bumps in the road, analysts said after Apple and Intel announced their deal in June.

Jobs had previously said that Apple would continue to release new Mac products based on the PowerPC chips this quarter, and Oppenheimer confirmed that new systems were to be launched this quarter. These systems could be powered by IBM's latest PowerPC processors, the dual-core 970MP or the low-power 970FX, both of which were introduced last week.

Apple did not see a clear dropoff in sales after the June 6 Intel announcement, but it does not yet have all the data it would like on the last few weeks of the quarter, said Tim Cook, executive vice president for worldwide sales and operations, on the conference call. "We're being prudent with our guidance," he said.

Oppenheimer noted that the expectations for US$3.5 billion in fourth-quarter revenue would represent a 50 percent increase over the prior year. The flat guidance would also allow Apple to again shatter analyst expectations with a decent quarter. Analyst firms such as NPD Techworld and Current Analysis expect a stronger third-quarter, back-to-school selling season than in recent years.

Overall Mac shipments grew at three times the rate of the overall PC industry during the quarter, Cook said. Apple shipped 687,000 desktops and 495,000 notebooks in the quarter, increases of 65 percent and eight percent compared to last year, respectively.

Apple posted a 48 percent increase in unit shipments in Europe, but the company had a difficult quarter in Japan with a 25 percent drop in shipments compared to its second quarter and a seven percent drop compared to last year. Changes are in store for the company's operations in Japan, Cook said.

Join the newsletter!


Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.
Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Tom Krazit

IDG News Service
Show Comments

Brand Post

Most Popular Reviews

Latest Articles


PCW Evaluation Team

Luke Hill


I need power and lots of it. As a Front End Web developer anything less just won’t cut it which is why the MSI GT75 is an outstanding laptop for me. It’s a sleek and futuristic looking, high quality, beast that has a touch of sci-fi flare about it.

Emily Tyson

MSI GE63 Raider

If you’re looking to invest in your next work horse laptop for work or home use, you can’t go wrong with the MSI GE63.

Laura Johnston

MSI GS65 Stealth Thin

If you can afford the price tag, it is well worth the money. It out performs any other laptop I have tried for gaming, and the transportable design and incredible display also make it ideal for work.

Andrew Teoh

Brother MFC-L9570CDW Multifunction Printer

Touch screen visibility and operation was great and easy to navigate. Each menu and sub-menu was in an understandable order and category

Louise Coady

Brother MFC-L9570CDW Multifunction Printer

The printer was convenient, produced clear and vibrant images and was very easy to use

Edwina Hargreaves

WD My Cloud Home

I would recommend this device for families and small businesses who want one safe place to store all their important digital content and a way to easily share it with friends, family, business partners, or customers.

Featured Content

Product Launch Showcase

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?