For second straight quarter, Apple breaks Mac sales record

Leopard adds $170 million 'bounce' to bottom line, says CFO

Apple Tuesday announced it sold 2.3 million Macintosh machines in the three months that ended Dec. 29, 2007, marking the second straight quarter of record sales for its computer line.

The company also sold 2.3 million iPhones during the year's final quarter.

Mac sales were up 44 per cent over the same quarter the year before, and beat the previous record, set during 2007's third calendar quarter, by 155,000 units, according to numbers Apple released prior to a conference call with financial analysts and reporters Tuesday. Apple sold 977,000 desktop Macs and 1.34 million notebooks during the quarter, with the former showing the strongest growth. Desktop sales, for example, were up 53 per cent year-to-year, while notebook sales increased 38 per cent.

Apple last revamped its primary desktop machine, the iMac, in August 2007.

"We're thrilled to report our best quarter ever, with the highest revenue and earnings in Apple's history," said Peter Oppenheimer, chief financial officer, during the call. Oppenheimer also called iMac sales "robust" and touted the success of Leopard, the new operating system introduced in late October.

"We're very pleased with the sales of Leopard," Oppenheimer said, adding that the Mac OS X 10.5 upgrade gave the quarter a $US170 million "bounce," substantially more than the $US100 million Tiger (Mac OS X 10.4) added to Apple's bottom line during its debut quarter in 2005. Almost one in five Macs now in use are running Leopard, said Oppenheimer, who touted a 19 per cent share for the three-month-old OS.

Apple's claimed financial impact of Leopard fell between analysts' estimates made before the operating system's launch. In October, Ezra Gottheil of Technology Business Research pegged Leopard's contribution at $US157 million, while Gene Muster of Piper Jaffray put it at $US240 million.

The iPhone, meanwhile, also picked up steam during the holiday season, reported Apple, selling to the tune of 2.32 million units, an increase of 107 per cent over the previous quarter, when the company sold 1.12 million iPhones.

Apple is sticking to its goal of selling 10 million iPhones by the end of this year. "We're very confident in meeting the 10 million," said Cook, who noted that Apple will launch the iPhone in several new markets in 2008, including Asia and an unspecified number of additional countries in Europe. The iPhone is currently available in the U.S., the U.K., Germany and France.

Both Oppenheimer and Cook repeatedly touted the iPod touch when they talked up sales of its music line. "It has the potential of being more than just a music player," said Cook.

"The iPod touch is the first mainstream Wi-Fi platform," added Oppenheimer.

Overall, Apple sold 22.1 million iPods, an increase of just 5 per cent in units year-to-year, but a 17 per cent growth in revenues. Apple did not, however, break out iPod touch -- or any other of the iPod models -- separately. "We're thrilled with the iPod business," Cook said in answer to one question from a financial analyst, then argued that there was plenty of room for more growth in the iPod business. "[The 17 per cent revenue gain] is not characteristic of a saturated market."

Oppenheimer and Cook even managed to squeeze in a few words about MacBook Air, the ultra-thin notebook introduced last week that has yet to ship. "Orders [for the MacBook Air] are very strong," said Cook, "[but] it's too early to tell the cannibalization factor."

For the record, the company posted earnings of $US1.58 billion, up from $US1 billion a year ago, on revenues of $US9.6 billion, up from $US7.1 billion in 2006. Its profit margin was 34.7 per cent, up from 31.2 per cent the year prior.

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Gregg Keizer

Gregg Keizer

Computerworld
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