Apple profit soars on computer, iPod sales
Last Updated: Thursday, July 26, 2007 | 4:32 PM ET
The Associated Press
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Apple Inc.'s fiscal third-quarter profit soared more than 73 per cent, fuelled by demand for its Macintosh computers and the strength of its iPod media players.
The company also said Wednesday it sold 270,000 iPhones in the first two days on the market, though the multimedia handset had little impact on the quarter's results because the company plans to account for its sales as subscription revenue over two years.
For the quarter ended June 30, Apple's profit rose to $818 million US, or 92 cents per share, up from $472 million US, or 54 cents a share in the year-ago quarter.
Sales grew to $5.41 billion US from $4.37 billion US last year.
Analysts polled by Thomson Financial expected Apple to report earnings of 72 cents per share on sales of $5.28 billion US, while Apple itself had projected earnings of 66 cents per share on quarterly sales of $5.1 billion US.
On a losing Thursday for most stocks, Apple shares gained more than six per cent to finish at $146 US on Nasdaq.
"We're thrilled to report the highest June quarter revenue and profit in Apple's history, along with the highest quarterly Mac sales ever," said Steve Jobs, Apple's chief executive. "IPhone is off to a great start — we hope to sell our one-millionth iPhone by the end of its first full quarter of sales — and our new product pipeline is very strong."
But for the quarter ending in September, Apple said it expects to earn about 65 cents per share on revenue of about $5.7 billion US. Analysts were expecting earnings of 83 cents per share on sales of $6 billion US.
IPhone launch
The gadget maker's highly anticipated iPhone launched June 29 and sold out within days. Wall Street analysts and investors have had lofty expectations for the multimedia cellphone, driving up Apple's stock more than 30 per cent during the quarter.
Apple's silence on how many iPhones were available at launch added to the frenzy, and analysts were hoping to gain some insight on the iPhone's initial sales impact and outlook when the Cupertino-based company discussed its quarterly earnings during a conference call late Wednesday.
Apple officials reiterated the company's target of selling 10 million iPhones in 2008 but declined to elaborate on how much of a cut it will be getting from exclusive service provider AT&T Inc. under their multi-year deal.
During the June quarter, revenue from iPhones and iPhone accessories totalled $5 million US, the company said. Shared revenue from AT&T was not included, it said.
Apple's established products were the money makers. The company said it shipped a record 1.76 million Macs, up 33 per cent from the year-ago period, accounting for $2.5 billion US, or more than 60 per cent of the quarter's revenues. Unit sales of iPods increased by 21 per cent from last year to 9.8 million and generated $1.57 billion US in revenue.
Yet all eyes were on Apple's newest cellphone gizmo, and investors seemed uncertain at first with how to react to Apple's financial report.
On Tuesday, Apple shares tumbled more than 6 per cent after AT&T Inc. said it activated 146,000 IPhones on June 29 and 30, a number that disappointed investors following some analyst forecasts that Apple would sell 500,000 or more Phones in its first weekend.
The reason for the discrepancy between Apple's and AT&T's numbers was unclear. But service activation problems may be the reason, and Apple chief financial officer Peter Oppenheimer apologized during the analyst call for the "less-than-stellar" activation experience some early iPhone customers had.
"There was initially some disappointment in the 270,000 phone units, but as people realized the gross margins came in at 37 per cent, they were very encouraged by the profitability of the company," said Caris & Co. analyst Shebly Seyrafi. "Clearly, Apple is a growth story."
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