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Apple 3Q Earnings Surge to $61 Million

TMO Reports - Apple 3Q Earnings Surge to $61 Million

by , 7:50 PM EDT, July 14th, 2004

Apple Computer posted quarterly net income in the third-quarter that was more than triple the same period a year ago, the company announced Wednesday. The highest third-quarter revenue in eight years, Apple said improved Mac computer sales of 19% and robust iPod portable music player sales up 162% were catalysts for the rosy earnings report of US$61 million.

It was an outstanding quarter," said Apple's chief executive Steve Jobs.

For the three months ended June 26, Apple said it earned $61 million, or 16 cents per share, compared with $19 million, or 5 cents per share, in the same period last year. Revenues increased 30 percent from a year ago to $2.01 billion. Excluding 2 cents a share in restructuring charges totaling $6 million, Apple said it had a profit of $67 million, or 17 cents a share.

Excluding an after-tax restructuring charge of $6 million, the company's net profit would have been $67 million, or 17 cents per share.

Wall Street analysts were expecting Apple to earn 15 cents per share on sales of $1.94 billion, according to a survey by Thomson First Call.

Apple continues to build on the success of its iPod digital-music player and its lead in the online music arena with its iTunes music store. Apple sold 860,000 iPods in the quarter, accounting for $249 million in revenue, up from 304,000 iPods sold in the year-ago quarter.

The demand for the mini version of the popular player has been "staggering" in the U.S. and continues to far outstrip supply even though the product's hard-disk provider has ramped up production, Apple's worldwide vice president of sales Timothy Cook told analysts during a conference call, Wednesday. "Unprecedented" orders for European shipments, set to begin July 24, also will mean continued backlogs probably through the end of the year, said Mr. Cook. He refused to estimate when supply will catch up with demand.

Apple Chief Financial Officer Peter Oppenheimer told analysts that its iTunes online music store made a small profit in the quarter, but would not offer specifics.

The company said it sold 876,000 Macintosh computers in the period, accounting for $1.26 billion, an increase from 771,000 a year ago. The Mac sales numbers account for 58% of the quarter's revenue growth. The latest numbers bring the product's lifetime total sales to 3.7 million units.

Breaking down Macintosh sales figures, Apple sold 243,000 iMac and eMac units at a revenue of $235 million. Apple sold 240,000 iBook laptops for revenue of $261 million. Power Mac desktop computers sold 173,000 for $332 million in revenue and 220,000 professional PowerBooks were sold for a total revenue of $435 million.

Apple saw an 8% drop in peripherals and other hardware sales sequentially, adding $219 million to Apple's bottom line. Software and other sales generated $210 million in revenue for Apple this quarter, up 12% from the previous quarter and up 31% year-over-year.

Revenue and unit sales were up across the board in all geographic segments from the previous year. In Europe, revenue was up 37% and unit sold was up 33%. In the Americas, revenue was up 23% from the third-quarter of 2003 and unit sales up 4%.

Japan was up fractionally at 2% in revenue from last year's 3Q, but down 4% in unit sales. "Frankly, Japan is our weakest-performing (geographic area)," Mr. Cook admitted. He said the company is continuing to make changes to try to attract new customers. Last quarter, Mr. Cook echoed those same comments regarding Japan and said he would be concentrating much of his time to improve business conditions for Apple in the country.

Mr. Oppenheimer revealed during the conference call that the new iMac that will begin shipping in September will be powered by the PowerPC G5 processor. Mr. Oppenheimer said an IBM chip shortage was behind the delay of the new consumer Apple desktop not being released sooner. On July 2, Apple announced it would no longer taking orders for the current iMac and that a new model will be introduced in September.

Mr. Oppenheimer indicated that Apple saw $3.2 million in average quarterly revenue per each of its retail stores, up from $2.6 million per store year-over-year. Apple said some 5.8 million people visited its retail stores during the quarter. Apple officers gave an optimistic outlook Wednesday for the current and final quarter of its fiscal year. Apple said it expects to post fourth-quarter revenues of $2.1 billion and earnings per share of 16 cents to 17 cents, including 1 cent per share in restructuring charges. That forecast is largely in line with current consensus Wall Street estimates of 17 cents a share on revenue of $2.04 billion.

For the fiscal year, the company expects to hit $8 billion in sales, a 29 percent increase from the previous year.

Shares of Apple closed Wednesday up 36 cents at $29.58 on the Nasdaq Stock Market. In after-hours trading, the shares were up 67 cents to $30.25.

Observer Comments

Show: Subjects Only | Full Comments
Close Name:Guest
Subject: Wow, this is pretty good news!

Considering most of the profits lately have been iPod driven, its good too see a pretty good chunk of Mac sales. Plus, this is one of the few recent quarters to have more Macs sold than iPods! I'm looking forward to the new iMac and hopefully new PowerBooks soon as well!

Close Name:pyxl8 Posts: 171 Joined: 24 Dec 2003
Subject: Cool

Yes, let's focus on the fact that Mac sales have INCREASED over last year's third quarter amount. Nevermind market share, the bottom line is MORE people bought Macs this quarter than they did a year ago!

One clarification is needed: What does the statement "The latest numbers bring the product's lifetime total sales to 3.7 million units." What is "the product"? It can't mean total Macs EVER?!!! Or does it refer to the total sales of CURRENT models?

-Ken P

Close Name:Guest
Subject: 3.7million total sales

Yep I noticed that too. 3.7 million is clearly a typo, or the editor accidentally remove a sentence immediately before it (referring to iPods, or OS X on its own perhaps). It's been a while since I heard definitive figures, but there were over 22 million back in 1998: http://www.findarticles.com/p/articles/mi_m0MWK/is_n1_v12/ai_20146059

Close Name:Guest
Subject: RE : 3.7 million total sales

3.7million iPods sold since introduction , an amazing number , without international sales of the mini and without what HP will bring to the party . I still have the original 5Gig (battery life is still reasonable) so I guess I'm due for an upgrade once the next generation is announced .

Close Name:DawnTreader -   TMO Staff Posts: 15039 Joined: 04 Jan 2002
Subject:

AAPL is up about 10% in early Thursday trading as investors and analysts digest the news about Apple's stellar quarter.

Executives called the current level of iPod demand "staggering" and supplies will remain constrained through the current quarter. Apparently Apple is making use of just about every 1" drive that can be manufactured as the component maker adds capacity to meet iPod demand.

Close Name:Guest
Subject: Where's "Reality Distortion" now??

Maybe he can't speak on account of his jaw being planted on the floor?

Close Name:Guest
Subject: RE: Where's "Reality Distortion" now??

He's too busy rebuilding his Windows box to remove all the spyware and viruses. He'll be back as soon as MS releases their next patch.

Close Name:Guest
Subject: Reality Check is in the mail.

He finally broke down and is now waiting in a long line of customers at his local Apple store.

Close Name:Guest
Subject: shorting apple

I've got the balls. Apple stock IS overinflated

Close Name:Intruder -   TMO Mac Specialist Posts: 3149 Joined: 07 Jul 2004
Subject: Re: shorting apple

Quote
Anonymous wrote:
I've got the balls. Apple stock IS overinflated


Wow, dredged up a 3 year old topic to make such a stupid statement.

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