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Apple's 3Q05 By the Numbers: iPod, CPU Units Top 6.1M, 1.1M

TMO Reports - Apple's 3Q05 By the Numbers: iPod, CPU Units Top 6.1M, 1.1M

by , 6:05 PM EDT, July 13th, 2005

Apple again hit new highs in both iPods and Macs sold during the third quarter of its 2005 fiscal year, with the former reaching 6.155 million units and the latter attaining 1.182 million laptops and desktops. However, as Apple previously said it would, those numbers aren't broken into specific products, so there's no way to know if sales of Mac minis and the 1GB iPod shuffle missed their targets during the quarter, as some analysts have thought recently. A company executive noted during Wednesday's conference call that it won't divulge those specifics because it doesn't want to help its competitors.

The company also revealed during the call that Mac sales were three times the overall PC market and were the highest Apple has seen in over four years. Channel inventory is in the four-to-five-week range. The launch of Mac OS X v10.4 "Tiger" earned US$100 million and, along with the release of Final Cut Studio, helped Apple hit 27.9% gross margins. The company is now sitting on $7.562 billion in cash, up $450 million from the previous quarter.

iPods and Macs Up

The iPod consumed 75% of the MP3 player market in May in the United States, according to NPD Intellect numbers cited by Apple executives during the call. The company's 6.155 million iPods sold translated to $1.103 billion in revenue, numbers up 16% and 9% sequentially (compared to 2Q05) and an astounding 616% and 343% year-over-year (compared to 3Q04). Those numbers show that while iPod sales growth has certainly slowed from the explosion that happened in late 2004 and early 2005, it's still on a slight upward trajectory.

While Apple doesn't break its laptop and desktop sales into specific models, as it used to, the company still provides a top-level split between the two form factors. In the laptop category, units were 495,000, with $720 million in revenue, during the current quarter. That was up 7% and 4% sequentially and up 8% and 3% year-over-year, indicating that Apple's failure to get a G5 into the PowerBook probably hurt sales. On the desktop side, 687,000 Macs (including Xserves) were sold for $845 million, up 13% and 5% sequentially and up 65% and 49% year-over-year, likely showing the impact made by the much-improved G5 iMac.

Overall, Apple's 1.182 million laptops and desktops sold earned $1.565 billion in revenue, which were up 10% and 5% sequentially and 35% and 24% year-over-year. Those numbers seem to validate the much-discussed "halo effect" caused by the iPod, although Apple is forecasting flat unit and revenue growth during the current quarter because it doesn't know how the switch to Intel processors will ultimately hurt sales in the short term.

Apple's sales in the education market have been in the news recently, with one school district dropping the company in favor of Dell while another chose them over Dell. Apple executives revealed during the conference call that that segment saw a 16% increase in sales on a year-over-year basis, turning in the best June quarter in nine years. Higher education sales at colleges and universities were up 34% year-over-year, with the number of Macs sold to students and professors at those institutions rising 37%.

Other Sales Categories

Apple's Other Music Products category, which includes sales at the iTunes Music Store as well as revenue derived from iPod-related services and accessories, saw $243 million revenue, up 12% sequentially and 230% year-over-year, showing how the iPod's ever-growing sales have made a major impact in that area. In the catch-all peripherals and other hardware category, $266 million in revenue was down 5% sequentially, although it was up 21% year-over-year.

Under Software & Other, Apple earned $345 million, a 44% jump sequentially and 64% higher year-over-year. Obviously, strong sales of Tiger and Final Cut Studio helped that category rack up big gains.

The Operating Segment Breakdown

Revenue and units in almost all operating categories were up when measured both sequentially and year-over-year. Japan, however, proved to be weak, with units of 76,000 and revenue of $227 million down 25% and 20% sequentially and units down 7% year-over-year. Revenue in Japan was up 32% year-over-year, however.

The Americas continued to be strong, contributing 595,000 Macs sold and $1.739 billion in revenue. Those numbers were up 25% and 21% sequentially and 26% and 71% year-over-year. European units and revenue of 283,000 and $742 million eked up 3% and 5% sequentially but leaped 48% and 82% compared to 3Q04. While retail revenue was down 3% sequentially, it was flat compared to 2Q05 while units and revenue were up 97% and 106% year-over-year. During 3Q05, Apple's retail stores moved 144,000 units out the door and amassed $555 million in income.

The company opened seven new retail stores during the quarter, bringing the total to 110. Revenue per store was $5.3 million, up from $3.4 million per retail outlet in the third quarter of 2004. Apple expects to open another 15 stores during the current quarter, ending its 2005 fiscal year with 125 of them.

Apple's final operating segment is its "Other" category, which includes sales in Asia Pacific as well as revenue derived from its FileMaker subsidiary. 84,000 units, for $257 million in revenue, were logged during 3Q05 in that area. That was up 18% and 7% sequentially and up 45% and 76% year-over-year.

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