Apple Turns $295 Million Profit; Revenue Soars to $3.49 billion [UPDATED]
Apple Turns $295 Million Profit; Revenue Soars to $3.49 billion [UPDATED]
by , 4:35 PM EST, January 12th, 2005
For its fiscal first quarter, Apple earned a profit of 70 cents per diluted share, or $295 million, on revenue of $3.49 billion. The results compare to a profit of 17 cents per share, or $63 million, in the year-ago quarter.
Analysts had been expecting Apple to earn 49 cents per share on revenue $3.19 billion; Apple's earnings beat consensus estimates by 42.8%, while its revenue exceeded estimates by 9%.
Apple shipped 1,046,000 Macs and 4,580,000 iPods during the quarter, a 26 percent year-over-year increase in Macs and a 525 percent increase iPods. Last year, Apple shipped 829,000 Macs and 733,000 iPods.
"We are thrilled to report the highest quarterly revenue and net income in Apple's history," said Steve Jobs, Apple's CEO. "We've sold over 10 million iPods to date and are kicking off the new year with a slate of innovative new products including iPod shuffle, Mac mini and iLife '05."
Looking ahead to the second quarter of fiscal 2005, Apple expects to earn 40 cents per share on revenue of about $2.9 billion. Before Apple's guidance, consensus estimates for the March quarter had been for profits of 33 cents per share on revenue of $2.75 billion.
Shares of Apple are trading up around 10 percent in after hours, trading around $73.
Breaking down Mac sales, the quarter looked like this:
iMac - 456,000 units ($620 million)The 4,580,000 iPods Apple sold accounted for $1.211 billion in revenue, while "Other Music Products" accounted for $177 million, "Peripherals & Other Hardware" totaled $284 million, and "Software & Other" totaled $213 million.
iBook - 271,000 units ($297 million)
Power Mac - 167,000 units ($381 million)
PowerBook - 152,000 ($307 million)
Looking at sales year-over-year, all segments enjoyed gains except for PowerBooks, which saw unit sales decrease 29 percent. The current PowerBook models are the oldest products in Apple's lineup of Macs. iMac unit sales about doubled, while iMac revenue was up 187%.
All regions of the world performed better than in the year-ago quarter, with Europe jumping 106% in unit sales while doubling its revenue. Apple saw sales worldwide increase 25% year-over-year and revenue increased 49%.
Analyst react to strong numbers
Analyst reaction to Apple's fiscal first quarter numbers were positive.
"It's certainly terrific numbers and terrific guidance. It's hard to find any flaws in these numbers," Barry Randall, an analyst with First American Technology Fund told The Mac Observer.
Michael Sansoterra with Principal Financial Group told CNBC thinks the numbers show a strong future for Apple.
"As I look at the way this company continues to innovate, enters new markets and expand existing markets, I think you've got a company that is still hitting the cover off the ball. I think (investors) have a year of growth ahead (in Apple stock) and time for stock appreciation...at this point there is not a lot of reason to have fundamental concern (about Apple). It's about valuation and expectation."
Mr. Sansoterra said he thinks the iPod shuffle will bode well for Apple in the coming year, as well as the Mac mini.
"The US$99 magic price point (on the iPod shuffle) for consumer electronics is something that is often widely accepted as a consumable good. It's gets people in at the nice low end. As for the iMac mini, that has great potential to the open the door to new users, switch users, people who would by a second or potentially even a third computer. The Mac mini suddenly becomes a very viable, very inexpensive solution."
Mr. Randall said the next big question will be if Apple has gained market share as a result of its strong first quarter results.
"Although iPod gets the headlines, the core of their profitability really does come from their core PC business and their software business," he said. "It's important to know that they are outgrowing, even temporarily, some of their peers in the traditional PC business."
Mr. Randall said Apple's recent market share worldwide stands at 1.5%. "I anticipate with that kind of growth (in the first quarter) that they probably have gained market share," he said.
Brad Gibson contributed to this article.
Observer Comments
The Mac Mini will change the MacWorld forever! And it's just the begining.
Wed Jan 12, 2005 6:16 pm Subject: Where? Ill tell ya
They're even going to sell better. Look around at the comments on websites. Everyone says they are going to be buying multiple versions of the Mac mini. I find this facinating, Before the keynote I was seriously scrounging around for cash so I could buy a used Mac for my mom. Not because she needs a great machine, but because I need a great machine. I don't want to have to do tons of tech support for her. Mainly because i'm two hours away and the long distance calls would take there toll on the phone bill. Enter the Mac mini. Solves all of my problems. Bulletproof OS. Once I set it up for internet and set the spam in Mail. I can go away and she can e-mail to here hearts content. But with the price being only $628 Cdn I now have an option of maybe picking one up for my sister, Adda few iSights and Wow. Grandma can see her grandson any time of the day. And I don't have to pick all of these things up right away. I can let my bank account recover between purchses. So in two weeks I went from buying on used Mac to buying two new Macs. I'm very interested to see the pent up demand. I'm sure the sales will trail off and then start to climb again.
Wed Jan 12, 2005 6:27 pm Subject: Big Decline In Pro Mac Sales - No Halo Effect
Here's the breakdown. iMac/eMac shipments up 101%!!!!!! Exactly where the Halo affect would occur. iBook sales up an impressive 35%!!!!
No one expected the Pro level computers to increase significantly. The PowerBooks are old, and need updating.
Oh, and margins increased to 28.5 percent, up from 26.7 year over year. Pretty impressive when you consider all the sales in the low end of the product lines!!!! Sweet. Now, with the addition of iMac Mini, plus the flash players, plus possible updates to the High End line - OOOOHHHHH BOOOOOYUYYYYY!
In Q1 - 2005 Apple unit shipments:
456,000 - iMac, eMac (vs. Q1 - 2004: 227,000, +101%)
271,000 - iBook (vs. Q1 - 2004: 201,000, +35%)
167,000 - Power Mac, Xserve (vs. Q1 - 2004: 206,000, -19%)
152,000 - PowerBook (vs. Q1 - 2004: 195,000, -22%)
4,580,000 - iPod, iPod mini (vs. Q1 - 2004: 733,000, +525%)
It is funny to see people speculate about the Halo Effect given the time frame in which the people have consumed iPods. Does anyone expect a person to buy an iPod, use it for 1 day, and then magically say "Wow, now I want a Mac"? It takes time for people to even figure out how use it and then even more time to incorporate it into their daily lives.
Over the next few years we will see how well the iPod keeps it's market share and then maybe we can see if there was a halo effect.
Think about this: 4.52M of the 10+M ipods were purchased in this last quarter. Let's give it some time before we declare the Halo Effect a success or failure.
Wed Jan 12, 2005 6:56 pm Subject: Pro Macs relative to others
I don't happen to know what the figures were for "pro" level computers for other manufacturers, and I doubt RC knows either, so until we do know we can't easily make any comments about whether this is good or bad. I do know that Apple is increasing its sales of enterprise and scientific computers, and I do know that I, for one at least, am holding off buying a powerbook until there is at least a speedbump. You can't increase everything all the time, but I am amazed that margins are up, as was pointed out a bit ago, given the sales of "lower margin" product. Pretty darn good I think.
eh, who said the Halo effect would directly effect pro sales? That is selectively ignorant reasoning at best. Which one would expect form someone such as yourself who masturbates to tweaking mac users by ignoring any facts which dont fit your jerk off agenda.
The iPod is a consumer product, not a Pro product. Never-mind holiday spending was down fort quarter, One may expect to see Apple low end rise before its high end would in any state of the economy and guess what? imac sales are up, store revenue is up with 40% of customers being PC users. the Mac Mini is only of gate a day. The Powerbook is in need of a refresh, with many people waiting for g5 Powerbook.
The PM sales last year included the G4 PM, RC. Even my son-in-law bought one for his studio he is building as it has a dual boot. A lot of these people are moving to a G5 iMac now that the G4 PM has been discontinued. Still got your facts wrong RC - no surprise there.
I am a little surprised that the PowerMac numbers are down. I attribute that to some of the potential buyer go to the iMac G5.
I do believe in this coming year the Xserve sales will go up. For full disclosure, I am currently doing a project comparing Xserve cluster price/performance versus Intel/AMD clusters in large scale computation in the oil industry. If the results are as Apple claimed, I think there will be a lot of interest in switching. Currently the Intel/AMD clusters are Linux clusters, and the customers buy on price/performance.
The Powerbook line is old. I expect them to update it soon. Right now, the iBook is eating into the PB's market.
QuoteRealityCheck wrote:
The Apple pro market is headed down the toilet fast.
RC: How about Oracle and Cisco moving to Xserve and/or XSan for mass storage. Very high profile. Those companies set often a trend in the industry and will be followed as happened in the past. And that isn't pro market? Maybe it all just is starting.... and if I was you, I would buy some AAPL stock. Mark my words in 6 months. It's still not too late to buy in.
So, I guess you're called 'RealityCheck' because you need to start checking reality. The halo effect has been proven by the numbers, but why let facts get in the way of your fantasy? iPod sales are up from last year; so are Macintosh sales. iPod owning Windows users casually interested in Macs aren't going to go out and buy G5 towers, they're aiming for eMacs and iMacs, sales of which have ballooned. PowerBooks aren't selling as hot as a year ago? Boo hoo. A year ago, they weren't as old. To have only a 22% percent decrease in the sales of a laptop that's now an antique in computer terms is excellent. As for PowerMacs, they're expensive during an awful economy, a 19% drop doesn't equal them being abandoned by the professional market.
You aren't about common sense or reality, you're about claiming that Apple's in trouble no matter what the facts really are. What you say isn't justified, it's just a reflex.
Hey RC, how are you doing?
You've been posting here for over a year predicting the demise of Apple. I'm really glad I did not take your assessment of Apple to heart regarding my stock purchases.
In the last year I have made over $120,000 on Apple stock. Had I purchased shares of PC-oriented companies instead, I would have made much less or lost mony. Here's the breakdown of stock gains over the last year in the PC industry:
Gateway: +13%
Intel: +1%
Microsoft: -1%
Dell: +14%
HP: +18%
Apple: +330%
So, RC, it would seem that you are in desperate need of a bit of your own namesake.
Thanks for all the great input over the past year. It's been fun.
QuoteRealityCheck wrote:
Sorry Mac fans to give you some bad news, but Power Mac unit sales fell 19% from the same quarter last year, and PowerBook unit sales fell a whopping 22%. The Apple pro market is headed down the toilet fast. Too bad that's where the big profit margins are.
The Halo effect has been completely discredited. Mac unit sales were up only 1% in the America's, while PC unit sales where up 10% for the quarter. Despite millions of iPod sales and more Apple stores, Apple lost more market share in the Americas.
But the iPod isn't just sold in the US and Canada, is it?
And is this 1% a sequential increase or year-over-year? Is the 10% increase of PC sales globally or in the US? And since it's "Americas," isn't it possible that Apple's sales increased by a decent margin in the US and dipped in other countries in the Americas? These type of things are important to consider before spewing BS.
Wow more news. Read the 6.5 Billion in cash at the end!!!! And no long term debt to speak of. Amazing, absolutely amazing.
Apple discusses earnings, new products
Wednesday, January 12, 2005 @ 6:55pm
Apple this afternoon held a Q1 earnings conference call with industry analysts. Apple executives Peter Oppenheimer, Tim Cook, and Gary Whipler discussed the company's results for the first quarter of fiscal 2005, as well as the company's latest products-- namely the Mac mini and iPod shuffle.
Highlight's from today's earnings conference call with Peter Oppenheimer, Tim Cook, and Gary Whipler:
* Apple reported the highest quarterly revenue and net income in the history of the company
* Apple said its record revenue and profit were driven by very strong CPU sales and record demand.
* Apple's operating margin increased to 11.5 percent from 3.7 percent.
* The company also reported a higher-than-expected gross margin of 28.5 percent for the first quarter.
* Mac-based revenues were up from last year.
* Apple saw record demands for the iPod, selling 4.5 million units
* Sales of the HP-branded iPod accounted for seven percent of overall iPod shipments.
* Apple sold over a million Macs this quarter, driven by strong sales of the iMac G5. The company shipped 1,046,000 Macs-- the most in four years.
* There was a reported 358 percent jump in music related revenues.
* Apple is "very pleased with the momentum and popularity" of the iTunes music store.
* Apple apparently expects song prices to stay around 99 cents.
* Apple was also optimistic with regard to its retail stores, located throughout the U.S. and increasingly around the world. Holiday traffic was "very strong" and the mini-store format "exceeded expectations." Apple said that it had 10.7 million visitors to its retail stores, averaging 8,700 people per store per week.
* Apple opened 15 new retail stores, ending the quarter with 101 retail outlets worldwide. Apple will end 2005 with 125 stores, ten of which will be located outside the US.
* Apple's new London retail store saw 450,000 visitors in first seven weeks.
* Apple saw its strongest education first quarter in 7 years. HIgher education sales increased by 25% on strong iMac and iBook sales.
* Apple saw revenue increase by 63 percent in Europe (or 66 percent when you include the London retail store). The Americas revenue increased by 81 percent when including all U.S. retail stores. Japan revenue increased by 26 percent, including retail stores.
* Apple plans to open its first retail outlet in Canada this year.
* Apple's retail revenue was $567 million, more than double the year-ago quarter. The average store revenue was $5.9 million, a 48 percent increase from the year ago quarter.
* Apple shipped 623,000 desktop Macs, an increase of 44 percent. This number included 337,000 iMac G5s and 119,000 eMacs.
* The company also reported a seven percent increase in laptop sales, alongside record iBook shipments.
* Apple does not expected to return to the high level of Power Mac sales seen in the past (200,000+).
* The lower Power Mac sales (compared to previous quarters) can be attributed to strong iMac G5 sales. Apple feels a "large percentage" of customers who would previously considered a low-end Power Mac G4 are now turning to the iMac G5.
* Apple is "really happy with the effort at IBM" with regards to G5 processor production.
* Apple is "focusing on total unit sales ... not of any specific family" when it comes to Mac sales.
* Apple is "very pleased" with the reception of the Mac mini and iPod shuffle, introduced yesterday.
* Apple hopes the Mac mini will allow more people to experience the Mac platform.
* When asked about the possibility of a G5-based PowerBook, Oppenheimer simply said it would be the "mother of all thermal challenges."
* Apple retains approximately six and a half billion dollars in cash.
Thu Jan 13, 2005 9:26 am Subject: And Apple SLAM DUNKS in RealityCheck's FACE ! ! ! ! ! ! ! !
It's no secret that the economy has been in a slump - this effects the Pro Sales more so than the Consumer Sales. Business' are trying to squeeze a little more outta those G4/G3s. It's been almost three years since I bought my G4 - but last year my wife got an iBook - and my daughter saved up her own money for an iBook G3. The design studio where I work is still churning along with old Sawtooth G4s and Yosemite G3s - only one Quicksilver. We won't be upgrading anytime soon - not for lack of wanting though.
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