Apple Turns $295 Million Profit; Revenue Soars to $3.49 billion [UPDATED]

January 11th, 2005 at 2:00 PM - Apple Stock Watch by Misha Sakellaropoulo

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; Appleis 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 Appleis history," said Steve Jobs, Appleis CEO. "Weive 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 i05."

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 Appleis 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)
iBook - 271,000 units ($297 million)
Power Mac - 167,000 units ($381 million)
PowerBook - 152,000 ($307 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.

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 Appleis 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 Appleis fiscal first quarter numbers were positive.

"Itis certainly terrific numbers and terrific guidance. Itis 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 youive 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). Itis 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. Itis 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. "Itis important to know that they are outgrowing, even temporarily, some of their peers in the traditional PC business."

Mr. Randall said Appleis 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.