Apple Profit Quadruples on iPods
SAN FRANCISCO (Reuters) – Apple Computer Inc. on Wednesday posted a quarterly profit that blew past even the highest Wall Street forecasts on skyrocketing sales of its iPod digital music players and the highest number of Macintosh computers sold in more than four years.
Shares of Apple, which issued a forecast for the current quarter that was above consensus analyst expectations, jumped 13 percent in after-hours trading.
The rising iPod sales are now clearly translating into higher sales of the company’s signature Macintosh computers, a trend that’s been dubbed the “halo effect,” analysts and Apple Chief Executive Steve Jobs said.
“In selling more than 1 million Macs, we’re clearly seeing it,” Jobs said in a telephone interview. “We’re thrilled.”
Apple, based in Cupertino, California, said net income for its fiscal first quarter ended Dec. 25 nearly quintupled to $295 million, or 70 cents a share, from $63 million, or 17 cents a share, a year ago.
That sailed beyond the high end of analysts’ expectations, 55 cents, by a wide margin, according to Reuters Estimates, and both net income and revenue set records.
“Apple is a name in technology that at least for the next couple of quarters will have the wind at its back,” said Owen Fitzpatrick, head of the U.S. Equity Group for Deutsche Bank Private Wealth Management.
Shares of Apple, which on Tuesday unveiled a smaller, cheaper iPod that starts at $99 and a slim Mac without a display starting at $499, more than tripled last year.
Apple Chief Financial Officer Peter Oppenheimer said the company sold 337,000 of its all-in-one iMac G5 computers in the quarter. Barry Jaruzelski, lead partner in Booz Allen Hamilton’s global technology and electronics practice, said that the iMac’s average selling price rose to $1,359 from $1,105 a year ago.
“The halo effect is real,” Jaruzelski said.
Revenue rose 74 percent to $3.49 billion from $2.01 billion. Analysts had forecast revenue of $3.14 billion.
Apple said it shipped 4.58 million iPods in the holiday-sales-fueled quarter, compared with 2 million in the previous quarter.
Sales of iPod, songs from Apple’s online music store and iPod accessories accounted for 40 percent of overall revenue.
Since their introduction in October 2001, Apple has sold more than 10 million iPods. “It took Sony six years to sell 6 million Walkmans,” Jaruzelski said.
Apple’s shares climbed to $74 in after-hours trade on the Inet electronic brokerage from their close of $65.46 on Nasdaq.
“There’s no question that this was a positive report — it shows the interest in the iPod — in particular before the Christmas holiday season — but going into 2005 and the latter half of ’05 I don’t know if that interest level will be sustained,” said Kevin Beadles, managing director of institutional equity trading at Wedbush Morgan.
For its fiscal second quarter, the company forecast revenue of about $2.9 billion and earnings of about 40 cents a share. Analysts on average have expected earnings of 33 cents.
Oppenheimer said Apple retail stores had a good quarter and that the company plans to end 2005 with a total of 125 stores, up from 101 currently.
Analysts said that Apple is selling computers at twice the industry growth rate, countering long-held skepticism that Apple could gain market share.
“Between the announcements at Macworld yesterday and the results today, it’s really about much more than just the iPod,” said Darcy Travlos, an analyst with Caris & Co.
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