Apple Computer's third-quarter profit rose fivefold as sales of iPod digital music players unexpectedly surged to a record and Macintosh...
Apple Computer’s third-quarter profit rose fivefold as sales of iPod digital music players unexpectedly surged to a record and Macintosh computer shipments reached a five-year high.
Net income rose to $320 million, or 37 cents a share, from $61 million, or 8 cents, a year earlier, Apple declared yesterday. Revenue climbed 75 percent to $3.52 billion. Sales and profit rose to their highest-ever levels and beat analysts’ estimates for the seventh straight quarter.
“They’ve blown away the expectations,” said Robert O’Donnell, an analyst at researcher IDC in Mountain View, Calif. “It’s great news for Apple.”
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A jump in iPod shipments to 6.16 million, seven times as many as a year ago, allayed concerns that demand is waning. Apple, which made its name selling Mac computers, now gets more than a third of its revenue from the iPod. Analysts, speculating the gadgets were losing their cachet, had expected shipments of 5.29 million.
Apple reported its results after the stock market closed yesterday. In after-hours trading, its stock surged $1.36 to $39.71. The stock has gained 19 percent this year after more than tripling last year.
Chief Financial Officer Peter Oppenheimer told analysts on a conference call he is being “prudent” while awaiting the effect of a decision to use Intel computer chips in Macs for the first time. Apple plans to ship the first Intel-based Macs by June 2006, raising concern that consumers may delay purchases until then.
The company last quarter also forecast results that were less than analysts’ hoped, causing a 14 percent drop in the stock price. The profit of 38 cents a share before one-time items released yesterday beat Apple’s forecast and the 31-cent average analyst estimate.
Apple sold 1.18 million Macs, the third straight quarter that more than 1 million machines were sold. Mac revenue rose 24 percent to $1.57 billion, driven by record notebook sales. Oppenheimer said iPod sales rose to $1.1 billion from $249 million.
“Anyone who has bet against them in the past few years is on a fool’s errand,” said Barry Jaruzelski, a technology analyst for consulting firm Booz Allen Hamilton in New York. “The iPod has become the de facto standard.”
“The iPod seems to have more strength than we expected,” said Walter Price, managing director at RCM Capital Management in San Francisco, which owns Apple shares.
Analysts’ expectations of iPod shipments for the third quarter ranged from 4.8 million to 5.55 million, according to a survey of eight estimates taken by Bloomberg News.
The iPod is sold through 25,000 stores, up from 21,000 in the second quarter. Sales through Apple’s more than 100 retail stores rose to $555 million from $270 million a year ago.
Apple will probably release new iPod designs in coming months to spur shipments during the back-to-school and holiday shopping season, according to analysts including UBS AG’s Benjamin Reitzes in New York.
Apple’s iTunes online music store and other music products generated revenue of $241 million, up from $73 million, and the store was profitable in the quarter, Oppenheimer said. Apple has sold about 494 million songs through iTunes since April 2003.
The company’s computer sales are growing twice as fast as the market. Notebook sales rose to $720 million from $696 million and desktop Mac sales, including the iMac, rose to $845 million from $567 million. As many as 45 percent of customers coming into Apple stores are first-time Mac buyers, Oppenheimer said.
Advanced Micro Devices posted a lower second-quarter profit that beat Wall Street expectations as the chip maker reported record microprocessor sales despite what it claims are the unfair business practices of rival Intel.
For the period ending June 26, AMD earned $11.32 million, or 3 cents per share, on sales of $1.260 billion. That’s down from a profit of $32.2 million, or 9 cents a share, on revenue of $1.262 billion in the same period last year.
On June 27, AMD filed suit against Intel, claiming the world’s largest chip maker is a monopoly that bullies computer makers into not buying AMD processors with a combination of financial incentives and threats that those might disappear. Intel has denied that its practices violate antitrust laws.
The results were announced after financial markets ended regular trading. Shares of AMD fell 12 cents to close at $19.25 yesterday on the New York Stock Exchange but rose to $19.85 in after-hours trading.