Apple Computer said fourth-quarter profit hit a record on sales of iPod music players and back-to-school demand for Macintosh computers...
Apple Computer said fourth-quarter profit hit a record on sales of iPod music players and back-to-school demand for Macintosh computers. But Apple shares tumbled as much as 11 percent after revenue missed analysts’ estimates.
“They missed the top-line estimates on revenue and they missed the overly optimistic estimates on iPod shipments,” said Jim Grossman, who helps manage $63 billion and owns Apple shares at Thrivent Financial in Appleton, Wis. “The question is: What happened?”
iPod shipments missed even the lowest analyst estimate of 6.7 million, based on a survey of eight analysts. The company shipped 6.16 million iPods in the third quarter.
While shipments of the music players climbed to 6.45 million, missing analysts’ estimates that ranged as high as 8.5 million. Analysts had predicted that the new pencil-thin Nano, introduced by Chief Executive Officer Steve Jobs last month, would fuel sales. Apple said yesterday that it sold 1 million Nanos and hasn’t been able to meet demand.
Shares of Apple, which have risen 60 percent this year, fell $5.51 in extended trading. They earlier rose $1.22 to $51.59 at the end of the regular session. The stock more than tripled last year.
The sales shortfall surprised investors who three months ago shed concerns about the growth in iPod demand. Apple last quarter surpassed the most bullish expectations and prompted a resurgence in optimism.
“We are pleased with our iPod sales,” Apple Chief Financial Officer Peter Oppenheimer said in an interview.
Oppenheimer said that many car-stereo manufacturers are signing on to provide iPod compatibility and that as many as 30 percent of the new cars sold next year will be able to connect with the music player.
Apple couldn’t get the parts it needed to make enough Nanos to meet demand, Vice President Tim Cook said on a conference call with investors.
“I’m not going to project when supply will meet demand,” he said. The backlog of orders was “enormous” at the end of the quarter and sales fell “far, far short” of demand, he said.
“There were production issues” for Nano, said Piper Jaffray analyst Eugene Munster said yesterday. “Initially they weren’t expecting any delays and now there are one-to-two week delays.”
Yesterday, Apple reported earnings more than quadruped to $1.34 billion, or $1.56 a share, in fiscal 2005 as sales surged 68 percent to a record $13.9 billion. It’s the first time annual profit has topped $1 billion in the company’s 29-year history and the first time in a decade that sales have surpassed $10 billion.
Net income rose to $430 million, or 50 cents a share, from $106 million, or 13 cents, a year earlier, Apple said, and sales increased 57 percent to $3.68 billion, compared with estimates of $3.74 billion.
Net income included a tax benefit of 12 cents a share, Apple said, and profit this quarter will be about 49 cents on revenue of $4.7 billion. Analysts were expecting profit of 48 cents on sales of $4.53 billion.
Apple sold 1.24 million Macs, the fourth-straight quarter shipments topped 1 million.
Including yesterday’s results, Apple has shipped more than 28.2 million iPods since Jobs propelled Apple into the digital-music market in October 2001. The company has sold more than 500 million songs through its iTunes online music store.
Apple’s devices accounted for 72 percent of all music players sold in the U.S. so far this year, according to NPD Group. The nearest competitor, SanDisk, held a 5 percent share.
The company’s earnings report came on the eve of yet another secretive announcement that has left the tech community abuzz over what Apple will reveal next.
Last week, Apple e-mailed invitations to media and industry analysts for an event that will be held today in Silicon Valley.
Tim Bajarin, president of market-research firm Creative Strategies, said he doubted the company will unveil an iPod that lets consumers watch feature-length movies on it — a popular prediction among analysts and other Apple watchers — but guessed that Apple may roll out an iPod that users can watch music videos on.
Or the announcement could be about new laptops, he said.
Or, maybe, something else.
“We haven’t a clue,” he said.
Information on iPod car-stereo compatibility and Apple’s special announcement scheduled for today provided by The Washington Post