Apple’s Profit Triples on Sales
Apple Computer Inc. said Wednesday that its profit more than tripled as third-quarter sales hit an eight-year high.
Core to the performance: the iPod portable music player, which helped drive the sales of accessories, online music and even the company’s signature Macintosh computers.
Net income rose to $61 million, or 16 cents a share, from $19 million, or 5 cents, in the same quarter last year. Sales grew 30% to $2 billion from $1.54 billion.
For the current quarter, Apple forecast sales of $2.1 billion.
Wall Street analysts had expected fiscal third-quarter earnings of 15 cents a share on sales of $1.9 billion. Apple shares rose 36 cents to $29.58 in regular Nasdaq trading and jumped to $31.55 in after-hours trading after the earnings announcement.
Analysts and Apple executives credited the iPod -- which has become virtually synonymous with digital music -- for raising the profile of the Cupertino, Calif.-based company’s other products. “It brought a spotlight to the broad product line,” said analyst Michelle Lin Gutierrez of Schwab SoundView Capital Markets.
Apple’s head of worldwide sales, Tim Cook, noted that half of the customers buying computers at the company’s retail stores had never owned a Macintosh or were switching back to the platform after using computers with competing operating systems.
“One of the things we would attribute that to is the iPod,” Cook said.
Apple sold 860,000 iPods in the quarter that ended June 30, up from 304,000 units a year earlier. Sales of the iPod totaled $249 million, up from $111 million last year. Gutierrez said the company probably could have sold more but was plagued by shortages of the iPod Mini, which is smaller and cheaper and comes in more colors than the standard white model.
Since the iPod was introduced in 2001, Apple has sold 3.7 million of them, making the iPod the most popular digital music player. That helped Apple’s online iTunes Music Store hit the symbolic milestone of having sold more than 100 million songs, more than any other authorized source of downloadable music.
This month Apple will begin shipping the iPod Mini to Europe. Cook said Apple expected shortages because the initial shipments “will not come close to supplying the number of people who want them.”
Apple’s core computer business improved as sales grew to $1.3 billion, from $1.1 billion a year earlier. Chief Operating Officer Peter Oppenheimer said sales were the strongest in more than three years.
Gutierrez said she was surprised at the strength in laptop sales, which grew 20% over last year. “I thought the PowerBook was the main reason for the upside in the quarter,” she said.
Oppenheimer said new models of the company’s fastest computers -- powered by IBM Corp.’s G5 chips -- would be delayed because of chip manufacturing problems. Similar problems delayed new versions of the popular iMac computer. Originally due out this summer, it will instead hit the market in September, toward the end of the crucial back-to-school buying period.
The iMac is in need of a boost. Sales fell 22% to $235 million, from $301 million last year.
Analyst Steve Lidberg of Pacific Crest Securities said that even with the delays, Apple would continue to be buoyed by the iPod -- especially if the company can increase production to meet demand.
“It’s going to be an iPod Christmas,” Lidberg said.
