IPod Sales Boost Apple’s Earnings

Sales of iPod music players propelled Apple Computer Inc.’s quarterly revenue and profit to all-time highs, with earnings nearly doubling from a year earlier, the computer maker said Wednesday.

Chip maker Advanced Micro Devices Inc. also reported strong results, swinging to a profit and taking market share from archrival Intel Corp.

The reports from the two Silicon Valley stalwarts offset bad news from Intel Corp. and Yahoo Inc., which said Tuesday that results fell short of Wall Street expectations, sending shares of both companies tumbling.

Apple earned $565 million, or 65 cents a share, in its fiscal first quarter, compared with $295 million, or 70 cents, a year earlier, before a 2-for-1 stock split. Wall Street analysts surveyed by Thomson Financial had expected 61 cents a share.

Revenue for the three months ended Dec. 31 was $5.75 billion, above analysts’ consensus estimate of $5.47 billion. Cupertino, Calif.-based Apple’s sales were $3.5 billion a year earlier.

Despite increased research spending, Apple beat estimates “quite materially,” said Shaw Wu, an analyst with American Technology Research, an equity research firm.

Apple Chief Financial Officer Peter Oppenheimer told financial analysts in a conference call, however, that in the current quarter he expected revenue of $4.3 billion, with a profit of 38 cents a share. Analysts were expecting earnings of 48 cents a share on revenue of $4.63 billion for the January-to-March period.

Apple typically offers conservative guidance and then surpasses it. Nonetheless, Apple shares, which closed at $82.49 in regular trading, slid more than 3% to $79.70 after hours. The stock hit a record closing high of $85.59 on Friday.

Apple executives credited the strong quarter in part from iPod sales, which soared to 14 million, more than twice the 6.5 million of the preceding quarter.

IPod revenue amounted to $2.9 billion, compared with $1.7 billion for all Apple computers. IPod and iTunes Music Store sales accounted for 59% of Apple’s revenue, underscoring their importance to Apple.

AMD, the world’s No. 2 maker of computer microprocessors after Intel, said it earned $95.6 million, or 21 cents a share, in its fourth quarter, contrasted with a loss of $30 million, or 8 cents, a year earlier.

For the year ended Dec. 25, Sunnyvale, Calif.-based AMD earned $165 million, or 40 cents a share, on revenue of $5.85 billion, up from $91 million, or 25 cents, on revenue of $5 billion in 2004.

AMD gave an upbeat outlook for the current quarter, saying it expected revenue to increase about 70% from a year earlier. The estimate sent AMD shares, which had gained $1.29 to $34.15 in regular trading, up $3.65, or nearly 11%, after hours.

AMD ended the quarter with 15.3% of the computer processor market, gaining 3.4 percentage points, Henri Richard, chief sales and marketing officer, said in a conference call.

Analysts have not confirmed that figure, but Intel acknowledged Tuesday that it had lost market share to AMD.

Intel shares, which fell 9.5% to $23.10 after hours Tuesday, slipped further to $22.60 on Wednesday.