Apple Posts $1 Billion Profit, Extremely Strong iPod Sales

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Date: Wednesday, January 17th, 2007, 17:27
Category: Finance
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On Wednesday, January 17th, Apple Inc. posted a record-breaking $1 billion profit on record revenues of $7.12 billion for the first fiscal quarter of 2007. Earnings per share for the quarter were $1.14. This compares to last year’s Q1 earnings with a quarterly profit of $565 million, $5.75 billion in revenues and 65 cents per share.
Profits rose 78% based on iPod sales as compared with one year ago and Apple representatives stated that the company had shipped 1,606,000 Macintosh computers and 21,066,000 iPods during the quarter, representing a 28% growth in Macs and 50% growth in iPods sales compared to Q1 of 2006. International sales accounted for 42 percent of the quarter’s revenue, according to the company.
Financial analysts expect Apple to post revenues of $4.8 to $4.9 billion and earn $0.78 per share in Q2 of 2007.
Click the jump for the full story…

q1logo.jpg

On Wednesday, January 17th, Apple Inc. posted a record-breaking $1 billion profit on record revenues of $7.12 billion for the first fiscal quarter of 2007. Earnings per share for the quarter were $1.14. This compares to last year’s Q1 earnings with a quarterly profit of $565 million, $5.75 billion in revenues and 65 cents per share.
Profits rose 78% based on iPod sales as compared with one year ago and Apple representatives stated that the company had shipped 1,606,000 Macintosh computers and 21,066,000 iPods during the quarter, representing a 28% growth in Macs and 50% growth in iPods sales compared to Q1 of 2006. International sales accounted for 42% of the quarter’s revenue, according to the company.
Financial analysts expect Apple to post revenues of $4.8 to $4.9 billion and earn $0.78 per share in Q2 of 2007.
Other information from the live conference is as follows:
-Representatives mentioned that the $7.12 billion in revenue was driven by strong holiday iPod sales and the company had ended with less than four to five weeks in channel inventory.
-Strong customer demand for portable Macs was cited, these machines accounting for 60% of Macs sold.
-21,066,000 iPods were sold this quarter, up 15% from Q1 of 2006.
-Apple is keeping four to six weeks of channel inventory on the iPod.
-The iPod holds a 72% market share of music players in the U.S.
-Over 2 billion songs sold have been sold through the iTunes Store, which currently accounts for over 80% of songs sold.
-Apple retail stores cleared over $1.1 billion in revenue with five new stores being opened in the United States. This brings the total number of stores to 170 with an average revenue per store of $6.7 million per quarter.
-More than 28 million visitors went to the Apple retail stores in the first quarter of 2007.
-Apple increased its cash balance of over $1 billion to end with over $11 billion in reserves.
-iPod demand was “extraordinary”. Unlike last year, Apple was better able to meet the demand.
-Apple has “voluntarily and proactively” provided details of both its internal investigation and independent investigation into the backdating/stock scandal to the SEC. The current management team has been cleared according to the company.
-DRAM prices are expected fall this quarter.
-Apple Store revenue rose 6% year over year, the lower gain resulting from iPod price reductions and lower iPod component prices.
-Apple confirmed that the 3G networking standard won’t be supported in the iPhone’s first generation and that the company likes the EDGE network’s prevalence in the U.S.
-Apple’s currently selling more portables than desktop units, having shipped 969,000 MacBooks and MacBook Pro units this quarter compared to 637,000 desktop machines for Q1 of 2006.
-Mac unit growth in Europe was about 28%.
-Faster growth of the iPod outside of the United States, the United Kingdom, Switzerland, Canada, Australia and Japan showing exceptional growth. The bulk of the 40,000 iPod distribution units is located outside the U.S.
-Next quarter’s results will divulge anticipated iPhone sales.
-“We continue to plan to ship Leopard in the spring,” stated representatives.
-Nothing was shared regarding a potential stock split.
-Apple currently holds 7,500 storefronts around the world for the Mac, up 1,500 from last year. 50 Best Buy locations have been added over the last quarter and Apple will continue to work with Best Buy.
-No related pause (hesitancy as to buying a new Mac) is anticipated for the Mac OS X 10.5 (“Leopard”) launch.
-Apple expects 10 million iPhone units to be sold in calendar year 2008. The worldwide market is about one billion units.
-Lower iPod gross margin this quarter – favorable commodity pricing and the product mix lent towards this.
-Representatives explained that around 50 percent of new Mac buyers coming to Apple Stores have previously owned PCs. A possible “halo effect” seen here given that iPod sales may be driving users to Macintosh as a platform.
-Mac Pro sales are doing well, but this is being tempered by Adobe’s upcoming release of Creative Studio 3.
-1.5 million Boot Camp downloads logged so far. The technology will be included in Leopard with its release in the spring.
-Apple believes it’s the first company to ever use the “iPhone” name for a cell phone and this helps defend their legal position against Cisco, which it’s involved in legal action against regarding trademark over the name.
-The Mac U.S. market growth in Q4 was 31% versus 3% PC growth.
-Apple will support virtualization software such as Parallels, CrossOver and VMWare.
-Apple opened five stores this past quarter, expects to open seven in the March quarter and will open 35 to 40 stores in fiscal 2007.
-A replay of the conference is available at http://www.apple.com/investor.
-Apple stock closed down $2.15 or 2.21% at $94.95 at the end of the business day but had gone up to $95.04 in after-hours trading.
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