April 19, 2006 2:24 PM PDT

iPod sales drive Apple earnings

Apple Computer's second-quarter revenue increased 34 percent compared with last year, it announced Wednesday.

Revenue was $4.36 billion, up 34 percent from last year's second quarter. Net income was $410 million, or 47 cents per share, up from a net income of $290 million and earnings per share of 34 cents last year. Analysts polled by Thomson First Call were expecting revenue of $4.5 billion and earnings per share of 43 cents.

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Tim Cook, Apple's COO, discusses the shipments of the three Intel-based Macs during the Apple earnings conference call.
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Apple's revenue, while below what many analysts had expected, was in line with what the company had predicted in January.

"Everybody knew (the quarter) would be a little bit light," said Gene Munster, an analyst at Piper Jaffray. But the shortfall was not as bad as some had thought, and the positive news on earnings helped send Apple's stock up in after-hours trading.

Sales of iPods are still driving Apple's growth, with a 61 percent increase in shipments compared with last year's second quarter, the company said in a statement. Mac shipments grew just 4 percent compared with last year, but "our transition to Intel processors is going very well, and our music business just experienced another quarter of outstanding growth," Apple CEO Steve Jobs said in a statement.

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Apple CFO Peter Oppenheimer discusses customer demand for Intel-based Macs during Apple's earnings conference call.
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The past quarter was the company's first with products based on Intel's processors out in the market following the launch of MacBook Pro, iMac and Mac mini systems with Intel's Core Duo chip.

Apple sold 8.5 million iPods, which accounted for $1.7 billion in revenue. That's a roughly 40 percent drop in both units and revenue from the December quarter. Even with the drop, the company still drew more revenue from iPods than from Macs, which accounted for $1.6 billion in revenue, a 24 percent drop from the December quarter.

Apple sold 1.1 million Macs in the quarter, down 11 percent from the December quarter. Most PC companies see a drop in sales from the fourth quarter to the first quarter of the calendar year, following the strong holiday shopping season.

The company expects to record between $4.2 billion and $4.4 billion in revenue and earnings per share of 39 cents to 43 cents during its third quarter, Chief Financial Officer Peter Oppenheimer said in a statement. Apple will hold a conference call later on Wednesday to discuss its results.

CNET News.com's Ina Fried contributed to this report.

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14 comments

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Second strongest quarter in history
It would have been an amazing feat to top the last quarter since it
included 2005 Christmas sales.

Apple had $8.7 billion in cash and short-term investments at the
end of last year. I wonder how much more money they've
stockpiled since then?
Posted by CBSTV (780 comments )
Reply Link Flag
They spent money
They've been opening stores like crazy. I even hear there's a huge
glass cube being designed for the Manhattan store, which alone
probably accounts for $400M or so.
Posted by dotmike (154 comments )
Link Flag
Second strongest quarter in history
It would have been an amazing feat to top the last quarter since it
included 2005 Christmas sales.

Apple had $8.7 billion in cash and short-term investments at the
end of last year. I wonder how much more money they've
stockpiled since then?
Posted by CBSTV (780 comments )
Reply Link Flag
They spent money
They've been opening stores like crazy. I even hear there's a huge
glass cube being designed for the Manhattan store, which alone
probably accounts for $400M or so.
Posted by dotmike (154 comments )
Link Flag
Unusual choice for this article's link and headline
The link "Apple misses on revenue" and the headline "iPods carry
Apple" are both unfortunate: the first implying that Apple had a
disappointing quarter, and the second that Apple's business is
being propped up solely by iPod sales.

Since analysts rightly care more about income than revenue --
and indeed the stock is up 5% in after-hours trading -- it would
seem that this negativity is misplaced. A contrarian view is often
healthy, but in this case it looks more like a deliberate attempt
to find a negative spin on an otherwise positive story.

As for the iPod's positive effect on Apple's bottom line, this is
undeniable! Most Apple watchers, though, are instead heartened
by the fact that Macintosh shipments in FY2006Q2 were still up
4% over FY2005Q2, even with the Intel transition causing
uncertainty -- and without Boot Camp in the mix yet to boost
Mac sales.

See <a class="jive-link-external" href="http://news.yahoo.com/s/ap/20060419/ap_on_bi_ge/" target="_newWindow">http://news.yahoo.com/s/ap/20060419/ap_on_bi_ge/</a>
earns_apple_computer for another view.
Posted by ewestby (49 comments )
Reply Link Flag
Link changed
It appears the "Apple misses on revenue" link on the News.com
front page has been removed. Good call. I withdraw the
comment....
Posted by ewestby (49 comments )
Link Flag
Unusual choice for this article's link and headline
The link "Apple misses on revenue" and the headline "iPods carry
Apple" are both unfortunate: the first implying that Apple had a
disappointing quarter, and the second that Apple's business is
being propped up solely by iPod sales.

Since analysts rightly care more about income than revenue --
and indeed the stock is up 5% in after-hours trading -- it would
seem that this negativity is misplaced. A contrarian view is often
healthy, but in this case it looks more like a deliberate attempt
to find a negative spin on an otherwise positive story.

As for the iPod's positive effect on Apple's bottom line, this is
undeniable! Most Apple watchers, though, are instead heartened
by the fact that Macintosh shipments in FY2006Q2 were still up
4% over FY2005Q2, even with the Intel transition causing
uncertainty -- and without Boot Camp in the mix yet to boost
Mac sales.

See <a class="jive-link-external" href="http://news.yahoo.com/s/ap/20060419/ap_on_bi_ge/" target="_newWindow">http://news.yahoo.com/s/ap/20060419/ap_on_bi_ge/</a>
earns_apple_computer for another view.
Posted by ewestby (49 comments )
Reply Link Flag
Link changed
It appears the "Apple misses on revenue" link on the News.com
front page has been removed. Good call. I withdraw the
comment....
Posted by ewestby (49 comments )
Link Flag
Apple: 2nd Highest Quarterly Sales in History : C|NOT "so,so"
Go to the SOURCE people...

www.apple.com

CUPERTINO, CaliforniaApril 19, 2006Apple® today
announced financial results for its fiscal 2006 second quarter
ended April 1, 2006. The Company posted revenue of $4.36
billion and a net quarterly profit of $410 million, or $.47 per
diluted share. These results compare to revenue of $3.24 billion
and a net profit of $290 million, or $.34 per diluted share, in the
year-ago quarter. Gross margin was 29.8 percent, equivalent to
the year-ago quarter. International sales accounted for 43
percent of the quarters revenue.

Apple shipped 1,112,000 Macintosh® computers and 8,526,000
iPods during the quarter, representing 4 percent growth in Macs
and 61 percent growth in iPods over the year-ago quarter.

Weve generated over $10 billion in revenue and almost $1
billion in earnings in the first half of fiscal 2006, said Steve
Jobs, Apples CEO. Our transition to Intel processors is going
very well, and our music business just experienced another
quarter of outstanding growth.

Were very pleased to report the second highest quarterly sales
in Apples history, resulting in year-over-year revenue growth of
34 percent and earnings growth of 41 percent, said Peter
Oppenheimer, Apples CFO. Looking ahead to the third quarter
of fiscal 2006, we expect revenue of about $4.2 to $4.4 billion.
We expect GAAP earnings per diluted share of about $.39 to $.
43, including an estimated $.04 per share expense impact from
non-cash stock-based compensation, translating to non-GAAP
EPS of about $.43 to $.47.

Apple will provide live streaming of its Q2 2006 financial results
conference call utilizing QuickTime®, Apples standards-based
technology for live and on-demand audio and video streaming.
The live webcast will begin at 2:00 p.m. PDT on Wednesday,
April 19, 2006 at <a class="jive-link-external" href="http://www.apple.com/quicktime/qtv/" target="_newWindow">http://www.apple.com/quicktime/qtv/</a>
earningsq206/ and will also be available for replay. The
QuickTime player is available free for Macintosh and Windows
users at www.apple.com/quicktime.

C|NOT : Bought &#38; paid for by the communist loving Microsoft.
Posted by Llib Setag (951 comments )
Reply Link Flag
Apple: 2nd Highest Quarterly Sales in History : C|NOT "so,so"
Go to the SOURCE people...

www.apple.com

CUPERTINO, CaliforniaApril 19, 2006Apple® today
announced financial results for its fiscal 2006 second quarter
ended April 1, 2006. The Company posted revenue of $4.36
billion and a net quarterly profit of $410 million, or $.47 per
diluted share. These results compare to revenue of $3.24 billion
and a net profit of $290 million, or $.34 per diluted share, in the
year-ago quarter. Gross margin was 29.8 percent, equivalent to
the year-ago quarter. International sales accounted for 43
percent of the quarters revenue.

Apple shipped 1,112,000 Macintosh® computers and 8,526,000
iPods during the quarter, representing 4 percent growth in Macs
and 61 percent growth in iPods over the year-ago quarter.

Weve generated over $10 billion in revenue and almost $1
billion in earnings in the first half of fiscal 2006, said Steve
Jobs, Apples CEO. Our transition to Intel processors is going
very well, and our music business just experienced another
quarter of outstanding growth.

Were very pleased to report the second highest quarterly sales
in Apples history, resulting in year-over-year revenue growth of
34 percent and earnings growth of 41 percent, said Peter
Oppenheimer, Apples CFO. Looking ahead to the third quarter
of fiscal 2006, we expect revenue of about $4.2 to $4.4 billion.
We expect GAAP earnings per diluted share of about $.39 to $.
43, including an estimated $.04 per share expense impact from
non-cash stock-based compensation, translating to non-GAAP
EPS of about $.43 to $.47.

Apple will provide live streaming of its Q2 2006 financial results
conference call utilizing QuickTime®, Apples standards-based
technology for live and on-demand audio and video streaming.
The live webcast will begin at 2:00 p.m. PDT on Wednesday,
April 19, 2006 at <a class="jive-link-external" href="http://www.apple.com/quicktime/qtv/" target="_newWindow">http://www.apple.com/quicktime/qtv/</a>
earningsq206/ and will also be available for replay. The
QuickTime player is available free for Macintosh and Windows
users at www.apple.com/quicktime.

C|NOT : Bought &#38; paid for by the communist loving Microsoft.
Posted by Llib Setag (951 comments )
Reply Link Flag
Headlines carry CNET
Sometimes I wonder if CNET is worried its readership would
drop off if it used more accurate, less "British tabloid" style
headlines.

The existing headline of course implies that without iPod, Apple
would be dead in the water, because no one at all bought its
computers, peripherals or software (apart from the 1.2 million
people who did, generating greater revenue than pure iPod
sales, but let's just ignore them).

Whereas, a headline such as "iPod and Mac sales carry Apple"
would imply that Apple made it revenue from, well, selling iPods
and Macs.

Looking forward to the return of the word BELEAGUERED!
Posted by dotmike (154 comments )
Reply Link Flag
Headlines carry CNET
Sometimes I wonder if CNET is worried its readership would
drop off if it used more accurate, less "British tabloid" style
headlines.

The existing headline of course implies that without iPod, Apple
would be dead in the water, because no one at all bought its
computers, peripherals or software (apart from the 1.2 million
people who did, generating greater revenue than pure iPod
sales, but let's just ignore them).

Whereas, a headline such as "iPod and Mac sales carry Apple"
would imply that Apple made it revenue from, well, selling iPods
and Macs.

Looking forward to the return of the word BELEAGUERED!
Posted by dotmike (154 comments )
Reply Link Flag
Sales, IPod vs Mac (Reuters)
From a 04-19-06 Reuters article:

"Sales of iPods and songs and videos sold on its iTunes online store accounted for 50 percent of revenue and sales of Macs represented 36 percent of revenue."

Among many other things, the article stated that "Apple had nearly a 30 percent gross margin."
Posted by john55440 (1020 comments )
Reply Link Flag
Sales, IPod vs Mac (Reuters)
From a 04-19-06 Reuters article:

"Sales of iPods and songs and videos sold on its iTunes online store accounted for 50 percent of revenue and sales of Macs represented 36 percent of revenue."

Among many other things, the article stated that "Apple had nearly a 30 percent gross margin."
Posted by john55440 (1020 comments )
Reply Link Flag
 

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