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Fri, Jul 21, 2006 - Page 10 News List

iPod helps Apple beat profit forecasts

MUSIC TO THE EARS Steve Jobs' company shipped 8.1 million units of the popular portable music player in the spring quarter to boost profits by nearly 48 percent


Apple Computer Inc easily topped Wall Street's income forecast for the spring quarter with a nearly 48 percent profit increase driven largely by the continued popularity of its industry-leading iPod music player. Company shares rose more than 8 percent in late-session trading.

For its fiscal third quarter ended July 1, Apple's profit rose to US$472 million, or US$0.54 a share, up from US$320 million, or US$0.37 per share in the same period of last year. That was US$0.10 per share better than the mean forecast of analysts surveyed by Thomson Financial.

Sales grew to US$4.37 billion from US$3.52 billion last year. That number was within the range of Apple's April forecast for quarterly sales of US$4.2 billion to US$4.4 billion, but fell shy of the mean estimate of US$4.4 billion among analysts polled by Thomson Financial.

The Cupertino, California-based company shipped 1.3 million Macintosh computers and 8.1 million iPods -- the overwhelming leader among digital music players -- during the quarter. The numbers represent a 12 percent increase in Mac sales and more than a 32 percent jump for iPods from the third quarter last year.

The "iPod continued to earn a U.S. market share of over 75 percent and we are extremely excited about future iPod products in our pipeline," CEO Steve Jobs said on Wednesday.

Apple also said it expected revenue of about US$4.5 billion to US$4.6 billion in the fourth quarter and earnings of between US$0.46 and US$0.48 a share. But chief financial officer Peter Oppenheimer said the company's profit margins will be smaller in the fourth quarter because it planned an "aggressive" back-to-school marketing campaign.

The company reported the results after financial markets closed on Wednesday. Shares jumped 8.4 percent, or US$4.56, to US$58.66 in aftermarket trading.

"It was a great quarter," said Jane Snorek, an analyst with Minneapolis-based First American Fund. "Mac sales were strong."

She also noted that iPod sales are not slowing as fast as some analysts had feared.

However, another analyst asked about the company's future product plans.

"There is a lot of concern out there about what sort of plans you have," said Bear Stearns analyst Andrew Neff. "How innovative can innovative be?"

Oppenheimer declined to discuss products under development, but expressed confidence that future products would be a hit with consumers.

"We are very confident," Oppenheimer said. "I don't imagine that the creativity at Apple can ever be lost."

The company also said initial results of its investigation into the back dating of employee stock options did not affect the quarter's results.

"However, if additional irregularities are identified by the independent investigation, a material adjustment to the financial information could be required," the company said in a press statement.

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