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Fri, Oct 20, 2006 - Page 10 News List

Apple's impressive growth surprises analysts


Apple Computer Inc quelled any concerns of slowing growth as fourth-quarter profits rose 27 percent, well beyond analyst expectations, on strong sales of its iPod and Macintosh computers.

For the quarter, Apple said on Wednesday it shipped 8.7 million iPods, up 35 percent from the year-ago period. A good back-to-school season also helped Apple ship a record 1.6 million computers, up 30 percent from a year earlier, breaking its previous record of 1.38 million units in the first fiscal quarter of 2000.

The sizzling sales put Apple's revenue for this fiscal year at a record US$19.3 billion, up from its previous all-time high of US$13.9 billion last year.

Apple also ended its fiscal year with more than US$10 billion in cash, up from more than US$8 billion in the last fiscal year.

"This strong quarter caps an extraordinary year for Apple," Apple CEO Steve Jobs stated.

Apple said it earned US$546 million in the quarter ended Sept. 30, or US$0.62 per share. That compared with net income of US$430 million, US$0.50 per share, in the same period last year.

Revenue for the quarter totaled US$4.84 billion, a 32 percent jump from US$3.68 billion last year.

The average estimate given by analysts was for earnings of US$0.51 per share on sales of US$4.66 billion, according to Thomson Financial.

Apple's iPod-iTunes juggernaut has helped the company reap record profits in recent years, but some of the earnings might be eroded when Apple later restates some quarterly reports due to earlier mishandling of stock options accounting.

The likely restatements could lead to a "significant adjustment," Apple said on Wednesday.

Still, investors cheered the latest results.

Shares of Apple jumped 4.5 percent to US$77.88 in extended trading. In regular trading before the report, Apple shares rose US$0.24 to close Wednesday at US$74.53 on the NASDAQ Stock Market.

"The iPod is still the must-have product for almost anyone under 30 and certainly for anyone under 18," said Barry Jaruzelski, a management consultant at Booz Allen Hamilton. "Because Apple has a 75 percent share in the music player market, people have been waiting for the laws of gravity to kick in, but it certainly has more legs than most people have expected."

In addition, the popularity of the iPod, which is compatible with both Mac and Windows computers, seems to be creating a "halo effect" for increased sales of Macs, Jaruzelski said.

Among computers, laptop sales were particularly strong: shipments rose 56 percent to almost 1 million units, while revenue climbed 63 percent to US$1.3 billion from the previous year.

Sales for all computers reached US$2.2 billion, up 37 percent from a year-ago, while sales of iPods reached US$1.56 billion, up 29 percent. The iconic portable music player, first introduced in October 2001, accounted for about a third of Apple's quarterly sales.

For the fiscal year, Apple sold more than 39 million iPods and 5.3 million Macs -- all while undergoing a complex transition to a new kind of chip for its computers, Jobs noted.

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