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Apple Zooms Past Rivals, With 88% Profit Growth
« on: 2007-04-27 19:33:36 » |
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The New York Times
April 26, 2007
Apple Zooms Past Rivals, With 88% Profit Growth
By LAURIE J. FLYNN
SAN FRANCISCO, April 25 — Apple Inc. surpassed even the most optimistic forecasts for its usually tepid second quarter, delivering an 88 percent increase in profit on strong sales of Macintosh computers and iPod music players.
The company said on Wednesday that its profit rose to $770 million from $410 million in the comparable quarter last year. Apple sold 1.5 million Macs in the quarter, a record for the company.
In an interview, Steven P. Jobs, Apple’s chief executive, called the quarter a “blowout,” and noted that the strong sales and market share gains came even though the company had not made any major upgrades to its lines of portable and desktop computers.
“The Mac is clearly gaining market share, with sales growing 36 percent — more than three times the industry growth rate,” Mr. Jobs said. Overall personal computer sales increased only about 11 percent during the quarter, according to the market researcher IDC.
Apple’s strength was particularly notable in that it came during the quarter in which Microsoft finally released the long-awaited Vista version of its Windows operating system, an event that the PC industry was counting on to spur a wave of computer upgrades.
Mr. Jobs noted that Dell had recently returned an earlier version of Windows to its product line, which he said was an indication that demand for Vista had not been overwhelming.
Apple reported revenue of $5.26 billion, an increase of more than 20 percent over the $4.36 billion in the same period last year. Profit increased to 87 cents a share from 47 cents.
On average, analysts were expecting earnings of 64 cents a share on sales of $5.17 billion for the quarter, according to a survey by Thomson Financial.
Apple executives said the company benefited from lower component costs, as well as surging demand for notebook computers. Of Apple’s total computer sales, 59 percent were notebooks.
The earnings report sent shares of Apple up more than 7 percent to $102.40 in after-hours trading on Wednesday, topping the $100 mark for the first time. The shares rose $2.11 to close at $95.35 in the regular trading session.
It was Apple’s profitability during the quarter that most impressed Wall Street analysts. Its gross profit margin reached 35.1 percent, up from 29.8 percent in the year-ago quarter. Company executives said it was the company’s most profitable second quarter ever. Sales typically slow in the second quarter as it comes between the holidays and buying for school in the fall.
“They’re defying the laws of gravity when it comes to profitability,” said Eugene A. Munster, an analyst at Piper Jaffray.
Peter Oppenheimer, Apple’s chief finance officer, told analysts that he expected gross margins to decline during the third quarter, to about 32 percent. Apple tends to sell lower-margin computers to school districts in the third quarter, and component prices are also expected to be higher, he said.
In the third quarter the company expects revenue to climb to about $5.1 billion and earnings to reach about 66 cents a share, slightly lower than analysts’ forecasts.
Mr. Munster said the appeal of the Macintosh was clearly expanding beyond its traditional niche. “There’s a global shift in how people see personal computers — for entertainment, creativity and good looks,” Mr. Munster said. “Apple has found that sweet spot, and with almost no competition.”
Apple said Mac sales accounted for 56 percent of revenue during the second quarter, with music-related products, including iPod and iTunes sales, accounting for the other 44 percent.
Apple sold 10.5 million iPods during the quarter. Earlier this month Apple said it had sold a total of 100 million iPods.
Apple had earlier said it was delaying the release of the next version of its Mac operating system, called Leopard, because it needed to divert resources to its iPhone project. The iPhone is scheduled to ship in late June, through an agreement with Cingular, and cost between $500 and $600.
Mr. Oppenheimer said Apple planned to regularly add new software features to iPhones after they are sold, at no charge, and would alter its accounting policies to make this possible. In the interview, Mr. Jobs said he believed these upgrades would give the company an advantage in a market where the software in phones generally remains unchanged once they are in use.
Apple said it ended the second quarter with $12.6 billion in cash.
John Markoff contributed reporting.
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Walter Watts
Tulsa Network Solutions, Inc.
No one gets to see the Wizard! Not nobody! Not no how!
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the.bricoleur
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Re:Apple Zooms Past Rivals, With 88% Profit Growth
« Reply #1 on: 2007-04-29 06:54:14 » |
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Walter, please excuse my off topic response ... but as an Apple engineer I am thoroughly enjoying witnessing your switch .. 
-iolo
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Walter Watts
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Just when I thought I was out-they pull me back in
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Re:Apple Zooms Past Rivals, With 88% Profit Growth
« Reply #2 on: 2007-04-29 15:22:07 » |
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Quote from: Iolo Morganwg on 2007-04-29 06:54:14
Walter, please excuse my off topic response ... but as an Apple engineer I am thoroughly enjoying witnessing your switch ..
-iolo
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Thank you Iolo.
Believe me. After 20+ years of DOS and Windows geekdom, the pleasure is ALL mine.
Walter
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Walter Watts
Tulsa Network Solutions, Inc.
No one gets to see the Wizard! Not nobody! Not no how!
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