News

Apple Profit Up 47 Percent

• By The Associated Press
• October 18, 2006

Apple earned $546 million in the quarter ended Sept. 30, or 62 cents per share. That compared with net income of $430 million, 50 cents per share, in the same period last year.

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

The average estimate by analysts was for earnings of 51 cents per share on sales of $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 restatements could lead to a "significant adjustment," Apple said Wednesday.

Chief Executive Steve Jobs apologized to shareholders and employees in early October after an internal probe uncovered irregularities in past stock option grants and raised "serious concerns" about two former officers. At the same time, the probe found no misconduct by the current management team.

Apple shares rose 24 cents Wednesday to close at $74.53 on the Nasdaq Stock Market. In extended trading, the stock jumped to $78.90.

For the quarter, Apple said 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.

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

Sales for all computers reached $2.2 billion, up 37 percent from a year-ago, while sales of iPods reached $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.

"This strong quarter caps an extraordinary year for Apple," Jobs stated. "Selling more than 39 million iPods and 5.3 million Macs while performing an incredibly complex architecture transition is something we are all very proud of."

Unsatisfied with its previous chip suppliers, Apple began switching its computers to Intel Corp.-based microprocessors in January. The Intel chips have a similar design, or "architecture," to ones used in rival computers running on Microsoft Corp.'s Windows operating system.

The move to Intel chips was part of the Cupertino-based company's larger goal to broaden its small share of the PC market. Apple has also been heavily promoting its Mac platform in television ads that criticize the Windows operating system.

There are signs Apple's efforts are paying off.

A little more than half of the 323,000 computers sold in Apple's retail stores during the quarter were to people who had never owned a Mac before, Apple's chief financial officer Peter Oppenheimer said during an analyst conference call. "We were thrilled by that," he said.

For the full fiscal year, Apple said it earned $1.99 billion, or $2.27 per share, up from $1.335 billion, or $1.56 per share, the previous period. Revenue was $19.3 billion, up from $13.9 billion last year.

Analysts were expecting earnings of $1.88 billion, or $2.16 per share, on sales of $19.1 billion for the full year.

Apple officials said they were optimistic about the current holiday quarter, despite new competition in the marketplace. Many analysts don't expect Microsoft's upcoming Zune player to knock down Apple's dominance in music players, but many are wondering how well the Zune and other players will compete.

For the first quarter, Apple said it expects revenue of $6 billion to $6.2 billion and earnings per share of 70 cents to 73 cents.