Thursday, January 19, 2006

Apple profit surges 95 percent on iPod sales

Apple Computer reported a 95 percent rise in quarterly profits on exploding sales of its iPod music players, and notched more than one billion dollars in sales through its retail stores.

Apple's stock, though, fell in after-hours trading because Apple offered a forecast that fell short of Wall Street estimates.

"In a sense, it's unfair," Silicon Valley technology analyst Tim Bajarin of Creative Strategies Inc. told AFP. "It doesn't seem smart to get out, given Apple's domination with iPod and the new MacBook Pro with the Intel chip."

Apple reported net income of 565 million dollars, or 65 cents a share, for the first fiscal quarter to December 31, up from 295 million a year earlier. The report beat analyst forecasts of a profit of 55 cents per share.

Sales rose 64 percent to 5.75 billion dollars. Chief executive Steve Jobs disclosed Apple's quarterly revenue result January 10 at the Macworld conference in San Francisco.

Consumers snapped up 14 million iPod devices during the holiday quarter, and Apple has now sold more than 40 million since late 2001. The groundbreaking product has transformed Apple from a niche PC maker into the leading purveyor of digital media.

Apple also sold 1.25 million Macintosh computers during the quarter, a figure that was up 20 percent from the year-earlier figure. Apple is in the process of transitioning its Mac line to Intel processors, and it expects to have all of its PCs running on Intel chips by the end of this year.

"We are thrilled to report the best quarter in Apple's history," said Jobs.

"Two highlights of an incredible quarter were selling 14 million iPods and getting ready to launch our new Macs with Intel processors five to six months ahead of expectations. We are working on more wonderful products for 2006, and I can't wait to see what our customers think of them."

Apple issued a second-quarter profit forecast of 38 cents a share on 4.3 billion dollars in revenue. That outlook fell well short of a Wall Street-estimated profit of 48 cents a share on 4.63 billion dollars in sales.

The forecast drove Apple shares down more than five percent to 78.07 in after-hours trades. It had given up 2.22 in the daytime Nasdaq session.

Jobs was being realistic, because the company's cultish followers as well as people considering switching to Macintosh are likely to put off buying computers until the new Intel-driven machines hit the market, Bajarin said.

"The numbers for Macs could have a hiccup because there are buyers waiting for new machines to come out," Bajarin said.

"I think this is one of those transitional issues."

At the recent Macworld exposition in San Francisco, devotees "couldn't wait to get their hands on the new Macs," Bajarin said.

Apple's mid-year earnings promised to be a better measure of the company's status, according to the analyst.

"Once the full ramp-up is there, with laptops and full desktops, there numbers could be very good," Bajarin said.

"What we were looking for was someone to challenge Apple with MP3 players, and that hasn't been the case."

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