Update: Apple's iPod sales fuel record quarter

IDG News Service - With sales of its iPod music players continuing to grow at a breakneck pace, Apple Computer Inc. today reported the highest revenue and earnings results in its history. The company said it shipped more than 14 million iPods during its first quarter of fiscal 2006.

Revenue for the quarter, which ended Dec. 31, was $5.75 billion, up significantly from the year-earlier total of $3.49 billion. Earnings for this most recent quarter totalled $565 million, or 65 cents per share.

Wall Street analysts had been expecting earnings of 61 cents per share, on average, according to a survey of 11 analysts by Thomson One. Analysts had set quarterly revenue expectations at $5.54 billion, according to Thomson.

Apple CEO Steve Jobs had disclosed some of the financial results at last week's Macworld Conference and Expo in San Francisco, when he revealed the iPod sales numbers and told attendees that revenue would be $5.7 billion for the quarter.

Sales of the iPod were up 207% from the year-ago quarter, and Apple shipped 1.25 million Macintosh computers during the most recent period, up 20% from the previous year, the company said.


During a conference call with financial analysts, Apple Chief Financial Officer Peter Oppenheimer gave cautious financial guidance for the quarter ahead and warned that iPod sales were likely to slow. "The iPod was one of the top holiday gifts in this season," he said. "It's natural to think that there would be a drop-off in demand in the March quarter from this exceptional holiday result."

Apple is also facing a possible slowdown in Mac sales as the company moves to new systems based on Intel Corp.'s microprocessors. The first of these systems, two configurations of both the MacBook Pro notebook and the iMac personal computer, were introduced last week.

Though the first three months of the year are typically a slow period for Apple, the company surprised analysts with its predictions for this period, which is the company's second quarter in the fiscal 2006 year. Apple expects revenue of about $4.3 billion and earnings of about 38 cents per share for the quarter, numbers that were more conservative than analysts had been expecting, according to Thomson.

The Cupertino, Calif., company plans to expand the number of its Apple Retail Stores during the next year by adding about 40 locations, Oppenheimer said. "We expect most of them to be [opened] domestically, but we'll continue to open stores in Canada, the U.K. and Japan as well," he said.

Apple's online music store "operated above break-even"during the first quarter, he added.

Apple's results come after industry bellwether Intel Corp. surprised investors yesterday by missing its quarterly estimates, citing slow sales of its desktop processors. Intel's stock dropped more than 11% today, closing at $22.69 per share.

Apple shares were down nearly 3% before the earnings announcement, closing at $82.49.