Apple 1Q Earnings Soar, But Company Tempers Outlook

For the quarter ended Dec. 30, 2006, Apple reported earnings of $1 billion on revenue of $7.1 billion. The Cupertino, Calif.-based company's earnings per share of $1.14 far exceeded the average Wall Street analyst estimate of 77 cents, according to Thomson Financial.

Apple said it shipped more than 1.6 million Macintosh computers and 21 million-plus iPods during the quarter, which amounts to year-over-year sales growth of 28 percent growth in Macs and 50 percent growth in iPods.

"We've just kicked off what is going to be a very strong new-product year for Apple by launching Apple TV and the revolutionary iPhone," Apple CEO Steve Jobs said in a statement.

In its fiscal 2006 first quarter, Apple turned in sales of $5.75 billion and a profit of $565 million in what was then a 14-week quarter.

Apple projects revenue of $4.8 billion to $4.9 billion and earnings per share of between 54 cents and 56 cents for its second quarter, CFO Peter Oppenheimer said. Wall Street's consensus forecast for the quarter is for sales of $5.22 billion and earnings per share of 60 cents.

Much of the credit for Apple's sterling first fiscal quarter of 2007 was given to iPod sales. The company also saw higher-than-expected revenue from retail sales of Macintosh systems during the quarter as well. But company executives said that during the current quarter they expect greater amounts of music downloads to come from gift-card redemptions -- from cards bought during the last quarter -- as well as lower software sales ahead of Apple's forthcoming release of its Leopard operating system.

Macintosh sales traditionally spike up during the last months of the calendar year, Apple executives said, taper off during the first quarter of the calendar year, and then ramp up again as education markets begin buying new systems.

This year, too, much of the professional market for Mac systems continues to wait for critical creative software from Adobe, Apple executives said.

"The Pro market met our expectations internally" for the quarter ended Dec. 1, said Apple Chief Operating Officer Tim Cook in a conference call with financial analysts after the quarterly results were announced. "Those expectaions were tempered by the fact that some customers are waiting for the creative suite from Adobe to be released." Adobe, San Jose, Calif., has announced its software, including a new version of Photoshop would ship in the second quarter of the year. Until now, the software has not been optimized for Intel-based Macintosh systems.

"We would hope to see some of those customers who are delaying purchase (of a Mac) get on board at that point," Cook said.

This story was updated at 6:12 p.m. Eastern Time to include new information from Apple's conference call with financial analysts.