Apple Profit More Than Doubles

The results released Wednesday easily topped Wall Street's expectations.

The Cupertino, Calif.-based company attributed the successful quarter to robust sales across its product line, namely its iBook and PowerBook computers, its iPod music players and stronger-than-expected results from its retail and education sectors.

"They all came together and did very well," said Peter Oppenheimer, Apple's chief financial officer said in an interview.

For the three months ended Sept. 25, Apple said it earned $106 million, or 26 cents per share. In the same period last year, the company earned $44 million, or 12 cents a share.

Sponsored post

Excluding a one-time restructuring charge of $4 million, Apple said that it would have earned $110 million, or 27 cents per share.

Revenue for the quarter was $2.35 billion, up 37 percent from $1.7 billion in the year-ago quarter.

Analysts surveyed by Thomson First Call had projected earnings of 18 cents a share on revenue of $2.15 billion.

For the current quarter, Apple gave an optimistic outlook, saying it expects revenue of between $2.8 billion and $2.9 billion, and earnings of 39 cents to 42 cents per share. The forecast topped Wall Street's earnings expectations of 28 cents per share on revenue of $2.52 billion.

Apple clearly dominates the market for portable music players though the list of rivals is constantly growing. The iPod accounts for about 92 percent of unit sales of hard-drive based players and more than 65 percent of the overall portable player category, according to Apple.

The company said it sold more than 2 million iPods during the fourth quarter -- a record -- bringing the product's lifetime total to 5.7 million. The music player accounted for 23 percent of the company's quarterly revenue, compared to 7 percent a year ago.

Apple's groundbreaking licensing deal with Hewlett-Packard also appeared to be paying off. HP's version of the iPod player, which started selling in September, accounted for about 6 percent of the quarter's iPod sales, Oppenheimer told analysts during a conference call.

Apple officials believe the popularity of the company's music products, which also includes the online iTunes Music Store, is also creating a "halo effect," translating to more sales for the computer business, Oppenheimer said.

Nearly 50 percent of computer customers at Apple's retail stores are either buying a Macintosh or a computer for the first time, Oppenheimer said.

For the quarter, Apple said it sold 836,000 Macintosh computers, accounting for 52 percent of the company's total revenue.

An ongoing supply shortage of the G5 microprocessor dragged down sales of the new flat-panel iMac and Power Mac desktop models, but strong sales of laptops buoyed the segment. iBook sales grew 66 percent, and PowerBooks increased 20 percent, from the year-ago period.

Sales of laptops and iPods also led to the education sector's best performance in four years, with unit sales up 19 percent and revenues up 21 percent, Oppenheimer said.

Meanwhile, retail store revenues climbed to $376 million, up 95 percent from the year-ago period. Apple had 86 stores worldwide at the end of the fourth quarter and plans to have 100 stores open by the end of 2004, including some that will be half the size of its existing stores, Oppenheimer said.

For the year, Apple reported net income of $276 million on revenue of $8.28 billion, compared to net income of $69 million on revenue of $6.21 billion in 2003.

"Apple is on track to going back to being a $10 billion-a-year company again," similar to the boom times in the late 90s following the debut of a revamped iMac and other lines of computers, said Barry Jaruzelski, management consultant at Booz Allen Hamilton.

Yet for Apple to sustain itself, given the dominance of Windows-based computers and the highly competitive consumer electronics market, "it will have to come out with an endless series of new consumer products because the iPods at some point will plateau, as any product does," Jaruzelski said.

"But if anybody could keep pulling a rabbit out of a hat," he said, "it's Apple."

Copyright © 2004 The Associated Press. All rights reserved. The information contained in the AP News report may not be published, broadcast, rewritten or redistributed without the prior written authority of The Associated Press.