Apple reports $818 million profit, record Mac sales
Apple rode record Mac sales and continued iPod sales growth to an $818 million profit in its fiscal third quarter, the company said Wednesday. Meanwhile, the company sold 270,000 iPhones in the first 30 hours after the mobile device’s June 29 release.
For the three months ended June 30, 2007, the company saw $5.41 billion in sales, a 24-percent increase from the year-ago quarter. Apple reported earnings of 92 cents per diluted share, up from 54 cents a year ago. Analysts polled by Thomson First Call expected Apple to report 72 cents per share on $5.28 billion revenue.
Record Mac sales
During the quarter, Apple shipped more than 1.7 million Macs, a 33-percent rise over the what it shipped in the third quarter of 2006 and 2.5 times the industry-wide growth rate published by market-research firm IDC.
More significantly, Apple’s third-quarter Mac sales marked a record for the company, topping the previous quarterly high of 1.61 million Macs shipped during the fourth quarter of 2006.
Much of the growth in Mac sales came from Apple’s laptop business. While there was a rise in desktop sales for the quarter—634,000 units compared to 529,000 for the same period in 2006—laptop unit sales skyrockected 42 percent to 1.13 million portables. All told, 64 percent of the Macs sold during the quarter were laptops.
While Mac products and services made up 60 percent of the company’s total quarterly revenue, Apple also sold more than 9.8 million iPods—a 21-percent increase from the year-ago quarter. Apple says the iPod enjoys a 71.5-percent share of the MP3 market based on figures from market-research group NPD.
International sales accounted for 40 percent of the quarter’s revenue.
The highly anticipated iPhone was released on June 29, the next-to-last day of the third quarter. Apple reported 270,000 units sold during the 30 hours of the quarter it was on sale.
“AT&T said more iPhones were sold in the first weekend than they had sold in the first month of any other wireless device in their entire history,” chief operating officer Tim Cook told financial analysts during a conference call.
The unit sales released by Apple Wednesday top the 146,000 iPhone activations AT&T reported for its quarterly earnings, suggesting that activation delays during the iPhone’s weekend may have depressed AT&T’s figures. Apple Chief Financial Officer Peter Oppenheimer acknowledged the activation problems during the call with analysts.
“We would like to apologize to those customers who had less than a perfect activation experience,” said Oppenheimer, adding that AT&T has corrected the most common cause of activation hang-ups.
Apple expects to sell its 1 millionth iPhone by the end of the September quarter. In contrast, it took the company seven quarters to sell its 1 millionth iPod. The company says it’s still on track to meet the goal spelled out by Apple CEO Steve Jobs to sell 10 million iPhones in 2008.
Apple reported $5 million in iPhone-related revenue during the quarter for both the iPhone and related accessories. Earlier in 2007, Oppenheimer indicated that Apple would adopt a subscription-oriented accounting policy that would spread revenue seen from handset sales over 24 months.
Apple plans to introduce the iPhone in Europe during the final quarter of the year “in a few major countries,” Cook said. The mobile device will be introduced across Europe throughout 2008; Apple also plans to bring the iPhone to Asia next year. Apple executives said they would announce details about which carriers in Europe they’ll work with later in the quarter.
Retail stores and future guidance
Apple’s brick-and-mortar stores saw 33-percent sales growth year-over-year. The company remodeled 15 stores and opened eight others for a total of 185 stores. The stores average $5.1 million in revenue, up from $4.7 million in the year-ago quarter. Apple plans to open 12 stores in the September quarter to end its fiscal year with 197 outlets.
Oppenheimer said he expects revenue of about $5.7 billion and earnings per diluted share of about 65 cents for the quarter ending in September. In the September 2006 quarter, Apple saw earnings of 62 cents a share on $4.84 billion in revenue.
Apple stock closed up $2.37 or 1.76 percent at $137.26. In after hours trading the stock has fluctuated from a couple of cents down to over $4.50 up.
Macworld.com executive editor Philip Michaels contributed to this report.
Added more information about the earnings and analyst predictions for the quarter.
Updated at 5:15 p.m. ET to add iPhone results.
Updated at 7:30 p.m. ET to add details from Apple’s conference call.
Reposted at 5:50 p.m. ET on July 27 to clarify that 60 percent of total revenue coming from Mac sales includes products and services.