Apple Q3 05 Analysts Call - Live Update

Apple on Wednesday reported a net profit of US$320 million, or $.37 per diluted share, and revenue of $3.52 billion, for its fiscal third quarter FY05, which ended in June. The company’s results are the highest revenue and earnings in Apple’s history.

By the numbers

Apple shipped 1.182 million Macintosh units and 6.155 million iPods during the quarter — that’s a 35 growth in Macs shipped and 616 percent growth in iPods for the same quarter a year ago.

Apple no longer provides a specific breakdown of sales by types of Macintosh, but notes that it moved 687,000 desktop units for the quarter, for a total of $845 million in revenue. Portables — including iBooks and PowerBooks — totalled 495,000 units, for $720 million in revenue — a new quarterly record for Apple.

Apple CFO Peter Oppenheimer said that growth for the quarter was three times the rate of the rest of the industry, according to recent market research. iPods have more than 70 percent marketshare, according to NPD Techworld, said Oppenheimer. Oppenheimer claims that the iPod’s closest competitor has closer to a 5 percent marketshare.

The iTunes Music Store’s share of legally purchased and downloaded music has increased to more than 80 percent, according to Neilsen Soundscan.

Apple averages 8,900 customers per store, per week. The company plans to have 125 stores worldwide by year’s end.

Apple’s revenue was up 89, 75 and 39 percent in its Americas, Europe and Japan operating segments respectively. The company’s retail stores — including those in the U.K. and Japan — accounted for $555 million in revenue, and moved about 144,000 CPU units total.

Looking to the future

For Apple’s fourth quarter, Apple is expecting sequentially flat revenue — but still consistent with its $320 million results for the third quarter. The company anticipates that the recent announcement it would switch to an Intel-based CPU architecture may have some effect on results, and Oppenheimer called the forecast “prudent” given the news. Responding to an analyst’s question, Oppenheimer explained that the June quarter greatly exceeded Apple’s projections — on the order of $250 million, partly thanks to Mac OS X v10.4 “Tiger’s” strong showing. These and other reasons are why the company expects flat revenue for the fourth quarter, which will end in September.

Mac mini appeal, software sales expected to wane

Oppenheimer told an analyst that Apple expects Mac mini appeals to a broader range of price-sensitive customer than Apple has been able to reach. With a growth rate three times the industry average, according to that research he previously mentioned, Oppenheimer “couldn’t be happier” with Apple’s CPU sales.

Apple normally sees the best software sales to hit the first quarter they’re available; Oppenheimer predicts that the company will see a sequential downtick in software sales, including lower Tiger sales. For the June quarter, Apple saw a total revenue of $345 million in software sales — $100 million was in quarterly sales from Tiger (the best selling software release in the company’s history).

Apple sales VP Tim Cook said that despite big year-over-year gains — 32 percent increase in revenue, but a 7 percent drop in unit sales — he’s “unhappy” with Apple’s performance in Japan. The company is making changes to its indirect and direct sales in that geographical region to help improve the situation. Apple saw a sequential drop in unit sales and revenue in Japan 25 and 20 percent respectively, resulting in 76,000 units shipped and $227 million in revenue.

Cook also said the Mac mini is an important factor in Apple’s growth plans, and the flat-panel iMac G5 is well-regarded by Apple’s customers. Cook discounted suggestions that Apple’s laptop sales are suffering from not having a G5 chip in its PowerBooks, emphasizing Apple’s record-setting results — almost one half million units (495,000) shipped.

Almost 16 million Mac users have installed Mac OS X, although Oppenheimer couldn’t specify how many of them are Tiger users.

Cook says that Apple has about 25,000 storefronts selling iPods around the world, up from 21,000 for the previous quarter. Cook explained that expansion into retailer Wal-Mart has been key to this expansion — the company now carries iPod shuffles in almost 90 percent of its stores, with about a quarter of them also carrying “white” iPods and iPod minis.

This concludes MacCentral’s live coverage of Apple’s conference call with analysts to discuss their third quarter FY05 results. Please visit our home page for more information.

This story, "Apple Q3 05 Analysts Call - Live Update" was originally published by PCWorld.

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