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Apple Chief Financial Officer Peter Oppenheimer began the conference call with financial analysts by recapping the company’s results for its fiscal fourth quarter. Apple posted a $546 million profit on sales of $4.84 billion; these results are preliminary and may be adjusted as a result of a likely restatement of historical results.
Oppenheimer said the quarter was the best for Mac shipments than any quarter in history “by far.” Apple shipped 1.6 million Macs in the just-completed quarter. The previous record quarter was 1.38 million Macs in the first quarter of 2000. Fifty-eight percent of the company’s revenue for the quarter came from Macs.
For the fiscal year, Apple sold 5.3 million Macs. iPod sales for the year totaled 39 million units—just under 8.8 million iPods were sold in the fourth quarter.
Oppenheimer also credited “unprecedented demand for portable products” for driving Apple’s quarterly results. Laptops accounted for 61 percent of all Macs sold during the quarter.
Apple estimates that 4,000 applications are available in Universal Binary format, allowing them to run natively on Intel-based Macs. By the end of the year, Oppenheimer says, 80 percent of the 500 Mac apps considered by Apple to be most important to users should be available in Universal form. (Programs that don’t run natively on Intel-based Macs must run using Apple’s Rosetta emulation technology, leading to a performance hit particularly for processor-intensive programs.
For the quarter, iPod shipments grew 35 percent from the same period a year ago. “We’re very confident in our new lineup despite increased competition this holiday season,” Oppenheimer said. Apple says there are 3,000 iPod accessories now available; what’s more, more than 70 percent of 2007 model year cars will offer iPod integration.
Apple says its iTunes Store now accounts for 85 percent of the songs downloaded in the U.S. according to Nielsen Sound Scan figures. Later in the call, Apple executives noted that the iTunes Store is now open in 21 countries, which the company estimates covers nearly 90 percent of the market for where music is downloaded legally. Apple reiterated plans to add the ability to purchase movies to its international iTunes offerings in 2007.
On the retail front, Apple’s brick-and-mortar stores—which now total 165—brought in $936 million in revenue for the quarter, up 41 percent year-over year. For the fiscal year, Apple Store sales increased by more than $1 billion.
More than 50 percent of the customers buying a Mac in the Apple Store were new Mac customers, Oppenheimer said. That means the average Apple Store added 1,000 new Mac customers during the three months ending Sept. 30.
Apple saw a very successful quarter in its education business, Oppenheimer said, with year-over-year growth of 20 percent. The past quarter saw the most successful back-to-school period ever for higher-education sales, fueled by a 49 percent jump in portable sales to that segment.
Breaking out Apple’s quarterly revenue gains by region, revenues in the Americas were up 33 percent in the quarter. Europe and Japan saw gains of 27 percent and 26 percent, respectively.
Looking ahead to the December quarter, Oppenheimer said Apple expects revenue to fall between $6 billion and $6.2 billion. He estimates diluted earnings per share ranging from 70 cents to 73 cents.
“In closing, we are very proud of our accomplishments as a company in fiscal year 2006,” said Oppenheimer, adding that the company is “very enthusiastic” about its product pipeline.
Turning the call over to questions from analysts, Oppenheimer fielded a question from UBS analyst Benjamin Reitzes about why music sales were lower than expected. While pointing out that the figures grew from a year ago, Oppenheimer noted that the September quarter is typically a slow one for music sales. Inventory of Apple-branded iPod accessories was also flat in advance of the September 12 launch of an overhauled iPod line.
Bear Stearns analyst Andrew Neff asked about Apple’s internal investigation into stock option practices and what role Apple CEO Steve Jobs might have played in those practices. “The board found no misconduct of any member of Apple’s current management team. And that includes Steve,” Oppenheimer said.
Gene Munster of Piper Jaffray wondered if the Mac sales numbers reflected pent-up demand. Company executives cited the completion of the transition to Intel processors as well as very strong back-to-school sales, including 50,000 units in two K-12 deals.
Asked about Boot Camp, Apple said that its beta software that allows users to install and run Windows XP on an Intel-based Mac has been downloaded more than 1 million times. The company plans to move forward with integrating Boot Camp into OS X 10.5 when the OS X update code-named Leopard ships next spring.
DeutscheBank’s Chris Whitmore asked about customer reception of the Mac Pro, particularly whether the lack of an Intel-native version of Adobe’s Creative Suite was causing some users to postpone their purchase of the new high-end hardware. Apple executives characterized reaction as positive but did concede a delay in purchases, primarily because of non-Univerisal high-end applications in general and the Creative Suite in particular.
Updated at 5:42 p.m. PT to include additional information on Apple’s education sales.
This story, "Live Update: Apple 4Q financial report" was originally published by PCWorld.