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Apple on Wednesday
announced the financial results
for its fiscal 2006 first quarter, which ended on December 31, 2005. The company posted revenue of $5.75 billion and a net quarterly profit of $565 million, or $0.65 per diluted share — its highest revenue and earnings in history.
Apple’s results compared to revenue of $3.49 billion and a net profit of $295 million, or $0.35 per diluted share, for the same quarter a year ago.
During the quarter, Apple shipped 1.254 million Macs and 14.043 million iPods — a 20 percent year over year growth in Mac shipments and 207 percent year over year growth in iPods. Mac sales represented 41 percent of Apple’s total revenue. Apple CFO Peter Oppenheimer said that Apple was pleased with the continued sales of Mac sales despite the announced Intel transition. Apple’s music-related sales, including iPods, represented 59 percent of Apple’s quarterly revenue.
Of the 1.254 million Macs shipped, Apple moved 667,000 desktop systems. 587,000 laptop systems shipped.
$1.072 billion in revenue was generated by Apple brick and mortar stores during the quarter. Retail store profits rose sharply, according to Oppenheimer. “We will continue to open new stores at a measured pace,” said Oppenheimer, who added that Apple plans to open more than 40 new stores this year. Most of them will be in the United States, though Apple will continue to open new stores in Canada, Japan and the UK.
In his introductory remarks before taking calls from financial analysts, Oppenheimer estimated that Apple will see revenue of $4.3 billion for its second quarter, which closes in April, and is a week shorter than the previous quarter which was reported Wednesday. The company is predicting earnings per diluted share of about $0.38.
“We just completed the best quarter in Apple’s history, and 2006 is off to a great start,” Oppenheimer added.
Apple saw positive year over year growth in virtually every geographical operating segment — up 8 percent in the Americas, 21 percent up in Europe, 27 percent in Japan and 62 percent in its retail stores.
Q&A with analysts
Oppenheimer called the extra week of holiday-related shopping in the last quarter as “a big week” for the company’s revenue and expenses, though he refused to offer specific details when pressed.
When asked about Apple’s conservative outlook for Q2, Oppenheimer explained that Apple has factored in the issues related to the company’s transition to Intel-based Macs, the limited amount of time Apple will have to ship MacBook Pros, seasonally weaker demand for iPods, and other factors.
Apple COO Tim Cook told an analyst that Apple recognized “a pause” in Mac sales last quarter which it attributes to concern about the Mac’s transition to Intel, but regardless, Mac sales were actually stronger than Apple expected.
Given the limited number of weeks that the MacBook Pro will be shipping during the quarter — Apple says the new Intel-based laptop will ship in February — Cook suggested that Apple may exit the quarter with a higher demand for those systems than it will be able to readily supply.
Cook said that more than 35,000 retail outlets worldwide are now selling iPods.
iMac G5 and 15-inch PowerBook G4 systems continue to be available “while supplies last,” according to Cook.
More than 2,000 accessories are now being sold for the iPod, said Oppenheimer. He called the iPod accessory business a “recurring revenue stream,” and explained that many consumers appear to buy an iPod and later buy accessories for it.
The iTunes Music Store operated “above break even,” according to Oppenheimer, though he didn’t elucidate further.
Direct sales jumped to 49 to 41 percent year over year, according to Apple. That includes Web-direct sales, educational sales and other sales.
Cook says that there are already 200 applications that have been announced as running natively on Intel-based Macs.