Apple Macs Fuel Record Quarterly Profit
Thursday, July 26, 2007; 4:42 PM
SAN JOSE, Calif. -- All eyes have recently been on the iPhone, Apple Inc.'s newest family member, but the company's fiscal third-quarter results showed the elder Macintosh computer was still flexing its muscles, helping to drive record profits that blew past Wall Street's expectations.
Apple shares surged $9.43, or 6.9 percent, to $146.69 Thursday after the computer and gadget maker reported that earnings grew 73 percent.
The company sold a record 1.76 million Macintosh computers during the quarter, up 33 percent from the year-ago period, far outpacing the industry's growth rate. Mac sales and services accounted for more than 60 percent of the quarter's revenue, the company said.
"Our Mac business has tremendous momentum and has grown faster than the industry for 11 consecutive quarters," Apple's chief financial officer Peter Oppenheimer said in a phone interview.
IPod music players remained a strong contributor as well, growing 21 percent in unit sales to 9.8 million.
The company also said it sold 270,000 iPhones in their first two days on the market _ disappointing some who had loftier projections. The multimedia handset had little impact on the quarter's results, however, because the company plans to account for its sales as subscription revenue over two years.
"We're still at the early stage of the iPhone, but it looks like the other parts of Apple's business are still growing strong," said Caris & Co. analyst Shebly Seyrafi.
Jane Snorek, a senior analyst with Minneapolis-based First American Fund, said she thinks Apple could achieve 40 percent growth in Mac sales next year. She boosted her earnings estimates for the current fiscal year from $4.75 to $5.25 per share based on the robust Mac performance.
"The only thing that kept people from getting Macs before is that they thought it was expensive and you couldn't do some Windows programs on them," Snorek said. "But they've taken down all those barriers, and that's why you've seen it take off."
For the quarter ended June 30, Apple's profit rose to $818 million, or 92 cents per share, up from $472 million, or 54 cents a share, in the year-ago quarter.
Sales grew to $5.41 billion from $4.37 billion last year.
Analysts polled by Thomson Financial expected Apple to report earnings of 72 cents per share on sales of $5.28 billion, while Apple itself had projected earnings of 66 cents per share on quarterly sales of $5.1 billion.