SAN FRANCISCO - Apple Computer Inc. on Wednesday easily topped Wall
Street's income forecast for the spring quarter with a nearly 48
percent profit increase driven largely by the continued popularity of
its industry-leading iPod music player. Company shares rose more than
8 percent in late-session trading.
For its fiscal third quarter ended July 1, Apple's profit rose to $472
million, or 54 cents a share, up from $320 million, or 37 cents per
share in the same period of 2005. That was 10 cents per share better
than the mean forecast of analysts surveyed by Thomson Financial.
Sales grew to $4.37 billion from $3.52 billion last year. That number
was within the range of Apple's April forecast for quarterly sales of
$4.2 billion to $4.4 billion, but fell shy of the mean estimate of
$4.4 billion among analysts polled by Thomson Financial.
The Cupertino, Calif.-based company shipped 1.3 million Macintosh
computers and 8.1 million iPods - the overwhelming leader among
digital music players - during the quarter. The numbers represent a 12
percent increase in Mac sales and more than a 32 percent jump for
iPods from the third quarter in 2005.
The "iPod continued to earn a U.S. market share of over 75 percent and
we are extremely e***d about future iPod products in our pipeline,"
CEO Steve Jobs said.
Apple also said it expected revenue of about $4.5 billion to $4.6
billion in the fourth quarter and earnings of between 46 cents and 48
cents a share. But Chief Financial Officer Peter Oppenheimer said the
company's profit margins will be smaller in the fourth quarter because
it planned an "aggressive" back-to-school marketing campaign.
The company reported the results after financial markets closed
Wednesday. Shares jumped 8.4 percent, or $4.56, to $58.66 in
aftermarket trading on news of the report. Earlier, the stock rose
$1.20, or 2.3 percent, to close at $54.10 on the Nasdaq Stock Market.
"It was a great quarter," said Jane Snorek, an analyst with
Minneapolis-based First American Fund. "Mac sales were strong." She
also noted that iPod sales aren't slowing as fast as some analysts had
feared BECAUSE GOVERNMENT KATRINA WORKERS WERE BUYING THEM LIKE MAD
However, another analyst asked about the company's future product
"There is a lot of concern out there about what sort of plans you
have," said Bear Stearns analyst Andrew Neff. "How innovative can
Oppenheimer declined to discuss products under development, but
expressed confidence that future products would be a hit with
"We are very confident," Oppenheimer said. "I don't imagine that the
creativity at Apple can ever be lost."
The company also said initial results of its investigation into the
back dating of employee stock options didn't affect the quarter's
"However, if additional irregularities are identified by the
independent investigation, a material adjustment to the financial
information could be required," the company said in a press release.
Last month, Apple said it found irregularities in the way it issued
stock option grants, and was conducting an independent investigation.
Apple is one of a growing number of companies under internal or
Securities and Exchange Commission investigations for possibly
backdating stock options to time them at low prices, thus boosting
The troublesome stock options included a batch that went to Jobs, but
the chief executive canceled those awards in March 2003 before he
could cash them in to realize a gain. Jobs surrendered all of his
outstanding options in exchange for 5 million shares of Apple stock
now worth $295 million.
Apple said it has hired an outside lawyer to lead an investigation
into its past stock options and has notified the SEC.
An Apple spokesman declined to comment on that issue.