IP Democracy: Despite Fears, Apple's Earnings Shine


Computing and portable media giant Apple Computer Inc. issued its fiscal Q4 06 earnings report today, defying skeptics, who feared a slow-down in iPod sales would crimp Apple’s style, by showing strong revenue and profit growth. Sales jumped 31.5% year-over-year and 10.5% sequentially to $4.837 billion.

Net income soared 27% year-over-year and 15.7% sequentially to $546 million, as iPod sales stayed strong and Mac sales broke records.

Apple Operating Data (units in 000s)
Q405 Q106 Q206 Q306 Q406
Operating Segments CPU Units CPU Units CPU Units CPU Units CPU Units
Americas       636        515      494      642      781
Europe       259        387      316      301      342
Japan         71           81         82         79         62
Retail       202        193      154      215      323
Other Segments(1)         68           78         66         89      102
Total Operating Segments   1,236     1,254   1,112   1,327   1,610
         
Product Summary          
Desktops (2)       602        667      614      529      624
Portables (3)       634        587      498      798      986
Subtotal CPUs   1,236     1,254   1,112   1,327   1,610
         
iPod   6,451   14,043   8,526   8,111   8,729
(1) Other Segments include Asia Pacific and FileMaker.
(2) Includes iMac, eMac, Mac mini, PowerMac and Xserve product lines.
(3) Includes iBook and PowerBook product lines.
Source:  Apple Computer Inc.

Apple sold 8.73 million iPods during the quarter, up 8% over the number sold the preceding quarter, and up 35% over the number sold during the year-ago quarter. Apple sold 1.61 million Macs during fiscal Q4 06, an all-time quarterly high and up 21% over the previous quarter’s Mac sales and 30% higher than the number of Macs sold during the year-ago quarter.

Sales are looking good for the upcoming quarter, the holiday shopping season, with Apple predicting it will generate $6 billion to $6.2 billion in revenue for its fiscal Q1 07.

The news was so good that investors and the press largely overlooked the fact that Apple has a little accounting problem on its hands. The company’s auditors found out that 15 stock option grants made between 1997 and 2002 had grant dates that preceded their approval. Apple warned that the auditors might find even more such problematic grants and that this quarter’s financial results, as well as the results for the relevant years, will have to be restated to take into account non-cash charges. Oh well….as long as things are zipping along on the sales front.


Posted by Cynthia Brumfield on October 18, 2006 7:19 PM to IP Democracy