RSSApple Profit Quadruples, iPod Sales Flat
By Ed Oswald | Published October 11, 2005, 7:25 PM
Apple on Tuesday reported yet another record quarter for the company, finishing the best year in its history. The devil is in the details, however, and iPod sales were relatively flat compared with last quarter only increasing five percent. Macintosh sales recorded a similar five percent increase.
Even with flat sales, the company is becoming more profitable, posting revenue of $3.68 billion on a profit of $430 million. "We're extremely proud to have just completed our best year in company history," Apple CFO Peter Oppenheimer said in a conference call for financial analysts Tuesday evening.
Oppenheimer said that the company shipped a staggering one million iPod Nanos in the last 17 days of the quarter ending September 24. Tim Cook, vice president of Apple sales, added that the company is actually having trouble getting the device into consumer's hands.
"The demand for this product is staggering," Cook said. "We ended the quarter with an enormous backlog." He also spoke to reports of Nanos scratching, dismissing them as not a widespread issue and emphasizing the materials used to build the Nano were the same as previous iPods.
In total, Apple shipped 6.45 million iPods, representing a 220 percent growth year-over-year. Oppenheimer said that data indicates Apple has 75 percent of digital music player devices and still holds 80 percent of the market for legal music downloads.
"We will have some very exciting announcements for you tomorrow," Oppenhimer said, possibly hinting that the announcement due Wednesday may be iPod related.
Oppenheimer noted that the 1.23 million Macintosh units sold was the second highest number of units shipped in the company's history, and Cook added that Apple sees no obvious impact from the Intel transition as once feared.
According to Apple data, approximately 45 percent of new Mac owners were first time buyers, up five percent from last quarter.
Apple also said that it is very pleased about its retail growth, with 14.8 million passing through its stores last quarter. Apple plans to open 35 to 40 new stores next year.
Jupiter Research senior analyst Joe Wilcox cautioned those who may read too much into iPod sales.
"While some folks on Wall Street are yelling 'fire' over iPod sales, I don't see too much trouble," Wilcox said. "Sales of iPod are pretty much in line with assumptions built into Jupiter Research's US portable music device forecast. It's true that iPod sales were sequentially flat, but that appears more reflection of the state of the larger portable music player market."
You know this is something to be excited about...a company thought to be completely dead finds a way to rebuild itself. Who cares how, but the backbone of the issue is...they simply make better products that just work properly. Personally I would love to see more and more macs out there, just to force some of the fat cat software companies to work with Apples OS.
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Aint capatilism grand? You make money and your stock falls because the market thinks the wrong things were sold....what a system
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IPods sell because of the fashion factor, they just look cooler than anything else on the market at the moment, sleek, clean, and if its a nano, more scratches than a stray cat collector.
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i got my nano 3 days after the anouncement and so far it looks like new. i just don't put it in the same pocket where i keep my coins or keys :P
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Flat out on fire:
Q4 2004: 2.1 million pods
Q4 2005: 6.4 million pods
Q4 2004: 615,000 macs
Q4 2005: 1,236,000 macs
Apple’s financial results for its fiscal 2005 fourth quarter see the company reporting the highest revenue and earnings in its history. Apple posted revenue of US$3.68 billion and a net quarterly profit of $430 million... and the stock drops 10%...
One more thing...
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well, i read on the news that the reason it drop 10% is beacuse all the financial companies and analyst have been expecting sky high earnings, but even though they are really high they are putting apple in a position where they keep expecting more and more, and they did really good, but is the expeculation that cost that 10% drop. Anyway good news for those who want to buy apple stock before the BIG anouncement today....
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After hours, it's off 10%.
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Saturation will set in, and at that point, premiums will no longer be paid. As much as Apple may be in the lead, someone will come out with a knockoff close enough that sales will drop. They have to -- I have a 40g ipod. Love it. It doesn't mean that I'm jumping out to get a nano. I didn't get a mini either. I dropped my $499, and I'm not doing it several times.
I'm not suggesting they shouldn't be aggressive to maintain, but the boo-hoo 5% is going to be a reality in a more mature market. They innovated, they conquered. Now it's full, so don't whine.
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I agree with Zulithe.
And also, the portable music player market is saturated... and it's not a matter of waiting for "the next big thing" before people are ready to switch... people just aren't ready. Practically everyone who wants one already has a decent mp3 player with gigs and gigs of memory. 5 years ago, a 512 MB player was hot stuff.
So now it's just a matter of time... Apple should bide their time before making any more purely awesome anouncements (like the nano) for a couple years, at least... by then people will be jumping to replace their old beat up "crappy 40 GB player."
You know it'll happen.
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"iPod sales were relatively flat compared with last quarter only increasing five percent."
Well boo-hoo! Only 5% increase over their already dominant share of the portable music player market! Yeah, I'd definitely consider the sales "flat."
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5% increased sales. If the Zen music player, or some other mp3 player posted a 20% increase, Apple could actually lose some of their share.
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Agreed! We seem to have some stupid pseudo-economic idea that companies will forever be able to produce double-digit gains every quarter. This expectation is unrealistic and should be ignored by all but the most jittery day-traders.
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