Mac sales lift Apple to $818 million third quarter profit

[Matthew Yohe]

http://www.apple.com/pr/library/2007/07/25results.html

[Matthew Yohe]

"“iPhone is off to a great start—we hope to sell our one-millionth iPhone by the end of its first full quarter of sales—and our new product pipeline is very strong.” -- Steve Jobs

[Matthew Yohe]

Apple Reports Third Quarter Results
Record June Quarter Revenue and Profit

CUPERTINO, California—July 25, 2007—Apple® today announced financial results for its fiscal 2007 third quarter ended June 30, 2007. The Company posted revenue of $5.41 billion and net quarterly profit of $818 million, or $.92 per diluted share. These results compare to revenue of $4.37 billion and net quarterly profit of $472 million, or $.54 per diluted share, in the year-ago quarter. Gross margin was 36.9 percent, up from 30.3 percent in the year-ago quarter. International sales accounted for 40 percent of the quarter’s revenue.

Apple shipped 1,764,000 Macintosh® computers, representing 33 percent growth over the year-ago quarter and exceeding the previous company record for quarterly Mac® shipments by over 150,000. The Company also sold 9,815,000 iPods during the quarter, representing 21 percent growth over the year-ago quarter.

“We’re thrilled to report the highest June quarter revenue and profit in Apple’s history, along with the highest quarterly Mac sales ever,” said Steve Jobs, Apple’s CEO. “iPhone is off to a great start—we hope to sell our one-millionth iPhone by the end of its first full quarter of sales—and our new product pipeline is very strong.”

“We are very pleased to report strong financial results including cash flow from operations exceeding $1.2 billion for the quarter,” said Peter Oppenheimer, Apple’s CFO. “Looking ahead to the fourth fiscal quarter of 2007, we expect revenue of about $5.7 billion and earnings per diluted share of about $.65.”

Apple will provide live streaming of its Q3 2007 financial results conference call utilizing QuickTime®, Apple’s standards-based technology for live and on-demand audio and video streaming. The live webcast will begin at 2:00 p.m. PDT on Wednesday, July 25, 2007 at www.apple.com/quicktime/qtv/earningsq307/ and will also be available for replay. The QuickTime player is available free for Macintosh and Windows users at www.apple.com/quicktime.

This press release contains forward-looking statements about the Company’s estimated revenue, iPhone™ sales and earnings per share. These statements involve risks and uncertainties, and actual results may differ. Risks and uncertainties include potential litigation and government enforcement actions that may result from the matters investigated by the special committee of the board of directors and the restatement of the Company’s consolidated financial statements; unfavorable results of legal proceedings; the effect of competitive and economic factors, and the Company’s reaction to those factors, on consumer and business buying decisions with respect to the Company’s products; war, terrorism, public health issues, and other circumstances that could disrupt supply, delivery, or demand of products; continued competitive pressures in the marketplace; the Company’s reliance on a sole U.S. service provider for iPhone; the continued availability on acceptable terms of certain components and services essential to the Company’s business currently obtained by the Company from sole or limited sources; the ability of the Company to deliver to the marketplace and stimulate customer demand for new programs, products, and technological innovations on a timely basis; the effect that product transitions, changes in product pricing or mix, and/or increases in component costs could have on the Company's gross margin; the effect that product quality problems could have on the Company’s sales and operating profits; the inventory risk associated with the Company’s need to order or commit to order product components in advance of customer orders; the effect that the Company’s dependency on manufacturing and logistics services provided by third parties may have on the quality, quantity or cost of products manufactured or services rendered; the Company’s dependency on the performance of distributors and other resellers of the Company’s products; the Company’s reliance on the availability of third-party digital content; and the potential impact of a finding that the Company has infringed on the intellectual property rights of others. More information on potential factors that could affect the Company’s financial results is included from time to time in the Company’s public reports filed with the SEC, including the Company’s Form 10-K for the fiscal year ended September 30, 2006, its Forms 10-Q for the quarters ended December 30, 2006 and March 31, 2007, and its Form 10-Q for the quarter ended June 30, 2007 to be filed with the SEC. The Company assumes no obligation to update any forward-looking statements or information, which speak as of their respective dates.

Apple ignited the personal computer revolution in the 1970s with the Apple II and reinvented the personal computer in the 1980s with the Macintosh. Today, Apple continues to lead the industry in innovation with its award-winning computers, OS X operating system and iLife and professional applications. Apple is also spearheading the digital media revolution with its iPod portable music and video players and iTunes online store, and has entered the mobile phone market this year with its revolutionary iPhone.

Press Contacts:
Steve Dowling
(408) 974-1896
dowling@apple.com

Investor Relations Contacts:
Nancy Paxton
(408) 974-5420
paxton1@apple.com

Joan Hoover
(408) 974-4570
hoover1@apple.com

NOTE TO EDITORS: For additional information visit Apple’s PR website, or call Apple's Media Helpline at (408) 974-2042.

[AppleInsider]

Apple said Wednesday that third quarter profits surged 73 percent to $818 million, or $0.92 per diluted share, on sales of $5.41 billion.

The results compare to revenue of $4.37 billion and net quarterly profit of $472 million, or $.54 per diluted share, in the year-ago quarter. Gross margin was 36.9 percent, up from 30.3 percent in the year-ago quarter. International sales accounted for 40 percent of the quarter's revenue.

"We are very pleased to report strong financial results including cash flow from operations exceeding $1.2 billion for the quarter," said Apple chief executive Peter Oppenheimer. "Looking ahead to the fourth fiscal quarter of 2007, we expect revenue of about $5.7 billion and earnings per diluted share of about $.65."

Apple shipped 1,764,000 Macintosh computers, representing 33 percent growth over the year-ago quarter and exceeding the previous company record for quarterly Mac shipments by over 150,000. The Company also sold 9,815,000 iPods during the quarter, representing 21 percent growth over the year-ago quarter.

"We're thrilled to report the highest June quarter revenue and profit in Apple's history, along with the highest quarterly Mac sales ever," said Apple chief executive Steve Jobs. "iPhone is off to a great start -- we hope to sell our one- millionth iPhone by the end of its first full quarter of sales -- and our new product pipeline is very strong."

Apple will provide live streaming of its Q3 2007 financial results conference call utilizing QuickTime, the company's standards-based technology for live and on-demand audio and video streaming. The live webcast will begin at 2:00 p.m. PDT on Wednesday, July 25, 2007.

AppleInsider will provide its usual coverage.

[ View this article at AppleInsider.com ]

[Matthew Yohe]

Sales Data:
*iPhone and Related Products and Services 270K
Revenue 5M

*Consists of iPhones and Apple-branded and third-party iPhone accessories.

[cameronj]

Originally Posted by Matthew Yohe

"“iPhone is off to a great start—we hope to sell our one-millionth iPhone by the end of its first full quarter of sales—and our new product pipeline is very strong.” -- Steve Jobs

That means the people on these boards who were hoping to hear that Apple had already hit that number will be quite disappointed. A good chunk of the market probably will be too.

[anantksundaram]

Originally Posted by Matthew Yohe

"“iPhone is off to a great start—we hope to sell our one-millionth iPhone by the end of its first full quarter of sales—and our new product pipeline is very strong.” -- Steve Jobs

Wow!



And, the company is doing fabulously on the Mac front: What more can you ask for?

[cameronj]

"For the third quarter, however, Apple said it expects to earn 65 cents a share, below analysts' expectations of 82 cents a share."

http://www.thestreet.com/_yahoo/news...&cm_ite=NA

Anyone else use Ameritrade? My quote at 4:55 PM is $130.02 per share. Heh... wow I see it's bouncing around quite a bit!

[macshark]

Originally Posted by Matthew Yohe

Sales Data:
iPhone and Related Products and Services 270K
Revenue 5M

$5M revenue for 270K iPhones sold? That is less than $20 revenue per iPhone. Even if Apple is going to amortize the price of the iPhone over time, I thought AT&T was going to pay an incentive to Apple for each iPhone sold. Maybe this is contingent on activation and the revenue from AT&T incentives will be recognized in this quarter for last querter's sales?

[macshark]

Originally Posted by Matthew Yohe

Sales Data:
iPhone and Related Products and Services 270K
Revenue 5M

Originally Posted by cameronj

"For the third quarter, however, Apple said it expects to earn 65 cents a share, below analysts' expectations of 82 cents a share."

http://www.thestreet.com/_yahoo/news...&cm_ite=NA

This is also strange. Given that the revenue is going up, the only expectation is that Apple expects to see drastically lower margins in this quarter. Given that prices of most of the components Apple uses is not likely to go up, does this mean that Apple will introduce a whole set of lower margin (cheaper) products this quarter? Lower price point iMacs? All-flash iPods?

[cameronj]

Originally Posted by macshark

This is also strange. Given that the revenue is going up, the only expectation is that Apple expects to see drastically lower margins in this quarter. Given that prices of most of the components Apple uses is not likely to go up, does this mean that Apple will introduce a whole set of lower margin (cheaper) products this quarter? Lower price point iMacs? All-flash iPods?

None of the above. They are just lowering expectations so they can more easily beat them. Apple does it every quarter, and the stock drops as a result most every time. Creates a really good buying opportunity for those who see it coming.

[addabox]

So if I'm reading this correctly, Apple sold 270K iPhone in the day and a half before the end of the quarter? And this number doesn't include Sunday?

That suggests to me that they could have easily sold 370K the first weekend, and half a million by the end of the week, at least.

So..... they hope to sell a million by the end of the first full quarter? Seems a tad conservative, even for, as noted above, notoriously expectation managing Apple.

[aaarrrgggh]

Originally Posted by cameronj

None of the above. They are just lowering expectations so they can more easily beat them. Apple does it every quarter, and the stock drops as a result most every time. Creates a really good buying opportunity for those who see it coming.

Usually, their guidance is pretty close to expectations and they kill the expectations at quarter end. I don't think I have seen them be 25% lower than street expectations before in their guidance. Apple will be back in the 120's by Friday. Doh!

[Matthew Yohe]

Originally Posted by macshark

$5M revenue for 270K iPhones sold? That is less than $20 revenue per iPhone. Even if Apple is going to amortize the price of the iPhone over time, I thought AT&T was going to pay an incentive to Apple for each iPhone sold. Maybe this is contingent on activation and the revenue from AT&T incentives will be recognized in this quarter for last querter's sales?

This includes phones and Apple/Thirdparty accessories.

[dstranathan]

Originally Posted by Matthew Yohe

iPhone and Related Products and Services 270K.

Does this number include the iPhones that AT&T sold or not?

How many iPhones did AT&T sell in the first 2 days?

[webmail]

The revenue from iphones ($5million) is going to be spread out over 2 year life of contract (smart move) that's why the revenue wasn't say $40million from 250k of iPhones.

[BRussell]

Originally Posted by macshark

This is also strange. Given that the revenue is going up, the only expectation is that Apple expects to see drastically lower margins in this quarter. Given that prices of most of the components Apple uses is not likely to go up, does this mean that Apple will introduce a whole set of lower margin (cheaper) products this quarter? Lower price point iMacs? All-flash iPods?

Yeah it looks that way. I'm listening to the conference call, and he cited "future product transitions" as one of the reasons for the lowered guidance. He did also mention component prices increasing too.

[physguy]

Originally Posted by cameronj

That means the people on these boards who were hoping to hear that Apple had already hit that number will be quite disappointed. A good chunk of the market probably will be too.

That's why after hours trading is already up $3.54

[Kickaha]

$8.33 now...

[physguy]

$12.14 now.... (2:59 PM PDT)

[Kickaha]

$14.04...

Good lord.

[macshark]

Originally Posted by physguy

$12.14 now.... (2:59 PM PDT)

AAPL past 150 now.
This is the strangest after-market reaction I have seen to an Apple quarterly results conference call.

Hope after-market prices hold up tomorrow morning...

[appleaddict]

I asked yesterday on this forum how long would it take apple to bounce back, and got answers like "september" or later

I love you guys ... but I'm glad you were wrong on this one ...

Let's see what happens when market open up tomorrow ... I say we close at 155 or 160 tomorrow!!

[appleaddict]

High reach 151.98 after hours .... I'm so happy right now!!!

This past 2 days were a rough storm ... but I'm glad it's over!!

[e1618978]

It is only up $10 now, at $147. This may well be ignored by tomorrow, there are lots of times that I have seen the open on a stock be the same as the close, even though the after hours numbers went crazy.

[anantksundaram]

Originally Posted by cameronj

"For the third quarter, however, Apple said it expects to earn 65 cents a share, below analysts' expectations of 82 cents a share."

http://www.thestreet.com/_yahoo/news...&cm_ite=NA

Anyone else use Ameritrade? My quote at 4:55 PM is $130.02 per share. Heh... wow I see it's bouncing around quite a bit!

Either you, or thestreet.com (is this the Cramer outfit?) -- perhaps both -- sound clueless.

Apple earned $0.92 during the quarter, not $0.65. Please don't spread false rumors. Thanks.

[MacSuperiority]

I was hoping for something about a special event for the new iMac.

[MacSuperiority]

Originally Posted by anantksundaram

Either you, or thestreet.com (is this the Cramer outfit?) -- perhaps both -- sound clueless.

Apple earned $0.92 during the quarter, not $0.65. Please don't spread false rumors. Thanks.

He is talking about the current quarter ending in Sept.

[spindler]

To put in perspective how much $818 million profit is, it is almost as much as McDonald's makes per quarter:

http://abcnews.go.com/Business/Indus...ory?id=3410729

The Macintosh makes about half as much profit as all McDonald's combined!

[anantksundaram]

Originally Posted by MacSuperiority

He is talking about the current quarter ending in Sept.

Really?

Why don't you re-read Post #8 above and tell me how you came to this conclusion?

[DHagan4755]

How's this for perspective? Think back 10 years ago. Did anyone ever think we would be having this discussion? Back on July 25, 1997, Apple's stock closed at $4.03. Today it's at $137.26 with a 9% jump in after hours trading. Wow.

[BRussell]

Originally Posted by anantksundaram

Really?

Why don't you re-read Post #8 above and tell me how you came to this conclusion?

It was a simple mistake, they're talking about next quarter. You'd have figured that out if you'd just read the article or listen to the conference call or read any other article that mentions Apple's next-quarter guidance.

[El Capitan]

Originally Posted by DHagan4755

How's this for perspective? Think back 10 years ago. Did anyone ever think we would be having this discussion? Back on July 25, 1997, Apple's stock closed at $4.03. Today it's at $137.26 with a 9% jump in after hours trading. Wow.

Don't forget all the splits.

[anantksundaram]

Originally Posted by BRussell

It was a simple mistake, they're talking about next quarter. You'd have figured that out if you'd just read the article or listen to the conference call or read any other article that mentions Apple's next-quarter guidance.

I appreciate your giving "them" the benefit of doubt, but c'mon, I am supposed to do all that due diligence because someone is being lazy or sloppy in his posts?

Very few of us have that kind of time on our hands.

And, who's the "they" in "they're"..... cameronj or thestreet.com?

[Kickaha]

Er, anantksundaram... I thought it was pretty obvious, and apparently so did most people reading it. Just let it go, really. You misunderstood, simple as that.

[SpamSandwich]

Originally Posted by spindler

To put in perspective how much $818 million profit is, it is almost as much as McDonald's makes per quarter:

http://abcnews.go.com/Business/Indus...ory?id=3410729

The Macintosh makes about half as much profit as all McDonald's combined!

Now that's a Big Mac!

[murk]

Originally Posted by DHagan4755

How's this for perspective? Think back 10 years ago. Did anyone ever think we would be having this discussion? Back on July 25, 1997, Apple's stock closed at $4.03. Today it's at $137.26 with a 9% jump in after hours trading. Wow.

ME! I bought Apple for $4 and something a share and held it all this time. It was actually a little over $16 a share, but I'm adjusting for splits. Are you doing this also? I don't remember it actually hitting four. I think it might have went to around $13. Anyway, things are going just exactly as I planned. This is just the beginning, however. Just wait until my future plans unfold. Steve is my puppet. He's licking the stamps for the invitations to the next special event at this very moment.

Here's a quote from an analyst that give you some clue as to where I plan to go with this. I think he may be too conservative.

I truly believe that Apple will be the first company to achieve a market cap of one trillion dollars. That 12:1 from today's valuation. And, I believe that this will occur in the next five years.

http://ce.seekingalpha.com/article/30720

[SpamSandwich]

Originally Posted by murk

Here's a quote from an analyst that give you some clue as to where I plan to go with this. I think he my be too conservative.

http://ce.seekingalpha.com/article/30720

This analyst has been inhaling the Kool-Aid vapors...

[macshark]

Originally Posted by SpamSandwich

Now that's a Big Mac!

Now that's a good joke!

[macshark]

Originally Posted by murk

ME! I bought Apple for $4 and something a share and held it all this time. It was actually a little over $16 a share, but I'm adjusting for splits. Are you doing this also? I don't remember it actually hitting four. I think it might have went to around $13. Anyway, things are going just exactly as I planned. This is just the beginning, however. Just wait until my future plans unfold. Steve is my puppet. He's licking the stamps for the invitations to the next special event at this very moment.

Here's a quote from an analyst that give you some clue as to where I plan to go with this. I think he may be too conservative.

http://ce.seekingalpha.com/article/30720

Actually you don't even have to go 10 years back. April traded below $13 (split adjusted 6.50) and closed just over 13 a few days in April 2003. The gains have exceeded 2000% in a little over 4 years since then.