Apple Posts Second-Highest Quarterly Numbers

Apple reports strong earnings for its second quarter of fiscal year 2006, but the results came in shy of the gains made in the previous holiday buying season and under the estimates of Wall Street.

Will second best be enough for the hottest technology company in the market?

Apple Computer reported strong earnings for its second quarter of fiscal year 2006 on April 19, but the results came in shy of the gains made in the previous holiday buying season and under the estimates of Wall Street.

Apple reported quarterly revenue of $4.36 billion, quarterly profits of $410 million and returns of 47 cents per diluted share.

This represents the second-highest numbers, said Apple CFO Peter Oppenheimer, and a significant gain over year-ago numbers of $3.24 billion in revenues, net profit of $290 million and 34 cents per diluted share.

However, this represented a drop from the previous quarter, which saw record profits and revenue of $5.75 billion and $565 million, respectively.

The second quarter was composed of 13 weeks, compared to the first quarters 14 weeks.

In addition, the first quarter included the revenue-driving holiday shopping season.

Prior to the release of the results, the general Wall Street consensus was that Apple would see $4.6 billion in revenues. Though some investors privately expected slightly less, their estimates were still above Apples own of $4.3 billion.

Oppenheimer said that Apple sold 1.254 million Macintosh computers and over 14 million iPods in the quarter.

Some analysts expected slowing iPod sales, but these numbers showed a 207 percent growth year over year.

He added that the company expected some potential purchasers will hold off on buying Intel-based Macs until their favorite software comes in a Universal Binary format that can run natively on these new models.

Still, he said, Macs represented 50 percent of total revenue and Mac sales were up 20 percent year over year. Apple does not break out models in its unit sales numbers.

Oppenheimer also said that Apple software sales contributed positively to the bottom line.

"iLife and iWork sales were higher than expected," he said.

"The second quarter isnt traditionally a strong quarter," said Tim Bajarin, president of Campbell, Calif.-based Creative Strategies. "Still, were seeing very strong iPod growth," he said.

Van Baker, a vice president of research at Stamford, Conn.-based Gartner, agreed.

"You cant compare [second-quarter] volumes to [first-quarter] volumes," he said, noting that the latter number will include holiday shopping.

/zimages/2/28571.gifClick here to read more about Apples first-quarter financials.

Bajarin said that "the new Intel-based MacBooks and minis havent really had a chance to kick in," due to the units shipping to customers later in the quarter. He said that "thats where were expecting big growth."

Baker said he was happy, but not fantastically happy, with the Mac unit sales numbers.

"Four percent growth in Mac sales indicates that the Intel transition has not slowed things down, but it hasnt really accelerated sales either," he said.

"People have been expecting an iPod slowdown for years," Bajarin said, "but its still the best product out there."

Bajarin said that he saw many iPods on a recent trip to China. On that point, Oppenheimer said in a conference call with analysts that iPod market share was 54 percent in Japan and 58 percent in Australia, while U.S. market share hit 78 percent.

"iPod growth [is] at 61 percent," Baker said. "That would tend to indicate that the adoption curve is still accelerating.

"The only thing we can expect is that Apple will continue to innovate and surprise," Bajarin said.

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