Demand for iPods exceeds expectations on the heels of Apple's iPhone announcement.
Apple, Inc. on Wednesday reported record revenue of $7.1 billion and record net quarterly profit of $1.0 billion, or $1.14 per diluted share, for the quarter that ended Dec. 30 2006, the company's first fiscal quarter of 2007.
"We are incredibly pleased to report record quarterly revenue of over $7 billion and record earnings of $1 billion," said Steve Jobs, Apple's CEO, in a statement. "We've just kicked off what is going to be a very strong new product year for Apple by launching Apple TV and the revolutionary iPhone."
On a conference call for investors, Apple CFO Peter Oppenheimer echoed Job's remarks. "We are pleased to report stellar financial results and another record breaking quarter for Apple," he said, attributing the company's showing to "extraordinary" iPod demand and continued demand for Macs.
The company said it shipped over 1.6 million Macs and over 21 million iPods during the quarter, increases of 28% and 50% respectively from Q1 2006.
In a January 9th research note, Jonathan Hoopes, managing director of equity research at investment bank ThinkEquity Partners in New York, estimated that Apple's revenue for the quarter would be $6.2 billion. "The 21 million iPod units I think blew away everyone's expectations," he said. "It really is a surprise. They've got a lot of traction, a lot of tailwind, and a lot of product ahead that we haven't seen announced."
Hoopes said that he's more impressed by what Apple didn't talk about on the conference call than what it did, namely the imminent release of Apple's iLife software suite and the spring release of Leopard, as Mac OS X 10.5 is known. "The Mac OS X user base today is significantly larger than it was when they launched Tiger," he said, referring to Apple's current version of its operating system. "Based on that and the Tiger update numbers, that's over a billion dollar revenue opportunity and that's very, very high margins."
During the call, Apple COO Tim Cook attributed the company's results in part to favorable commodity prices for the components in Apple products like LCDs and flash memory.
Asked about the company's recent stock options controversy, Oppenheimer reiterated Apple's earlier public statement to the effect that the company's board of directors was satisfied with the results of an independent investigation and that Apple continued to voluntarily and proactively report findings to the SEC.
Cook repeated Apple's position that Cisco's recent lawsuit claiming ownership of the iPhone trademark is "silly," calling the company's claim on the name "tenuous at best." He expressed confidence that Apple would prevail if Cisco continued with its claim.
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