Apple today announced financial results for its fiscal 2007 first quarter ended December 30, 2006. The Company posted record revenue of $7.1 billion and record net quarterly profit of $1.0 billion, or $1.14 per diluted share. These results compare to revenue of $5.7 billion and net quarterly profit of $565 million, or $.65 per diluted share, in the year-ago quarter. Gross margin was 31.2 percent, up from 27.2 percent in the year-ago quarter. International sales accounted for 42 percent of the quarter’s revenue.
Apple shipped 1,606,000 Macintosh computers and 21,066,000 iPods during the quarter, representing 28 percent growth in Macs and 50 percent growth in iPods over the year-ago quarter.
“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 the press release. “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.”
“We generated over $1.75 billion in cash during the quarter to end with $11.9 billion,” said Peter Oppenheimer, Apple’s CFO, in the press release. “Looking ahead to the second fiscal quarter of 2007, we expect revenue of $4.8 to $4.9 billion and earnings per diluted share of $.54 to $.56.”
Apple will provide live streaming of its Q1 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. PST on Wednesday, January 17, 2007 at http://www.apple.com/quicktime/qtv/earningsq107/ and will also be available for replay.
MacDailyNews Note: Ahead of the earnings release, Thomson First Call analysts had expected Apple to make 78 cents a share on sales of $6.42 billion for the first quarter.
wowee! nice job son
That’s awesome. Fly, AAPL, fly, baby!
Amazing. Simply Amazing. $12 billion cash in the bank, too – that’s a whole lotta interest there.
Wall Street is going to nail them for having a “low” Mac units sold number.
Holy crap. 7 billion gross? 1 billion profit?
wow how things have changed since 1997.
Nuclear Kid, 28% Growth in Mac units is low?
I think the number are astonishing – but Wall Street will feel otherwise. They’ll claim the Mac shipments were lower than expected.
“We generated over $1.75 billion in cash during the quarter to end with $11.9 billion”
Two words: Shareholder Dividend
FYI, the reason there is no after-hours activity on this news as AAPL trading has been halted pending the Q1 financial results conference. Expect the price to surge before markets re-open. IOW, only the big guys will get in on today’s bargain-basement dip.
Unless Steve resigns or something equally traumatic comes up during the conference. (And no I am not perpetrating this rumor.)
Estimate for Q2 is quite low, below 5 Billions …
My bad. After-hours markets resumed at 4:40 EST (1:50 PST). AAPL has broken $98/share and hit a new 52-week high! Today would have been a good day to add more shares.
I am disappointed in the Mac sales as well. I would rather have seen less iPod sales and greater Mac sales. This represents ever slightly less sales than last quarter’s 1.610 million.
It’s surprising that the gross margins are up therefore. IPods have lower margins than the computers.
I’m wondering if software sales have shot up.
Estimate for Q2 is quite low, below 5 Billions …
Jeff,
Q2 is traditionally the slowest quarter. Look for a big surge in Q3 when the desktop publishing/multimedia community upgrades their hardware to go with the new Adobe application suites – along with the traditional graduation purchases, etc…
Not only is this great in the aggregate, but the Mac growth number may be great individually if the overall PC market growth is low (which is what I’ve heard). If overall PC market grow is 12-16%, this is just OK (i.e., advantage already baked in), but if overall market growth is only 6-8%, this is spectacular! I believe overall growth is in single digits…
And no doubt we will see the usual suspects writing a flurrly of articles proclaiming how Steve Jobs deceived shareholders and cost them money as a result of the options backdating mistake. Whining about an $84 million dollar expense (which will not happen again) when shareholders have literally been raking in billions overnight because of Apple consistently producing results like this.
More cash in the bank, now go buy something apple.
Buy Blockbuster or Netflix or Burst or Adobe or a Cell Phone Network or something fun like that. Something that will blow everybodys mind.
Wow, a $7B quarter. Just a few short years ago, $7B was revenue for a WHOLE YEAR! How things have changed. And, companies that generate $1B in income are big companies, not niche ones.
And, look at that iPod number. That BLEW away the analyst predictions of 14 to 16 million. The only person to predict over 20 million was Carl Howe of Blackfriars, who consistently comes closer to Apple’s numbers every quarter, and he’s a media specialist not an analyst.
AH has died! WTF!!!!
Everyone expected AAPL to drop after the earnings report, so that they could buy on weakness.
But the stock jumped up instead, to a high of $99.48 in after hours trading.
The stock failed to break resistance at $100, and short sellers took control, dropping the stock to ~$95.90 currently, below yesterday’s close at $97.10.
Apple’s Mac shipments were lighter than expected (1.6 million vs. 1.7 million), and this has raised concerns about margin. But the stupendous shipment of 21.07 million iPods may have blunted that concern.
Apple as usual issued conservative guidance, which in this case is actually downside guidance, but most investors know how conservative Apple usually is, and that Apple usually beats when it reports its actual numbers.
In addition, the next quarter (Fiscal Q2 2007, i.e. January through march 2007) is Apple’s weakest quarter, coming after the holiday quarter. So the prospects for AAPL are a bit cloudy. It may climb towards the obvious target: $100. Or it may consolidate and drift downwards, towards the $93 range, in which case it becomes an obvious buy.
Look for analysts to reiterate their rankings and price targets of AAPL tomorrow, which should provide support for the stock. Also look for increased earnings estimates, as analysts start factoring in revenue from AppleTV and iPhone in the second half of 2007.
Reuters is reporting that Apple is up over 4% in after hours trading–guess the market disagrees with some of the negativists here…
Wow. “Smashes” is right.
I hope the next two quarters will be “relatively” successful, during the wait for iPhone. Apple may have “frozen” some smart phone purchases, but it may have frozen some video-capable iPod purchases as well. Although the iPhone lacks storage capacity, I’m sure people are expecting a new “full-size” iPod (that’s not a phone) with the 3.5-inch touch-screen interface. Fortunately, the release of Leopard will no doubt take place during the next two months, and that will push up Mac sales. The wait for Leopard may account for Mac sales being up “only” 28%, which I think is a pretty good showing.
Kate, unfortunately that Reuters report is now out of date. AAPL has dropped vertically from $98.50, and is trading now at $96.40.
21 million iPods, Apple must surely be reaching the magical 100 million mark. I wonder if they will have a fanfair for the 100th million ?????
Maybe it will be a special limited edition “St Pepper” one
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“Apple shipped…21,066,000 iPods during the quarter, representing… 50 percent growth in iPods over the year-ago quarter.”
Well, it is too bad this is meaningless. After all, we all know that iTunes sales are plummeting and with Apple’s propriety system, you can only play media from the iTunes store on iPods.
for those that need to be told: no, not serious
I think next Wednesday we will be talking about a new release from Apple-something every week to keep them in the spotlight.
I also think there could be a small pent up demand for new Macs and once Leopard is released Mac sales will be going up. Way up.
I also think iPod sales may slow, at least the higher end units, until the iPhone is released or until Apple comes out with a full screen iPod.
Apple expects operating margin to drop from 18% last quarter to ~12% this quarter. The drop is attributed to the favorable commodity prices not beeing sustained going forward.
AAPL is trading at $94.73. The short sellers are in control right now.
AAPL is tanking – now it’s below $94.50 – and well below the day’s closing price of $94.95
I’m waiting for Leopard to ship, and my new stylish 12″ multitouch, super duper, ultra pro portable, magical computer (Harry Potter eat your heart out.)
When that happens mac sales will soar to magical heights. You heard it here first.
macromancer: wow how things have changed since 1997.
Ain’t it? Good thing Jobs didn’t sell Apple and return the money to the investors.
OK, my last post on this. $93.60 and falling fast. Sigh.
Sell on news?
AAPL trading at $93.65 currently.
Does anybody think it’s possible that Apple will try to buy Cingular if their iPhone is successful? It would make more sense why they went with them exclusively.
Curious.
Bob, AT&T just bought Cingular
Two words: Buy Adobe
Bob, there is zero chance of Apple buying Cingular. This would make no business sense at all, neither for Apple nor for Cingular.
Apple does not want to become a mobile phone operator, and Cingular’s two parent companies (BellSouth and AT&T) just merged, bringing Cingular in house.
Two different industries – computers/consumer electronics vs telecom.
Yeah, I just think it’s weird that Apple went with them exculsively. Still trying to figure out why.
Thanks
The conference call has ended. AAPL is trading at $94.30, well below yesterday’s close at $94.10.
Good support @ $93
Oops! Above, I meant “… well below yesterday’s close as $97.10”.
Apologies for the error.
AAPL does have support below, namely at the $93 level. Below that, support is around $91.50, $90, and $86.40-$87 levels.
AAPL currently trading at $93.70.
AAPL is tanking – now it’s below $94.50 – and well below the day’s closing price of $94.95
—
This happens every single time.
The depresssing thing is you weren’t trying to be ironic. You were just trying to bum everyone out.
Please shoot yourself.
This doesn’t happen every single time. It shot up $10 bucks last time. And I wasn’t trying to bum you out. Just venting publicly, I guess. I was happier when it peaked at an all-time high.
And violence is NEVER a solution. You should know better. Shame on you!
Who cares about these short-term price gyrations? The stock will go well above $100, split (2 or 1), and get back to $100 (after the split) before this time next year.
And don’t forget that I think last year, they payed off all of their debt.
How long will it be before Rob Enderle writes that the Mac is doomed because sales are stagnating?
I give him 2 days.
Bob, because they needed to change the “voicemail” database handling system for the iPhone (and Cingular was willing to do that). It’s in the Time article
Everyone is so ‘impressed’ that the stock is now in meltdown mode in after hours.
MSFT is still real cheap, though.
Welcome to the social.
Well, I got the 21 million iPods right. But I was hoping for 2.1 million Macs – too optomistic I guess.
21 million iPods?!?!?! Who does NOT own one now?
The 1.6 million Macs sold is mildly disappointing. That’s actually slightly less than were sold in the 3rd quarter. Maybe Steve needs to stop pumping the iPhone so much and get to work on increasing those Mac sales some more. Lord knows he sure ignored the Mac at MacWorld.
RC and others…
Actually, Apple doesn’t need to do anything to the Macintosh market other than get some more BTO capacity for the independent reseller channel (i.e. non-Apple Store).
When I was trying to purchase BTO machines for customers at the end of November/start of December, I was being quoted for delivery in late December/early January if I was lucky.
Thankfully, due to the rest of my projects being unreasonably profitable, I was able to cross-subsidise the purchase of third-party RAM in order to bring my customer’s machines up to spec given the somewhat bizarre circumstances of Apple’s expansion RAM being cheaper than the rest of the market.
Many ‘box shifters’ wouldn’t have that kind of flexibility and a lot of customers who could have been counted into the quarter probably didn’t see their machines until after the 30/12 deadline and may only just be seeing them now, which means that Apple won’t count them until this quarter or they’ll get screwed by Sarbanes-Oxley or somesuch.
If you don’t believe me, look at Apple average revenue per CPU: $1501 per unit in the last quarter as opposed to $1375 either for the previous quarter or the same quarter 12 months ago. In other words, whilst the rest of the PC market invariably is selling more systems for less revenue/unit, Apple sold 28% more units for 9.16% more revenue/unit. I would argue that this is a sure sign that a lot of people are buying their expansion RAM as CTO from Apple and I’ve already provided evidence that – at the peak of the season – Apple was short on CTO capacity for independent resellers.
On that basis, I’d argue that Apple probably had a massive catapult into the current quarter – possibly 100,000 to 150,000 units, maybe even more – and that anyone who is stupid enough to be selling on the basis of today’s results needs their head examined.
MSFT is still real cheap, though.
In so many ways, except for total cost of ownership.
And just to conclude my point…
In CY2005, Apple sold 4.742 million CPUs at an average of $1348/unit. In CY2006, Apple sold 5.655 million CPUs at an average of $1425/unit.
To save you the effort, that’s a 19.25% unit growth in annual sales and – in a generally deflationary market – a 5.71% growth in average revenue/unit.
The naysayers are tools who don’t understand the market:
http://business.timesonline.co.uk/article/0,,13129-2553529,00.html
Daaaamn… sorry I missed all the fun today, I started a new job so no blatant MDN usage. I have to say I’m pleased, though I’m a little sad about the iPod number. I really thought they could get closer to 30 million. But hey. there’s always next year. Apple is proving them wrong yet again, and the news is only going to get better. See you on the other side of $100!
-c
And for anyone who doubts my commitment to mindless trivia, Apple sold just over 2.6 iPods every second of the 91 days of the last quarter and sold a Macintosh every 4.9 seconds or so.
Apple should buy Adobe.
For me and anyone I advise, I say unless you’ve got a driving need for a faster machine, why not wait til Leopard comes installed on the machine. Let’s face it, no matter how cheap computers get, it’s still real dollars and cents to many folk and not just a “hey it’s holidy season and I should buy a new computer!!”
This goes even for those unfortunates stuck on MS systems.
“To save you the effort, that’s a 19.25% unit growth in annual sales and – in a generally deflationary market – a 5.71% growth in average revenue/unit.”
Where do you get the “Generally deflationay market” information from? IDG says the worldwide market grew 8.7% last year, and 7.4% for the fourth quarter.
So on that basis, Apple is about 10% ahead of the pack in growth year on year, that’s not surprising based on pent up demand for MacWinIntel systems. That quarter in 2005, everybody was sitting around waiting for the imminent MacWinTel release. But Apple’s PC business is flat for the last quarter where the market grew substantially. In simple terms if the market grows, and you stay where you are in terms of units shipped, you’re falling behind.
Also the iPod number shows a shift to lower cost units. Unit Sales are up 50%, but revenue is only up 28% year on year. If you do the math, that means the average price of those incremental ipod sales was about half the price of the average iPod sale last year.
That doesn’t take away from a great iPod sales number and handy increase in margin, but it does show a shift in the iPod product mix to the lower end.
“Apple should buy Adobe.”
Yay! Then I would work for Apple!
Numbers…
How interesting that you quote numbers with no idea what they really mean.
1) No sane analysis can ever be done by comparing sequential quarters. As an analogy, when analysing a racing lap around Laguna Seca, you don’t analyse someone’s time through the Corkscrew section and then compare it to their time down the main straight. It doesn’t make sense, any more than comparing a lap at Laguna Seca to a lap around the old Nurburgring.
All you can do by plotting sequential quarters is ascertain the short-term trend of the business, but meaningful analysis should be done by a) comparing like quarters and b) taking longer samples than 91 days. For instance, I can give you real trend figures for two or three year samples of you’d like.
2) The PC market in general is deflationary in the classic economics sense of the word: more PCs may be being sold, the overall dollar value of the PC market might equally be increasing. However, the average revenue/unit for the PC marketplace has been decreasing steadily since the start of the industry as a general trend, and has continued to deflate over the last three or four years specifically. Go check Toshiba’s price list today and compare the cost of the top-of-the-line Tecra or Portége in 2001 against today’s flagship model – I can buy 1.5 machines that are significantly more powerful today for the same price I paid for an anaemic single machine in 2001.
However, Apple’s business model appears to have protected them from the deflationary pressures of an over-supplied commodotised market with too many players: for the holiday quarter in 2001 (Q1, FY2002), Apple sold 846,000 CPUs for an average of $1266/unit; for the quarter just finished (Q1, FY2007), Apple sold over 1.6 million units at over $1500 per unit. If you can’t see how that bucks the trends of the market, I’m not sure how I can help you.
Of course, you are right about the iPod; but then you’re starting a different argument – or moving to a different racing circuit. However, if you analyse Apple’s classic strategic defence to deflation in the media player market, you’ll see that their response will be to increase the “perceived value” of the products and thus bring the market price back to what the company considers “optimal”.
The new iPod shuffle has undoubtedly found a more willing market than its predecessor and was obviously a major stocking-filler over the holiday period, but when Apple releases the 6G iPod (end of April?? 4th anniversary of the iTunes Store) and the 3G nano (later in the year) I’m willing to lay money on the fact that the average will slide back to the $185-$200 mark.
“1) No sane analysis can ever be done by comparing sequential quarters. As an analogy, when analysing a racing lap around Laguna Seca, you don’t analyse someone’s time through the Corkscrew section and then compare it to their time down the main straight. It doesn’t make sense, any more than comparing a lap at Laguna Seca to a lap around the old Nurburgring.”
Actually what you’re talking about does mean something. it’s like looking at the split times around a race circuit and seeing the that competition is going faster through a twisty section and you are going a lot faster down the straights, as a race team that tells you a lot about where you need to improve, or what the other team might be doing differently from you with car setup. Real race teams will use telemetry to analyze individual corners.
The analysis is relevant because you have a benchmark, how well other teams did on the same day through the same part of the track.
Here we have a situation where, to use the analogy, on average all other teams improved their times through that part of the track, and Apple did not.
Sure you can wait for another whole lap to see if that’s a trend, or if you want quicker information, look at the next split time to guess whether your car might have a problem. But unless you’re stupid, seeing that first data point of flat sales when everybody else goes up should start you down the line of watching carefully to see what happens next.
“) No sane analysis can ever be done by comparing sequential quarters. As an analogy, when analysing a racing lap around Laguna Seca, you don’t analyse someone’s time through the Corkscrew section and then compare it to their time down the main straight. It doesn’t make sense, any more than comparing a lap at Laguna Seca to a lap around the old Nurburgring.”
If anyone thinks that in any sales organization if sales are down one month, or flat in a growing market, that people sit around until the next YEAR to figure out why, you’re dreaming. Clearly Fanatic Realism as a philosophy is a lot different from Real World Realism. Forget QUARTERS, you’ll be analyzing why two WEEKS into the first bad MONTH.