Apple announced its highest third-quarter results for eight years last night, returning a net profit of $61 million, or $0.16 per diluted share.
These results exceeded Wall Street expectations: analysts polled by Reuters Estimates had predicted the company would achieve $0.15 per diluted share.
These results compare to a net profit of $19 million in the year-ago quarter. Revenue was above Apple's own expectations of $1.925 billion, closing at $2.014 billion, up 30 per cent from the year-ago quarter. These results included an after-tax restructuring charge of $6 million, without which the company's net profit for the quarter would have stood at $67 million.
The company's gross margin remained steady at 27.8 per cent (as in the third quarter), itself up from the 27.7 per cent margin Apple saw in the year-ago quarter.
Apple's international sales fell slightly, perhaps due to the unavailability of the phenomenally succesful iPod mini beyond US shores: international sales accounted for 39 per cent of revenues, down from 43 per cent in the second quarter.
Quarter-on-quarter unit shipments climbed: while Apple shipped 749,000 Macs in its second quarter it shipped 876,000 Macs in the third. This represented a 14 per cent year-on-year increase in Mac sales.
Power Mac sales (including servers) reached 173,000 units, a slight dip; PowerBook sales climbed 40 per cent in unit sales reaching 220,000 units; iBook sales also grew 19 per cent (240,000 units); and Apple's iMac/eMac range accrued 243,000 unit sales, up 12 per cent.
iPod sales also drove company profits. Apple sold almost as many iPods as it did Macs - a stunning 860,000 iPods sold, up 53,000 from the second quarter. These sales exceeded iPod unit sales in the traditionally busy Christmas shopping season, too. Apple sold 733,000 iPods last Christmas; it sold 304,000 iPods in its third quarter 2003. Adding it up, Apple saw a 183 per cent increase in iPod sales year-on-year.
Retail sales also grew, with 73,000 units shifted adding $270 million revenue to Apple's bottom line. Research and development spending climbed $5 million year-on-year, reaching $125 million. Interest on Apple's investments contributed $13 million to the company's bottom line.
Welcoming all the good news, Apple CEO Steve Jobs said: "It was an outstanding quarter - our highest third-quarter revenue in eight years. Our Mac-based revenue grew a healthy 19 per cent, and our music-based revenue grew an incredible 162 per cent. We've got a strong product portfolio, with some amazing new additions coming later this year."
"We were very pleased with our 30 per cent year-over-year revenue growth and our operating margin expansion," said Peter Oppenheimer, Apple's CFO.
"Looking ahead to the fourth quarter of fiscal 2004, we expect revenue of about $2.1 billion and earnings per diluted share of $.16 to $.17, including $.01 per diluted share in restructuring charges," he said.
Richard Gardner of Smith Barney observed that Apple's successful foray into music products has reduced its reliance on Mac sales from about 72 per cent of revenues in 2003 to between 50-55 per cent today.
Speaking to Reuters, he said: "Our modelling shows that Apple is one of just two companies in our entire PC and enterprise hardware coverage universe with significant upside to consensus revenue and EPS estimates in the coming one to two years."
As the US markets prepare to open this morning, Wall Street appears happy with Apple's results. Its stock is currently trading at $32 on the pre-trades market - up $2.42 on yesterday's $29.58 closing price.