• E-mail
• Print
• Comment
• Font Size
• Digg
• del.icio.us
• Discuss article

IPod Sales Off at Apple, but Profit Up

Posted on: Thursday, 20 April 2006, 06:00 CDT

By Jefferson Graham

For the first time in nearly three years, iPod sales finally slowed down.

Apple Computer, which reported earnings Wednesday, said it sold 8.5 million units of the trendy digital music device in its latest quarter, compared with 14 million in the previous quarter. It was the first time Apple didn't increase iPod sales quarter to quarter since June 2003, says analyst Gene Munster of securities firm Piper Jaffray.

"This suggests that as the numbers get bigger and bigger, Apple is starting to see some seasonality to its iPod business," says Munster.

For the fiscal 2006 second quarter, Apple reported $4.4 billion in revenue and profit of $410 million, up from $3.2 billion and $290 million in the year-ago quarter.

In January, Apple began transitioning its computers to chips made by Intel, and the results for the company were both positive and negative. While Apple received rave reviews for its reconfigured and speedier iMac and Mac Mini computers, many consumers looking to buy Macs such as the iBook or PowerBook, which haven't made the transition yet, decided to wait.

"We saw a pause," Apple Chief Operating Officer Tim Cook said on a conference call with analysts. "And we're factoring that into our guidance."

Apple says it will have completed the Intel transition by the end of the year, and Cook said Apple expects revenue of $4.2 billion to $4.4 billion in the current quarter.

Apple sold 1.1 million Macintosh computers in the second quarter, up 4% from the year-earlier quarter.

Despite the runaway success of the iPod and Apple's retail stores, sales of Mac computers haven't taken a huge leap forward. Apple's share of the U.S. PC market held steady at about 3.6%, researchers Gartner and IDC said Wednesday. Dell remains the No.1 U.S. PC maker, with about 32% of the market, while Apple is No.5.

Apple stock rose $2.91, or 4.4%, to $68.56 in after-hours trading on the news, released after the market close.

Separately, Apple says it plans to build a second campus on 50 acres near its Cupertino, Calif., headquarters. Apple CEO Steve Jobs told the Cupertino City Council that sales have more than tripled in the last few years, from $6 billion to $20 billion and that he needed more room.

"We're pretty thrilled," he said, at a meeting that was webcast. "Since we're your largest taxpayer, I thought you might be happy for us."

(c) Copyright 2005 USA TODAY, a division of Gannett Co. Inc.

Source: USA TODAY

More News in this Category