Apple quarterly profit up 27 per cent

SAN FRANCISCO - Apple Computers today posted a better-than-expected 27 per cent increase in quarterly profit, buoyed by strong sales of its Macintosh computers and iPods that topped analyst estimates and sent its shares higher.

During its fiscal fourth quarter, Apple sold 8.73 million iPods, up 35 per cent from a year ago, and 1.61 million Mac computers, a 30 per cent increase from the year-earlier period.

Apple said it had the best Macintosh quarter in the company's history and sold nearly 1 million notebook Macs, up 56 per cent from a year ago.

Chief Financial Officer Peter Oppenheimer said the company grew at roughly three times the overall PC market, citing a forecast from market research firm IDC that called for just under 10 per cent year-over-year growth.

Apple said net quarterly profit for its fiscal fourth quarter ended September 30 rose to US$546 million ($833 million), or US62 cents per share, from US$430.0 million, or US50 cents per share, a year ago. Revenue climbed 32 per cent to US$4.84 billion.

The company said in July it expected earnings per share of US46 cents to US48 cents, including an estimated US3 cents per share for expensing stock options, on revenue of US$4.5 billion to US$4.6 billion. Analysts, on average, expected earnings of US51 cents per share -- which includes stock-based compensation -- on revenue of US$4.67 billion.

Shares of Apple were up 4.2 per cent at US$77.65 in composite late trading after the company reported results. They had closed in regular trading on Nasdaq at US$74.53.

Cupertino, California-based Apple concluded its transition to Intel Corp. microprocessors with the introduction of its Mac Pro and Xserve computers in August. Increasingly, investors are more focused on Mac sales driving revenue and profit growth as sales of iPod players moderates.

"I think iPods' slowing has been priced in (to the stock) at this point, now everybody is focusing on the Mac sales," said Michael Church, portfolio manager, at Church Capital Management in Yardley, Pennsylvania. "A lot of people are looking at Mac sales to drive growth over the next two years."

For the current first quarter of fiscal 2007, which includes the crucial holiday-sales season, Apple said it expects earnings per share of US70 cents to US73 cents, and revenue in a range of US$6.0 billion to US$6.2 billion.

Analysts currently expect a first-quarter profit of US77 cents per share, on average, within a range of US62 cents to US84 cents, on revenue of US$6.43 billion.

"We think they are conservative in their guidance going forward," said Shannon Cross, an analyst at Cross Research. "Overall things look really good at Apple."

Merrill Lynch analyst Richard Farmer expected fourth-quarter iPod shipments of 7.7 million and Mac shipments of 1.51 million. American Technology Research analyst Shaw Wu had forecast iPod sales of 8.5 million units and Mac shipments of 1.4 million.

Apple also said that it was reviewing accounting guidance regarding its stock option grants, but has not yet determined the resulting tax and accounting impact. It also said that it still expects it will need to restate its historical financial results and to take noncash charges.

"The biggest surprise for the quarter is that they were able to show the full financials to us," said Wu. "That is a big vote of confidence. It is going to be a significant adjustment (but) if it were more egregious, where there was some wrongdoing, they wouldn't even talk about their financials."

So far this year, shares of Apple have risen about 5 per cent, based on Wednesday's Nasdaq close, compared with an increase of over four per cent in the Morgan Stanley High-Tech Index .MSH, of which Apple is a constituent.

- REUTERS