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January 18, 2006

iPod Sales Propel Apple Earnings, But Shares Fall On Outlook

Courtesy of TechWeb News

Apple Computer Inc. on Wednesday reported that profits almost doubled in the fiscal first quarter, driven by a huge demand for its iPod digital media player.

But the Cupertino, Calif., company's stock fell in after-hours trading, due to a disappointing forecast.

The Cupertino, Calif., company said net profit for the quarter ended Dec. 31 was $565 million, or 65 cents a share, compared with $295 million, or 35 cents a share, during the same period a year ago. Revenues jumped to $5.75 billion from $3.49 billion in 2004.

The company beat Wall Street analysts' mean estimate of 61 cents a share, according to a poll by Thomson First Call.

Nevertheless, Apple shares were down more than 5 percent in after-hours trading, due to its fiscal second quarter outlook. The company expected revenues of about $4.3 billion, and earnings based on generally accepted accounting principles, or GAAP, of about 38 cents a share. Non-GAAP earnings, which included expenses from non-cash stock-based compensation, were expected to be about 42 cents a share.

The numbers fell below Wall Street analyst estimates of 48 cents a share on sales of $4.6 billion, according to Thomson.

During the first quarter, Apple shipped 1.3 million Mac computers, a 20 percent growth over a year ago, the company said. IPod shipments skyrocketed 207 percent over a year ago to 14 million.

“We are thrilled to report the best quarter in Apple’s history,” Steve Jobs, chief executive of Apple, said in a statement. “Two highlights of an incredible quarter were selling 14 million iPods and getting ready to launch our new Macs with Intel processors five to six months ahead of expectations. We are working on more wonderful products for 2006, and I can’t wait to see what our customers think of them.”

Jobs unveiled an Intel-based notebook and Mac at the company's Macworld Conference in San Francisco last week. Besides new iPods, the company is expected to try to drive growth this year with more Intel-based computers, which are expected to eventually replace the company's line of PowerPC Macs.

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