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October 18, 2006

money

The numbers game: liveblogging Apple’s Q4 2006 earnings

Posted Oct. 18, ’06, 2:07 PM PT by Dan Moren
Category | Money

Q4 2006 Conference CallWell hidey-ho, MacUser readers. We’re tapped into Apple’s webcast of the Q4 financial results and we’ll be bringing you all the info as we get it. Apple has released some preliminary financial results which it says “may be subject to significant adjustment as a result of a likely restatement of historical results,” which we take to be a tip of the hat to the options backdating investigation.

Apple turned a profit of $546 million on a revenue of $4.84 billion, which works out to a $.62 gain per diluted share. In Q4 2005, the numbers were a profit of $430 million on a revenue of $3.68 billion, or $.50 per diluted share.

The most interesting numbers are, of course, the sales numbers. Apple moved 1,610,000 Macs and 8,729,000 iPods, which puts the fiscal year’s figures at 5.3 million Macs sold and 39 million iPods. All that during the transition to Intel chips.

Stick with this post in order to get the latest, freshest, um, digits that we’ve got. We’ll be updating below the jump, so click on to read more.

CFO Peter Oppenheimer is joined by COO Tim Cook and Treasurer Gary Whistler for the Q&A. As noted above, the results may be altered by the backdating probe, but they think it’s in the best interests of the investors to release the details now.

Best Mac sales of any quarter in Apple history. 58% of revenue was Macs. 1.38 million in Macs Q1 2000 was previous record . 30% growth over prior year. “Unprecedented demand” of portables, portable Macs were 61% of all Macs sold.

80% of 500 “most important” apps will be Universal by end of the quarter.

iTunes is 85% of songs purchased and downloaded in US (Nielsen Sound Scan). 3000 accessory products available for the iPod. Over 70% of 2007 model year cars sold will offer iPod integration.

Revenue for the stores for the year over $1 million, average revenue per stores $24 million. 165 stores now open. 60% of customers in stores are new to the Mac. The average store added 1000 new Mac customers during the quarter.

39% year over year growth in revenue.

Open to questions (I’m picking the ones that are interesting and that I understand):

UBS Analyst: Why were music sales lower than expected?

Slow quarter for music, reduction of Apple-branded accessories in expectation of new iPods. Expected to pick up in the next quarter. Still a growth year over year.

Bear Stearns: Japan CPU sales are down? Ongoing investigation and Steve Jobs’s role?

Reiterating Apple’s investigation findings: no misconduct of Apple’s current management team, including Steve.

Not pleased with the performance in Japan, but a number of initiatives in place to deal with them.

JP Morgan: Video sales similar economics to music sales?

Don’t report individual product lines; music store is running above break-even. Still maintain that music sales lead iPod/accessory sales.

Morgan Stanely: Any effect of Leopard on Mac sales?

Reiterating that Leopard shipping in spring.

Gene Munster, Piper Jaffray: Pent-up demand reflected in the Mac sale numbers?

Combination of completing Intel transition, exceptional customer response due to innovative products, very very strong back-to-school and education sales, including 50,000 units for two K12 deals.

When is shuffle shipping?

By end of October.

Cross Research: Boot Camp downloads?

Over 1 million Boot Camp downloads. Continue to plan on integrating Boot Camp into Leopard.

Game and video sales from iTunes store?

Re-releasing game and movie sales for iTunes at a future date. Very happy with performance of iTunes store.

Deutsche Bank: Customer reception on Mac Pro? Demand still pent up waiting on Adobe CS transition?

Customer and analyst response very positive. Delay in purchasing primarily associated with applications, in particular Creative Suite.

Needham: “Top secret” features in Leopard? Are there new features that haven’t been show yet, and is virtualization possible?

Leopard shipping in spring. (Snap).

Bank of America:

Wedge Partners: Comment at all on iPod promotions in other, international markets?

Working with Coke in UK and Germany. 70 million free iTunes songs.

Any updates on iTunes stores in other markets?

21 countries as of today. 90% of where music legally purchased. Trying to bring movies international in 2007.

Shaw Wu, American Technology Research: Any feedback on the iTV product? Any feedback on how many units?

Announced products to give customers full view of market that they were planning on launching with iTunes movies.

Missed who asked the question, but there are 5800 retail store employees.

And that’s it.

Overall, Cook and Oppenheimer were very closed mouthed. The most common answer was “we don’t comment on that,” though people asked several times for details on this or that. This was the first conference call I’ve listened to live, so I’m not sure if they were more close-mouthed than usual (for example, last quarter, Oppenheimer infamously said of the iPhone that Apple “wasn’t sitting around doing nothing.” This time around, they were very careful not to even hint at anything in the future. Perhaps Steve had a choice word or two to say.


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