Mac sales set Apple 'on fire'

Apple's first quarter hit on all cylinders, as the company continued its financial run on the strength of its Mac business.

More on the iPhone

News
♦  First iPhone Trojan reported
♦  iPhone 'mugging fear' unfounded, say police
♦  iPhone too pricey for Brits?
♦  iPhone in the UK: Hands up who wants one?
Video
♦ Apple shows off iPhone apps
Photos
♦  Photos: Who's in the iPhone queue?
♦ Steve Jobs and the UK iPhone launch

The company posted revenue of $9.6bn for its first fiscal quarter, which ended 29 December. That's better than the $9.5bn expected by financial analysts, and announced a profits-per-share number of $1.76 - better than expectations of $1.62 per share. That translates to net income of $1.6bn, up 58 per cent from last year.

Mac sales were up 44 per cent and Mac unit revenue grew by 47 per cent compared with last year, as Apple continued its resurgence in personal computers. Tim Cook, Apple's chief operating officer, said: "The Mac business is on fire". The increases were led primarily by the new iMac desktops Apple introduced last August.

Apple estimates 19 per cent of the Macs installed are running Leopard, Mac OS X 10.5, and Leopard generated $170m in revenue for Apple during the first quarter it went on sale, compared with the $100m that Tiger, Mac OS X 10.4, generated for Apple in 2005.

But on the iPod front, Apple's iPod sales of 22.1 million were well below Wall Street expectations of 24.7 million. But iPod revenue was up 17 per cent, so perhaps more high-end iPod Touches were sold than iPod Nanos or Shuffles as a percentage of its mix during the quarter.

Apple executives supported that argument after the release of the company's profits. Apple gained iPod share internationally, but iPod unit sales in the US were flat, said Cook.

While not specifically addressing the missed Wall Street target for iPod unit sales, Cook did say iPod unit sales met the company's own expectations. And the iPod Touch is off to a good start, he said, which accounted for overall iPod revenue growth that matched last year's first-quarter revenue growth.

Peter Oppenheimer, Apple's CFO, said: "This was [iPod Touch] the most expensive iPod we've introduced in some time." The company thinks the iPod Touch really belongs in a different category than the broader music player market, saying the iPod Touch has a chance to "become the first mainstream mobile wi-fi platform".

CEO Steve Jobs already tipped the company's hand on iPhone shipments at Macworld, noting Apple had sold four million iPhones as of his keynote speech. Apple sold 2.3 million iPhones during its first quarter, and Cook reiterated Apple's goal of shipping 10 million units during 2008.

Original article: Apple posts nice Q1, but pessimistic on Q2 from CNET News.com