Apple Q1 2006 Financial Results

[MacRumors]

http://www.macrumors.com/images/macrumorsthreadlogo.gif

In an audio webcast conference call today, Apple is announcing its 2006 Q1 financial results, covering the last 14 weeks of 2005.

Apple reported its highest-ever revenue and earnings.

Highlights, with 2005 Q1 for comparison:

- Macs shipped: 1,254,000 (20% growth over 2005 Q1)
- iPods shipped: 14,043,000 (207% growth over 2005 Q1)
- Revenue: $5.75 billion, 40% from international sales ($3.49 billion in 2005 Q1)
- Net quarterly profit: $565 million ($295 million in 2005 Q1)
- Gross margin: 27.2% (28.5% in 2005 Q1)

From Steve Jobs, Apple CEO:

We are thrilled to report the best quarter in Apple's history. 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.

From Peter Oppenheimer, Apple CFO:

We're very pleased to report year-over-year revenue growth of 65 percent and net income that was nearly twice the year-ago level. Looking ahead to the second quarter of fiscal 2006, we expect revenue of about $4.3 billion.

[mazola]

I predict bad things for Apple's stock on this news!

[Edge100]

Revenues and profit WAAAY up, stock down by 6% in afterhours trading!

Go figure!

Apple RAWKS!

[shawnce]

Yup a barn burner of a quarter.. even for Macs despite the Intel transition.

91% increase in profit over later year Q1

[longofest]

Apple's stock is already down about 3% today... Oh well, it will go back up.

[Photorun]

Originally Posted by Edge100

Revenues and profit WAAAY up, stock down by 6% in afterhours trading!

Go figure!

Apple RAWKS!

Typical Wall Street, dumb money for soulless people based on rampant vacant rumor, speculation, lies, and corruption.

But go Apple!!! You're still three times better than Dell stock and hundreds of times better as a company.

[plinden]

Of course, the breakdown in numbers is more interesting.

Desktop sales up 11% on last quarter, or 7% on last year. Laptops down 7% on last quarter, up 39% on last year.

56% of Apple's income is now iPod/music related.

[jholzner]

Originally Posted by Edge100

Revenues and profit WAAAY up, stock down by 6% in afterhours trading!

Go figure!

Apple RAWKS!

Their gross margins are down from the year ago quarter. I suppose that could be part of the reason. Not that I care! This was an awsome quarter for Apple! Can't have lower priced products and expect your gross margins to go up...but people want to eat their cake and have it too!

[plinden]

Originally Posted by Edge100

Revenues and profit WAAAY up, stock down by 6% in afterhours trading!

Go figure!

Apple RAWKS!

That's because of the "conservative" estimates for next quarter, of $4.3 Billion. Apple always seem to do that, then beat their own estimates.

[freeny]

Originally Posted by Photorun

Typical Wall Street, dumb money for soulless people based on rampant vacant rumor, speculation, lies, and corruption.

Well said.
Same thing happend last quarter. 5% drop but it rebounded the next day. Lets see if people spot a good price to buy in the next few days....

[SiliconAddict]

OH NO! Apple is doomed! They are going out of business next week!

Originally Posted by Edge100

Revenues and profit WAAAY up, stock down by 6% in afterhours trading!

Go figure!

Apple RAWKS!

Part of it may be iPod sales. Wasn't there some insane estimates of 19 million expected to be sold?

[~Shard~]

Looks like I'll make some decent money after all, after shorting AAPL 2 days ago... I'll be getting out soon enough though before it rebounds.

Great numbers though on the whole - it will be interesting to see how Apple sustains this though. The stock is trading at a very high multiple and I think will correct some more (hence why I shorted). If Apple can't sustain these types of numbers, it could mean more rough times ahead for the stock. Regardless though, it's great for Apple to see such positive numbers - hopefully an increase in computer marketshare will add to the accolades in 2006 as more PC users make the switch.

[MacsRgr8]

One word:

EXCELLENT!!!!

[Stella]

The laptop sales indicate that once again the powerbooks ( and iBooks ) are uncompetitive AND that Apple were absolutely right to create the Frankenstein Mac Book Pro.

56% of revenue is iPod... this is a tad worrying. Apple are relieing ( spelling ) too much on one product.

[Doctor Q]

More facts from the conference call:

587,000 iBooks and Powerbooks shipped
667,000 desktop systems shipped

Music: 59% of total revenue

A "stunning reaction" to the new ipods, despite replacing iPod lines. iPod inventories "lower than we would have liked".

The iTunes Music Store is now available in 90% of the global music market and sells 83% of all music purchased legally online in the U.S.

Retail profits were $90 million. 11 new Apple stores, now 135. Plans are to open 40 new stores in Fiscal 2006.

Q1 was 14 weeks, not 13 weeks as Q2 will be, and covered the week before New Year's day, adding to the record high quarter.

[Doctor Q]

More facts:

Apple saw an "extraordinary response" to their announcements of the new iMac and MacBook Pro, which they mistakenly called the new PowerBook!

They are "thrilled with the response" from last week and hopeful that they can meet demand for iMacs during the upcoming quarter.

With the MacBook Pro shipping in February, there is limited time within the quarter, so they may not be able to meet first quarter demand.

[gwangung]

Originally Posted by Stella

The laptop sales indicate that once again the powerbooks ( and iBooks ) are uncompetitive AND that Apple were absolutely right to create the Frankenstein Mac Book Pro.

56% of revenue is iPod... this is a tad worrying. Apple are relieing ( spelling ) too much on one product.

Word.

With desktops making up a solid majority of systems sold, that puts Apple in an uneasy spot (at least for modern computing). Some sort of Macbook Pro needed to come out soon, and this sort of release (imperfect as it is) will probably help out the bottom in second quarter.

[qtip919]

Originally Posted by Photorun

Typical Wall Street, dumb money for soulless people based on rampant vacant rumor, speculation, lies, and corruption.

But go Apple!!! You're still three times better than Dell stock and hundreds of times better as a company.

I would have to say that there is a little bit more to it than that...

Look at it this way...it's not necessarily about what the company is doing, its more about wha they could do. Its also more about how much people believe that they could do it...

Look, 80/share is way too high for Apple even with the wildest of expectations. Simple reason; you just dont get that many #1 hits in a lifetime. Dont get me wrong, I consume just about everything apple sells, but its just not enough for an 80/share price. We're all living on speculation and hype right now that apple will:

1. Cut waaaay into the home user market - No one cares too much about this long term, and this will likely drive costs up around apple as a whole. especially when you consider support costs. Think about the rediculous situation we had a while back with people SUING Apple over sticking their ipod nano's in their pockets which was full of dust and debris which then scratched their screen...That was a very expensive hit on apple. Welcome to the new world of customer support

2. Create another new market for video distribution - This is quite likely what is causing the majority of the stock speculation. But it is by no means a done deal. The players are worse than the RIAA, and satisfying customers is a lot more difficult here. You cant get away with selling people low-quality versions of videos through itunes. People want the highest quality available for watching videos at home first, and they will also take other versions, but realistically, these lower quality versions should be free if I have already purchased a DVD...ah, but that would be ILLEGAL...welcome to the new world of copyright protection in video...it sucks...big time

3. Step into the ITPro server market - Sun + Apple = success? Dont bet on it. There is more work to be done here than anyone could realistically begin to estimate. You have two very different companies with extremely different visions of computing. Bringing these two worlds together will be painful and it take a long time before they could even consider competiting with areas such as email, storage, etc. ... however, there are also some quick wins that could keep a merger like this on life-support for a long, long time.

All of these (and more) are reasons to want to buy stock in apple at 80, but I would be cautious...the split is coming with a likely short-term dip in stock price...if they split and come down to the low 30's... there would be a mad rush to buy their stock again, especially if they can keep the reality distortion field going at full strength and announce at least 2 more ground-breaking products...and Im NOT talking about iWeb

Come on...where is Front-Row 2!!!!

[EricNau]

20% growth in Mac sales! That is a good thing. Maybe next year we can see 100%!

[Some_Big_Spoon]

Welcome to the stock market.

If Jesus himself was CEO and turning water into $100 bills the stock would still go down 10% because the analysts are "concerned that the Son of God isn't choosing to turn water into $500 bills".

Have you met a stock broker, fund manaer, analyst ever? I'm surprised they can tie their own shoes.

Originally Posted by Edge100

Revenues and profit WAAAY up, stock down by 6% in afterhours trading!

Go figure!

Apple RAWKS!

[shawnce]

Originally Posted by Some_Big_Spoon

If Jesus himself was CEO and turning water into $100 bills the stock would still go down 10% because the analysts are "concerned that the Son of God isn't choosing to turn water into $500 bills".

Now that made my day.

[bigandy]

i'm pleased to see how the mac sales are steadily increasing. i hope this trend does continue upward beyond all our humble (HA!) expectations...

[eSnow]

This is excellent, absolutely excellent news!
I still remember the "beleagured computer maker" comments in the years 1996 and following, so it really warms my heart to see them succeed big time.

I don't expect them to gain market share big time, but they now sure have some money in their war chests...

[Whiteapple]

Why make trillions when we can make...billions?
Muhahaha

[Doctor Q]

More facts:

Apple expects its next quarter to be the second highest in Apple history, trailing only this just-finished quarter.

The PowerBook G4 and iMac G5 will be sold while supplies last. They didn't promise discounts.

iPod sales in the holiday season lead to subsequent accessory sales, a source of revenue in the coming quarter.

There are now over 35,000 outlets selling iPods, although not all models are sold in all outlets.

Some iPod models are low on stock, even though the averages across all models are on target. Apple didn't confirm, but didn't deny, that the 4GB iPod nano is a bottleneck in the supply flow.

Comments about components: Apple saw greater than predicted memory and LCD sales. They expect the supply to continue to exceed the demand for LCDS, while the DRAM market is expected to stabilize. Hard drive prices are declining at lower than historical rates and price reductions are expected to continue for flash memory.

Most of the new Apple Stores will be in the U.S., but new stores will be opened in Canada, the U.K., and Japan.