Apple's Q4 1.61 Million Mac Sales Best Ever, Earnings Blow By Analysts' Estimate by 22 Percent

Following another huge increase in sales from notebooks (MacBook and MacBook Pro), Apple posted a $546 million net profit for the fourth quarter ending September 30 of its 2006 fiscal year, the second highest in Apple's history right behind the 2006 first quarter net profit of $565 million. Earnings per share came in at $0.62 on revenue of $4.84 billion, leaping over the analysts' consensus estimate announced by Thomson First Call of $0.51 by nearly 22 percent. Gross margin was 29.2 percent and cash and short term investments now total $10.1 billion, up from $9.2 billion last quarter.

Compared with last year's fourth quarter, the 2006 Q4 is up 30 percent in net profit, up 32 percent in revenue, up 24 percent in earnings per share and up 4 percent in gross margin. Overall, the fourth quarter was an outstanding result, the second best quarter in Apple's history.

This terrific financial performance was driven largely by increased sales of Apple notebooks, the MacBook and MacBook Pro. Notebook sales were 986,000 out of a record total Mac sales of 1,610,000. The notebook sales were up 56 percent from Q4 2005 and 24 percent from the third quarter this year due largely to Apple's "Back-to-School" Program.

Desktop (iMac, Mac mini, Mac Pro and Xserve) sales at 624,000 were up breaking their recent downward trend, i.e. up 4 percent from the 2005 Q4 and 18 percent from 2006 Q3. Apple executives reported positive acceptance of the new Intel-based Mac Pro that replaced the Power PC-based Power Mac during this past quarter.

iPod sales at 8.7 million were up 35 percent over last year's Q4 up 8 percent from the third quarter.

Sales revenue was up over the 2005 Q4 in all three geographical areas (Americas, Europe and Japan) by 27 to 30 percent up sequentially from last quarter by 5 to 11 percent. But unit sales continued down in Japan even though revenue is up.

The Apple retail stores, now at 165, are doing extremely well. Sales revenue increased 41 percent over the 2005 Q4 and 31 percent over the third quarter. For the first time over 50 percent of their sales are new-to-Mac sales.

With regard to education, that channel saw 49 percent growth in Mac portable sales to make it the best quarter ever for Apple's education channel, according to Apple's executives.

In response to a question about Boot Camp, Apple COO Tim Cook responded by saying that downloads of Boot Camp software are now over 1 million. Apple's Boot Camp allows an Intel-based Mac to boot and run Windows XP.

Apple expects its first 2007 quarter, usually the best quarter in a fiscal year, to yield some $6 to 6.2 billion in revenue and some $0.70-0.73 earnings per share.

"This strong quarter caps an extraordinary year for Apple. Selling more than 39 million iPods and 5.3 million Macs while performing an incredibly complex architecture transition is something we are all very proud of," said Steve Jobs, Apple's CEO. "Looking forward, 2007 is likely to be one of the most exciting new product years in Apple’s history."

The financial results and projections were revealed in an Apple press release and a webcast conference call. [Bill Fox]