Apple's Q1 Profit hits Record $1B--Blows Away Analysts Earnings Estimate by Over 46%
Apple had a monster first quarter of their 2007 fiscal year (Q1 2007) posting a $1 billion net profit, its highest quarterly profit ever. Earnings per share (EPS) came in at $1.14 on revenue of $7.1 billion, leaping over the analysts' consensus estimate announced by Thomson First Call of 78 cents by over 46 percent (see chart at right). Gross margin was up to a remarkable 31.2 percent and cash and short term investments now total $11.9 billion, up from $10.1 billion last quarter.
Compared with last year's super first quarter (Q1 2006), Q1 2007 is up 77 per cent in net profit, up 25 per cent in revenue, up 79 percent in earnings per share and up 15 per cent in gross margin. To put things in perspective, Q1 2006 was previously Apple's best ever fiscal quarter.
This terrific financial performance was driven largely by increased sales of iPods, increased sales of Macs (over Q1 2006), decreased component prices and a more profitable mix of products sold, i.e. more higher end products.
iPod sales at 21.1 million were up 50 percent over last year's record Q1 and up a whopping 141 percent from the previous quarter.
Sales of Apple notebooks, the MacBook and MacBook Pro, were 969,000 out of a near record total Mac sales of 1,606,000. The notebook sales were up 65 percent from Q1 2006 but down 2 percent from the previous quarter which had benefitted from Apple's "Back-to-School" Program.
Desktop (iMac, Mac mini, Mac Pro and Xserve) sales at 637,000 were down slightly by 4 percent from the Q1 2006 but up 2 percent from the previous quarter. Apple executives still reported positive acceptance of the new Intel-based Mac Pro but also still expected delayed purchases due to the lack of Intel-based Adobe applications due in Q2 2007.
Sales revenue was up over Q1 2006 in two geographical areas (Americas and Europe) by 30 and 38 percent and up sequentially from the previous quarter by 52 and 73 percent. Sales were down in Japan compared with Q1 2006 but up sequentially.
The Apple retail stores, now at 177, are still doing well. Sales revenue increased 6 percent over Q1 2006 and 22 percent sequentially. New-to-Mac sales continue to be over 50 percent of their sales.
Other interesting tidbits from Apple's late afternoon conference call (replay it here), with Apple CFO Peter Openheimer and COO Tim Cook answering questions, include:
- It's too early to factor in expected effects of the iPhone on total sales and iPod sales. Perhaps next quarter.
- The major effect for the very high gross margin is exceptional iPod sales.
- Mac sales were higher than expected.
- Worldwide there are 40,000 iPod points of sale and 7,500 Mac points of sale.
- There have been 1.5 million downloads of Boot Camp and it is still planned to be included in Mac OS X 10.5 "Leopard". Apple considers Parallels, maker of Desktop for Mac for running Windows on an Intel-based Mac, to be a "key partner."
- Regarding iLife '07, "stay tuned."
- The key factors in the high profit are lower component prices across the board and product mix in sales, meaning more sales of higher priced products--"Very strong MacBook Pro sales in the mix."
Apple expects its second 2007 quarter results to decline, as is usual, to yield some $4.8 to 4.9 billion in revenue and earnings per share of some 54 to 56 cents. The second quarter is traditionally Apple's lowest. Here is Apple's press release.
[Bill Fox]
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