Apple Posts Record Earnings

Wednesday evening, Apple reported its second highest quarterly earnings and revenue in history. Going in to this earnings report, Apple’s shares had dropped nearly 25% since May and forecasts for the iPod sales going forward were dismal. Many major analysts had predicted that unless Apple reinvented the iPod soon, the sales would inevitably slow. With this earnings report, Apple can put those fears behind them. For now.

The Numbers
In terms of sheer numbers, Apple’s earnings were quite impressive. They posted their second highest quarterly earnings and revenue in a quarter when the switch to Intel, Boot Camp and doubts about the iPod’s future all were in full swing. Apple’s net income for its third quarter that ended on the 1st of July, rose to $472 million, up from $320 million a year earlier. In the same time period, revenue rose 24 percent to $4.37 billion from $3.52 billion.

The iPod
The biggest sigh of relief from Apple watchers and investors came in the growth in iPod sales. With few major changes in the iPod line-up in recent times and a market that was seen to have peaked, Apple shipped 8.1 million iPods in the last quarter. This was a 32 percent growth, year over year and beat many analyst predictions. With WWDC in the near future, and new iPod announcements expected, the iPod sales could be rejuvenated during the holiday season at the end of 2006. In many ways, the market only cares about iPod sales because they are what have fueled the Apple juggernaut in the past few years. Any positive or negative signs on this front are magnified by the market and the media.

The Mac
While the market concentrates on the iPod, Mac users in general are usually more curious about Mac sales- especially in an Intel-inside, post-Boot Camp, virtualized world. With many thousand words written on the power of Intel and the ability to run Windows as a driver for a new wave of Mac-switchers, any growth in Mac sales will fuel more speculation. Well, the growth in number of Macs shipped last quarter is also substantial. Last quarter, 1.33 million Macs were shipped, which was a 12 percent growth over last year. This growth can be attributed to the ability to run Windows or the iPod halo effect, but more likely the growth may be due to the number of people who were planning to buy a Mac late last year but held off until their favorite notebook came out with an Intel processor. Ever since the switch to Intel had been announced, it had been speculated that some percentage of potential sales were being postponed until the switch was complete. Seventy-five percent of all Macs sold last quarter ran on Intel processors.

The Future
Again, in terms of numbers, Apple is predicting an equally strong quarter ending October 1. The current prediction is a revenue of $4.5 billion, which would be even better than this quarter. In more practical terms, the future holds only one thing- the WWDC, Apple’s World Wide Developer’s Conference, where it is expected to showcase the new Mac OS 10.5 Leopard operating system and additions to the iPod Nano line-up. Also, there are many rumors circulating regarding iTunes Movie rental store and other cool Apple devices that could surface during this event. The WWDC 2006 will be held in San Francisco between the 7th and the 11th of August and Apple Matters will have regular coverage from there.