Apple Profit Almost Triples on Strong iPod, Notebook Sales

Apple Computer Inc. (AAPL) Wednesday posted much stronger-than-expected quarterly profit and revenue on heavy sales of its iPod (search) digital music players and notebook computers, pushing its shares up nearly 10 percent in after-hours trade.

For the first time, Apple sold more iPods in a quarter than it did its signature Macintosh computers, and sales of the trendy gadgets even topped levels seen in the preceding holiday sales-fueled December quarter.

Executives said on a conference call that the company expected to face tight supplies of the successful iPod mini through the June quuring the Christmas quarter, which is pretty telling," said analyst Shannon Cross of Cross Research. She had expected Apple to sell 600,000 iPods in the quarter; Apple shipped 807,000.

For its second quarter ended March 27, Cupertino, California-based Apple said net income more than tripled to $46 million, or 12 cents per share, from $14.0 million, or 4 cents, a year earlier.

Revenue surged to $1.91 billion from $1.48 billion.

The company also issued an outlook for its current, third quarter that was above even the most optimistic Wall Street estimates.

"Clearly, it's sustained good news," said Barry Jaruzelski, lead partner in Booz Allen Hamilton's global technology and electronics practice.

iPod Sales Up Tenfold

Apple said it shipped 749,000 Macintosh computers during the quarter, up 5 percent from the year-earlier period. Sales of iPods soared more than tenfold.

Apple's revenue from iPod sales was $264 million, up from $31 million a year ago, when the iPod was just getting started. Revenue from its iBook notebook computers climbed 48 percent to $223 million, while sales of its high-margin Power Mac computers increased 19 percent to $349 million.

Apple's retail stores also had another strong quarter, Chief Financial Officer Fred Anderson in a telephone interview. Apple's stores saw revenue of $266 million, almost double the $135 million a year ago.

Gross margin, or the percentage of revenue remaining after product costs are subtracted, was 27.8 percent, down from 28.3 percent a year earlier.

Excluding a restructuring charge of $7 million, Apple said it posted a profit of $53 million, or 14 cents per share.

Analysts had forecast the company to earn, on average, 10 cents per share, within a range of 9 cents to 11 cents, on revenue of $1.81 billion, according to Reuters Research, a unit of Reuters Group Plc.

For the third quarter, Anderson forecast earnings per share including about 2 cents in restructuring charges of 12 cents to 13 cents, on revenue of about $1.93 billion.

Analysts now expect Apple to earn a third-quarter profit, on average, of 9 cents, within a range of 7 cents to 11 cents, on revenue of $1.81 billion.

Shares of Apple rose in after-hours trade to $29.21 on INET. During regular Nasdaq trade, before the results were released, the stock fell 29 cents, or 1.1 percent, to close at $26.64.

Based on Wednesday's close, the shares have climbed about 24 percent year to date, compared with a 21-percent rise in the American Stock Exchange Computer Hardware Index (search).