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Apple profits leap as iPod sales rocket

Over 2m players sold, masking Mac decline

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Apple saw profits more than double year on year during the fourth quarter of its 2004 fiscal year, the company reported yesterday.

Profits totalled $106m (26 cents a share), up 41 per cent from $44m (12 cents a share) this time last year, and 74 per cent up on Q3.

Revenue for the quarter reached 2.35bn, 37 per cent higher than Q4 2003's $1.72bn and 17 per cent up on Q3's $2.01bn.

It's not hard to guess where the increased revenue - and thus the profitability - came from. That's right, iPod. Apple sold 2.016m iPods, up 134 per cent on Q3's 860,000 total. That takes the iPod grand total to just under 5.74m units, well ahead of expectations. If the holiday sales period proves as successful as the back-to-school time has, Apple should easily reach a iPod installed base of over 8m by the end of calendar 2004. Competition is certainly becoming more fierce, with strong rival products from Creative, Rio and Sony. But they have yet to gain the iPod's level of street cred, and with their multi-colour, iPod Mini-esque styling risk being perceived as 'me too' products.

iPod's success masked a decline in Mac sales, which fell from Q3's 876,000 units to 836,000, a decline of almost five per cent. Given Apple wasn't selling iMacs through July, August and a good portion of September, it has clearly got away with a smaller than expected decline, almost certainly a sign of the strength of demand for its notebook products, particularly with back-to-school buyers.

For FY2004 as a whole, Apple shipped 3.29m Macs, up nine per cent on FY2003's 3.01m, so there's clearly good, increasing demand for the company's computers. It sold 4.42m iPods during FY2004. We don't have a comparable total for FY2003, but it's likely to be significantly lower.

Annual income totalled $276m on year-total revenues of $8.28bn, up from $69m and $6.21bn, respectively, for FY2003.

"Looking ahead to the first quarter of fiscal 2005, we expect revenue of between $2.8bn and $2.9bn, operating margin above seven per cent and earnings per diluted share of 39-42 cents a share," said Apple CFO Peter Oppenheimer. ®

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