SAN JOSE, Calif. — Apple Computer Inc. said Wednesday that its second-quarter profit jumped more than sixfold as its iPod music players continued to dominate the market. The results soundly beat Wall Street estimates.
Even so, shares of Apple sank Thursday. The question, analysts said, is whether the company will be able to deliver another blockbuster quarter.
For months, analysts have been speculating whether Apple has another iPod-caliber product in the company’s notoriously secret pipeline. There is speculation that Apple may be working on a version of the iPod that will play video files but the company declined to reveal any information.
“If I gave you any sense of that, I wouldn’t be on this call next quarter,” said Timothy D. Cook, Apple’s executive vice president of worldwide sales and operations.
However, when an analyst pressed him for details about upcoming products, he added: “I don’t think Apple could ever be without good ideas. It’s embedded in our DNA.”
For the three months ended March 26, Apple’s profit jumped to $290 million, or 34 cents per share, from $46 million, or 6 cents per share, a year earlier. Excluding certain unusual items, the computer maker said it would have earned $299 million, or 35 cents per share.
Revenue for the quarter was a record $3.24 billion, up nearly 70 percent from $1.91 billion in the year-ago quarter.
The Cupertino-based company shipped 1.07 million Macintosh computers and 5.3 million iPods during the quarter, a 43 percent increase for computers and a nearly sevenfold increase for iPods from the same period last year. Profit margins also grew — increasing to 29.8 percent from 27.8 percent a year ago.
Analysts surveyed by Thomson Financial expected earnings of 24 cents per share on sales of $3.21 billion.
The company said international sales accounted for 40 percent of the quarter’s revenue.
“Apple is firing on all cylinders and we have some incredible new products in the pipeline for the coming year,” Steve Jobs, Apple’s CEO, said in a statement.
The latest version of its Mac OS X operating system, code-named “Tiger,” is to go on sale April 29 for $129.
Apple executives expect strong sales of the new operating system in the current quarter. Although they are bullish about the college market, they remain somewhat cautious about the kindergarten through high school market because of state budget shortfalls that have curtailed public school districts’ spending.
“California in particular has weighted down our results,” Timothy D. Cook, Apple’s executive vice president of worldwide sales and operations, said in a conference call Wednesday. “The good news is that higher ed continues to be extremely good for us.”
Earlier this year, Apple executives cautioned bullish Wall Street traders that the company couldn’t continue delivering blockbuster revenue and profit growth into the future. Executives warned in January that the introduction of two relatively low-priced products — the Mac mini computer and the tiny iPod shuffle — would make it difficult to provide financial guidance for the rest of the year.
But on Wednesday, Apple Chief Financial Officer Peter Oppenheimer increased the company’s forecast for the fiscal third fiscal quarter. The company expects to record sales of $3.25 billion, 61 percent higher than the fiscal third quarter of 2004, and profit of 28 cents per share.
Executives said the company sold more higher-profit products than it had previously anticipated in the fiscal second quarter. The company also increased the percentage of products that it sold through its online and bricks-and-mortar retail stores.
So-called direct sales accounted for 48 percent of Apple revenue in the fiscal second quarter, up from 44 percent in the same period last year. Direct sales boost profit by cutting out payments to third-party vendors, such as electronics retailer Best Buy Co. Inc.
“I couldn’t be happier with our company’s performance,” Oppenheimer said. “We look forward to a great second half of fiscal 2005.”
Apple will announce longer-term financial forecasts at the end of the summer, and analysts are eagerly anticipating the guidance. Technology companies often confound Wall Street because a single smash-hit product — or an abject failure — can reverse a company’s fortunes with little warning.
The iPod has reached iconic status, but it’s unclear if Apple can continue to create such blockbusters. That forced analyst Mark Stahlman of Caris & Company Inc. to be cautious in his praise.
“Some target primary demographics for iPods appear to be relatively ’saturated,’ but the appeal of the expanded product line is also evident,” Stahlman said.
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