Apple profits up on strong Mac sales
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Strong sales of Macintosh computers helped boost profits at Apple Computer on Wednesday, offering further evidence that the success of the company’s iPod music player is helping it to win converts in the personal computer market.
Apple said it sold 1.6m Macs in the fourth quarter, a 30 per cent increase over last year. The company said that more than 50 per cent of people who bought Macs in Apple stores were first-time customers.
Wall Street analysts had been awaiting further signs that the popularity of the iPod would translate into a strong pick-up in Mac sales, which account for the bulk of the company’s revenues.
Steve Jobs, chief executive, said the results capped an “extraordinary year” for the company.
The surge in Mac sales helped push profits up 27 per cent to 62 cents a share, from 50 cents a share last year, beating Wall Street forecasts.
Revenues were $4.8bn, an increase of 30 per cent over last year’s $3.7bn and ahead of most expectations.
IPod sales also beat forecasts, surprising some industry watchers, who had feared a slowdown in music player sales growth. Apple said it sold 8.7m iPods in the period, up 35 per cent from the year-ago period.
Apple’s shares were up 6.6 per cent in early trading in New York on Thursday.
The shares, which rose 0.3 per cent to $74.53 ahead of the announcement, had risen from a recent low of $50.67 in July.
Apple commands just 2 per cent to 4 per cent of the worldwide PC market, but analysts have said that even small gains in market share could translate into big increases in revenues at the company.
Meanwhile, Apple’s iPod and iTunes music store continued to dominate the market for digital music, with iTunes accounting for 85 per cent of online music sales in the US.
Last quarter, iPods, music downloads and related accessories accounted for 42 per cent of Apple’s revenues, the company said.
Barry Jaruzelski, a consultant at Booz Allen Hamilton, said an inevitable slowdown in iPod sales could force Apple to launch new electronics products.
“Apple are going to have to be very focused,” he said. “They can only pick maybe one to two categories at a time.”
Observers have long suspected that Apple may be working on a new mobiletelephone that would incorporate its iTunes music and video download service. Although Apple remained mum on the subject yesterday, Mr Jobs hinted that 2007 was “likely to be one of the most exciting new product years in Apple’s history”.
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