Apple's fourth-quarter results shine

SAN JOSE, Calif. — Apple's fiscal fourth-quarter profit jumped 67 percent and easily beat Wall Street expectations, capping a record-breaking year that saw unprecedented momentum in its Mac business, ceaseless consumer interest in its iPod players and a successful introduction of its newest endeavor, the iPhone.

For the three months that ended Sept. 30, Apple said Monday it earned $904 million, or $1.01 a share, compared with $542 million, or 62 cents a share, in the year-ago quarter.

Revenue totaled $6.22 billion, compared with $4.84 billion in the same quarter last year.

Analysts polled by Thomson Financial were expecting earnings of 86 cents a share on sales of $6.07 billion.

Apple's stock price, which has more than doubled since January, rose $3.94, or 2.3 percent, to close at $174.36 Monday. After the earnings report, which was released after the close of regular stock trading, shares climbed $11.88, or almost 7 percent, in extended trading. Apple shares have more than doubled this year and are the fourth-best performer on the Standard & Poor's 500 index.

Apple said it shipped a record 2.16 million Macs in the quarter, an increase of 34 percent, while it sold 10.2 million iPods, up 17 percent.

In the first full quarter of iPhone sales — a number many on Wall Street were waiting for — Apple said it sold 1.12 million units, bringing the cumulative total to 1.39 million since the product debuted June 29.

For the full fiscal year, Apple earned a record $3.5 billion, up more than 75 percent from last year when it earned $1.99 billion. Yearly sales reached over $24 billion, a 24 percent jump from fiscal 2006.

"We had a fantastic quarter and year," said Peter Oppenheimer, Apple's chief financial officer.

"They knocked the cover off the ball," Roger Kay, an analyst at Endpoint Technologies in Wayland, Mass., said in an interview. "More than 2 million Macs, sold lots and lots of iPods, and the phones have done better than expected."

"They've tended to underpromise and overdeliver," said Romeo Dator, who helps manage $5.3 billion at San Antonio-based U.S. Global Investors, which owns Apple shares. "They'll probably overdeliver again."

Apple's fortunes have skyrocketed in recent years as its iPods became a cultural phenomenon. The portable players, which work on Macs as well as Microsoft Windows-based machines, also have drawn more people to Apple's software and design, leading to what analysts call a "halo effect" on Mac sales.

After hovering for years with 2 percent to 3 percent share of the PC market in the United States, Apple's slice has now grown to 8 percent, according to the latest figures from market research firm Gartner.

Apple posted the fastest growth among the top five PC makers, outpacing larger rivals Hewlett-Packard and Dell.

"Apple is reaching a strong inflection point in terms of PC market share," said Mike Abramsky, an analyst at RBC Capital Markets, which raised its Apple share price estimate by 17 percent to $205 last week. "Even though there's a lot of focus on the iPhone, it's really the Mac that's driving the growth in revenue and earnings per share."

The Mac accounted for half of revenue last quarter. Sales rose 40 percent to $3.1 billion. The average selling price for the Mac was $1,433, compared with $1,375 a year ago.

"The Mac had just a blow-away quarter," Oppenheimer said.

Now, many investors are betting Apple's foray in the cellphone market will be another lucrative engine.

The iPhone, a combination cellphone, iPod and multimedia Web device, "is a game-changing product," said Stephen Coleman, chief investment officer at Daedalus Capital.

Based on income from the iPhone alone, "I expect Apple's earnings to continually grow materially at 50 percent a year for the next three years," Coleman said.

For the current quarter, Apple said it expects earnings of about $1.42 per share on revenue of about $9.2 billion. Analysts on average had been expecting earnings of $1.39 per share on sales of $8.58 billion.

"We're looking forward to a strong December quarter as we enter the holiday season with Apple's best products ever," said Steve Jobs, Apple's CEO.

Information from Bloomberg News is included in this report.