Apple reports record 1Q profit , outlook lags

Surging sales of Apple Inc.’s two flagship products, iPod and Mac, have lifted its profit to a record high. Apple, the Cupertino, CA based computer technology corporation, on Wednesday reported a record $1bn profit for its first 2007 financial quarter ended December 30, 2006.

Apple said it earned $1 billion, or $1.14 per share from record revenue of $7.1 billion, up 24 percent, compared to net quarterly profit of $565 million, or 65 cents a share from revenue of $5.7 billion in the year-ago period.

The posted record revenue and profits go beyond analysts’ estimates, who, on average, were expecting profit of 78 cents per share on sales of $6.42 billion.

About the shipment of its two signature products, Apple said it sold 1,606,000 Macintosh computers and 21,066,000 iPods during the quarter. The computer company said its portable media players showed tremendous success during last year's holiday shopping season, boosting its growth by 50 percent over the year-ago quarter, while Mac computers sales grew by 28 per cent year-over-year.

Of the total revenue over the quarter, 42 per cent came from outside the US. Sales of the revolutionary iPod accounted for $3.43 billion, or nearly half, of the company's total revenue.

“We are incredibly pleased to report record quarterly revenue of over $7 billion and record earnings of $1 billion,” said Steve Jobs, Apple’s CEO. In hopes to retain the profits up over the rest of the year, Jobs said, “We’ve just kicked off what is going to be a very strong new product year for Apple by launching Apple TV and the revolutionary iPhone.”

Apple, which unveiled its much-anticipated iPhone last week at the annual Macworld conference and Expo in San Francisco, said it expects to sell about 10 million mobile phones in 2008. However, some analysts are questioning how well the $500 phone would perform in the highly competitive mobile phone market.

Despite the surging profit and sales Apple's forecast for its current, second quarter was below analysts’ previously forecast. Apple forecast fiscal second-quarter revenue of $4.8 billion to $4.9 billion and earnings per share of 54 cents to 56 cents, below the analysts’ projected revenues of $5.22 billion and earnings per share of 60 cents.

“We generated over $1.75 billion in cash during the quarter to end with $11.9 billion,” said Peter Oppenheimer, Apple’s CFO. “Looking ahead to the second fiscal quarter of 2007, we expect revenue of $4.8 to $4.9 billion and earnings per diluted share of $.54 to $.56.”

Shares of Apple declined 88 cents, or about 1 percent, to close at $94.07 in late after-hours trading on the NASDAQ Stock Market.