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Flagship products boost Apple profits

Latest update : 2008-07-22

US tech giant Apple announces that third fiscal quarter revenue was $7.46 billion, with profits of $1.07 billion. This is an improvement over last year's results for the same quarter, mainly due to the iPhone, iPod and iMac.

Apple on Monday reported its third-quarter profits topped a billion dollars on strong sales of its Macintosh computers, iPods, and iPhones.

Apple said revenues for the fiscal quarter ending June 28, 2008 were 7.46 billion dollars and profits tallied 1.19 dollars per share of stock.

Apple's revenues were 5.41 billion dollars with profit of 818 million dollars, or 92 cents per share in the same quarter the prior year.

"We're proud to report the best June quarter for both revenue and earnings in Apple's history," said Apple chief executive Steve Jobs.

"We set a new record for Mac sales, we think we have a real winner with our new iPhone 3G, and we're busy finishing several more wonderful new products to launch in the coming months."

Apple shipped 2.49 million Macintosh computers during the quarter, representing a 41 percent jump from the same period in 2007.

Sales of iPod MP3 players rose 12 percent from the year-ago quarter. Apple reported selling 717,000 iPhones in the recent quarter as opposed to 270,000 in the same three months last year.

Apple's stock price dropped nearly 10 percent to 149.70 per share in after hours trading as investors focused on the California company's less optimistic outlook for the fourth quarter.

Apple forecast fourth-quarter revenues of 7.8 billion and per-share earnings of about a dollar.

Analysts expected Apple to rake in more than 8.3 billion dollars in revenues and post profits of 1.23 dollars per share in the coming quarter, which is typically strong due to buying for students about to start a new school year.

"The market hates it when somebody predicts declining margins," said Gartner analyst Van Baker.

"People always want you to sell twice what you sold last year and at the same margins. That is a tough thing to do."

Apple's conservative outlook is due to back-to-school promotions and "future product transition I can't discuss today," chief financial officer Peter Oppenheimer said during a conference call with media and analysts.

"We are going to be delivering state-of-the-art new products at prices our competitors can't match," Oppenheimer said. "That is all I can tell you at this point."

Analysts speculate that Apple may be planning to further shuffle off its reputation for premium-priced elite hardware in favor of trimming prices to boost sales volume.

"Maybe Apple is finally going to take the dive on the Macbook (laptop) to below 1,000 dollars," said Gartner analyst Van Baker.

Sales of iPod Shuffles jumped after the price was cut to 49 dollars (US) early this year.

It took just three days from launch to sell a million iPhone 3G models priced at 199 and 299 dollars, depending on memory capacity.

Demand for iPhone 3G models has outstripped supply since sales began in 22 countries on July 11 and Apple is ramping up production. IPhones sales will begin in 20 more countries next month, Oppenheimer said.

"The demand for the new iPhones has been staggering," Apple chief operating officer Tim Cook said during the conference call. "We are shipping units as fast as we can."

Oppenheimer curtly dismissed rumors that Jobs has health problems that could force Apple's iconic leader to leave the company.

"Steve loves Apple and he serves as chief executive officer at the pleasure of the Apple board," Oppenheimer said in response to a question.

"He has no plans to leave Apple. Steve's health is a private matter."

Jobs was treated for pancreatic cancer in 2004 and concerns about his health arose after a June press event at which he unveiled the iPhone 3G without his legendary verve.

Date created : 2008-07-22

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