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Technology Stocks : Apple Inc. -- Ignore unavailable to you. Want to Upgrade?

To: Henry J Costanzo who wrote (41588)	10/15/2004 12:23:57 PM
From: Kip S	Respond to of 213183

Think this is a pretty balanced view, from Business Week Online. Kip iPod Has Broad Shoulders for Apple The diminutive music player is leading Jobs & Co.'s jazzed up profit machine, where even the bad news is pretty darn good The momentum just keeps building for Steve Jobs and the crew at Apple Computer (AAPL ). The Cupertino (Calif.) company announced a blowout quarter on Oct. 13. Shares surged 6.6% in aftermarket trading based on the report and then soared 12% more on Oct. 14, as shares hit a new 52-week high of $44.98. Could this be a prelude to further Wall Street euphoria? Strong sales of Apple's iPod music players and notebook computer highlighted a boffo quarter with few negatives. Sales and foot traffic at Apple retail stores increased, and even the dark spots were more silver lining than anything else, namely, the slow sales of higher-end G5 Mac desktop computers due to component constraints. Earnings rang in at $106 million, or 26 cents per share, for the fourth fiscal quarter ending Sept. 25. That marked an impressive 141% vault in net income. Gross sales rose 37%, to $2.35 billion, the highest level for the fourth fiscal quarter in nine years. The strong showing also indicated that Apple is on track to become a company with $10 billion in annual sales again -- as management has been predicting. LITTLE BIG STAR. "We believe the investments we have made in our innovative products and our distribution channels are starting to pay off. And we are looking forward to a very exciting holiday quarter," said Apple chief financial officer Peter Oppenheimer during the announcement on Oct. 13. The real star of the show was, of course, the iPod. Apple sold a stunning 2 million units in the quarter, nearly seven times more than during the same quarter last year. Although Apple refused to break out the split between sales of the standard iPod vs. the diminutive iPod mini, the big total shows that demand for both iPod lines continues apace and that no cannibalization was occurring within the product line. Music-related revenues for Apple, which includes iPods and the iTunes Music Store, rose 370% year-over-year. What's more, PC giant Hewlett-Packard (HPQ ) started reselling iPods in only in September and still accounted for 6% of total unit sales in the quarter. K-12 PUSH. Apple's notebook business also turned in impressive numbers. Unit sales of the entry-level iBook portable rose 74%, and sales increased 66% year-over-year as strong demand among college kids and consumers powered growth. Apple posted iBook revenues of $256 million on sales of 238,000 units. That's particularly impressive, considering the relatively sluggish and aging G4 chips that form the iBook's guts. The premium PowerBook line showed respectable 21% unit growth year-over-year. Even in the K-12 education market where Apple has steadily lost market share, it managed to push a 9% growth in unit sales during the primary buying quarter for school folks. Retail is another success story. Revenues there rose 95% over the previous year, to $376 million, as 7.8 million people visited Apple stores, which should number 100 by yearend. As these outlets continue to draw traffic, Jobs has managed to push 52% of total worldwide sales into direct purchasing via the Apple Web site, catalogs, education sales reps, or retail outlets. That helped bump Apple's overall operating margin to 5.7% for the quarter, up from 4.8% the year before. LURING FIRST TIMERS. The only really bad news, it seems, wasn't really bad news at all. Apple's inventory levels dropped below the preferred four-week security level as demand for its high-end G5 desktop machines continued to outstrip supplies from chipmaker IBM (IBM ). Apple executives won't speculate as to when the issue would be finally resolved, but they did say they expect marked improvement in the coming quarter. While this means Apple had to forgo sales, it also means demand for the G5 could prove to be exceedingly strong in the quarters ahead. And below-par G5 sales likely accounted for most of the weakness in Apple's desktop sales. Can the lure of the iPod draw in new users to the Mac platform? Oppenheimer speculated that some indirect evidence existed that 40% to 50% of people buying computers at Apple stores are first-timers, suggesting that Apple is making some headway. Jobs & Co. are clearly dreaming of holiday sales pushing iPods off the shelves and into stockings -- while pushing Apple shares toward $50. Recent analyst upgrades were on the money. Now the question is whether Apple can continue to turn in a pitch-perfect performance.