Apple Posts 2nd Best Quarter Ever!

Apple released their 2nd Quarter financial results last night. This is Apple’s 2nd fiscal quarter January-March and despite the fact that this quarter had 13 weeks instead of 14, like the 1st quarter, despite the fact that the MacBook Pro didn’t really start shipping until March, despite a most difficult transition to Intel processors, despite the fact that the holiday buying season dominates the 1st quarter Apple posted the second best quarterly results in the company’s history!

I’d say it was getting boring to see Apple consistently beat the street over the head by out-performing even the most optimistic analysts but I can’t help but be thrilled as I see Apple’s continued success. So much success that Steve Jobs appeared before Cupertino’s City Council to propose a new 50-acre Apple campus for the California city. You can see the video of Steve’ presentation at Chris Saribay’s blog – http://chrissaribay.com/2006/04/second-cupertino-campus.html. I’ve said it before and I’m saying it again – the story of Apple Computer is the greatest American business story of the last century!

One of the most interesting tidbits coming out of the conference call with analysts was that over 50% of the customers buying Macs in Apple’s retail stores are classified as “new to Mac”. This is consistent with what we are seeing at Small Dog and is an exciting trend that speaks to an increasing market-share for Apple!

Apple had $4.3 Billion of revenue (remember when they had about that much sales for a whole year?!) and turned a profit of $410 million or $0.47 per share. That means for the first 1/2 of their year, a year that is an important year of transition for Apple, that Apple has posted over $10 Billion in sales and almost $1 Billion in net profit!

Apple shipped 1,112,000 Macs and over 8.5 million iPods in the quarter. That’s a modest 4% growth rate for Macs but that is understandable and remarkable considering the Intel transition and a 61% growth rate for iPods!

Here’s a few other highlights from their report:

•Apple’s iTunes Music Store generated $485 million in revenue, an increase of 125 percent

•Apple’s retail stores combined to sell 154,000 Macs and other products that totaled $636 million in revenue, which was an increase of 7 percent in units and 11 percent in revenue. However, these results represent a 20 percent decrease in Mac units and 41 percent decrease in revenue for the retail segment quarter-to-quarter.

•Apple admitted that a lack of Intel-native Adobe software is impacting Intel Mac sales. The company said it is working with Adobe to help deliver software such as Creative Suite 3.0 as soon as possible.

•The Apple iTunes Music Store is responsible for over 87 percent of legal music downloads in the United States!!

•The Apple iTunes Music Store now boasts over 2.9M audio tracks, 60,000 Podcasts, 9,000 videos and 70 TV shows.

•Apple expects 30 percent of all new cars sold in the US this year to offer iPod integration.

•Commenting on some of its investments during the quarter, Apple said it paid off the remaining $500M committed to its NAND flash memory suppliers, net-share settled 5.5M shares, and also spent about $120M for its new data center in Newark, Calif. and property in Cupertino, Calif. for its upcoming headquarters expansion.

•Despite investing $500 million in its long term NAND flash memory supply contract and $120 million in its new data center and property in Cupertino for its new campus, Apple’s cash declined only $481 million to about $8.32 billion in the bank. They have so much of a bankroll that they have formed a new company just to manage those billions!

•Apple reiterated that it has no desire or plan to sell or support Windows, but believes Boot Camp should make Macs more appealing to Windows users.

•Apple is “very excited” about the products it has in its pipeline, including Macs. So are we!!!!