updated 06:15 pm EDT, Wed July 13, 2005
Q3 conference call
Apple today held its first earnings conference call since it announced a transition to the Intel platform. Apple executives Peter Oppenheimer and Tim Cook said the company has yet to see a significant pause in sales in anticipation of forthcoming Intel Macs. Oppenheimer said Apple "expects to learn more" in the coming quarter about how the announcement will affect Mac sales. However, he assured analysts that Apple remains committed to bringing new PowerPC products to the market in the coming quarters, and was quick to point out that today's earnings were "driven by the highest Mac sales in over four years." Oppenheimer emphasized that Apple is "hard at work" -- and "very enthusiastic" about -- new products, both Macintosh and otherwise. In terms of the company's music business, Apple saw "very impressive" numbers, outstripping market growth significantly.
Apple reported that 62 percent of revenue came from its Mac business, while 38 percent of revenue came from music -- up over 300 percent. Revenue from Mac sales were up a respectable 29 percent. Oppenheimer said Apple "couldn't be happier" with Mac sales. In accordance with a new company policy, Apple would not give a Mac or iPod unit sales breakdown.
The iPod held a 75 percent share of the MP3 player market, while the next closest competitor had a five percent share. Oppenheimer noted that the Apple iTunes Music Store is now available in 19 countries, and commands a 70 percent share of the global online music market. In the United States, the iTunes store captured a record setting 80 percent market share. In response to concerns over a building iPod inventory, the Oppenheimer said inventories were within the target range. Oppenheimer said while he remains respectful of the competition, he feels the iPod and iTunes are "by far" the best products in their market categories.
Tim Cook would not comment on the forthcoming iTunes-based phone from Motorola.
Apple feels its addition of podcasts to iTunes 4.9 is a "great complement to the ipod experience." Over 4,000 podcasts are already available for free via the iTunes store.
Apple retail stores had "another solid quarter," according to Oppenheimer. Apple opened seven stores during the quarter, with an average of 105 open during Q3. The average store revenue has climbed to $5.3 million per store, a 56 percent increase. Traffic to Apple Stores continues to grow, with a total of 12.2 million visitors each weak. Each store sees an average of nearly 9,000 people per week. Apple will end fiscal 2005 with 125 stores open worldwide.
Apple saw the highest revenue in nine years form education sales for a June quarter.
Apple saw a "very successful launch of Mac OS X Tiger," which generated about $100 million in revenue in the third quarter. The stronger-than-expected Tiger sales contributed to the company's high gross margins, according to Oppenheimer. Q3 2005 was the most successful quarter in Apple's history in terms of operating system sales. Oppenheimer said the response to Tiger's Dashboard and Spotlight features has been "tremendous[ly]" positive. The install base of Mac OS X has grew to 16 million users in Q3.
Apple now has $7.5 billion in cash. Neither Oppenheimer nor Cook would comment on future plans for the money.