Apple calls iPod nano demand "staggering"

Apple today held a conference call with investors to discuss the company's record-setting fourth quarter financial results. Apple said it shipped 634,000 laptops and 602,000 desktops, an overall increase of 58 percent in Mac sales. Apple is "very happy" with Mac sales, which do not seem to be affected by the impending Intel transition. Apple experienced a "fantastic overall back-to-school" season in terms of Mac and iPod sales.

Apple said that iPods captured 75 percent of MP3 player sales in August. Apple sold 6,451,000 iPods during the quarter, and an impressive 1 million iPod nanos in 17 days. The quarter marked the tenth sequential quarter of iPod sales growth. Apple characterized demand for the Nano as "staggering" and said iPod sales "accelerated significantly" after the release of the new device. Apple "fell short of demand and ended with an enormeous backlog" of iPod nano orders. Backlog issues are a result of a component constraint, not manufacturing, the company said.

Apple said it wound down iPod mini shipments in preparation for the release of the iPod nano, which could have resulted in less sales than would have otherwise been made.

Over 1000 iPod accessories are now available, according to the company. When asked about the iPod nano's susceptibility to scratches, Tim Cook said Apple advises users to buy one of the many iPod nano cases. Apple also noted that 15 automakers now include iPod support on new cars. About 30 percent of 2006 model year vehicles offer iPod support.

iTunes still leads the digital music market in 20 countries, with an 85 percent share of the global digital music sales market. There are now 10 million iTunes users with accounts at the iTunes Music Store. In the United States, Apple had more than an 80 percent share. Apple did not release specific numbers for the Japan market, but states that it was the leading music store in the country.

The iTunes Music Store operated above break-even for the quarter, but Apple said the focus remains on selling iPods: "Selling music helps us sell iPods."

Apple said its overall music business accounted for 40 percent of revenues in the quarter.

Tiger revenue for the fourth quarter was around $35 million.

Higher eduction Mac unit sales grew 38% year-over-year

Apple retail stores saw 14.8 million visitors during the quarter, or about 9800 visitors per store, per week. The company plans to open 35 to 40 new retail stores in fiscal 2006.

Apple would not comment on specific plans for its multi-billion-dollar cash stockpile -- which now equates to approximately $10 a share -- other than to "invest in the business."

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