Apple's Q4 Conference Call highlighted the first profitable quarter for its retail segement, its highest iPod quarterly sales, its strongest PowerBook sales quarter, its highest revenue in 7 quarters, and its strongest higher education sales quarter ever. We have additional highlights and details...

• Apple exceeded its guidance on revenues of $1.715B, its highest quarterly revenue in 3 years.




• Apple sold 787,000 Macs during quarter, an increase of 7 percent over the year ago quarter.





• Apple had strong sales of beyond the box items, such as AppleCare, displays, iSight, and iPod, which accounted for for the additional revenue increase.





• Apple's Power Mac sales rebounded in the fourth quarter to 221,000; all three three Power Mac G5 units are available in volume. The strongest sales were in the high-end Power Mac and the entry-level Power Mac G4 ($1,299).





• Apple shipped 176,000 PowerBook units, an all time quarterly high.





• Apple shipped 336,000 iPods for $121 million revenue, another quarterly record. Apple held the No. 1 position in the MP3 player again, according to NPD. It expects to have 8,000 retail points of distribution (worldwide) for the Christmas buying season.





• Apple's retail segment achieved its first profitable quarter, posting a net profit of $1 million. It ended the quarter with 65 stores. Apple earned $193 million in revenue from its retail segment in the fourth quarter--up to $48 million from from the June quarter (with 6 additional stores opened during the quarter).





• The average quarterly revenue per store was $3.1 million up from $2.6 million last quarter. Apple was pleased with its high profile stores, including Apple Store SoHo in New York with impressive year over year growth and Apple Store Chicago, which showed the highest traffic of any store last quarter with 375K visitors.





• Apple said it expects to have 73 stores open by Thanksgiving 2004 (compared with 50 open as of Thanksgiving 2003). Apple's first international store in Tokyo is expected to be complete by the end of calendar year, making a total of 74 Apple Stores by the end of the year.





• Apple saw a 15% decline in education in education spending when compared with the year ago quarter, primarily due to weakness in the K-12, which Anderson speculated was to due budget crises and reluctance to spend in the early part of budget year. About 47% of the education units shipped were portables.





• Apple had its best quarter ever in higher-education with strong PowerBook sales as well as strong sales to both students and education.





• Anderson said the future of education was more one-on-one initiatives. Apple closed 6 deals with more than 1000 units and 20-25 below that threshold.





• Anderson said over the last six months, sales to education decreased only 5% (when combined with the 5% increase in Q3) and that Apple was hoping this was inline with overall education sales and that it hoped to maintain education market share.





• Apple's gross margins at 26.6% were down 110 basis points due to air freight costs associated with the ramp of the Power Mac G5 and iMac lines. Apple capitalized $14 million in expenses related to Panther development. It gained $8M on the sale of Akamai shares and saw a tax rate of 25%.





• Apple's cash reserves increased to $4.566 billion, an increase of $229 million for the entire fiscal year. It spent $58 million in the fourth quarter with $32 million going to its retail segment. The total spent in 2003 on its retail segment was $164 million compared with $92 million in 2002.
  




• Apple said it expects a stong upgrade cycle with availability of Power Mac G5, Panther, Quark Xpress 6, and new Adobe products.





• Japan unit sales were up 27%; Europe unit sales were up 16%, retail unit sales were up 74%, while Americas unit sales were down 3%.





• Apple expects revenue to increase to $1.9 billion next quarter and its gross margins will rise to 27% due sales of Mac OS X and despite slight increases in flat-panel costs due to more demand than supply during the upcoming seasonal buying season. Apple also expects more expenses with seasonal advertising, more retail store expenses, and other costs for a total of $30 million next quarter. However, it expects in a slight increase in sequential earnings relative to the September quarter.





• Apple said its ASE (Apple Solutions Experts) program was up to 300 employees worldwide who were placed in third-party retail locations such as CompUSA and Best Buy. Apple was still exploring its pilot program with Best Buy in about 48 stores--though only some have Apple-badged employees.





• Apple said it saw a decrease in iBook sales primarily due to weakness in the K-12 market, but also due to some cannibalization by sales of the 12" PowerBook.





• Apple sold 253,000 iMacs, 137,000 iBooks, 221,000 Power Macs, and 176,00 PowerBook--showing a year-over-year change in each model: -20% (iMacs), -25% (iBooks), +26% (Power Mac), and 203% (PowerBook) for an overall 7% increase. Apple sold 59,000 Mac units through its retail stores for year-over-year increase of 74% in unit sales.





• Apple's direct sales accounted for 43% of its overall sales. This includes retail sales to the education channel and online sales to customers. For the entire fiscal year, 39% of its sales were direct compared with 34% in 2002.





• Anderson said Apple is targetting more than 200,000 Power Mac units for next quarter.

by MacNN Staff