iPod sales power Apple’s fivefold increase in profits

APPLE Computers’ third-quarter profits rose fivefold as sales of iPod music players unexpectedly surged to a record and Macintosh computer shipments reached a five-year high.

Net income rose to $320 million or 37 cents a share, from $61m, or 8c, a year earlier, California-based Apple said in a statement yesterday. Sales climbed 75% to $3.52bn, the company’s highest ever. Profit beat analysts’ estimates for the seventh straight quarter.

A jump in iPod shipments to 6.16 million, seven times as many as a year ago, allayed concerns that demand for the iPod is waning.

Analysts, speculating the gadgets were losing their cachet, had expected shipments of 5.29 million.

Apple sold 1.18 million Macs, the third straight quarter it has sold more than 1 million machines. Profit of 38c a share before one-time items beat the 31c average estimate of 22 analysts surveyed by Thomson Financial.

Shares of Apple rose 35c to $38.70 in extended trading. They earlier rose 11c to $38.35 in Nasdaq Stock Market composite trading. The stock has gained 19% this year after more than tripling last year.

Profit this quarter will be about 32c on revenue of $3.5bn, Apple said.

Analysts were expecting profit of 33c on sales of $3.58bn, according to the average of 21 estimates in a Thomson Financial survey.

Analysts’ expectations of shipments for the third-quarter ranged from 4.8 million to 5.55 million, according to a survey of eight estimates taken by Bloomberg News. IPods account for 75% of all MP3 music players sold in the US.

Growth in iPod sales had slowed because Apple hasn’t introduced a new model since the Shuffle in January, choosing instead to cut prices and boost memory.

It will probably release new designs in coming months to spur shipments during the back-to-school and holiday shopping season as the average selling price, and Apple’s profit per unit, drops, according to analysts.