Apple Profit Quadruples, iPod Sales Flat

Apple on Tuesday reported yet another record quarter for the company, finishing the best year in its history. The devil is in the details, however, and iPod sales were relatively flat compared with last quarter only increasing five percent. Macintosh sales recorded a similar five percent increase.

Even with flat sales, the company is becoming more profitable, posting revenue of $3.68 billion on a profit of $430 million. "We're extremely proud to have just completed our best year in company history," Apple CFO Peter Oppenheimer said in a conference call for financial analysts Tuesday evening.

Oppenheimer said that the company shipped a staggering one million iPod Nanos in the last 17 days of the quarter ending September 24. Tim Cook, vice president of Apple sales, added that the company is actually having trouble getting the device into consumer's hands.

"The demand for this product is staggering," Cook said. "We ended the quarter with an enormous backlog." He also spoke to reports of Nanos scratching, dismissing them as not a widespread issue and emphasizing the materials used to build the Nano were the same as previous iPods.

In total, Apple shipped 6.45 million iPods, representing a 220 percent growth year-over-year. Oppenheimer said that data indicates Apple has 75 percent of digital music player devices and still holds 80 percent of the market for legal music downloads.

"We will have some very exciting announcements for you tomorrow," Oppenhimer said, possibly hinting that the announcement due Wednesday may be iPod related.

Oppenheimer noted that the 1.23 million Macintosh units sold was the second highest number of units shipped in the company's history, and Cook added that Apple sees no obvious impact from the Intel transition as once feared.

According to Apple data, approximately 45 percent of new Mac owners were first time buyers, up five percent from last quarter.

Apple also said that it is very pleased about its retail growth, with 14.8 million passing through its stores last quarter. Apple plans to open 35 to 40 new stores next year.

Jupiter Research senior analyst Joe Wilcox cautioned those who may read too much into iPod sales.

"While some folks on Wall Street are yelling 'fire' over iPod sales, I don't see too much trouble," Wilcox said. "Sales of iPod are pretty much in line with assumptions built into Jupiter Research's US portable music device forecast. It's true that iPod sales were sequentially flat, but that appears more reflection of the state of the larger portable music player market."

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