Apple

KK · Guru

Apple

KK · Guru

Apple First-Quarter Profit Rises on IPod, Mac Sales

Jan. 17 (Bloomberg) -- Apple Inc. said first-quarter profit jumped 78 percent after holiday shoppers snapped up iPod digital music players and Macintosh computers.

Net income rose to $1 billion, or $1.14 a share, from $565 million, or 65 cents, a year earlier, Cupertino, California-based Apple said today in a statement. Sales rose 24 percent to $7.12 billion. Analysts anticipated profit of 78 cents, according to the average of 14 estimates compiled by Bloomberg.

Apple sold a record 21.1 million iPods after Chief Executive Officer Steve Jobs stoked holiday demand by releasing smaller, less-expensive and higher-capacity models. Updated Macs with faster chips from Intel Corp. helped drive shipments to 1.61 million machines. Sales gained in the U.S. and abroad.

``The results today confirm that Apple's product portfolio is a superior offering to the market place,'' said Glen Kacher, a fund manager at Integral Capital Partners in Menlo Park, California, which owns Apple shares. This year ``should be a victory lap for Apple.''

Profit and sales this quarter will fall short of analysts' estimates. Apple forecast earnings of 54 cents to 56 cents a share, compared with the 60-cent average analyst estimate. The company expects sales of $4.8 billion to $4.9 billion, below analysts' average estimate of $5.23 billion.

Apple tends ``to be very cautious'' in its forecasts, said Michael Church, who helps handle $2.2 billion at Church Capital in Yardley, Pennsylvania. ``Expectations were pretty lofty.''

Options Overhang

Shares of Apple fell 1 percent in late trading to $94.04 after dropping $2.15 to $94.95 at 4 p.m. New York time in Nasdaq Stock Market trading. They have advanced 12 percent this month following an 18 percent increase last year.

The results may divert attention away from a stock options scandal at Apple.

The company in December said an internal investigation, led by Apple director and former U.S. Vice President Al Gore, cleared Jobs of any misconduct. While he knew about and recommended some backdating -- in which recipients receive more favorable pricing on stock grants -- Apple said Jobs, 51, didn't benefit from the practice.

That may not clear Jobs in the eyes of U.S. investigators at the Securities and Exchange Commission and Department of Justice. Federal prosecutors in San Francisco are reviewing Apple's backdating of stock options.

``He's more important to the company than almost any other CEO is to any other company,'' said Roger Kay, an analyst at Endpoint Technologies Associates in Wayland, Massachusetts. ``He embodies the company. Any vulnerability on his part is definitely negative.''

IPhone

Jobs, who co-founded Apple in 1976, didn't mention the company's stock-options probe last week when he unveiled the iPhone, a gadget due in June that combines the iPod and a cell phone with Internet browsing.

Apple plans to sell 10 million iPhones next year to capture a 1 percent slice of the cell-phone market, Jobs said at the San Francisco Macworld Expo conference. He also introduced Apple TV, a set-top box enabling users to send movies, TV shows and other media files from their computers to their televisions.

``Adding the iPhone and the Apple TV product to the mix can only mean that Apple will lead the connected device market,'' said Integral Capital's Kacher.

The company has sold more than 88.7 million iPods since Jobs introduced the player in October 2001.

Wait and See

``We could not have been happier with the quarter,'' Chief Financial Officer Peter Oppenheimer said in an interview. Apple will have ``to see'' whether customers hold off buying iPods as they wait for the iPhone, he said.

While the iPhone may damp sales of standalone iPod players, investor enthusiasm that Apple's earnings will continue to thrive pushed the shares to a record $97.10 yesterday.

This marks the ninth-straight quarter that Mac shipments have topped 1 million machines, with sales of MacBook notebooks surpassing orders for desktop models such as the iMac.

The average selling price for Macs rose to $1,501 in the first quarter, compared with $1,375 a year earlier. For iPods, average selling prices dropped to about $163 from $205 with the addition of the $79 Shuffle in October.

The Mac is competitively priced and Apple doesn't expect to cut pricing to gain more orders, Chief Operating Officer Timothy Cook said on a conference call with analysts. ``We have no reason to change.''

`Like Band-Aids'

Sales through Apple's 170 retail stores made up 16 percent of total revenue, down from 19 percent a year earlier, as the company adds retail partners to help sell Macs and iPods. The Mac is sold through 7,500 stores worldwide, while the iPod is available at 40,000 stores, Apple said.

The stores ``are bringing many new customers to Apple,'' Oppenheimer said on the call. ``Come June, they'll sell a lot of iPhones.''

More than a third of annual iPod orders come in December, according to a Jan. 3 report by analyst Richard Farmer at Merrill Lynch & Co. in New York. He cited research on sales of so-called MP3 players from the NPD Group Inc.

Some buyers including Ramon Smith, 33, were drawn to the Shuffle, Apple's lowest-priced iPod. Having already purchased an iPod for his wife and daughter, Smith, an office manager at Thomas Weisel Partners Group Inc., bought the Shuffle for himself while shopping at Apple's San Francisco store three days before Christmas.

``They're like Band-Aids,'' said Laura Bzdek, 38, after picking up an 80-gigabyte video iPod for her boyfriend. ``They're the brand name of MP3 players.''

KK · Guru

BT, Published February 9, 2006
Apple price cut hits Asia chip maker shares

(SEOUL) Shares in Samsung Electronics and other Asian memory chip makers fell yesterday after Apple's music player price cut fanned fears of a steeper price decline in chips used in the products.

Apple, which uses the NAND flash memory chips in its portable MP3 players, cut the price of its cheapest model, iPod Shuffle, on Tuesday and launched a smaller-capacity version of its mid-priced iPod Nano. The move reflects the recent drop in NAND flash memory prices triggered by seasonally slower demand in the first quarter, analysts say, which exacerbated investor concerns about the chip makers. It also cast a shadow over smaller makers of MP3 music players, struggling in a fiercely competitive market dominated by Apple.

'The spot prices of NAND flash memory fell more than 20 per cent so far this year and it clearly is worse than expected, even considering demand usually slows in the first quarter,' said Lee Min Hee, an analyst at CJ Investment & Securities. 'Apple appears to be aiming at spurring demand with lower prices. Looking back, people had been too optimistic about NAND late last year.'

Chip makers have been aggressively raising NAND flash output, shifting their production capacity away from less profitable computer memory chips, betting on explosive demand for portable music players, digital cameras and photo-snapping phones.

Shares in Samsung Electronics Co Ltd, the world's largest memory chip maker with about a half of the NAND flash market, dropped 2.27 per cent to end at 690,000 won. Hynix Semiconductor Inc, the number-two memory chip maker, fell 1.56 per cent to 34,700 won. Japan's Toshiba Corp slid 3.11 per cent to 716 yen, mostly hit by investor concerns over its pricey deal to buy Westinghouse, the US power plant arm of British Nuclear Fuels, but also in part on concerns over the weaker NAND market.

'Right now I think the issue with Westinghouse is a bigger factor for Toshiba,' said Hideyuki Suzuki, investment information manager at SBI Securities. 'Falling NAND prices have been in the background for a while so that might be responsible for the price (cut).' Toshiba expects global NAND demand to more than double to 2.15 trillion yen (S$29.7 billion) by the year to March 2009.

Apple, which has 70 per cent of the US digital music player market, said in November it would prepay US$1.25 billion to secure flash memory supply up to 2010 with five leading makers, including Samsung, Hynix, Toshiba, Intel Corp and Micron Technology Inc.

Samsung had a 50.2 per cent share in the global NAND flash memory market in the third quarter of 2005, followed by Toshiba's 22.8 per cent. Hynix had 13.2 per cent of the market, research firm iSuppli showed.

Analysts and company officials say Apple's smaller rivals such as Singapore's Creative Technology Ltd and South Korea's Reigncom Ltd will have to follow suit to stay competitive. 'Apple's price cut will deepen competition in the US market and other makers will have to lower prices to survive,' said Donald Kim, a spokesman at Reigncom, the maker of iRiver MP3 players.

Creative, which makes Nomad and Zen MP3 players, and Samsung Electronics, which sells Yepp players, declined to comment. Creative shares were flat at S$13.2, while Reigncom shares fell 1.47 per cent to 13,450 won. - Reuters

tfwee · Veteran

Apple faces lawsuit over iPod screen scratches

Sun Oct 23,11:50 PM ET

PHILADELPHIA (Reuters) - Apple Computer Inc. (Nasdaq:AAPL - news) faced a lawsuit that alleged the company knew its nano portable music player was defective but still decided to press on with the product's release last month.

The credit card-sized nano, which replaced the best-selling iPod mini and is smaller than the traditional iPod, met with rave reviews. But users quickly started grumbling on Internet message boards that the device's screen scratches too easily.

Consumers have filed a proposed class action lawsuit in San Jose, California on Wednesday, claiming the nano scratched "excessively during normal usage" and alleged Apple released the product knowing the problems and led consumers to believe it was durable -- forcing them to shoulder the cost of replacing defective music players.

The complaint blamed the nano's defectiveness on the film of plastic resin that covers it to protect it from damage. Previous versions of the iPod were coated with thicker and stronger resin, the suit said.

"Rather than admit the design flaw when consumers began to express widespread complaints ... Apple concealed the defect and advised class members that they would need to purchase additional equipment to prevent the screen from scratching excessively," the complaint said.

A spokesman for Apple, whose main offices are in Cupertino, California, could not be reached for comment.

Sales of iPods account for nearly a third of Apple's total sales, and the company has a share of about 75 percent of the U.S. market for all MP3 players. The company's shares, which have soared thanks to overwhelming demand for iPods, hit a new 52-week high of $56.98 on Friday.

Apple admitted in late September that some iPod nano screens cracked too easily, but blamed that separate issue on vendor quality problems and said it had occurred in less than one-tenth of 1 percent of the nanos sold at that point.

The plaintiff named in the California lawsuit, Jason Tomczak, bought a nano in September that he said quickly became so scratched he could not view the screen. Apple replaced that device because of a battery problem, but the complaint said the replacement nano also became so scratched that Tomczak decided to return it.

The lawsuit will require a judge to grant it class action status. Because Tomczak and other complainants were required to pay a $25 fee to return the nano, the suit seeks the return of those fees along with the device's original cost and several other forms of damages.

The suit, filed by law firm Hagens Berman Sobol Shapiro LLP, said Apple has "failed to remedy the problem in any meaningful way" and claimed Apple deleted postings on its Web site that relate to the scratching problem.

KK · Guru

Apple drops Samsung investment plan
South Korean newspaper says anti-Samsung sentiment scared Apple away from investment in chipmaker.
October 15, 2005: 8:04 AM EDT

SEOUL (Reuters) - Apple Computers, the maker of iPod digital music players, has dropped a joint $3.8 billion investment plan in flash chip production of Samsung Electronics, a South Korean newspaper said on Saturday.

"Apple had proposed about 4 trillion won joint investment with Samsung Electronics in the production lines of NAND flash chips used for its MP3 players," a senior Samsung official was quoted by the Korea Economic Daily as saying. "But as the anti-Samsung sentiment has recently deepened among some political and civic groups, Apple ended the talks, complaining about the sentiment," the unnamed official was cited as saying.

Apple was currently in talks with another memory chip maker for joint flash chip output in the United States, he added. Samsung's and Apple's officials in Seoul could not be reached immediately for comment.

California-based Apple, which also produces Macintosh computers, plans to buy as much as 40 percent of Samsung's flash memory output in the second half of this year for its popular iPod Shuffle and other music players.

Samsung, the world's top memory chip maker, is boosting flash chip output, betting on strong demand from hot-selling digital cameras, music players and other portable devices. It competes with Japanese rival Toshiba in the NAND flash memory chip market. Early this month, two executives at Samsung Group, the parent of the world's most valuable technology firm outside of the United States, were found guilty of conspiring in a 1996 deal to help the children of the group's chairman buy a majority stake in an affiliate at below-market prices. Samsung later lodged an appeal with a local court.

South Korea-based Samsung Electronics reported on Friday a 30 percent drop in third-quarter profits from a year ago due to lower memory chip prices. But it forecast a recovery on brisk demand for sleek flat screens and pricier mobile phones. After the earnings announcement, a Samsung executive forecast the average selling price of flash chips would fall about 20 percent in the fourth quarter from the preceding quarter, while demand was seen continuing to grow until the end of 2008. Doubts among investors about the corporate governance and ownership structure of South Korean firms has kept stock prices low relative to corporate assets.

Shares in Samsung ended flat at 562,000 won on Friday, shedding initial gains, as investors fretted over its earnings growth potential.

KK · Guru

Investors cheer Apple's video iPod
Stock gains nearly 9 percent after the company unveils its latest addition to the iPod family.
October 13, 2005: 5:27 PM EDT

SAN FRANCISCO (Reuters) - Shares of Apple Computer Inc. surged nearly 9 percent Thursday, a day after the company unveiled an iPod that plays video and two days after the company's results disappointed some investors.

Shares of Apple (Research) rose $4.49, or 9.12 percent, to $53.74 on Nasdaq, their best day in more than 10 months. In extended trade Tuesday, the stock fell nearly 10 percent as sales of iPods disappointed some investors.

Apple yesterday unveiled the widely expected video iPod but surprised investors and analysts with a deal with Walt Disney Co. (Research), which owns the ABC network, to sell television shows that can be watched on the new iPod.

Analysts expect more such deals. "We view Apple's move as a sign of things to come," wrote Citigroup analyst Richard Gardner in a note to clients of Apple's deal with Disney to sell shows on the iTunes online store.

Apple Chief Executive Officer Steve Jobs said at a media event in San Jose, Calif., where he unveiled the iPod, the deal with Disney and a new iMac computer with a remote control: "I think it's just the beginning." Disney CEO Bob Iger, who shared a stage with Jobs at the event, said that he believed that the sale and distribution of digital television and other content was the future.

Other analysts also said that the video iPod could further spur sales of the iPod, which holds about 75 percent of the market for digital music players. "We anticipate [Apple] to sign up other video content providers as we believe the vPod [video iPod] could serve as a Trojan horse, much like the original iPod, in moving the industry forward to the digital domain," wrote American Technology Research analyst Shaw Wu in a note to clients.

Apple and Disney said Wednesday that among the TV shows available for purchase and download are the hit shows "Lost" and "Desperate Housewives." "This announcement reinforces our view that Apple is the best positioned vendor to capitalize on the convergence of digital media and computing," wrote Deutsche Bank analyst Chris Whitmore in a note to clients.

Year to date, Apple shares have gained 60 percent and are the 14th biggest gainer in the Standard & Poor's 500 index, of which Apple is a component. The stock tripled in value in 2004.

KK · Guru

BT October 13, 2005, 6.44 am (Singapore time)

Jobs unveils video iPod, TV deals

SAN JOSE, California - Apple Computer unveiled on Wednesday an iPod capable of playing videos, evolving the portable music player of choice into a multimedia platform for everything from TV shows to music videos. Videos will now be sold online alongside songs on Apple's iTunes Music Store. Citing a ground-breaking deal with ABC Television Group, Apple chief executive Steve Jobs said the online iTunes store will sell episodes of hit shows 'Desperate Housewives' and 'Lost' for US$1.99 each, making them available the day after they air on television for viewing on the new iPod's 2.5-inch (6.3cm) colour screen.

Analysts consider Apple's much-anticipated introduction of a video iPod a test of whether consumers would embrace video on such a small screen. Over-the-air TV services are already available for cell phones but the quality remains substandard.

TV deal 'first of its kind'

'It's never been done before, where you could buy hit TV shows and buy them online the day after they're shown,' said Mr Jobs whose other company, Pixar Animation Studios, has a long relationship with ABC's parent, The Walt Disney Company.

Competing portable video players have been available for several years but very little compelling content has been available, and Apple's move comes amid fledgling initiatives to offer original video programming on the Internet.

The new video iPod, available in black or white, will be able to play video and podcasts. A 30GB version will sell for US$299 and a 60GB, US$399. Extra features on both versions include a clock, a calendar that Mr Jobs said never looked better, a stop watch and a screen lock. The video iPod will lock TV shows and music videos downloaded from the iTunes store with copy-protection software, just as Apple does for music. But it will also support the MPEG-4 video standard, meaning users could view home movies and other unencrypted videos on it.

On Wednesday, Apple also introduced newer, thinner models of the all-in-one iMac desktop computer.

KK · Guru

Apple Net Rises; Stock Falls as Sales Miss Estimates

Oct. 11 (Bloomberg) -- Apple Computer Inc. said fourth- quarter profit rose on sales of iPod music players and back-to- school demand for Macintosh computers. The shares tumbled as much as 11 percent after revenue missed analysts' estimates. Net income rose to $430 million, or 50 cents a share, from $106 million, or 13 cents, a year earlier, Cupertino, California- based Apple said today in a statement. Sales increased 57 percent to $3.68 billion, compared with estimates of $3.74 billion.

IPod demand also fell short. Shipments of the music players climbed to 6.45 million units, missing analyst predictions that ranged as high as 8.5 million. Analysts had predicted that the new pencil-thin Nano, introduced by Chief Executive Officer Steve Jobs last month, would fuel sales. Instead, Apple said today it couldn't make the Nanos fast enough to meet demand. "They missed the top-line estimates on revenue and they missed the overly optimistic estimates on iPod shipments,'' said Jim Grossman, who helps manage $63 billion and owns Apple shares at Thrivent Financial in Appleton, Wisconsin.

Shares of Apple, which have risen 60 percent this year, fell $5.54 to $46.05 in extended trading. They earlier rose $1.22 to $51.59 at 4 p.m. in Nasdaq Stock Market composite trading. The stock more than tripled last year.

Net income included a tax benefit of 12 cents a share, Apple said. Profit this quarter will be about 49 cents on revenue of $4.7 billion, Apple said in the statement. Analysts were expecting profit of 48 cents on sales of $4.53 billion. The forecast takes into account the possible effect of rising oil prices on consumer spending, Chief Financial Officer Peter Oppenheimer said on a conference call with investors.

Mac Sales

Apple sold 1.24 million Macs, the fourth straight quarter shipments topped 1 million. Apple said in July that profit would be 32 cents a share on sales of $3.5 billion. Twenty-four analysts surveyed by Thomson Financial on average anticipated profit of 37 cents.

IPod shipments missed even the lowest analyst estimate of 6.7 million, based on a survey of eight analysts by Bloomberg News. The company shipped 6.16 million iPods in the third quarter. The sales shortfall surprised investors who three months ago shed concerns about the growth in iPod demand. Apple last quarter surpassed the most bullish expectations and prompted a resurgence in optimism.

Missing Parts

Apple couldn't get the parts it needed to make enough Nanos to meet demand, Vice President Tim Cook said on the call. The company also wound back production of the iPod mini, which will be replaced by the Nano, toward the end of the quarter. Cook wouldn't say whether the supply problem will be resolved this quarter. ``I'm not going to project when supply will meet demand,'' he said. The backlog of orders was ``enormous'' at the end of the quarter and sales fell ``far, far short'' of demand, he said.

Jobs, 50, introduced the Nano last month in San Francisco. The company tomorrow may release a new iPod that plays videos, according to analysts Piper Jaffray & Co.'s Eugene Munster. ``There were production issues'' for Nano, Munster said in an interview today. ``Initially they weren't expecting any delays and now there are one-to-two week delays.''

Including today's results, Apple has shipped more than 28.2 million iPods since Jobs propelled Apple into the digital music market in October 2001. The company has sold more than 500 million songs through its iTunes online music store. Apple's devices accounted for 72 percent of all music players sold in the U.S. so far this year, according to NPD Group Inc. in Port Washington, New York. The nearest competitor, SanDisk Corp., held a 5 percent share.

Annual Profit

Earnings more than quadruped to $1.34 billion, or $1.56 a share, in fiscal 2005 as sales surged 68 percent to a record $13.9 billion, Apple said today. It's the first time annual profit has topped $1 billion in the company's 29-year history and the first time in a decade that sales have surpassed $10 billion.

The average selling price of the iPod has fallen in the past year after Apple introduced lower-cost players, including the $99 Shuffle, and cut prices across the iPod line. While the average selling price fell to $188 last quarter from $266 a year ago, the Nano helped drive the average up from $179 in the third quarter. Apple offers two versions of the Nano, a 2-gigabyte model for $199 and a $249, 4-gigabyte unit.