Apple Profits, Sales Up, But Stock Price Down

Apple's (Nasdaq: AAPL) quarterly and yearly earnings statement, released yesterday, showed four times the fourth-quarter income than it did in 2004, but still the hip computer company's stock has slumped more than 11 percent since the announcement.

That drop came despite reported revenues of US$430 million -- 50 cents a share -- on income of $3.7 billion for the quarter ending Sept. 24, and annual sales of $13.93 billion, up 68 percent over 2004. The company also showed a profit of $1.3 billion for the year, nearly five times its 2004 profit.

Computer Sales Up, Too

Apple also recorded above-industry-average bumps in the sales of laptops and desktops, but some analysts expressed concern that the company sold fewer than 6.5 million iPods in the quarter. While that number represented a 4.8 percent jump, it was lower than analysts had expected. It also includes sales of a million iPod nanos, released with 17 days left in the quarter.

But Apple executives admitted that demand outstripped supply of the tiny music players.

"We ended the quarter with enormous backlog, and at this point, I can't project when supply would meet demand," Tim Cook, Apple executive vice president of worldwide sales and operations, said in a conference call.

Although Morningstar predicted higher sales of the music player, the actual numbers did not change its opinion of the company.

"Though iPod sales were below the 7.2 million we expected, we are not concerned," analyst Rod Bare wrote. "Demand for the iPod family remains robust, and new products around the corner should keep momentum alive for awhile."

Foundation Is Mac Sales

Bare believes that while iPod sales are important, their key benefit is that they drive sales of Apple's Macs.

"The key to Apple's financial future, in our opinion, remains Macintosh computer sales. Unit sales continue to be robust, and Apple's software expertise continues to create an experience that's hard to beat," he said.

Along those lines, Mac sales were up 400,000 units to 1,236,000 in the fourth quarter. More than half of those sales came from Apple's two laptop lines, iBooks and PowerBooks. The company does not separate sales figures for the two. Just over 600,000 desktops sold in the quarter. Those sales may be somewhat depressed by consumers awaiting the release of Macs featuring Intel (Nasdaq: INTC) chips, due out in 2006.

The stock was trading a bit under $50 this afternoon, lower than its $51.59 close yesterday, but more than 2.5 times its 52-week low of $18.83 on Dec. 12, 2004.