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Notes of interest from the Apple FY 04 fourth quarter conference call


Overall, Apple Computer achieved a superb fourth quarter, shattering the street's expectations by some 8 cents a share. Some notes of interest from the conference call with Apple CFO Peter Oppenheimer and vice president Tim Cook:

  • Apple achieved its highest Q4 revenue in 9 years and closed out its 04 fiscal year with its highest annual revenue in 8 years.
  • Apple shipped over 2,016,000 iPods during the quarter, with Hewlett-Packard iPod shipments accounting for just 6% of total iPod sales (or approximately 121,000 units).
  • Apple has shipped 5.7 million iPods since its inception, which compares to 300 million Sony Walkmans sold during the 80s-90s.
  • In the US, Apple's iPod retains 65% market share of digital music players and over 90% market share of players based on a hard drive.
  • Apple generated $98 million in revenue from its iTunes Music Store and other iPod-related services during the quarter.
  • For the quarter, US revenue was $1.196 billion (up 29%), European revenue was $423 million (up 31%) and Japan revenue was $175 million (up 2%).
  • Overall, Mac based revenue was up 9% year-over-year.
  • The quarter marked the biggest education quarter for Apple in four years.
  • Shipments of portable Macs topped 450,000 units, including 238,000 iBooks and 213,000 PowerBooks.
  • PowerMac G5 and Xserve G5 shipments totaled 156,000 units, though Apple did not provide a breakdown of the two.
  • The company shipped a total of 173,000 eMacs (up 19%) but only 56,000 flat-panel iMacs due to supply constraints associated with the G5 processor.
  • Shipments of both the new iMac G5 and the PowerMac G5 were constrained due to ongoing supply constraints associated with the G5 processor. However, the company is enthusiastic over progress made in this area by chip supplier IBM.
  • In September Apple shipped twice as many G5s as it did in the July and August quarters combined. The company believes it will see a leveling of supply and demand for the G5 by the end of Q1 05, with the exception of the 2.5GHz G5 processor.
  • Apple confirmed that it will open six mini retail stores this Saturday, and said that the smaller sized outlets will allow the company to showcase its products to more people, in "interesting new locations."
  • The company's first European flagship retail store will open on Regent Street in London this November with additional international retail stores to follow in UK and Japan soon after.
  • Apple has decided not to compete in the sub-$800 PC market and instead will focus its efforts in its booming music business and related products. "We don't think we can make a lot of money there."
  • Apple's total direct sales— online, retail, US education, and music— accounted for 52% of the company's total world-wide revenue, fueled by strong performance from its retail and online stores. This figure is up from 43% year-over-year.
  • Apple's Retail segment reported record revenues of $376 million, representing 95% year-over-year growth. Profits from the segment totaled an approximately 18 million.
  • The number of Apple Retail store visitors increased 34% from the previous quarter to 7.8 million in Q4, up from 5.8 million.
  • With an average of 81 stores operating during the quarter, per store revenue rose to 4.6 million per store, up from 3.1 million from the year ago quarter.
  • Apple now boasts 4 unique retail store formats and plans to close out the 2004 calendar year with 100 operating stores.
  • 45 to 50% of CPU buyers at Apple's retail stores remain PC converters or those new to the Macintosh.
  • Best Buy is considered a "very important partner" to Apple and is doing a "fabulous job" selling the iPod.
  • Apple retains a cash-pile of $5.564 billion, which is up approximately 500 million from the previous quarter.
  • During the previous quarter, all new iMac G5s were air freighted from Asia. This practice is expected to continue throughout the current quarter, costing the company between $40 to $50 per unit.
  • Apple sold $213 million worth of software and $271 million in peripherals and other hardware.
  • Apple remains focused on "marketing" the iPod rather than offering a slew of enticing holiday promotions.
  • Apple is working on more marketing campaigns similar to the current U2 iPod campaign, which should turn up in the coming weeks.
  • Apple expects revenues for its Q1 05 (holiday) quarter to reach $2.8 to $2.9 billion.