Apple Posts $1 Billion in Profit (1Q 2007) and Financial Call Notes

Apple announced their financial results for the 1st fiscal quarter of 2007 ending on December 30, 2006.

Apple posted record revenue of $7.1 billion and record net quarterly profit of $1.0 billion, or $1.14 per diluted share. These results compare to revenue of $5.7 billion and net quarterly profit of $565 million, or $.65 per diluted share, in the year-ago quarter. Gross margin was 31.2 percent, up from 27.2 percent in the year-ago quarter. International sales accounted for 42 percent of the quarters revenue.

Apple shipped 1,606,000 Macintosh computers and 21,066,000 iPods during the quarter, representing 28 percent growth in Macs and 50 percent growth in iPods over the year-ago quarter.

"We are incredibly pleased to report record quarterly revenue of over $7 billion and record earnings of $1 billion," said Steve Jobs, Apples CEO. "Weve just kicked off what is going to be a very strong new product year for Apple by launching Apple TV and the revolutionary iPhone."

"We generated over $1.75 billion in cash during the quarter to end with $11.9 billion," said Peter Oppenheimer, Apples CFO. "Looking ahead to the second fiscal quarter of 2007, we expect revenue of $4.8 to $4.9 billion and earnings per diluted share of $.54 to $.56."

A live streaming conference call of the Q1 2007 Financial Results will take place at 2:00 p.m. PST on Wednesday, January 17, 2007 at http://www.apple.com/quicktime/qtv/earningsq107.
Financial Call Notes
Some highlights from the Financial Results Conference Call are provided. The most interesting tidbits:

- Q: You decided not to support 3G in the first prototype iPhone model? Your thinking? A: At this point we are very much sold on the EDGE network with Cingular because it is much more widely deployed in the U.S. We don't comment on our roadmaps, but obviously, we would be where the technology is over time.- Q: Didn't get much on Leopard at Macworld. Anything to add? A: Continue to plan to ship Leopard in the Spring. We've got a lot of people working on it.
- Q: Is iLife still a January release time schedule? A: We don't comment on unreleased products, but stay tuned

- Welcome to 1st Quarter Conference Call.
- Stellar financial results. 24% Revenue Growth.
- Driven by strong iPod sales and continued robust demand for Macs.
- Net income of $1 Billion, up 78% from last year's quarter.
- Mac Products: 43% of total quarterly revenue. 1.6 million Macs.
- Pleased with Mac growth. 3x IDG Market growth rates.
- MacBook and MacBook Pros demand was particularly strong. 65% of total Macs were portable
- 21.1 million iPods. 50% growth over year ago quarter.
- Happy that iPod retained leadership position in market.
- iPod has 72% marketshare for MP3 Playerss according to NPD.
- Marketshare gains internationally
- 29% growth in "other" music revenue - primarily iTunes
- Sold over 2 billion songs. Added Paramount at Macworld.
- iTunes music sales - have 85% marketshare
- Apple Retail Stores. 170 stores now. 5 opened during quarter.
- Invested in Stores. "Great experience for iPhone beginning in June."
- $11.9 Billion cash balance.
- Outlook for March Quarter: Targetting $4.8-4.9 Billion in Revenue
- Introduced revolutionary iPhone and Apple TV. Excited about products coming from Apple this year.

Q/A

- Q: Factoring in any pause in iPod demand due to iPhone? A: We factored our view of customer demand in our guidance. Too soon to tell, but feel they have great iPod offerings right now to meet customer needs. In terms of seasonality, for iPods, we've learned that what drives iPod sales are innovative product launches and holiday sales. iPod supply in demand were in balance, so expect a higher seasonal decline this year.
- Q: Which commodities were more favorable than expected in the quarter? A: Favorable pricing across the board. Great time to be a buyer. See the favorable pricing to continue on LCDs and Flash.
- Q: You decided not to support 3G in the first prototype iPhone model? Your thinking? A: At this point we are very much sold on the EDGE network with Cingular because it is much more widely deployed in the U.S. We don't comment on our roadmaps, but obviously, we would be where the technology is over time.
- Q: Considering pricing the Mac more aggressively (lower) considering the high margins? A: We grew at 3x the market, so substantially above the market. 8 of the last 9 quarters, the Mac has beat the market. No reason to change.
- Q: iPod gross margin? A: We don't release product specific gross margins, but iPod was key in achieving the high total margins.
- Q: What caused sequential drop in Mac sales? A: Same decline as previous year. Have extremely strong education/institutional business in Q4, which accounts for Q4->Q1 drop.
- Q: Gross margin on iPhone? A: Don't plan to ship iPhone until June. We don't provide product level gross margins. But the guidance we give in April will comprehend the anticipated iPhone shipments.
- Q: iPod sales breakdown? A: All three models did exceptionally well
- Q: Didn't get much on Leopard at Macworld. Anything to add? A: Continue to plan to ship Leopard in the Spring. We've got a lot of people working on it.
- Q: Is the iPhone design fixed? For example, the battery sealed? Any consideration to changing that? A: We'll provide more details on the iPhone right before we start shipping in June.
- Q: Steve Jobs said that they predict 10 million iPhones sales? Fiscal or Calendar Year? A: Calendar year 2008.
- Q: Will the iPhone be in full production in June? 10 million for 2008 seems low. Do you expect to have capacity constraints? A: We'll share more details closer to the launch.
- Q: Apple TV projected units? It's the best selling product on your website right now. A: We just started taking orders. Plan to ship in February. We'll just have a few shipping weeks in this quarter.
- Q: Do you see the Apple TV a niche platform or broad platform? A: We see it as the DVD player of the 21st century. So clearly not a niche.
- Q: Comments regarding Halo effect? A: Intent to buy a Mac is up substantially. Significant momentum on the Mac. We are thrilled with the numbers this quarter for the numbers for the Mac.
- Q: Breakdown of the iPod sales going to new owners or upgraders? A: Don't know
- Q: Any comments on iPhone canabalization of the iPod? A: Still early to say, we believe we have a broad range of iPods to satisfy consumers.
- Q: Do you see the iPod and iPhone converging? A: We'll see. The iPod has a broad range of products. We'll talk more as the iPhone gets closer to shipping.
- Q: Mac Pro performance? A: Pro market met our expectations internally, but expectations were tempered by the fact that some customers were waiting for the Universal Adobe Suite. We would hope to see those customers to buy after the final version is released
- Q: Comment on Boot Camp downloads? A: 1.5 million downloads for Boot Camp. Still intend to ship it with Leopard.
- Q: Comment on the Cisco lawsuit? A: We think the Cisco lawsuit is silly. Several companies use the term iPhone already. First company to use it for a cell phone. Confident we'll prevail.
- Q: Is iLife still a January release time schedule? A: We don't comment on unreleased products, but stay tuned
- Q: Will there be additional software download opportunities on the iPhone? A: We'll talk more about the iPhone closer to the launch
- Q: Update on Retail Store plan for '07? And Employee count? A: Ended the Dec quarter with about 6600 employees in our retail stores. Opened 5 stores in December Quarter. Expect to open 7 in the March quarter. Open 35-40 in Fiscal '07.

Top Stories

Five Mac Apps Worth Checking Out - June 2020

Tuesday June 2, 2020 2:25 pm PDT by
Apps developed for the Mac often don't receive as much coverage as apps designed for iPhones and iPads, so we have a series at MacRumors that highlights interesting Mac apps that are worth taking a look at. This month's apps are designed to make working from home a little bit easier. Subscribe to the MacRumors YouTube channel for more videos. Meeter (Free) - Working from home often...

iPhone 13 Prototype Mockup Depicts Notch-Free Design and USB-C Port

Thursday June 4, 2020 10:07 am PDT by
We still have a few months to go before Apple unveils the iPhone 12, but rumors about the iPhone 13, coming in fall 2021, are already circulating. Japanese site Mac Otakara today shared a rough 3D printed mockup of a 5.5-inch iPhone said to be coming in 2021, which is from "Alibaba sources." The model may be built on leaked specifications and rumors, but where the info comes from is unclear. ...

iPad Pro With A14X Chip, 5G, and Mini-LED Display Expected in First Half of 2021

Wednesday June 3, 2020 6:22 am PDT by
Apple plans to launch new iPad Pro models with an A14X chip, 5G connectivity, and a Mini-LED display in the first or second quarter of 2021, according to the increasingly reliable Twitter account L0vetodream. The leaker claims that the new iPad Pro models will be equipped with Qualcomm's Snapdragon X55 modem, which supports both mmWave and sub-6GHz. mmWave is a set of 5G frequencies that...

Apple's First MacBook Pro With a Retina Display Will Become 'Obsolete' in 30 Days

Monday June 1, 2020 7:50 am PDT by
If you are still hanging on to a Mid 2012 model of the 15-inch MacBook Pro with a Retina display, and require a new battery or other repairs, be sure to book an appointment with a service provider as soon as possible. In an internal memo today, obtained by MacRumors, Apple has indicated that this particular MacBook Pro model will be marked as "obsolete" worldwide on June 30, 2020, just over...

$5 Billion Lawsuit Accuses Google of Tracking Chrome Users in Incognito Mode

Wednesday June 3, 2020 3:13 am PDT by
A proposed class action lawsuit in the U.S. has accused Google of violating federal wiretap laws by tracking the online activities of users when in Incognito mode. According to Reuters, the class action argues that by surreptitiously collecting information about what people view online and where they browse when they use Chrome's private browsing mode, Google has been intentionally deceiving...

Next iPad Air Could Feature a USB-C Port Instead of a Lightning Port

Tuesday June 2, 2020 8:30 pm PDT by
The fourth-generation iPad Air may be equipped with a USB-C port instead of a Lightning port, according to a new report from Japanese site Mac Otakara that says the information comes from a Chinese supplier. Apple transitioned to USB-C for its iPad Pro models in 2018, but other iPads have continued to feature a Lightning port for charging purposes. Mac Otakara says that the new iPad Air will ...

Next Apple Pencil Could Be Released in Black

Tuesday June 2, 2020 10:25 am PDT by
The next iteration of the Apple Pencil could be available in black for the first time, according to leaker Mr. White who shared the tidbit on Twitter this morning. A mockup of an Apple Pencil in black We haven't heard rumors of a next-generation Apple Pencil and it's not clear when a new model might be released. Apple is rumored to be working on mini-LED versions of the iPad Pro, and it's...

Apple's Stock Price Hits a New All-Time High [Updated]

Friday June 5, 2020 7:06 am PDT by
Roughly four months after hitting an all-time high just before financial markets and economies faltered in the face of the current public health crisis, Apple's stock price has returned to those levels and has set a new all-time high today. Apple's previous intraday high of $327.85 was set on January 29, and that high-water mark was surpassed just a few minutes ago as it hit $328.00 before...

Code in iOS 13.5.5 Suggests Apple is Working on Services Bundle

Wednesday June 3, 2020 5:04 pm PDT by
Rumors have suggested Apple is working on a services bundle that will offer multiple Apple services like Apple TV+ and Apple Music for one flat monthly rate, and according to 9to5Mac, code found in iOS 13.5.5 seemingly confirms Apple's bundle plans. Files in iOS 13.5.5 reference a "bundle offer" and a "bundle subscription," and these files weren't in earlier versions of iOS. The files are...

Deals: Get the Limited Edition Mac Bundle With 11 MacOS Apps Including Parallels Desktop for $54

Wednesday June 3, 2020 6:46 am PDT by
At StackSocial this week you can get the Limited Edition Mac Bundle featuring Parallels Desktop for a low price of $54 with the promo code RUMORS10. This new bundle features 11 total apps for macOS, including Parallels Desktop, TextExpander, PDF Expert, and more. Note: MacRumors is an affiliate partner with StackSocial. When you click a link and make a purchase, we may receive a small payment, ...