Earnings: Apple Execs: iTunes Store Helps Sell Macs


Apple’s last earnings call of the fiscal year started with execs crowing about the success the company has had converting to Intel architecture in just nine months and pushing Macs out the door. Macs made up 58 percent of Apple’s revenue for the quarter; the shipment of 1.61 million Macs broke the earlier record of 1.38 million shipped in 1Q00. More important, perhaps, 61 percent of all Macs sold in the quarter were portables.
The other 42 percent of Apple’s revenue comes from music, which was up 36 percent year over year. iPod shipments grew 35 percent to 8.73 million; more than 39 million were sold during the year. CFO Pete Oppenheimer said Apple estimates that over 70 percent of 2007 model year cars sold in the U.S. will offer direct iPod integration as an option.
— Apple retail stores revenue was up 41 percent year over year to $936 million; annual average revenue per store is almost $24 million.
Options woes: Asked about the ongoing investigation and the role of Chairman Steve Jobs, Oppenheimer reiterated the company’s earlier statement: “As we reported about two weeks ago in our release, the special committee of Apple’s board with its independent advisors reported their key findings. One of which was that the investigation found no misconduct by any member of Apple’s current management team, and that includes Steve.”
iTunes economics: The question: are the video economics similar to the music model? Oppenheimer: “We don’t report individual product gross margins, but we’re running the music store at above breakeven levels. Our view continues to be that selling music and TV shows and now movies helps us to sell iPod and accessories.” At a different point he said: “I don’t want to comment specifically, but we are very happy with the performance of the iTunes store with everything that it’s selling, and as I said, we think it’s a big reason why people are buying iPods and accessories and certainly think it’s helping us in the Mac business.
iTunes video: No indication of when Apple might add another studio’s movies to its iTunes store.
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