Markets unimpressed by record Apple results

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It seems that even the electronics company that can do no wrong can still encounter the wrath of a jittery US stock market, as Apple discovered last night when it released its first quarter results.

Apple has been focusing on diversifying its product base and with it spreading its turnover and profit reliance across more than just the iPod line. It shipped 2.3 million Mac computers in the quarter, up 44 per cent from the same quarter a year ago.

Growth in Mac sales was again based on Christmas sales of all Mac computers coupled with high demand for its MacBook and MacBook Pro laptops, as consumer users continue to opt for neater portable devices. However, sales of Apple's laptops, which can run both Mac OS and Windows, continue to sell in volumes above the industry average.

The company shipped 22.1 million iPods (exlcluding the iPhone), up about 5 per cent from the previous year's quarter, but fell short of several analysts published expectations of 22.4-25 million units.

Apple sold a total of 2.3 million iPhones in the quarter, in line with expectations and still on track to meet the company's projection of 10 million handsets by the end of 2008.

All this translated into turnover of $9.6 billion (£4.92 billion) and profit of $1.58 billion (£810 million) for the quarter. Sales outside the US accounted for 45 per cent of the quarter's revenue.

"Apple's revenue grew 35 percent year-over-year to $9.6 billion, an increase of almost $2.5 billion over the previous December quarter's results," said Peter Oppenheimer, Apple's chief financial officer. "Apple produced cash flow from operations of over $2.7 billion during the quarter, yielding an ending cash balance of over $18.4 billion. Looking ahead to the second quarter of fiscal 2008, we expect revenue of about $6.8 billion."

Despite the strong figures, shares in Apple fell 11 per cent in after-hours trading as investors expressed concern that the tough economic conditions in the US would hit future sales, particularly of high-price items such as the MacBook Air laptop announced last week at the Macworld conference in San Francisco.

"Investors are nervous about strength in consumer and even though Mac shipments were quite strong, iPods were light versus expectations," said Shannon Cross of Cross Research.

The next quarter should also see financial contributions from recently announced products including online movie rentals via its iTunes service, new storage products and the updated Mac Pro high-end desktop workstation.

(Additional reporting from Reuters)

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