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Mac sales calm before Intel storm

Tags:
Decline,
ITunes,
Growth,
Sales

Ina Fried CNET News.com

Published: 19 Jan 2006 09:40 GMT

Apple executives confirmed on Wednesday that some buyers put off Mac purchases last quarter in anticipation of new Intel-based Macs — although that slowdown was masked somewhat by strong iPod sales.

In the Christmas quarter that ended on 31 Decwmber — which this year included an extra 14th week — Apple sold 1.25 million Macs. That was just a 1 percent increase from the prior quarter and below what many analysts had originally predicted.

Apple acknowledged that it saw some customers hold off on purchases ahead of January's Macworld Expo as they waited for the company to start making Intel-based Macs. However, Apple said it was pleased the stall in sales wasn't more pronounced.

"Mac unit sales exceeded our internal expectations despite what we believe was a pause in sales associated with the Intel transition," chief financial officer Peter Oppenheimer said during a conference call with analysts and reporters following the company's earnings report. The company also issued a forecast for the current quarter that was less than most analysts had been projecting.

"We are targeting the second-best quarter in the company's history, second only to last quarter, with revenue of about $4.3bn," Oppenheimer said. Analysts had been looking for more than $4.6bn, according to First Call.

In making its forecast, Apple said it was predicting a seasonal decline in iPod sales as well as a further hit to Mac sales as the company continues its transition to Intel-based Macs.

"We did see a pause[in Mac sales] last quarter," chief operating officer Tim Cook said on the conference call. "We factored what we saw last quarter into this quarter's guidance."

As for the first of the Intel Macs, Cook said he was "thrilled" with the early response to the new iMac, as well as the MacBook Pro. Given that the former is already shipping, Cook said that Apple hopes to be able to meet demand for that product. However, demand for the MacBook Pro laptop, which won't ship until next month, is likely to exceed supply, he added.

"We may not be able to meet the demand on the MacBook Pro," Cook said.

Apple also said it will continue to expand its growing network of retail stores, which last quarter generated more than $1bn of Apple's $5.7bn (£570m of £3.2bn) in sales. "We will continue to add new stores at a measured pace and expect to open a total of 40 new stores in fiscal '06," Oppenheimer said.

Most of those stores will be in the United States, but the company also plans new shops in the UK Canada, and Japan, Apple said.

On other fronts, Apple noted that its music store again did better than break even, but the company did not quantify the size of the profit. The company said it was selling an average of 3 million tracks per day from the store.

"We couldn't have been happier with sales of iTunes in the December quarter," Oppenheimer said. The company also promised "there's more video content on the way."