iPod sales drop, Apple still making money

Apple has posted an increase in net profit and sales for its fourth fiscal quarter of 2009, despite a year on year decline in iPod shipments.

The company reported a profit of $1.67 billion (£1 billion), or $1.82 per diluted share, for the quarter ended 26 September, an improvement from the net profit of $1.14 billion (£700 million) for the fourth quarter of 2008. The earnings per share beat expectations of $1.42 based on estimates polled by analysts at Thomson Reuters.

Apple also posted revenue of $9.87 billion (£6 billion) for the quarter, compared to revenue of $7.9 billion (£4.8 billion) reported last year. Analysts expected $9.2 billion (£5.6 billion) in revenue.

Apple sold 10.2 million iPods during the quarter, an 8 percent decline from a year ago. However, the company recorded a year over year increase in Mac computer and iPhone shipments. Apple shipped 3.05 million Macintosh computers during the quarter, a 17 percent increase. The company sold 7.4 million iPhones for 7 percent unit growth.

"We are thrilled to have sold more Macs and iPhones than in any previous quarter," said Apple CEO Steve Jobs in a statement. "We've got a very strong lineup for the holiday season and some really great new products in the pipeline for 2010."

Mac laptop shipments grew by about 35 percent year over year, though desktop shipments declined by 16 percent, said Peter Oppenheimer, Apple's chief financial officer, during an earnings call. Laptops accounted for close to 74 percent of Mac shipments.

The growth in Mac shipments was aided by a strong back to school season and the release of Apple's new OS, Mac OS X 10.6, codenamed Snow Leopard, said Tim Cook, Apple's chief operating officer.

Mac shipments were stronger in Europe than in the US, with a 25 percent increase in shipments, Cook said. Shipments in Spain and Germany climbed by about 40 percent, while Switzerland and Italy saw increases in the mid-30 percent range. In contrast, Mac shipments in the US grew just 12 percent.

Apple also set new highs in iPhone shipments, helped by the addition of new countries. The company is looking to expand even farther by launching the iPhone in China by the end of this month through 1,000 points of sale. The iPhone could be offered free with certain types of plans, he said.

Apple sells the iPhone 3GS in 64 countries today and will increase that to 80 countries by the end of the year. It will also start offering the phone though multiple carriers in countries including the UK.

Apple shipped 21 million iPhones during the entire fiscal year, Cook said. Interest grew among businesses, boosted by growing support for enterprise applications. More than half of the Fortune 100 companies are testing the iPhone for possible deployment, Cook said.

Despite a drop in iPod shipments during the quarter, sales are likely to pick up during the holiday season. Apple launched an iPod nano in June with a video camera and FM radio. iPod revenue during the fourth quarter declined by 6 percent to $1.56 billion (£950 million), Apple said.