Revenue rose 35% to $4.36 billion and net income was up 41% to $410 million. But iPod sales and Mac sales came in well below the more optimistic expectations.
Mac sales were 1,112,000. Gartner Group came out with its Q1 PC sales at about the same time as Apple put out earnings, and Mac share in the U.S. market fell to 3.5% in the U.S. from 3.6% a year ago, according to an analysis at marketwatch.com. Much of the hype around the Apple stock has been that Mac share would rise as customers migrate from PCs due to the popularity of the iPod. It looks like that is not happening. If the Intel-based Mac is not a huge success, the platform maintains its position as an "also ran".
Sales of iPods rose to 8,526,000. While these were up from 5,311,000 a year earlier, they were off sharply from 14,043,000 in the immediate previous quarter. Obviously, the holidays helped that quarter, but media accounts indicate that analysts forecast 9 million to 10 million units for fiscal Q2. A number of people who follow the stock tried to explain this shortfall away. Perhaps customers are waiting for newer versions. Color it however they wish, sales appear to be slowing.
With the pace of iPod sales now questionable and the assault of the Mac on the PC market in doubt, Apple may well have real trouble getting above $70 and staying there.
Douglas A. McIntyre is the former Editor-in-Chief and Publisher of Financial World Magazine. He is also the former president of Switchboard.com, which was the 10th most visited site in the world at the time, according to MediaMetrix. He has been chief executive of FutureSource LLC and On2 Technologies, Inc. and has served on the boards of TheStreet.com and Edgar Online. He does not own securities in companies he writes about. He can be reached at email@example.com.