Apple earnings set records, but revenue off. (InfoWorld) - Apple Computer Inc.'s fourth quarter of 2005 was the best operating period in the company's history, according to Apple, but financial analysts were expecting even more from the company in Tuesday's earnings release. 
Fourth-quarter revenue was $3.68 billion, up from $2.35 billion in last year's fourth quarter, but slightly below the expectations of analysts polled by Thomson First Call for revenue of $3.73 billion.
Analysts have been worried that Apple's skyrocketing growth over the last few years would inevitably fall as its iPod music player becomes almost ubiquitous. However, even though revenue fell short of expectations, iPod shipments were up an astounding 220 percent compared to last year's fourth quarter.
When it announced its third-quarter results in July, Apple predicted that fourth-quarter revenue would be $3.5 billion. Analysts had expected the company to do even better during what was considered a strong back-to-school season, but shipments of iPods and Macs were in line with the company's expectations, said Peter Oppenheimer, senior vice president and chief financial officer at Apple, on a conference call following the company's announcement.
Still, after-hours stock traders punished Apple's stock (AAPL) for missing the revenue expectations of financial analysts. The stock was down $5.39, or 10.5 percent, to $46.20 in after-hours trading on the Inet exchange.
Apple's fourth-quarter profit was $430 million, or $0.50 in earnings per share. This compares to profit of $106 million, or $0.13 per share, last year. The profit numbers included a $0.12 per share benefit related to revisions in Apple's tax accounting. Excluding the benefit, earnings per share were $0.38, slightly ahead of analyst estimates of $0.37 per share.
The quarter was highlighted by the introduction of the iPod nano in early September. The company sold 1 million iPod nanos in the 17 days between the device's debut and the end of the quarter, Oppenheimer said. In total, 6.45 million iPods were shipped during the quarter, marking the tenth consecutive quarter of sequential increases in iPod shipments, he said.
Demand for the iPod nano far exceeded supply, and Apple has a large backlog of orders heading into the new quarter, said Tim Cook, executive vice president of sales and operations for the company.
On the Mac side, Apple shipped 1.23 million units, the second highest quarterly shipment total in the company's history, Oppenheimer said. Desktop sales were up 56 percent compared to last year, while notebook sales were up 41 percent.
For the full year, Apple recorded $13.93 billion in revenue and $1.34 billion in profit, both of which were company records, Apple said.
The company expects revenue of $4.7 billion and earnings per share of around $0.46 for the upcoming quarter.
NOTE:
Update includes Oppenheimer comment and market reaction in graphs four and five, and executive comments on iPod and Mac sales in graphs seven to nine.
REFERENCES:
Apple earnings set company records, but revenue off, Oct. 11, 2005
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