Apple Posts $1 Billion in Profit (1Q 2007) and Financial Call Notes

Apple announced their financial results for the 1st fiscal quarter of 2007 ending on December 30, 2006.

Apple posted record revenue of $7.1 billion and record net quarterly profit of $1.0 billion, or $1.14 per diluted share. These results compare to revenue of $5.7 billion and net quarterly profit of $565 million, or $.65 per diluted share, in the year-ago quarter. Gross margin was 31.2 percent, up from 27.2 percent in the year-ago quarter. International sales accounted for 42 percent of the quarters revenue.

Apple shipped 1,606,000 Macintosh computers and 21,066,000 iPods during the quarter, representing 28 percent growth in Macs and 50 percent growth in iPods over the year-ago quarter.

"We are incredibly pleased to report record quarterly revenue of over $7 billion and record earnings of $1 billion," said Steve Jobs, Apples CEO. "Weve just kicked off what is going to be a very strong new product year for Apple by launching Apple TV and the revolutionary iPhone."

"We generated over $1.75 billion in cash during the quarter to end with $11.9 billion," said Peter Oppenheimer, Apples CFO. "Looking ahead to the second fiscal quarter of 2007, we expect revenue of $4.8 to $4.9 billion and earnings per diluted share of $.54 to $.56."

A live streaming conference call of the Q1 2007 Financial Results will take place at 2:00 p.m. PST on Wednesday, January 17, 2007 at http://www.apple.com/quicktime/qtv/earningsq107.
Financial Call Notes
Some highlights from the Financial Results Conference Call are provided. The most interesting tidbits:

- Q: You decided not to support 3G in the first prototype iPhone model? Your thinking? A: At this point we are very much sold on the EDGE network with Cingular because it is much more widely deployed in the U.S. We don't comment on our roadmaps, but obviously, we would be where the technology is over time.- Q: Didn't get much on Leopard at Macworld. Anything to add? A: Continue to plan to ship Leopard in the Spring. We've got a lot of people working on it.
- Q: Is iLife still a January release time schedule? A: We don't comment on unreleased products, but stay tuned

- Welcome to 1st Quarter Conference Call.
- Stellar financial results. 24% Revenue Growth.
- Driven by strong iPod sales and continued robust demand for Macs.
- Net income of $1 Billion, up 78% from last year's quarter.
- Mac Products: 43% of total quarterly revenue. 1.6 million Macs.
- Pleased with Mac growth. 3x IDG Market growth rates.
- MacBook and MacBook Pros demand was particularly strong. 65% of total Macs were portable
- 21.1 million iPods. 50% growth over year ago quarter.
- Happy that iPod retained leadership position in market.
- iPod has 72% marketshare for MP3 Playerss according to NPD.
- Marketshare gains internationally
- 29% growth in "other" music revenue - primarily iTunes
- Sold over 2 billion songs. Added Paramount at Macworld.
- iTunes music sales - have 85% marketshare
- Apple Retail Stores. 170 stores now. 5 opened during quarter.
- Invested in Stores. "Great experience for iPhone beginning in June."
- $11.9 Billion cash balance.
- Outlook for March Quarter: Targetting $4.8-4.9 Billion in Revenue
- Introduced revolutionary iPhone and Apple TV. Excited about products coming from Apple this year.

Q/A

- Q: Factoring in any pause in iPod demand due to iPhone? A: We factored our view of customer demand in our guidance. Too soon to tell, but feel they have great iPod offerings right now to meet customer needs. In terms of seasonality, for iPods, we've learned that what drives iPod sales are innovative product launches and holiday sales. iPod supply in demand were in balance, so expect a higher seasonal decline this year.
- Q: Which commodities were more favorable than expected in the quarter? A: Favorable pricing across the board. Great time to be a buyer. See the favorable pricing to continue on LCDs and Flash.
- Q: You decided not to support 3G in the first prototype iPhone model? Your thinking? A: At this point we are very much sold on the EDGE network with Cingular because it is much more widely deployed in the U.S. We don't comment on our roadmaps, but obviously, we would be where the technology is over time.
- Q: Considering pricing the Mac more aggressively (lower) considering the high margins? A: We grew at 3x the market, so substantially above the market. 8 of the last 9 quarters, the Mac has beat the market. No reason to change.
- Q: iPod gross margin? A: We don't release product specific gross margins, but iPod was key in achieving the high total margins.
- Q: What caused sequential drop in Mac sales? A: Same decline as previous year. Have extremely strong education/institutional business in Q4, which accounts for Q4->Q1 drop.
- Q: Gross margin on iPhone? A: Don't plan to ship iPhone until June. We don't provide product level gross margins. But the guidance we give in April will comprehend the anticipated iPhone shipments.
- Q: iPod sales breakdown? A: All three models did exceptionally well
- Q: Didn't get much on Leopard at Macworld. Anything to add? A: Continue to plan to ship Leopard in the Spring. We've got a lot of people working on it.
- Q: Is the iPhone design fixed? For example, the battery sealed? Any consideration to changing that? A: We'll provide more details on the iPhone right before we start shipping in June.
- Q: Steve Jobs said that they predict 10 million iPhones sales? Fiscal or Calendar Year? A: Calendar year 2008.
- Q: Will the iPhone be in full production in June? 10 million for 2008 seems low. Do you expect to have capacity constraints? A: We'll share more details closer to the launch.
- Q: Apple TV projected units? It's the best selling product on your website right now. A: We just started taking orders. Plan to ship in February. We'll just have a few shipping weeks in this quarter.
- Q: Do you see the Apple TV a niche platform or broad platform? A: We see it as the DVD player of the 21st century. So clearly not a niche.
- Q: Comments regarding Halo effect? A: Intent to buy a Mac is up substantially. Significant momentum on the Mac. We are thrilled with the numbers this quarter for the numbers for the Mac.
- Q: Breakdown of the iPod sales going to new owners or upgraders? A: Don't know
- Q: Any comments on iPhone canabalization of the iPod? A: Still early to say, we believe we have a broad range of iPods to satisfy consumers.
- Q: Do you see the iPod and iPhone converging? A: We'll see. The iPod has a broad range of products. We'll talk more as the iPhone gets closer to shipping.
- Q: Mac Pro performance? A: Pro market met our expectations internally, but expectations were tempered by the fact that some customers were waiting for the Universal Adobe Suite. We would hope to see those customers to buy after the final version is released
- Q: Comment on Boot Camp downloads? A: 1.5 million downloads for Boot Camp. Still intend to ship it with Leopard.
- Q: Comment on the Cisco lawsuit? A: We think the Cisco lawsuit is silly. Several companies use the term iPhone already. First company to use it for a cell phone. Confident we'll prevail.
- Q: Is iLife still a January release time schedule? A: We don't comment on unreleased products, but stay tuned
- Q: Will there be additional software download opportunities on the iPhone? A: We'll talk more about the iPhone closer to the launch
- Q: Update on Retail Store plan for '07? And Employee count? A: Ended the Dec quarter with about 6600 employees in our retail stores. Opened 5 stores in December Quarter. Expect to open 7 in the March quarter. Open 35-40 in Fiscal '07.

Popular Stories

Generic iOS 19 Feature Mock Light

iOS 19 Leak Reveals All-New Design

Friday January 17, 2025 2:42 pm PST by
iOS 19 is still around six months away from being announced, but a new leak has allegedly revealed a completely redesigned Camera app. Based on footage it obtained, YouTube channel Front Page Tech shared a video showing what the new Camera app will apparently look like, with the key change being translucent menus for camera controls. Overall, the design of these menus looks similar to...
2024 App Store Awards

Apple Explains Why It Removed TikTok From the App Store in the U.S.

Sunday January 19, 2025 6:58 am PST by
Apple on late Saturday removed TikTok from the App Store in the U.S., and it has now explained why it was required to take this action. Last year, the U.S. passed a law that required Chinese company ByteDance to divest its ownership of TikTok due to potential national security risks, or else the platform would be banned. That law went into effect today, and companies like Apple and Google...
iPhone 17 Air Size Feature

'iPhone 17 Air' With Rear Camera Bar Allegedly Shown in Leaked Photo

Tuesday January 21, 2025 12:46 pm PST by
A leaker known as "Majin Bu" today shared an alleged image of a component for the rumored, ultra-thin "iPhone 17 Air" model. The blurry, pixelated image shows a pair of rear iPhone shells with a pill-shaped, raised camera bar along the top. On the left side of the bar, there is a circular cutout that appears to be for a single rear camera. On the right side of the bar, there appears to be an ...
iPhone SE Dynamic Island Majin Bu

iPhone SE 4 Leak Shows Dynamic Island, Casts Doubt on Rumored 'iPhone 16E' Name

Monday January 20, 2025 9:01 am PST by
A new iPhone SE is widely rumored to launch this year, and the device has potentially been confirmed today by known leaker Evan Blass. In a private social media post, Blass shared an image of what appears to be source code mentioning an iPhone SE (4th Gen), which casts doubt on the alternative "iPhone 16E" name rumored for the device. However, the name in the source code could be a...
airtag 4 pack blue

AirTag 2 Launching This Year With These 3 New Features

Sunday January 19, 2025 8:11 am PST by
After a four-year wait, a new AirTag is finally expected to launch in 2025. Below, we recap rumored upgrades for the accessory. A few months ago, Bloomberg's Mark Gurman said Apple was aiming to release the AirTag 2 around the middle of 2025. While he did not offer a more specific timeframe, that means the AirTag 2 could be announced by the end of June. The original AirTag was announced...
iOS 19 Roundup Feature

iOS 19 Rumored to Be Compatible With These iPhones

Saturday January 18, 2025 10:28 am PST by
iOS 19 will not drop support for any iPhone models, according to French website iPhoneSoft.fr. The report cited a source who said iOS 19 will be compatible with any iPhone that can run iOS 18, which would mean the following models: iPhone 16 iPhone 16 Plus iPhone 16 Pro iPhone 16 Pro Max iPhone 15 iPhone 15 Plus iPhone 15 Pro iPhone 15 Pro Max iPhone 14 iPhon...
apple power beats pro 2

Powerbeats Pro 2 Coming Soon: Apple to Announce Them 'Imminently'

Sunday January 19, 2025 8:25 am PST by
In September, Apple said that it would be launching Powerbeats Pro 2 in 2025, and it appears the wireless earbuds are coming very soon. Powerbeats Pro 2 images found in iOS 18 code In his Power On newsletter today, Bloomberg's Mark Gurman said the Powerbeats Pro 2 are "due imminently." In addition to Apple filing the Powerbeats Pro 2 in regulatory databases last month, Gurman said Apple is...
Generic iOS 18

Everything New in iOS 18.3 Beta 3

Thursday January 16, 2025 12:39 pm PST by
Apple provided the third beta of iOS 18.3 to developers today, and while the betas have so far been light on new features, the third beta makes some major changes to Notification Summaries and also tweaks a few other features. Notification Summary Changes Apple made multiple changes to Notification Summaries in response to complaints about inaccurate summaries of news headlines. For...