I'm a little bit weary of Mac sites(and Gene Munster), even to some degree leery, but do pay attention to papers I respect like the San Jose Mercury
PC sales fuel jump in Apple's profits
By Troy Wolverton
Mercury News
The iPod music player has been the key reason for Apple Computer's fortunes in recent years.
But the company is starting to show that it still knows a thing or two about selling computers. On Wednesday, the company reported stronger than expected earnings, fueled in part by a surge in PC sales.
After years as a bit player in the PC market, Apple is rapidly gaining share. The company is clearly benefitting from a recent move to change the chips at the heart of its computers, making them more competitive with those offered by rivals. But at least some investors and analysts think Apple's resurgence in the PC space has only just begun.
``I think it's possible that snowball is so big and going so fast downhill that nothing can stop it,' said Steve Wallman, a hedge fund manager in Madison, Wis., who owns Apple's stock.
The latest evidence of Apple's gains in the PC business came on Wednesday. Industry research firm IDC reported that Apple's share of the U.S. market, in terms of computers shipped, grew to 5.8 percent in the the third quarter this year compared with 4.3 percent last year.
While that may seem small, it makes Apple the fourth-largest PC maker in the United States, marks the highest share the company has had since 1996 and is up markedly from its nadir in 2000 when it dipped to 2.3 percent, according to IDC.
Meanwhile, Apple reported that its overall PC sales grew 37 percent in the fourth quarter from the same period a year earlier, with sales of its notebooks growing a whopping 63 percent to $1.34 billion.
Apple's computer sales numbers came as part of its generally bullish fiscal fourth quarter earnings report.
For the quarter ending Sept. 30, Apple's profit rose 27 percent from the year-ago period to $546 million, or 62 cents a share. Sales jumped 32 percent to $4.84 billion.
Due to previously acknowledged irregularities in its past stock options grants, Apple warned shareholders that its financial results are preliminary, and the company will likely restate them along with results from past quarters.
Still the report was far better than Wall Street had expected. Analysts polled by Thomson First Call were predicting the company would earn 49 cents a share on $4.67 billion in sales in the quarter.
Apple's outlook for the holiday quarter was somewhat disappointing. The company predicted a profit of 70 to 73 cents a share on sales ranging from $6 billion to $6.2 billion, while analysts had forecast earnings of 75 cents a share on $6.44 billion in sales.
Noting that Apple generally gives conservative guidance, Noah Blackstein, a portfolio manager at Dynamic Mutual Funds in Toronto, said the company's outlook didn't dim his optimism.
Through what's been dubbed the ``halo effect,' Apple's success with the iPod is driving sales of its computers, said Blackstein, whose fund holds Apple's stock.
``I'm getting pretty excited to see what's coming,' he said.
Other investors seemed to agree. In after-hours trading on Wedneday, Apple's stock was up $3.32, or 4.6 percent, to $77.85. The company's shares closed regular trading up 24 cents, or 0.3 percent, to $74.53.
In addition to the strong notebook sales, Apple also saw continued success with its iPod lineup. Sales of the digital music players rose 29 percent year-over-year to $1.56 billion.
``The Apple critics say, `all Apple is is an iPod company,' but it goes beyond that,' said Scott Rothbort, president of LakeView Asset Management. ``This halo effect is really beginning to take hold.'
