iPod Fuels Apple

iPod replaces Big Mac

IPODS have become the latest measuring stick in an economic index used to compare worldwide currencies.

The US-created Big Mac index in the 1980s has been replaced with the iPod index, and Australia is sitting pretty in the ranks.

CommSec yesterday said it was time to replace the old index based on the price of a McDonald's Restaurant burger, which was invented more than 20 years ago by The Economist magazine. The index assesses whether a currency was under or over-valued against others.

"The Big Mac index has some limitations, one being that hamburgers cannot be traded across countries," CommSec chief equities economist Craig James said.

"CommSec has compiled the iPod index - a comparison of prices for the popular iPod nano music player across the world."

Apple said yesterday it sold 21 million of the portable music players in the past four months.

Of 26 countries, Australia is the eighth cheapest place to buy a 2-gigabyte iPod nano at $US$172.36 ($219).

"The index suggests the US dollar has potential to appreciate against a range of major currencies, with the Aussie dollar about 15 per cent over-valued against the greenback," Mr James said.

The most expensive country is Brazil at US$327.71 ($417) and the cheapest is Canada at US$144.20 ($183).

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Apple shares fall 4% on forecast


By Rex Crum, MarketWatch
Last Update: 11:09 AM ET Jan 18, 2007

SAN FRANCISCO (MarketWatch) -- Apple Inc. shares fell as much as 4% Thursday as a weaker-than-expected forecast for the second quarter and concerns over Macintosh sales outweighed the company's first-quarter surge in earnings and iPod sales.

For some analysts, Apple's forecast raised the issue of whether the planned June release of Apple's iPhone, which combines a cell phone with an iPod, could cause some potential iPod customers to put off their purchases until the iPhone is on the market.

Bill Shope, of J.P. Morgan, cut his rating on Apple's stock to neutral from overweight, citing several factors, including the iPhone's possible effect on iPod purchases.

"We believe this [seasonal] risk is particularly pronounced given our concerns that some consumers may delay iPod purchases ahead of the iPhone lauch," Shope said, in a research note.

Based on the results from Apple's first fiscal-quarter, the iPod is showing no signs of losing its allure with consumers. Apple said it shipped 21 million iPods during the quarter ended Dec. 30, a 50% increase from a year ago.
"After five years, the iPod is still going strong," said Shaw Wu, an analyst with American Technology Research. "It's still a very popular product." Wu holds a buy rating on Apple's stock.

That iPod demand was a large contributor to financial results that exceed those estimates of even the most ardent Apple supporters. The company reported a profit of $1 billion, or $1.14 a share, for its fiscal first-quarter, a 78% rise from the $565 million, or 65 cents a share Apple earned a year ago.
Revenue rose to $7.1 billion, up 24.5% from $5.75 billion in the year-ago quarter.
The results beat the estimates of analysts surveyed by Thomson First Call, who expected Apple to earn 78 cents a share on revenue of $6.42 billion.
IPod ales of the device accounted for $3.43 billion of the company's revenue, or nearly half the total. Apple's total number of iPod sales now stands at about 90 million units since the device first went on sale in October 2001.
The results show that demand for Apple's products remains strong despite stepped-up competition from rivals such as Microsoft Corp.

But it was a mixed bag for Apple's flagship Macintosh computer line.
On the surface, Mac sales put in a solid performance, with sales surging 40% from a year ago to $2.4 billion, while Mac shipments rose 28% to 1.61 million units, more than double the growth of the overall PC market.
However, the Mac results were slightly below many analysts forecasts, as several had expected Apple to sell between 1.75 million and 1.8 million Macs during the quarter.

J.P. Morgan's included the Mac sales shortfall among the reasons for his ratings downgrade.
"Our bullish thesis was based primarily on expectations for significant upside in Mac units," Shope said.
Richard Gardner, of Citigroup, said that while the Mac's year-over-year growth was solid, "it did not meaningfully exceed that of the consumers markets from which Apple derives the majority of its revenue." Gardner has a hold rating on Apple's stock.
However, Munster of Piper Jaffray, said the holiday-quarter Mac sales needed to be taken into context, because they remained almost in line with Apple's September quarter results, which is when Apple sees strong back-to-school PC sales.
"People give iPods for Christmas, not computers," Munster said.
Apple's report comes amid a federal probe into the company's past accounting for stock option grants made to employees. An internal inquiry concluded that Chief Executive Steve Jobs was aware the company backdated some options but didn't benefit from the practice personally.

Chief Financial Officer Peter Oppenheimer said the company was "voluntarily and proactively" informing federal officials of findings regarding Apple's stock-option backdating investigation. Speaking on a conference call to discuss Apple's first-quarter results, Oppenheimer reiterated that Apple's internal review found "no misconduct by any member of Apple's current management team."
Oppenheimer didn't say if the Securities and Exchange Commission has launched a formal probe of the options that a company investigation found to be backdated. Of particular interest to investigators is a special stock grant Jobs' received in exchange for surrendering some backdated options. See full story.
In late December, Apple said it would restate earnings for the past three fiscal years, and that its after-tax profits would be lowered by $10 million for 2004, $7 million for 2005 and $4 million for 2006.

The company heads into its second fiscal-quarter with high anticipations for two new products, the Apple TV and the iPhone. The Apple TV is on sale now and will begin shipping in February, and plugs into a television and allows a person to wirelessly stream digital content such as movies, videos, music and photos from their computer to their TV.

One device that Apple won't be able to include in its next report is the new iPhone, Apple's first entry into the digital phone market. Apple CEO Jobs showed off the touchscreen device at the Macworld show and said Apple intends to put the iPhone on sale in June.
Already, Apple's iPhone has incurred the wrath of another Silicon Valley titan, Cisco Systems Inc.

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Apple's core of iPod sales helps top $1bn
JIM STANTON

CONSUMER electronics giant Apple has smashed through the $1 billion quarterly profit barrier for the first time, as demand for its iPod digital music player and computers soared over the holiday period.

The group said net profit over the three months to December 30 hit $1bn (£508 million) from $565m (£286.3m) over the same period the year before.

The figure smashed analysts' expectations, with Wall Street having forecast a figure of around £345m.

Apple, which last week launched its latest product, the iPhone, said demand had boomed for key products, with sales of its Macintosh computers up by 1.6m on the same period last year and 21m additional iPods flying off the shelves - increases of 28 per cent and 50 per cent respectively.

That helped push turnover to £3.6bn, also a record, from £2.94bn previously.

Sales of the iconic iPod accounted for £1.74bn, or nearly half, of the company's total revenue.

The company now has around 70 per cent of the digital music player market.

Peter Oppenheimer, Apple's chief financial officer, said: "This one [quarter] was for the record books."

However, Apple took some of the shine off the performance when it warned analysts that it expected slightly lower gross margins and slower software sales over the next quarter, which falls ahead of the release of its upgrade to the Mac OS X operating system, dubbed Leopard.

Mac sales continued to be strong, Mr Oppenheimer said, with a growth rate that was three times higher than the PC industry's during the quarter.

Market research firm IDC has just released figures which show Apple's share of the PC market in the key US market had grown to 4.7 per cent in the quarter, up from 3.6 per cent a year ago.

Looking ahead, however, Apple said it expected second-quarter sales of only around £2.43bn, which is less than the £2.65bn analysts were forecasting.

Apple chief executive Steve Jobs said he was "incredibly pleased" to reveal the details of the group's latest quarterly performance.

"We've just kicked off what is going to be a very strong new product year for Apple by launching Apple TV and the revolutionary iPhone."

Apple said that it expects the iPhone to sell about 10 million units in 2008, but some analysts are questioning how well the iPhone - a cell phone combined with its iPod media player, internet browsing and e-mail capabilities, due for release in June at around £250 - would fare in the highly competitive mobile phone market.

Shannon Cross, an analyst at Cross Research, said Apple's results show the "strength and diversity of Apple's product line-up right now".

American Technology Research analyst Shaw Wu said. "The iPod business is stronger than most people were expecting."

But he added: "The guidance [for the second quarter] is pretty conservative, more so than what people were expecting."

Apple iPod