Apple Beats Estimates, Blowout Earnings, Stock Soars!

Apple Computer Inc. (NasdaqNM:AAPL - News) on
Wednesday posted a quarterly profit that blew past even the
highest Wall Street forecasts on skyrocketing sales of its iPod
digital music players and the highest number of Macintosh
computers sold in more than four years.

Shares of Apple, which issued a forecast for the current
quarter that was above consensus analyst expectations, jumped
13 percent in after-hours trading.

The rising iPod sales are now clearly translating into
higher sales of the company's signature Macintosh computers, a
trend that's been dubbed the "halo effect," analysts and Apple
Chief Executive Steve Jobs said.

"In selling more than 1 million Macs, we're clearly seeing
it," Jobs said in a telephone interview. "We're thrilled."

Apple, based in Cupertino, California, said net income for
its fiscal first quarter ended Dec. 25 nearly quintupled to
$295 million, or 70 cents a share, from $63 million, or 17
cents a share, a year ago.

That sailed beyond the high end of analysts' expectations,
55 cents, by a wide margin, according to Reuters Estimates, and
both net income and revenue set records.

"Apple is a name in technology that at least for the next
couple of quarters will have the wind at its back," said Owen
Fitzpatrick, head of the U.S. Equity Group for Deutsche Bank
Private Wealth Management.

Shares of Apple, which on Tuesday unveiled a smaller,
cheaper iPod that starts at $99 and a slim Mac without a
display starting at $499, more than tripled last year.

Apple Chief Financial Officer Peter Oppenheimer said the
company sold 337,000 of its all-in-one iMac G5 computers in the
quarter. Barry Jaruzelski, lead partner in Booz Allen
Hamilton's global technology and electronics practice, said
that the iMac's average selling price rose to $1,359 from
$1,105 a year ago.

"The halo effect is real," Jaruzelski said.

Revenue rose 74 percent to $3.49 billion from $2.01
billion. Analysts had forecast revenue of $3.14 billion.

Apple said it shipped 4.58 million iPods in the
holiday-sales-fueled quarter, compared with 2 million in the
previous quarter.

Sales of iPod, songs from Apple's online music store and
iPod accessories accounted for 40 percent of overall revenue.

Since their introduction in October 2001, Apple has sold
more than 10 million iPods. "It took Sony six years to sell 6
million Walkmans," Jaruzelski said.

Apple's shares climbed to $74 in after-hours trade on the
Inet electronic brokerage from their close of $65.46 on Nasdaq.

"There's no question that this was a positive report -- it
shows the interest in the iPod -- in particular before the
Christmas holiday season -- but going into 2005 and the latter
half of '05 I don't know if that interest level will be
sustained," said Kevin Beadles, managing director of
institutional equity trading at Wedbush Morgan.

For its fiscal second quarter, the company forecast revenue
of about $2.9 billion and earnings of about 40 cents a share.
Analysts on average have expected earnings of 33 cents.

Oppenheimer said Apple retail stores had a good quarter and
that the company plans to end 2005 with a total of 125 stores,
up from 101 currently.

Analysts said that Apple is selling computers at twice the
industry growth rate, countering long-held skepticism that
Apple could gain market share.

"Between the announcements at Macworld yesterday and the
results today, it's really about much more than just the iPod,"
said Darcy Travlos, an analyst with Caris & Co.