Update: Strong Mac sales boost Apple's quarterly earnings

Apple reported strong earnings for the second quarter of 2008 on Wednesday with Macintosh computer sales overriding weak growth in iPod shipments.

The company's net revenue was $7.51 billion for the quarter that ended March 29, a 43 percent rise from last year's second quarter. Analysts polled by Thomson Financial estimated revenue would be $6.96 billion for the quarter.

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 The company's net profit was $1.05 billion, a rise from the $770 million it reported last year. Earnings per share were $1.16.

Apple shipped 2.3 million Macintosh computers, a 51 percent rise in units and 54 percent revenue growth from the year-ago quarter. It sold 10.6 million iPods, a 1 percent growth in units and 8 percent growth in revenue from a year ago. iPhone sales for the quarter were 1.7 million.

The company is excited about new products in the pipeline, said CFO Peter Oppenheimer during a call to discuss the results. When asked about the possible release of a 3G iPhone, Apple executives declined comment.

Apple sold more iPhones than expected, said Tim Cook, COO at Apple, during the call. Inventories fell during the quarter, and stores were short on stock, Cook said.

"Currently [aggregate iPhone] inventories are low in both the stores and the channel" in the U.S. and Europe, Cook said. A contributor to the low inventory could be the significant numbers of iPhones bought with the intent of unlocking, Cook said.

Unlocked phones are being used in a number of countries where carriers don't yet offer iPhones, which indicates strong worldwide demand for the phone, Cook said. Apple plans to introduce the iPhone into more countries in Europe and Asia-Pacific later this year.

Apple remains confident in reaching its goal of selling 10 million iPhones in calendar 2008, Oppenheimer said. That forecast covers only phones activated with carriers. The company plans to deliver iPhone 2.0 software as a free download in late June. The software will support applications developed using the SDK announced by Apple in March.

The SDK has already been downloaded 200,000 times and is being used in one-third of the Fortune 500 companies to develop applications for the iPhone, Oppenheimer said.

The SDK could also broaden the appeal of the iPod Touch as more applications are developed, Oppenheimer said. The iPod Touch is a portable media player with the iPhone design, but without phone features. Revenue from iPods for the quarter was $4 billion.

Apple shipped 1.34 million portable Macs during the quarter, which includes MacBook, MacBook Pro, and MacBook Air. The growth in portable Macs was driven by strong demand in the MacBook and MacBook Pro lines, Apple officials said.

The MacBook Air, which was announced this quarter, sold well too, Cook said.

The MacBook Air appealed to a large audience and didn't eat into sales of Apple's other portable Mac lines, Cook said. Revenue from portable Macs was $2.04 billion for the quarter.

Apple shipped 977,000 desktop Macs during the quarter. Overall Mac shipments grew 52 percent year-over-year in the U.S. and 48 percent in Europe, Cook said.

Sales of the Leopard operating system to go into existing Macs dropped sequentially to $40 million from $170 million in the first quarter of 2008. Apple announced Leopard in October, and new OSes tend to perform better in the launch quarter, but these are the best OS sales Apple has ever experienced in the first two quarters, Oppenheimer said.

This story was updated on April 23, 2008.