Apple launches new Intel PCs

Duncan Martell

SAN FRANCISCO: Apple Computer Inc. on Tuesday introduced new Intel-powered desktop and notebook computers and said its wildly popular iPods helped drive a 63 percent jump in holiday quarter sales, sending shares up more than 4 percent.

Chief Executive Steve Jobs said the company sold 14 million iPods music and video players during the holiday quarter and 42 million to date. Speaking at the company's annual Macworld conference in San Francisco, Jobs also said the company's online iTunes store has so far sold 850 million songs.

The strong demand for iPods helped fuel a 63 percent jump in revenue to a record $5.7 billion during the holiday quarter compared with a year earlier, and was near the high end of Wall Street forecasts.

"Apple blew away revenue and iPod estimates," Soleil-Cross research analyst Shannon Cross said.

Jobs also told the packed convention center that Apple could have sold even more of the portable music players. "And it still wasn't enough," Jobs said. "More iPods are on the way."

FAST CURVE

Apple also introduced new computers based on Intel Corp. chips, the first to result from its decision to switch from IBM PowerPC chips it had used for years. Paul Otellini, Intel's CEO, appeared on stage in a bunny suit to help with the introduction.

"We told Paul that we had spent the last decade learning everything there was about PowerPCs and we needed to learn that much about Intel processors in three to four months," Jobs said in an interview.

Said Otellini in the same interview: "The teams had this kind of instant bonding, not just because it was an exciting product, but because both sides love their technology."

Jobs said the company's new line of iMac computers -- two to three times faster than their G5-powered predecessors -- would come in the same shape and sizes as the existing G5 line of iMacs, with starting prices at $1,299.

The new Apple computers are based on Intel Core Duo microchips and are set to begin shipping on Tuesday with the entire Macintosh line moving to Intel chips this year, Jobs said. It also introduced a new high-end laptop called the MacBook Pro that will replace its PowerBook series, starting in February at prices beginning at $1,999. It comes with a remote control and Apple's Front Row technology.

SURGING iPOD SALES

The company also updated its iLife photo and media software as a new version of its suite of digital media editing tools for use in organizing and editing music, photos and movies and Web sites. ILife, which costs $79, also includes the ability to edit high-definition videos.

"Everybody expected to see the Intel notebook computer at Mac World," said Ted Schadler, a technology analyst with Forrester Research. "But people did not expect to see the new iMac."

While the iPod faithful focused on new products, investors and analysts cheered the company's strong holiday quarter.

Wall Street analysts on average were expecting Apple to post revenue for the fiscal first quarter ending in December of $5.04 billion compared with $3.49 billion a year ago, according to Reuters Estimates. Forecasts ranged from $4.69 billion to $5.85 billion.

Jupiter Research digital music analyst Michael Gartenberg said the iPod's strong holiday sales provide more evidence that rivals are having a tough time in their bid to unseat Apple as the dominant player in the digital music business.

"It clearly solidifies their position, not just as the leading player, but the dominant player," he said.

$1 BILLION QUARTER IN RETAIL

Analysts have credited the popularity of the devices with reversing Apple's fortunes and have also said Apple's reemergence in personal computers has hurt the sales of Dell Inc.

Apple sold 1.25 million of its Macintosh computers during the holiday quarter when sales at its retail stores were about $1 billion, Jobs said during his keynote.

Meanwhile, despite a decades-old rivalry with Apple, Microsoft said on Tuesday it would continue to supply versions of its Office suite of business productivity software to run on Apple Macintosh products. Microsoft is the biggest outside provider of software to Apple.

Apple shares rose $4.81, or 6.3 percent, to close at $80.86 on Nasdaq. Shares of Intel fell 35 cents, or 1.3 percent, to close at $26.12, also on Nasdaq.

The stock also trades at 46 times projected fiscal 2006 earnings, compared with 54 times for shares of Google, another high-flying company, and with 17 times projected earnings for Hewlett-Packard Co.

((Additional reporting by Eric Auchard in San Francisco and Jim Finkle in Boston))