Apple Reports Record Earnings & Marketshare

[Craig]

Apple Inc released its quarterly earnings report today. Though they are competing in the same difficult retail climate as everyone else is, they returned some amazing results of both all up sales dollars and market penetration. Of note was how strongly the Mac is coming on these days.

Quote:

"We're proud to report the best June quarter for both revenue and earnings in Apple's history," said Steve Jobs, Apple’s CEO. "We set a new record for Mac sales, we think we have a real winner with our new iPhone 3G, and we're busy finishing several more wonderful new products to launch in the coming months."

Continuing a trend that largely coincided with the switch to Intel CPUs, Mac sales continue to nearly double over the same period two years ago. Apple sold 943,000 desktops and 1,553,000 laptop computers, a 49 and 37 percent increase respectively over the same period last year. Revenue was up over 40 percent for each. It was a great quarter for Macs, and surprisingly for iPods too.

Over on MacRumors they dug deeper into the words of Steve Jobs and came up with some interesting tid-bits regarding new products.

Quote:

Steve Jobs first suggests in the initial press release that Apple is "busy finishing several more wonderful new products to launch in the coming months."

Meanwhile, in the conference call, Apple executives repeated referred to a "product transition" that may affect Q4 revenue numbers. Typically, "product transitions" represent existing product line revisions. In this case, the MacBook and MacBook Pro have been widely expected to be revised in the coming months with both models starting to approach the end of their lifecycles. Intel has conveniently released a new processor and chipset that could be used in the new Apple laptops.

Apple also described their formula of introducing "state of the art new products at prices their competitors can't match". They describe that these new products introduce new "technologies and features" (like the iPhone) justifying their initial higher prices. Over time, they expect to to take advantage of scale and engineering to drive prices down. Apple suggested that they would follow this formula again and are "very excited" about what they have in their new product pipeline. Rumors have suggested that Apple may introduce a 12" or 13" Mac tablet later this year (September or October). Another possibility includes rumors of a smaller PDA-like device that is 1.5x larger than the existing iPhone.

[CoffeeShark]

would be cool if they came out with a EEE-type PC.

[Craig]

looks like that's what's coming. either in the Mac form or the iPhone-on-steroids form. time will tell

[CoffeeShark]

people would poop if they came out with a PDA device.

bigger than the iphone, natch.

[Craig]

Here's a bit more from ArsTechnica:

• Gross margins dropped to 34.8 percent, down from 36.9 percent, and are guided down near 30 percent because of the flying car mystery product, hence AAPL is getting hammered in trading after hours.
• Apple sold just under 2.5 million Macs in the quarter, the highest total ever, and Mac sales were about half the revenue for the quarter. Apple retail outlets sold 476,000 Macs, half of those new to the platform, as usual. The stores saw more than 30 million visitors for the quarter. Apple also had the best education quarter ever. Mac desktop sales growth actually outpaced laptop growth, 49 percent to 37 percent, respectively. Who knew.
• While Mac sales were up everywhere, regions outside the US continue to outperform the larger PC market big time: Europe 4X, Japan 4-5X, Asia Pacific 2-3X. This is important because the US economy is hurting, though Apple takes the US economy "into account."
• Apple sold a mere 717,000 iPhones during the quarter due to the still-unexplained shortages. Apple expects to sell more iPhones this quarter "than ever before." The previous record high was 2,315,000 sold during the holiday quarter of 2007. The company is also "very confident" in achieving the goal of selling 10 million iPhones in 2008.
• There was a hilarious explanation given regarding shortages of the iPhone 3G. While Apple is "confident" in the ability create supply, it apparently is "difficult to predict demand." Nonetheless, Apple is preparing a roll out in 20 more countries on August 22nd, and will be selling the iPhone 3G in more than 70 countries by year's end.
• The App Store is doing phenomenally, more than 900 apps available so far, and more than 25 million downloaded. Regarding revenue, the company sees the App Store as a source of "small profits," the goal being to make the iPhone and iPod touch more attractive.
• Apple sold just over 11 million iPods in the quarter. While iPod sales are up 10 percent in the US and 15 percent abroad, ASP is down due to a higher mix of shuffles and the current promo, and possibly cannibalization by the iPhone. However, company executives reiterated the stance that if there is to be cannibalization, they want to eat themselves.
• The iTunes Store has more than 8,000,000 songs, 20,000 TV shows, and 2,200 movies, 450 being HD.
• For the end of the fiscal year, Apple has 242 retail outlets, up 45 from 2008. While refusing to comment upon numbers for 2009, there will be more, and the Apple Store in Beijing "is off to a good start."
• The store-in-store program with Best Buy is going well, with the company having added 170 more stores for at total of 570, and with more than 600 expected by the end of summer.
• Someone finally asked about the product whose picture should be on a milk carton, the Apple TV. The response was that Apple has been pleased with sales—but not pleased enough to release numbers—but that the Apple TV remains a "hobby." However, the company is continuing to invest in development—Take 3 with Blu-ray, anyone?
• A terse reply was given to a question about the health of Steve Jobs. "Steve loves Apple, serves at the pleasure of the board, has no plans to leave Apple. Steve Jobs health is a private matter."

[DennyCrane]

The NY Post had an article about Jobs, Apple and their tied future.

Quote:

Originally Posted by Post

Apple has a history of dragging its heels when it comes to admitting that Jobs is sick.

His October 2003 cancer diagnosis wasn't disclosed until after the removal of a pancreatic tumor. Recent reports have suggested the company knew about Jobs' condition for nine months prior to the public announcement.

One investor polled by The Post acknowledged to recently selling down his stake by "a few million shares" as a hedge in case any more bad news comes out about Jobs' health.

Andrew Hargreaves, an analyst with Pacific Crest Securities said recent trading in shares likely reflects concerns about Jobs - at least partially.

Shares in Apple, which also have been subject to larger economic issues and trading trends around company product announcements, are off 13 percent since mid-May, and down 11 percent since the June conference. Shares fell 3.9 percent to $165.15 on Friday.

Apple is expected to deliver a profit of $1.08 per share on revenue of $7.36 billion, according to First Call estimates. But investors will be closely watching the company's performance for signs of exposure to weakness in the larger economy.

Part of the reason for the concern over Jobs' health - aside from genuine sympathy - is that Apple has no succession plan in place. A good deal of Apple's worth is tied to its leader.

APPLE INVESTORS WORRY ABOUT STEVE JOBS' HEALTH - New York Post

[Craig]

Its scary really. They sucked when he left last time, and if they haven't groomed anyone yet, they might just suck again once Steve bails to practice Hinduism full time.

[DennyCrane]

Maybe it's time for Steve Wozniak to come back into the Apple fold. IMHO, he really WAS the original Apple company. He was the real tech guy who made the Apple ][ computer the cutting edge rig it was.
Would he radically change the company? Probably not. Would it vastly calm the investors? Absolutely. Time for the Two Steves to ride again. Hell, they were pals with Bill Gates back then and Gates wrote the OS for the original Apple, imagine the 3 of them working together again?

[Craig]

Getting the band back together never really works. They're all sickly rich and not as driven as then. Woz would be a disaster as he doesn't speak Wall Street and Apple is a public company.

My bet is the guy they have running the iPhone progy is way up there. He's done a great job and seems to be part of a bigger picture at Apple.

[CoffeeShark]

the woz would be a disaster. he got all Kathy Griffin'd and has all the baggage that comes with that.