I am reminded that I probably said something of this sort three months ago, but here it is again: Before Apple released its quarterly financials Wednesday afternoon, those Wall Street analysts were suggesting that Mac sales would be up, but that iPod sales would be stagnant or take a dive. Once again, their crystal ball or star gazing has, unfortunately, turned up empty.
Or they pretending to be psychics or analysts? Yes, these are the very people on whom you depend for accurate investment information, so you can get an idea of how a company is performing, or is likely to perform in the future. But when it comes to Apple, they are almost always wrong.
This time out, Apple reported total revenue of $4.84 billion for the quarter ending September 30th, with a net profit of $546 million, or 62 cents per diluted share. Those so-called analysts were talking in terms of $4.67 billion revenue, with earnings of 51 cents per diluted share.
As far as iPod sales are concerned, some 8.73 million were sold, an increase of 35 percent over last year. Not too shabby, and with new models on hand, except for the iPod shuffle that’s now due later this month, the Christmas quarter may deliver stellar sales, but I’ll get to that shortly.
If you want to explore all the financial information unvarnished, you’ll want to check out the data posted at Apple’s site. Unlike some commentators, I’m not going to simply regurgitate all the raw figures here. I have other things to say, but I will refer to some significant numbers here and there.
The first important piece of information is that Mac sales have reached record proportions, totaling 1.61 million units. Of that, some 624,000 desktops were sold, but note-books had a breakout quarter, with 986,000 units sold, or 61 percent of the total. Despite some teething pains, it’s clear that the MacBook represented a large part of this figure. But to really appreciate how well Apple is doing, consider that note-book sales alone are larger than the total sales of new Macs in some quarters not so very long ago.
All this has apparently boosted Apple’s U.S. market share big time, and it’s now reported at 6.1 percent according to one survey. Back in the early 1990s, before Apple took its big fall versus Microsoft, the figures were in the 9 percent range, but they’re existing in a much bigger environment now.
The Apple Store now has 165 branches, and it’s reported that over 50 percent of the folks buying new Macs at these outlets are new to the platform. The retail chain is clearly one of the big factors in boosting Apple’s market share, and I have no doubt those always-amusing “Get a Mac” ads are contributing to the growing public interest in the platform.
But this doesn’t mean everything is coming up roses. Few are guessing just how Microsoft’s forthcoming Zune music player might affect Christmas sales of the iPod, or whether it will have any noticeable impact at all. But the best estimates, such as they are, have it that Microsoft’s partners in its “PlaysForSure” DRM program will suffer the most. However, with its player less than a month from its scheduled release date, Microsoft is still pretty much talking up other products at its site. Talk about building demand — or not!
In passing, I don’t really think that the problem with a Windows virus shipping on a small number of iPods will have much impact after a few days of negative publicity. It was caught early enough to keep it from hurting too many PC owners. Apple claims it got only 25 reports so far.
It does seem certain, though, that with Windows Vista shuttled off to a delivery date in early 2007, Apple has a pretty clear path to grow Mac sales even further this quarter. But when Vista nears delivery, Microsoft will be rolling out a huge marketing campaign. Will Apple decide to go toe-to-toe, or just let Microsoft do its thing? A big question, but with over $10 billion in the bank, Apple can certainly afford to open up the ad spigots big time and make sure its message is not drowned out.
While some are suggesting Apple is going to really boost the stakes by releasing Mac OS 10.5 Leopard at the January 2007 Macworld Expo in San Francisco, or shortly thereafter, there’s little indication it’ll be ready by then. Not that I always believe rumor sites, mind you, but that would seem quite premature. I personally think it might come out in late March, on the sixth anniversary of the original release of Mac OS X in 2001. That would be in keeping with the spring dateline.
For now, Apple’s stockholders have to be happy, even if things will have to be adjusted somewhat in light of that backdating stock options probe. As for those Wall Street analysts that got it wrong once again, they will, I suppose, just try, try again.
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