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  • So Apple Isn’t Looking Very Beleaguered!

    April 22nd, 2009

    Consider what some so-called tech pundits and industry analysts said in the long (some say endless) run up to Apple’s quarterly report. Mac sales are down and Apple has a problem. They’ve got to cut prices and rush out a netbook to save the business.

    Perhaps the best comment I read about Apple’s quarterly financials, released Wednesday afternoon, came in an email in which a friend forwarded a link to their press release on the subject and said: “I dunno…Apple isn’t looking very beleaguered to me. :-)”

    Indeed, Apple reported its best non-holiday quarter in the company’s history, with total sales of $8.16 billion, compared to analyst estimates of $7.96 billion. Net income increased to $1.21 billion, or $1.33 per share, compared to $1.05 billion, or $1.16 per share. To be blunt, as we previously predicted, Apple beat the street yet again.

    Overall, some 2.2 million Macs were sold during the March quarter, representing a three percent decrease compared to last year. However, the desktop refresh in early March has apparently helped, because sales did improve markedly after that product introduction. In all, Apple regards actual sell through, which means units shipped to customers, as “relatively flat” year over year.

    Despite predictions that iPod sales were finally going to dip, they actually increased three percent to 11.01 million. Yes, not a substantial increase, and it does seem the new iPod shuffle helped a lot, but predictions that the best selling digital media player on the planet are fated to decrease have to be updated for yet another quarter.

    As far as the iPhone is concerned, 3.79 million units were sold, an increase of 123 percent over last year.

    In the words of Apple CFO Peter Oppenheimer: “We are extremely pleased to report the best non-holiday quarterly revenue and earnings in our history. Apple’s financial condition remains very robust, with almost $29 billion in cash and marketable securities on our balance sheet. Looking ahead to the third fiscal quarter of 2009, we expect revenue in the range of about $7.7 billion to $7.9 billion and we expect diluted earnings per share in the range of about $.95 to $1.00.”

    All in all, these numbers sound quite good to me considering the perilous state of the economy. Besides, they have $28.9 billion in “cash and marketable securities” to help whether the storm, if a storm should occur. If you’re into numbers and want to explore them in more detail, you’ll want to check Apple’s site directly for their official release on the subject.

    As to the subject on the minds of many, considering the unexpectedly good financial results, Apple clearly remains highly skeptical about netbooks. In the usual earnings conference with financial analysts after the numbers were released, acting CEO Tim Cook continued to pour huge amounts of cold water on the prospect: “”I see cramped keyboards, terrible software… very small screens…not something we would put the Mac brand on. It’s not a segment we’re interested in and we don’t believe customers are interested in.”

    “A customer who wants to buy a small computer for e-mail or web browsing may want to buy an iPod touch or an iPhone.”

    Despite that, it does appear Apple isn’t closing the door on the prospects of a netbook, “if we find a way to deliver a product that makes an innovative contribution.” Don’t forget that Apple has also denigrated product categories in the past, such as a low-cost Mac, only to release its own entrant into that space months later; in that case, the Mac mini.

    In case you’re curious, Steve Jobs is still expected to return from his extended medical leave in late June. Saying “expected,” of course, doesn’t mean he can’t or won’t show up, at least for a cameo appearance, at the WWDC keynote earlier that month.

    Understand the skeptics won’t give up their efforts to restore Apple to beleaguered status. They will probe every single digit in Apple’s financial report in order to find evidence that Mac adoption was nothing more than a flirtation, and that customers are now ready to return to Windows, where they can do “real” computing.

    One so-called analyst, in fact, claimed that Apple was immune to most of the effects of the economy because of the alleged Apple Tax and the fact that they cater to more prosperous customers. However, sales of Macs desktops actually favored the low-cost Mac mini rather than the high-end Mac Pro workstation. So much for analysts and their wrongheaded assumptions.

    What I’d like to see, when Microsoft reports its results, which are apt to show a more than a few troublesome numbers, is whether anyone is going to ask bombastic CEO Steve Ballmer whether Microsoft itself is actually the beleaguered company. I think it is, and that if they don’t make substantial organizational and product changes in the next few years, they will become the Wang Laboratories of the 21st century.

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