Suppose I told you a few months ago that Apple would come out of the April through June quarter with the highest revenues ever for a non-holiday period. Would you believe me, or just assume that the worldwide recession would make it impossible even for Apple to deliver credible financial results?
Certainly many financial analysts delighted in finding every single indication of faltering sales, and spent plenty of time telling us that Apple had the wrong product mix and needed to build cheap Macs, including netbooks, to remain a credible contender.
In recent days, with growing indications that Mac sales had recovered and then some, the predictions have become more optimistic, but, as usual, Apple still beat the street. Why am I not surprised?
For the quarter ending June 27, which Apple counts as the third quarter for their fiscal year, they reported revenue of $8.34 billion and a net profit of $1.23 billion, amounting to $1.35 per diluted share. This compares to last year’s totals of $7.46 billion, with a net profit of $1.07 billion, or $1.19 per diluted share.
Despite the recent price reductions of the unibody note-book lineup, gross margins jumped from 34.8 percent to 36.3 percent. Apple sure knows how to make deals for component parts, it seems. Again Wall Street clearly doesn’t have much of a clue as to how Apple actually does business.
When it comes to unit sales, some 2.6 million Macs were sold, a four percent increase over last year. This is just a tad below the record 2.61 million sold in the September quarter last year. iPhone sales tallied 5.2 million, representing a unit growth of 626 percent over last year.
The analysts, though, were at least correct that iPod sales were dropping. Some 10.2 million were sold, representing a seven percent decrease over last year. Not too shabby, considering that a lot of potential iPod purchasers are selecting iPhones instead. However, Apple for numerous accounting reasons, won’t merge the two product categories.
If you are truly into exploring the numbers in further detail, you can read the same reprints of Apple’s press release on a number of sites or, even better, go direct to the source.
During the regular conference call with financial analysts, Apple fielded the usual round of convoluted or softball questions, and revealed as little as they could. We do know, though, that they still claim to be not terribly enthusiastic about netbooks, pointing again to buyer’s remorse over the inability of those gadgets to handle basic computing chores with decent speed and comfort. Cramped keyboards, tiny screens and awkward trackpads are only part of the picture.
In other words, Apple doesn’t want to build what they regard as junk, and that makes a whole lot of sense. Consider that the PC makers are even now struggling to make the netbooks larger, with keyboards that are more conventional in size, and bigger screens. Clearly they aren’t making very much money when they sell the basic models for $199 and even less in some situations. True, you can option them up and watch the price increase fast, until they morph into nothing more than standard note-books with lesser processors. You call that original?
At the same time, Apple is still struggling to meet demand on some MacBook Pro models, and iPhone supplies remain constrained. Something tells me that they underestimated demand for these products and they are working hard to speed up the production lines.
Clearly the Palm Pre hasn’t made much of a dent in iPhone sales. More than likely, it has served mostly to prop up Sprint’s fading fortunes, and reduce customer churn. This isn’t to say the Pre is a bad product. It has actually gotten fairly good reviews, although build quality is not regarded as exceptional, and the physical keyboard could have been better designed.
Into the mix is Microsoft. They still run those putrid Laptop Hunter commercials, despite the fact that their complaints about high Mac note-book prices that are just plain wrong. Their Windows Mobile operating system is losing steam, and their new search engine — or at least relabeled search engine — has only delivered a modest improvement in market share against Google.
Windows 7? It seems they are actually giving away long-term beta versions, in the hope that customers might decide once they get regular reminders to buy a regular copy that maybe it would be a good idea. This isn’t to say that Windows 7 is as pathetic as Vista. The early reviews say it’s pretty decent, actually, and performs reasonably well. Or maybe that’s simply because the hardware has finally caught up.
Regardless, the real problem for Microsoft is whether businesses will be willing to upgrade, or will they simply sit another one out. That could be a disaster, except for people who feel Microsoft had its day and is on the way out.
Meantime, Apple remains prosperous, with billions of bucks in the bank to hang onto for a rainy day.