The financial community has, in the past year, warmed to the inevitable success of Apple’s business plan, and you wonder why it took so long. For so many years, you see, the words “beleaguered” and “Apple” were synonymous. Whenever Microsoft released a new version of Windows, you just knew that the Mac couldn’t possibly compete, and it’s true that Mac market share was stagnant for oh so many years, but not now.
Even during the worst of last year’s economic woes, Apple managed to defy the experts, and for years the headline “Apple Beats the Street” were common. Wall Street, to use the famous garbled expression from our previous president, “misunderestimated” Apple.
In reporting its quarterly earnings Monday afternoon, Apple soared to record earnings again, with revenue jumping 32%. The figures included first-quarter net income of $3.38 billion and revenue of $15.68 billion. The new features represent Apple’s decision to adopt a new FASB standard for revenue calculation, which means they no longer postpone much of the earnings from sales of the iPhone and Apple TV.
More interesting, it’s clear that Mac sales are in the stratosphere again, with some 3.36 million were sold, up 33% from last year. This is particularly staggering when you consider that not only were Wall Street estimates exceeded, but Apple managed that feat despite ongoing delays in delivering new 27-inch iMacs to customers. Overall Mac desktop sales increased by 70%, with an 18% increase in sales of MacBooks and MacBook Pros.
On the iPod front, 21 million were sold, which is down a mere 8% from last year, which demonstrates that digital music players aren’t dead — yet. Some 8.7 million iPhones were sold. Although this represents an increase of 100% over last year for the comparable quarter, analysts might be disappointed, because they were talking about figures upwards of nine million. So maybe it’s true that the financial community is now demonstrating maybe a bit too much optimism over Apple’s achievements.
Then again, when a company doubles its sales over a year-to-year period, that’s supposed to be a good thing, but not among the airheads who masquerade as financial analysts and take your money and mine in payment for their alleged expertise at prognostication. Fortune tellers would probably do near as well.
Tantalizing us yet again about what’s going to happen Wednesday, Steve Jobs said, in the company’s earnings press release, “the products we are planning to release this year are very strong, starting this week with a major new product that we’re really excited about.” Yeah, I bet!
Apple also has close to $40 billion of spare cash around, and you have to wonder just what other corporate acquisitions are in their sights. I expect the pace to only increase this year, but I wouldn’t presume to predict just what companies might be takeover targets.
If you’re into looking at raw numbers and seeking trends, feel free to check out the actual figures at Apple’s site. I’m going to avoid the practice of other sites, where they just repeat press releases.
In its quarterly phone conference with analysts, opened by Apple Chief Financial Officer Peter Oppenheimer, he detailed the figures, again repeating that roughly half the new Macs sold at Apple’s retail outlets are bought by people new to the platform. This continues to present troubling signs to Microsoft, although I expect their financials won’t be quite as bad for the last quarter in light of the arrival of Windows 7 and that perfectly awful ad campaign.
If you happen to listen to the playback of the conference call, you’ll see that Oppenheimer’s opening remarks were clearly written, and he’s not really good at public speaking. On the other hand, that is not a skill that too many executives have mastered. Maybe they should hire a professional announcer to deliver these messages, and, no, I’m not seeking that sort of work because a job of that sort would seriously impair my credibility as an independent journalist.
During the session, some of the questions were also fielded by Apple Chief Operating Officer Tim Cook, the man who is credited with much of Apple’s success, particularly during the six months sick leave Steve Jobs took last year.
As you might expect, Apple continued to express confidence in AT&T as the exclusive iPhone partner in the U.S., particularly plans to overcome network congestion issues in some cities. But did you really expect an announcement about Verizon Wireless, even if it’s in the cards?
As usual, the questions were mostly softball. There was an inquiry about problems with the App Store approval process, though. Cook replied that 90% of all submissions are approved within 14 days. He went on to say that most rejections are the result of buggy code, with a lesser number covering products with possibly objectionable content.
As I listened to the standard range of financial-related chitchat, I expected someone to ask one or two questions about the ongoing delay in shipping the largest iMac, and the reports of ongoing screen flickering and other problems. However, that was not to be, and you have to wonder why. As of the time this article was written, the shipping delay has jumped to three weeks, and there are unconfirmed reports of yet another fix to address display problems. At the same time, I’ve encountered none of these difficulties, but I am keeping my fingers crossed as my 27-inch iMac approaches the two month benchmark.