MacBook has Apple walking on Air
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| The MacBook Air was a top-seller for Apple last quarter, helping to deliver the equivalent of a second holiday season. Image: Apple |
iPod growth has stalled. The iPhone is basically doing as expected. So in Apple's financial results, the real surprise was the MacBook Air.
This time, gadgets didn't save the day for Apple (AAPL). Even after adding a pink iPod nano to its lineup in time for Valentine's Day, the company sold just 100,000 more iPods in the first three months of this year than it did a year before. iPhone sales came in 26 percent (or 600,000 units) lower than the holiday quarter, which isn't a great sign.
Mac computer sales, on the other hand, fell only 1 percent compared to the holiday quarter. This is huge. The holidays are the biggest single season for every PC retailer, and for Apple's Mac sales, it's as though Christmas came twice. The star in the Mac family would have to be the MacBook Air, the ultra-thin laptop unveiled in January that has been the top-selling computer at its online store for much of the year. "The customers love it," said Tim Cook, Apple chief operating officer.
While singing the Air's praises, Cook also downplayed the iPhone's sales skid. "We expected iPhone to decline more on a sequential basis than it did," he said. "As we got toward the end of the quarter we started to experience some stock-outs." He blamed some of those shortages on a "significant" number of people who are buying phones in U.S. Apple stores to unlock them for sale overseas.
The constrained iPod and iPhone sales leave Apple investors in the unfamiliar position of relying on computers again (gasp!) to provide growth. That used to be a dangerous proposition; before Apple moved to Intel (INTC) processors for its computers, Mac sales would routinely spike for a couple of quarters with a new design and then trail off.
Now that seems to have changed. Apple has found a comfortable groove selling black and white consumer laptops, and metallic professional laptops, and – MacBook Air aside – sales are less driven by sleek new designs. In the most recent quarter, Apple appears to have grown computer sales at 3.5 times the industry average, well above competitors like Hewlett-Packard (HPQ) and Dell (DELL). But how long can this Mac revival last?
There's little reason to expect it must stop anytime soon. The current quarter includes the "Dads and Grads" season when consumers traditionally buy electronics for Father's Day and graduations, and that could help laptop sales. Next quarter includes the back-to-school season, when Apple typically updates the iMac desktop line. And Microsoft's (MSFT) Windows Vista operating system isn't soon scheduled for any overhauls that would make it look better next to Mac OS X.
The bottom line is that Apple's stock could well hold on to the 40 percent it has gained since investors got spooked and dumped it in January. That is, if its MacBooks can keep walking on air.
I read somewhere that the Ipod Touch has been a huge success as well. In addition, it has a healthy margin, and so each Touch sale gives some multiple of a small Ipod in total profit. Could you speak to that? Thank!
Everyone is a critic. Good summation of the key metrics and drivers. It seems that there are too many investors that see this company as an Ipod/Iphone story supported by Mac instead of the other way around. I would be interested to see if the company does anything to try to capture a portion of the rebate checks about to be released like every other consumer product maker out there. While that would be US specific it would produce incremental sales and could be good timing for a 3G rollout.
It sounds like earnings expectations are always a little high for Apple.
These were pretty solid numbers.
I suggest the market wait until AT&T and Apple release a 3G iPhone. There will be alot of exisiting and new iPhone customers buying one. I know I am waiting to buy 2 3G'ers.
On the iPhone, from a consumer perspective there are three reasons why I haven't got one.
Firstly, in the UK its only on 02 and I'm on Vodafone and don't want to change. I know its the same situation in the US.
Secondly, I always get a free phone when I renew my contract and I'm never going to pay for one no matter how cool the device is.
Thirdly, I think its still too big; its wide and tall. It's like having a plate in your pocket. I like the size of my nice small Nokia 6300.
It is a really cool device, so if Apple create an iPhone Nano and its available free with a reasonable contract on any network then they will be on to a right winner, everyone would have one. I think they're neglecting a market of consumers who aren't massive gadget fans but would get one if it was given on a plate; ie same deal as a Nokia phone with their contract.
Also, I don't think an economic downturn will stop people renewing their mobile contracts and getting new phones, so it'd weather that storm.
guy not going to complain and get bent out of shape about this. Numbers do not lie and from the looks of it Apple is well positioned. it has a price target ranging from 185 – 200 so where the stock price is currently there still is a lot room for a good investment. But I do have to say this they say Ipod sales slowed but did it really it's kind of hard to have that same type of growth when Iphones are also selling are we forgetting that you by an Iphone and you also have an Ipod so why will people continue to get and Ipod when they can get the phone along with an Ipod let's start being smart (all of you analyst).
Well duh. Once again the company excels–but never enough to meet the hunger of analysts. What on earth is wrong? Apple does better than anyone–anyone. But the stock is played. Are you looking at the real results? Who else has achieved so much this quarter–with absolute potential for achieving the same results and better again?
Are we crazy? What are we doing? Investors, please take notice. Ignore idiots like Cramer. He obviously plays for his own gain. Look for yourself.
Dude, iPod sales had stalled???? are you forgetting we are on a middle of a recession??? and they still sold over 10 million of them, LOL. Dude you should consider finding another job cause you don't sound like you have a clue of anything
From Jon Fortt: Do you read numbers? Yes, their growth stalled. And Mac growth didn't. That's why the stock didn't tank. How about you do some reading, then get back to us.
THE BIG NEWS:
Mac sales up 51%
In the conference call it was noted that Asia was up 62% – now there is an area with potential growth!
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Re iPhones;
Anyone consider this – a company renown for its conservative guidances repeatedly insists that it sticks by the 10 million iPhones in CY2008. They must be pretty darn certain of that one!!
It would seem to me that you misunderstand what Tim Cook said about the iPhone sales. He said that they expected a larger decline than the one that occurred such that there would be a sequential decline from the December quarter. Thus, Apple began producing less units and assumed by the end of the quarter they would still have ample stock for their retail stores and partners.
However, the demand for the iPhone did not dip sequentially and thus after the initial post-Holiday decline of sales, the demand flatlined at a higher number than expected. Thus Apple had not produced enough iPhones to match the demand and retail stores began to run out of stock until Apple could produce enough iPhones to meet demand again.
From Jon Fortt: No, I didn't misunderstand that. Demand did dip sequentially, just not as much as Apple thought it would.
Don't forget that iPhone sales were lower in part because people were postponing their purchases for the 3G iPhone, due to be released soon.
Jon,I'd love to see the hard data – how many Macbook Airs did Apple sell last quarter? Thanks in advance, BB.