Apple reports record Q3 earnings
Apple (AAPL) blew past expectations — its own and Wall Street's — to report record third-quarter earnings Tuesday.
Buoyed by strong sales of its new iPhone, an explosion of iPhone applications and price cuts on its flagship MacBook line, the company earned $1.35 per share on revenue of $8.34 billion — up nearly 12% year over year.
Analysts were expecting earnings of $1.17 on revenue of $8.2 billion, according to Thomson Financial.
Apple's shares, which had closed at $151.51, down 0.91% for the day, rose sharply in after-hours trading. By 5:49 p.m. its shares had climbed 4.3% to $158.03.
The stock has been one of the market's best performers of 2009, having risen nearly 80% against the Nasdaq's 21%.
The strong results in the face of a global economic slump could be viewed as vindication of the company's decision to stay out of the market for low-cost netbooks — which now dominate the consumer PC business and are squeezing the profit margins of Apple's competitors.
Apple did cut prices a bit in June. It knocked $100 off the retail price of the older iPhone 3G and trimmed prices on most of its MacBooks by 10%.
But basically, Apple stuck to its long-term strategy: selling high-margin machines that offer better support and superior end-user experience.
It's a strategy that seems to have paid off in spades this quarter.
“We’re making our most innovative products ever and our customers are responding,” said Steve Jobs, Apple’s CEO, in a prepared statement. “We’re thrilled to have sold over 5.2 million iPhones during the quarter and users have downloaded more than 1.5 billion applications from our App Store in its first year.”
Although it was rumored that Jobs might participate in the earnings call Tuesday afternoon, he was not among the listed speakers.
Highlights from Apple's earnings report include:
- Mac sales: 2.6 million units, up 4% year over year
- iPhone sales: 5.24 million units, up 626%
- iPod sales: 10.2 million units, down 7%
- Gross margin: 36.3%, up from 34.8% last year
- Cash holdings: $31.1 billion, up $2.2 billion for the quarter.
- Guidance for the September quarter: revenue between $8.7 and $8.9 billion, EPS between $1.18 and $1.23, and gross margins of 34% — considerably higher than expected.
COO Tim Cook, who ran Apple while Steve Jobs was on medical leave, was asked repeatedly during a conference call with analysts how he plans to compete with netbooks that cost $399 to $499.
Cook stuck to his mantra: that Apple's goal is not to build the most computers, but to build the best computers.
"The Mac," he pointed out, "has now outgrown the market a staggering 18 out of the last 19 quarters."
Apple's press release is available here.
A replay of the conference call will be available for the next two weeks, starting at 5 p.m. PDT. The instructions are here.
For our analysts of how the analysts did, click here.
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If you are having problems with your iPhone syncing, maybe the problem is actually the PC syncing and/or the fact that you are not on mobile me. As an IT guy, I have made the painful move from PC to Mac with my fingers still in my PC and my toes dipping into the Mac…
I have found them not only flawless, but safe, easy to setup and a real wonder for unifying my information between iPhone apps, mobile me, social networking sites and iTouch. If you cannot get things working, maybe you should head into Micro Center and get a refurb mac mini for $399 or $499 and throw away that loud, hot, wasteful PC you got?!
I still use my PC, but only when I have to. Otherwise, Mac it is!!!!
One last note… I tried to render a video last year on my dual core PC and it froze, not even able to show thumbnails of things. I worked on it the other nite on my mac mini with less ram and smaller dual core processor and it not only processed it, but it did so in less than 45 minutes. As a matter of fact, it processed it while I was running imports for iPhoto from a thumb drive, processing the video on an external hard drive running at 5200 rpm, browsing the web, logged in through logmein.com from my iPod touch as I sat in bed watching a movie on my PC and playing iDragon on the iPod touch.
Once complete, with air sharing, I opened the file on the iTouch and checked its integrity!!!!
SHOCKING!
Just a thought…
d
Funny all the accolades. I have experienced griefs with the iPhone. Crashes, "bricking," and the wasted time (at least two hours per incident) resuscitating the unit to name a few. In addition, my installation of the iTunes–on a PC–is corrupted and cannot be fixed by removing and reinstalling–wasted time in the orders of 6+ hours. That's why I'm still on 2.x. because I don't want to lose the songs and apps from the App store because synching only works one way, from computer to phone (whatever on the phone will be deleted if not in existence on the computer). Worst the songs are locked to iTunes. The list goes on and on.
AAPL is going through the roof Wednesday. And Apple's 4Q looks like it will be even stronger than this incredible 3Q report, especially with the bulk of the iPhone 3G S sales falling into their 4Q earnings…and back to school buying…new iPods…it just doesn't stop.
Apple does not solely make proprietary products that it keeps for itself. First of all OSX is built on a Mach kernel. This most of the kernel(Project Darwin)is available under an open source license. Its userspace tools are built on FreeBSD UNIX, another open source project. Cocoa (the user interface) is proprietary. All things considered, its a tradeoff I will accept. Macs "just work" and as a seasoned IT professional, recommend them to everyone that also wants a better computing experience.
Apple does make their platform open and easy. For a mere $100 you can design and sell your own apps in the iphone store using software apple freely provides.
with Xcode you can also build mac apps, a simple free download with the purchase of a mac operating system. A mac can also run windows or linux, it can do it all with a free download of virtualbox.
Just how open is a Microsoft Zune?
With snow leopard and leopard server a mac will even be more useful in the business world, which is Microsoft last stronghold. A mere $29 upgrade for snow and it takes half the install space keeping even more Apple fans with older intel equipment happy.
You can buy a cellphone if you want made from some other guy or you can buy an iphone and pay basically the same monthly rates, having internet, banking, a wicked gaming machine and full word processor/spreadsheet etc all in your pocket for $250 or so, touchscreen watch videos listen to music…the list is endless.
Cry babies saying Apple is greedy. What is happening is the other guys dont have as good of product or complete solution that spans over so many lines from phone to computer, with fairly good security and ease of use.
Apple wins accolades by making products and solutions that just work, while the other guys make products that just take your money or give you grief. I got tired with swiss cheese windows and free linux headaches that still would catch things.
John's (Orlando Fla.) comment misses the most fundamental principal of successful business, that being, the building of a defensible business. Proprietary technology and service will always prevail. You may not be the biggest, the cheapest, or have the most market share, but you will be profitable and there to see your competitors fade before the finish line.
Bob / LA, Ca.
If Apple weren't proprietary they would be just another "me too" PC manufacturer with ZERO competitive advantages against any other manufacturer. When all you have to differentiate yourself is price, you cut corners and squeeze for every penny. Result: utter garbage. Thank you, Apple, for giving the computing world another option. Let them keep bludgeoning each other over Yugo sales while you take the high road.
@John:
"…Apple's greed knows no bounds."
Wow, that's a bit extreme. Let's see…you make the best product you can make and sell it for the highest price you can get for it. Last time I checked, that was called BUSINESS.
What else? Oh, you invest billions of dollars in purchasing, developing, and implementing a technology, then do what you must to protect it from moochers who would try to benefit from all your hard work. I'm pretty sure that is a common BUSINESS practice, also (there is a reason it is called intellectual PROPERTY: that means I own it).
Of course, the competition will catch up – as soon as they begin making products that people actually want and quit treating their customers like crap.
Apple is obviously a completely different company from the one you choose to recall. It is posting record quarters in a down economy. Meanwhile, Microsoft is seeing the first extended financial decline in its history while experiencing difficulty with its core competency: selling operating systems to businesses. Surveys are showing that large numbers of IT heads are making no plans to adopt Windows 7 any time soon and many are actually considering Mac OS X.
If you don't think there is some quivering going on in Redmond right now, you are quite naive.
For John from Orlando. Everything Apple makes is NOT proprietary. For example, Apple made WebKit, the rendering engine behind Safari. They open-sourced it. Now Android uses WebKit. Now, Adobe Air uses WebKit. Now Palm's Pre uses WebKit. Just about everyone is using WebKit, except for Firefox which uses Gecko, as its rendering engine, and Microsoft.
Yawn .. same drivel another day. Apple is all about $$$$ now. They will always be a niche due to that so who really cares other then stock holders.
I love owners of Apple products getting all worked up. The solutions and dumbed down and elegant so you can say to your (as equally clueless) neighbor. "Yeah I bought the macBook, Missy uses it for iTunes and that iPod"
I don't know why Apple afficiandos write things like "an earthquake ripped through Redmond" and other such nonsense. Maybe, the company IS more innovative and makes a better operating system than Microsoft, but it keeps everything it creates proprietary. Prior to the latest wave of Apple innovation, that greed mongering behavior once doomed the company to steadily decreasing market share and eventual demise, and, as I see it, the same thing will happen in the future. Sooner or later, the competition always catches up. Now, Apple's greed knows no bounds. It has gone so far as to deliberately lock its songs out of the new Palm smart phone. Bad geek though Bill Gates may be, Apple is much greedier and worse in every way than Microsoft.
Good job Apple. Great company always coming out on top with higher than expected earnings, great sales, and a strong company. People will continue to realize that NOTHING is wrong with Apple and buy more stock. Stock will easily be trading around $200+ by YE. Keep up the great work.