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Apr-26-2008Slip In Apple's Gross Margins Is Hot Topic For Market(topic overview)
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Of the eight analysts for which AppleInsider had data leading into the earnings report, Abramsky's model stood out as the most well-rounded in light of the company's actual results. He had predicted earnings of $1.11 per share on revenues of $7.2 billion and a gross margin of 34 percent, which factored in sales of 2.2 million Macs, 1.8 million iPhones, and 10 million iPods. Wu was a close second, and along with Lehman's Ben Reitzes came the closest to predicting the company's actual gross margin -- an indicator of a company's profitability at the most fundamental level -- with his estimate of 33.5 percent. The remainder of his forecast included per-share earnings of $1.10 on $7 billion in revenues, based on estimated sales of 2.15 million Macs, 1.5 million iPhones, and 10 million iPods. In a research note release to clients Thursday, Abramsky reiterated his Buy rating on shares of Apple, bumping his price target by $10 to $200 a share. He called on investors to realize that the advent of a 3G iPhone in the near term will enable the Cupertino-based company to tap a global market five times the size of the MP3 player market and ten times the size of the worldwide PC market. [1] Apple has posted a 36 per cent rise in quarterly profit, helped by strong sales of Macintosh computers and iPods, but its lower profit margin and cautious outlook disappointed investors. Shares of Apple fellone per cent after the company, known for conservative financial forecasts, gave a profit outlook for its current quarter that was below Wall Street estimates. Chief financial officer Peter Oppenheimer also said he expected gross margin to be similar to the March quarter's 32.9 per cent, which was down from 35.1 per cent a year ago. Apple said it expected profit of $1.00 per share on revenue of $7.2 billion for its third quarter ending in June. This figure is slightly below Wall Street expectations. The company blamed the gross margin slide on lower sales of its Leopard operating system, a price cut on the low-end iPod shuffle, and higher sales at its iTunes online music and movies store, which runs at break-even or slightly profitable. For its second quarter ended in March, net profit rose to $1.05 billion, or $1.16 per share, from $770 million, or 87 cents per share, a year ago.[2]
"The bottom line, we believe the margin was negativity impacted by a higher mix of Mac Book Air, which we now believe carries a lower margin." On the bright side, Apple has likely built the potential for margin expansion into its MacBook Air design as adoption swells and component prices fall. What's more, Apple management appeared upbeat in stating that the Air has thus far shown little to no cannibalization effect on the company's other notebook offerings and thus could be considered largely responsible for helping push Mac unit growth to its highest rate in nearly two decades. "The key takeaway from Apple's March quarter is that the Mac units grew at the highest year-over-year rates (units 51 percent and revenue 54 percent) in 17 years," Munster added in his note to clients. "Macs are the most meaningful category with the most potential and they are performing the best." Looking ahead, the Piper Jaffray analyst said he's modeling conservatively for Mac growth rates to decline to 12 percent year-over-year for the remainder of calendar year 2008, which leaves "ample room for positive estimate revisions over the next 8 months." "Mac growth is accelerating despite multiple quarters of strong growth, iPod sales are stabilizing with higher average-selling-prices due to the touch, and the iPhone will be significant in the second half of the year with the release of new hardware and software," he wrote.[3] Pacific Crest Securities analyst Andy Hargreaves also thinks the results assuaged some fears that the company could be hurt by economic weakness. Concerns about the economic environment and slowing iPod sales - as well as concerns about certain kinds of iPhone sales - surrounded last quarter's earnings report, he said. This quarter, he was surprised by the strength in Macintosh sales and geographic breadth of Apple's growth. "To have them report accelerating sales in a macro environment that is deteriorating should have done a lot to calm people's fears," said Hargreaves, who rates the stock "Outperform" with a $225 price target. Hargreaves also noted potential share catalysts this time around, which include expectations that Apple may update its MacBook and MacBook Pro computers and release a 3G, or third-generation, iPhone, around the time of the Worldwide Developers Conference in June.[4] Apple has traditionally issued conservative financial forecasts, and its U.S. sales were particularly strong in the latest quarter, rising 40 percent over last year. Many investors were left scratching their heads about how to interpret Apple's outlook. Chief Financial Officer Peter Oppenheimer would not specifically address how the company might be affected by slowing domestic consumer spending, but he noted that Apple's sales growth overall is expected to continue accelerating, a sign the company is faring well despite the economic downturn. The company earned $1.05 billion, or $1.16 per share, in its second quarter, which ended March 29. That's 9 cents per share better than the average analyst estimate.[5]
Apple said Wednesday that earnings rose over 36 percent to $1.16 per share on revenues of $7.51 billion and a gross margin of 32.9 percent for the three-month period ending March 29th, driven by sales of 2.29 million Macs, 10.64 million iPods, and 1.7 million iPhones.[1] According to the analyst, other pending catalysts for the stock include higher capacity iPod touch players and refreshed MacBooks with aluminum enclosures later in the calendar year, as well as a boost in international Mac sals as consumers in foreign countries see increased exposure to the company's well-received iPhone handset. "Apple may phase out the 80GB Classic following the launch of a 64GB iPod touch," he said, adding that greater availability of video content on the iTunes Store/Apple TV also creates a need for current generation iPods that are video capable, and thus may drive a replacement cycle for a significant number of consumers. In his own report Thursday, Wu noted that some investors may be concerned that Apple's revenue upside did not translate into big per-share earnings upside, and cited gross margin as the culprit. "One may beg the question of whether Apple has lost its unparalleled ability to capitalize on declining component prices," he wrote. "We believe it is too early to declare this, but we believe this could remain a lingering concern." As such, Wu maintained his Neutral rating and positive longer-term fundamental view on the company, but continued to wave caution at buying into shares at current levels. "We remain concerned with volatility in shares and a potential vacuum before the launch of 3G iPhones and new Macs," he said.[1] A young customer uses an iMac at an Apple Store in Palo Alto. Its earnings, powered by sales of personal computers, beat analysts' forecasts. SAN FRANCISCO -- Apple Inc. said Wednesday that consumers shrugged off economic worries and kept buying Macintosh computers and iPods during its last quarter. Apple reported a 43% jump in revenue and a 36% gain in profit for its fiscal second quarter, mostly because its Mac sales far outpaced those of the overall computer industry.[6] Sakuma/AP Apple has been struggling of late. Apple's profits jumped 36% on blistering sales of Macintosh computers, but its stock dropped on the company's forecast of earnings that will fail to meet earlier expectations. The Mac and iPod maker is believed to be especially vulnerable to slowing consumer spending in the United States because of its stronger presence here than overseas. Another factor weighing on Apple during the second and third quarters is the company's decision to delay recognizing iPhone sales until a software upgrade for the multimedia gadget is shipped this summer.[7]
This could be a case of deja vu all over again for Apple, only this time around things are looking pretty peachy for the stalwart computer company. Back in the late 1990's however, Apple had a big mess on its hands and on its store shelves, but after Steve Jobs returned he immediately simplified product lines by dumping all the desktop options ''' the Performa, the Quadra, the LC, the Power Macintosh''' simplification was the order of the day and Apple rebuilt the product line based on Job's "Grid of Four" which were portables and desktops for the design pros and for the average consumer. The next thing he did upon his much heralded return to the then beleagured computer company, was to shut down all cloning operations in the belief that dilution of the brand would soon be Apple's death knell. Fast forward a decade with the rampant success in sales and profits from iMacs, iPhones, and iPods and $18 billion in the kitty it might be time for Apple to rethink the clone model as a way for them to break further into Dell and Microsoft territory.[8] What the analysts call the "halo effect" from the iPod is clearly helping to sell Macs too. Apple's retail stores are part of this success story, and they sold 458,000 Macs in the quarter. I don't think these stores would be as mobbed with tourists and other gawkers if they just sold computers and not iPods and iPhones as well. When we look at all the companies that have stagnated along with the products that made them successful ''' from AOL to Microsoft ''' Apple stands out as one company that has been able to flip its business forward so well that it is in a great position to thrive, even if its iPod problems become more than little.[9] What we do know is that Vista has faltered, an enormous number of people are visiting the Apple stores and that the growth of the Mac's market share is 3.5 times that of the PC market overall. "When we look at all the companies that have stagnated along with the products that made them successful ' from AOL to Microsoft ' Apple stands out as one company that has been able to flip its business forward so well that it is in a great position to thrive, even if its iPod problems become more than little," Mr. Hansell concluded.[10]
PC's getting improved every month- all manufacturers come with new exciting products while Apple has only 7 year old design mac book pro, 3 year old macbook, 5 year old mac pro, 4 year old imac and the only new product is macbook air! So much about innovation. Apple charge gold prices for their regular stock memory and there is no customization available on regular models. You have to pay more to qualify to customize!!! Soon Microsoft will come out with even better OS- 7! It already has free upgrade for XP. In fact all upgrades are for free! Apple charges $129+ for simple OS upgrade! Vista works flawlessly, it is the best OS in the world.[9]
As a former systems administrator and someone who has worked in budgeting and purchasing in IT, for a medium-sized company I really can't see how that would happen. Businesses are bottom-line driven and the vast majority of them are not likely to convert for several reasons 1) Cost - Dell, HP, IBM, etc have well recognized corporate purchasing divisions that work with companies to provide discounts for bulk corporate purchasing. Apple is still thought of as the costlier alternative that can't compete on pricing. and I haven't heard of their corporate sales aggressively pursuing new business clients. 2) Change - probably the most important consideration from an administration standpoint, no matter how easy a Mac is to use there is MUCH more to consider than the user experience when designing and developing a corporate network. Does the Mac interface well with Active Directory? What would the time cost of a rollover to a Mac-centric network vs a PC one be? Security policies and procedures, any change control processes and all those things that many businesses MUST consider that regular people do not. What would the time be to re-train users on how to access their files across the network, to navigate the UI, to print, etc? I know it's "easy" but when people are used to certain ways change is not easily accepted.[11]
Apple's U.S. education business during the second quarter generated Mac unit growth of 35% from a year ago -- the highest growth rate in any quarter in the last eight years, the company told analysts on a conference call. Strong Mac sales are clearly the highlight of the earnings report, says Romeo Dator, co-manager of the All American Equity Fund GBTFX at U.S. Global Investors, which has Apple in its top 10 holdings. "They were better than expected again," he says, "and shows the iPod halo effect is working."[12] Looking at Apple's recent earnings report and the iPod sales numbers from the past few years, it's clear that the days of massive iPod sales growth are behind us. Sales this quarter were up roughly one percent year-on-year, and some are even suggesting that we'll see a period of negative growth soon. According to the New York Times' Saul Hansell, Apple iPod-related business lines put the company in a good position to weather such a slowdown.[13]
The company sold 2.29 million Macintosh computers during the quarter, a 51 percent jump over a year ago. It also sold 10.6 million iPods — 1 percent better than last year — and 1.7 million iPhones. Pumped up by scorching sales, Apple's stock had quadrupled from its recent low of $50.67 in July 2006 to the high it reached in December of last year.[5] The company said that during the quarter ended March 31 it sold 2.29 million Macintosh computers, 1.7 million iPhones and 10.6 million iPods. For its third quarter, Apple estimates it will earn $1 a share on $7.2 billion in sales.[14]
During the quarter, Apple shipped 2.3 million Macintosh computers, accounting for $3.49 billion in revenue — an increase of 54 percent from the same quarter last year. It also sold 10.6 million iPods and 1.7 million iPhones in the quarter.[15] The report showed that Apple was firing on all cylinders during the first three months of the year. The iPhone and iPod maker had net income of $1.05 billion after winning customers for its Macintosh personal computers. Apple sold 2.29 million Macs, spurred by demand for notebooks such as the ultra-thin MacBook Air, unveiled by CEO Steve Jobs in January.[7]
A few observations here. 1- HOLY FLYING MACKEREL! 51% increase in Mac sales! Even the most outrageous fanboy would never have predicted this rate. Implication of this: a) Apple is becoming a Computer company again, and the iPod business will recede to a sideline business - a very profitable sideline, but with a much smaller percentage of bottom line. b) Computers have higher gross profits (not margin) than iPods so growing the Mac business at 40 - 50% is much greater than growing the growing the iPod business at that rate. (Hey - sooner or later businesses will wise up to the fact that Apple's Xserve servers are more than $1,000 cheaper than Dell's.) c) Does anyone here see a hockey stick? 2- In conference call: one reason for reduced margin was iTunes store which has very low margin. Those analysts who complain about the margin are basically saying "Hey Apple, stop selling so many songs/videos!" RIGHT! (Wouldn't Dell love to have ONLY 32% GM?? - lol) 2- iPhone a) This delay of recording iPhone revenues is positively weird.[11] Apple Inc. posted impressive gains in revenue (43%) and profit (36%) in its fiscal second quarter, but analysts said the iPhone's sales momentum has stalled more than what can be attributed to the post-holiday quarter effect. Apple also delivered a forecast that fell below analysts' expectations, raising concerns that a slowdown in consumer spending could indeed take its toll on the company. Despite its outlook, the iPhone maker stuck to its original forecast of selling 10 million units worldwide by the end of this year.[16] Apple Chief Financial Officer Peter Oppenheimer said the company expects revenue of $7.2 billion ''' a 33 percent year over year increase. He estimates earnings per share at about $1.00, which translates to about $900 million in profits. Of course, Apple always lowballs its guidance to make it easier to exceed the numbers.[17] In a MarketWatch story yesterday BMO Capital Markets analyst Keith Bachman pointed out that over the past three years Apple has predicted an 18 percent drop from 2Q earnings, but in fact reported gains averaging 10 percent in the June quarter. If Apple follows this historical pattern, it will earn about $8.25 billion in revenue and $1.15 billion in profits.[17] The economy may still be pointed downward, but you wouldn't necessarily notice that in parsing this week's technology -earnings reports. Stocks rallied through most of this week as investors welcomed a stronger dollar, weaker oil prices and upbeat earnings from the tech center, including trendsetters like Apple, Yahoo, and Microsoft. Apple led the charge, exceeding its own forecast with a quarterly profit jump of 36 percent, as revenue climbed to $7.5 billion and net income $1.1 billion for its second fiscal quarter.[18] SAN FRANCISCO (AFP) — Apple reported on Wednesday that profits in the first three months of the year topped one billion dollars as sales of Macintosh computers climbed more than 50 percent. Apple's stock price struggled to hold ground, though, after it trimmed its earnings prediction for the current quarter.[19]
Apple's global market share is only 3.3 percent among the 69.5 million PC shipped in the March quarter, according to IDC. But that market share tally is up from 2.5 percent in the March quarter a year ago. Why do those Apple gains matter? Those Mac sales most likely came at the expense of a new Windows machine.[20] Apple shipped a total of 2.29 million Macs in the quarter, a prodigious 51 percent increase year over year. Oppenheimer noted in his remarks that Mac sales grew 3.5 times faster than the overall PC market growth rate. He also said Apple'''s U.S. education business increased 35 percent year over year, '''its highest growth rate in any quarter in the last eight years.'''[17]
Soleil - "With Mac sales up 51% y/y- a rate of growth 3.5X better than the industry-we believe our long-term market share thesis for AAPL remains firmly intact." WR Hambrecht - "With the Mac franchise as the core growth driver, we are still optimistic about the prospects for the iPhone, and we expect Apple to use many of its levers (e.g., price, new features, new models, and new carriers/distribution partners) to accelerate unit sales throughout the year."[21] International sales accounted for 44 percent of the quarter's revenue. Remember, iPod at this point is a cash cow, not a growth driver. It did its job - to reinvent the company and drive a new generation of people to the Mac and make it the "cool company" that people will pay a premium for. With the 3G iPhone and lower prices, this is set to move into the mainstream in the next generation. Yes, there will be stress from the U.S. consumer but things like this and video games will be the last to go.[22] Cupertino, Calif. -based Apple (NASDAQ: AAPL) said Mac sales led revenue growth to $7.51 billion, compared to the year-ago quarter's $5.26 billion.[23] Apple is also now putting a lot of emphasis as well on the iPod Touch, which is being touted as much as a platform for pocket Internet access and mobile computing as it is for playing music and videos. Already, sales of the Touch helped Apple increase its revenue from iPods by 8 percent to $1.8 billion in the quarter, compared to that 1 percent increase in unit sales.[9] April 24, 2008 - With first quarter figures boasting computer sales up nearly 44% over the preceding year and iPods up nearly 5%, 2008 has already proven to be an excellent year for Apple. Now to further illustrate their sales dominance this year, Apple recently released their second quarter figures citing record-breaking unit growth of up to 51% and 54% revenue growth from last year's quarterly figures.[24] What I was illustrating with that statement is the fact that no new iPhone revenue will be counted in the quarter. It is clear, due to Apple's spreading of iPhone sales over 2 years, that all of the previously sold units will provide revenue.[25] International sales accounted for 44% of the company's second quarter revenue. It has been a volatile couple of months for Apple. Shares plunged earlier this year along with other tech stocks due to concerns about the slowing economy as well as fears about competition for Apple's iPhone from Research in Motion's ( RIMM ) Blackberry and smartphones made by Nokia ( NOK ) and Motorola ( MOT, Fortune 500 ).[26]
NEW YORK, April 23 (Reuters) - Shares of Apple Inc (AAPL.O: Quote, Profile, Research ) extended losses and were last down 2.8 percent at $158.35 after the bell on Wednesday after the iPod and iPhone maker gave a profit outlook for its current quarter that fell below Wall Street estimates and its CFO said the company sees third-quarter gross margins flat with the second quarter.[27] We are watching it grow every quarter, as we did Wednesday. In its fiscal 2Q, Apple was expected to ship 2.1 million Macs. It shipped 2.3 million. It was expected to ship 10 million iPods. It shipped 10.6 million. In its fiscal 2Q a year prior, Apple reported net income of $770 million or 87 cents per share.[11]
As expected Mac sales were simply ridiculous and the iPod and iPhone were good enough so people do not cry and sell the stock off 20%. Guidance was set low ( AGAIN ) but this is the Apple game. Whatever they say for guidance, they beat by 20-25 cents of late. Again, people may obsess over this, but this is the Wall Street game - under promise, over deliver. They say $0.94. which means $1.10 or so in dog years.[22] Low prices for flash memory used in iPods offset the decrease in money brought in by Shuffle sales. Apple commands more than 70 percent of the MP3 player market and affirmed its prediction it will sell at least 10 million iPhones in the product's first year on the market.[19]
Ironically, it has been the so-called iPod halo effect, where iPod owners look favorably to other Apple products, as well as the strong retail push using Apple stores, and the Mac's ability to run Windows applications, that helped drive sales for Apple and offset weakness in gross margins during the second quarter, say analysts.[12] I learned on a UNIX box and used DOS before WIndows, so I would consider myself a somewhat experienced user. The atmosphere was great, all of their products were there for hands-on demos, and their sales staff was quite knowledgeable. They took the time to answer all of our questions over several visits, had iMacs for our 4-year-old daughter to play on while we shopped, steered us away from buying a lot of new expensive replacement apps, showing instead us how cheaper apps could handle our needs, and have been more than willing to answer any post-purchase questions we have had, although we have used their technical support and One-to-One program as well. All of this is why when friends ask for advice, I simply tell them to go to the Apple store. Set aside all of the hype, the MS v OS debate, etc.; when friends have gone there and actually checked them out, most have made the switch.[9] M$is a software company that needs to make software and OS products to fit a morass of "standardized" hardware. I've been at this personal and portable computing game since the bicentennial and and I have always preferred tighter integration of hardware and OS. Some machines that used this model were too rigid, relied too heavily on hardware kernel code, or didn't have the power to deliver on their goal. Apple has learned well from both their mistakes and those of others. I maintain an OS X install on a 300mhz blue imac ($60 at a tag sale), and my new MBP ($2k), and it is equally solid on both boxes.[9]
Analysts have a few ideas, ranging from an increased focus on the company's fundamentals to anticipation that updated products will soon be released. In a phone interview, Hudson Square Research-Soleil analyst Daniel Ernst said he was "positively surprised" to see the company's fundamentals taking center stage. "It appears that the market is actually focusing on real fundamentals here, not on irresponsible whisper numbers, which is a nice change for Apple," said Ernst, who rates the stock "Buy" with a $200 price target. He said Apple's results, which included a 51 percent increase in Macintosh sales, also indicate the company is thriving despite the economic slowdown.[4] While Apple's sales jumped 43 percent and profits rose 36 percent, higher than analyst estimates, lower-than-expected guidance for the third quarter held the stock down. Apple shares are trading well below their 52-week high of $202.96 set in December.[5]
Analysts polled by Thomson Reuters expect Apple to report earnings of $1.07 a share on revenue of $6.96 billion in the second quarter, compared with EPS of 87 cents on revenue of $5.26 billion a year ago.[28] Apple earned $1.05 billion or $1.16 a share on revenue of $7.51 billion. Both revenues and earnings easily beat Apple'''s prior projections. They also showed substantial improvement over last year'''s result of $770m net profit (87 cents/share) on revenue of $5.26 billion.[29]
Apple on Wednesday announced financial results for its fiscal second quarter, the first calendar quarter of 2008. The company posted earnings of $1.05 billion on revenues of $7.51 billion, both up sharply from the same quarter a year ago.[30] "With over $17 billion in revenue for the first half of our fiscal year, we have strong momentum to launch some terrific new products in the coming quarters." In related news, Apple has launched the fourth version of its iPhone SDK which includes Xcode IDE, iPhone simulator with Open GL ES support, Interface Builder, Instruments, frameworks and samples, compilers and a Shark analysis tool. An upgraded Audio Toolbox, NSXML Parser support and redesigned UIFont are in there too making this an important upgrade as opposed to mostly bug fixes seen in Beta 3.[31] "With over $17 billion in revenue for the first half of our fiscal year, we have strong momentum to launch some terrific new products in the coming quarters," Apple Chief Executive Steve Jobs said.[6]
Executives gave a hint of Apple's vision of new product and market directions. As reported Wednesday by Jason O'Grady in his real-time coverage of the conference call, Apple announced revenues of $7.51 billion and net quarterly profit of $1.05 billion.[32]
Analysts had anticipated profit of $1.06 and revenue of $6.96 billion. Apple sold 2.29 million Macs, spurred by demand for notebooks such as the ultra-thin MacBook Air, unveiled by Chief Executive Officer Steve Jobs in January.[33]
Apple is not like the other tech companies such as Motorola and Microsoft, in that it has plenty of gains from the ethonol revenues which have been a long time coming. and now with Oil at $119, we will see the crack spread having an effect to buy more iPhones as consumers have less to spend on petrol for thier holiday vacations. Most people these days will not buy a Mac operating system due to the Vista effect in which there are far more solar companies available to increase the electricity output for such high powered devices, as opposed to the energy effecient lower end devices made by the Mobile handset makers such as Sony Ericsson.[9] Not to mention the fact that all the kids that are buying iPods now (and can't afford Mac's now) will be future Macintosh customers. That's been true for some time, but now it becomes the safety blanket that people need to tip a computer purchase in Apple's favor. (Being able to run Windows software for many is like having a 4wd which you might need only a few days per year it takes on a greater value than it should.)[9] All that said, system crashes on OS X are quite rare, and maybe four times in 17 years have I had to reinstall a Mac OS; twice it was due to bad hardware. It may be an urban myth, but I hear that the best solution to problem solving in the Windows realm is to reinstall Windows, and that many Windows users do this on a quarterly or biannual basis. This would drive me crazy. It has been said that the only reason why there aren't more Mac viruses and Trojan horses out there is that the installed base is too small; once Apple owns a significant fraction of the market, the bad guys will redirect their malevolent energies.[9]
Now contrast that with what Apple CFO Peter Oppenheimer had to say about Mac growth. Apple shipped 2.29 million Macs in its March quarter, a tally that was well ahead of expectations. We are extremely pleased to have shipped 2.29 million Macs, just shy of the record number of Macs we sold this past holiday quarter and representing 51% growth over the prior March quarter's results. This is a 3.5 times the overall PC market rate of growth for the March quarter based on the latest forecast published by IDC, up from the 2 to 3 times market growth rate we have been reporting almost every quarter for the last three years.[20] Much for my $1.10. The stock dropped 30-40% due to this "guidance" last time around (we took a big hit). Again, this shows you, you can be intellectually correct, nail a call, but still get destroyed short term by owning a stock and having the herd run over you. Now they have guided for $1.00 next quarter - in Apple speak that means $1.22 or so. At least the lemmings are taking it better this time around, since this "guidance" is below analysts estimates of $1.10. I liked everything about this report except for the gross margin degradation, down from both last quarter's 34.7% and last year's 35.1%% - no specific reason given in the earnings report so we'll have to listen to the conference call to find out. Everything else was quite spectacular for a company of this size. Whatever the spin is today, tomorrow or the next day (or where the stock goes) - this company is becoming the de facto entertainment (slash) fashion accessory company for the next generation. They are 2 steps ahead of everyone else.[22] Speculation is already rampant that the company is preparing to release a third-generation, or 3G, iPhone. Munster and Gartenberg both predict a whole new family of iPhones to gradually unroll in the coming year. ("Maybe a dumbed down version for $200," says Munster.) Apple's hardware archrival turned a few heads this week as well, but not for its earnings (which, despite falling 11 percent from a year earlier, still exceeded expectations). Microsoft CEO Steve Ballmer suggested in a speech Wednesday in Milan that his company was "prepared to move forward without merging with Yahoo."[18] READ BETWEEN THE LINES here. Apple is doing so well, they WANT to push some of the earnings out, to level things out, provide an ongoing cushion, and turn cyclical product sales into smooth revenue streams for booking purposes. THAT tells you, they KNOW they are going to EASILY BEAT whatever "guidance" { I prefer to call it confusion } they give. Imagine, in a DOWN MARKET, where everyone is trying to show every dime they can, to shore up the sinking ships, Apple is doing the opposite, SLOWING DOWN recognized revenue streams. Think for a second what this must really mean, they KNOW they have the rest of the year in the bag, they KNOW that with the 3G iPHONE and whatever else they have planned are going to be blowout sellers. so they are SLOWING DOWN the recognition, not wanting things to SPIKE UP SO HIGH NOW, that they can't keep up the pace.[25] Apple's product mix will also help it through any tough times. The iPhone and iPod touch have higher margins than other iPod models, and Apple has been selling a decent number of both devices, which is part of the reason iPod revenue in Q2 grew by more than unit sales.[13] The iPods in place have generated a healthy revenue stream for iTunes, and Apple is now the #1 seller of legal, online music in the U.S. In addition, Apple is transitioning from a simple MP3 player concept to handheld devices like the iPod touch, a Mobile Internet Device (MID), and of course the iPhone. While the iPod sales were up only 1 percent for the quarter, iPod revenue was up 8 percent, reflecting the fact that Apple is moving its customer base over to more sophisticated, expensive models like the iPod touch.[10]
Apple saw "healthy growth" in regions around the world and strong Mac, iPod and iPhone sales were at the heart of the firm's revenues, according to Oppenheimer.[19] During Q2 Apple also shipped 2.289m Macs and 10.644m iPods representing 51 per cent and one per cent unit growth respectively. iPhone sales for the period were 1.7m - suggesting a vast number are being bought and unlocked.[31] Which reinforces our earlier blog posting about Apple's growth now being led by Macs - not iPods or iPhones. The iPod certainly did the job of making Apple matter again - but now as sales flatten off, it's the firm's success in winning converts to the Mac OS which is the real moneyspinner. Having expanded its following beyond the cult of Mac-lovers, Apple just needs to keep the newcomers interested with constant innovation.[34]
The iPod: Sales of the iPod increased only 1 percent year over year to 10.6 million units. Many observers interpreted the small increase as a '''maturation''' of the MP3 player market and a sign that Apple can no longer expect much growth in this segment.[17] Apple reported the sale of 10.6 million iPods in FY Q2 on Wednesday, but that reflected only a one percent growth year over year.[10]
As iPod sales have grown to staggering heights, the Law of Large Numbers takes effect. To continue its FY07 31% unit growth rate, Apple would need to sell close to 70 million iPods in FY08, which is one-half the 140 million total sold over 6 years. At that growth rate, iPod sales would be 200 million FY12.[35] Considering Apple has sold more than 140 million iPods, it'''s not inconceivable to think that the PMP market is maturing. The iPod segment was Apple'''s primary growth engine for FY05 and FY06 representing 58% of the dollar sales increase both years.[35]
Apple just recently cut iPod Shuffle prices from $79 to $49 making iPods more competitive among lower-priced devices. I expect Apple may slightly increase its market share, but not to an extent large enough to boost sales growth significantly. They outnumber competitors''' users and non-users likely to purchase a PMP in the near-term. Apple'''s sales strategy will increasingly focus on selling more iPods to current owners since they represent the largest source of potential sales growth.[35] "With the stock up 41 percent since the February low, it is going to take a lot of good news to propel the stock higher," said Robert Stimpson, portfolio manager at Oak Associates, which owns Apple shares. The company blamed the gross margin slide on lower sales of its Leopard operating system, a price cut on the low-end iPod shuffle, and higher sales at its iTunes online music and movies store, which runs at break-even or slightly profitable.[36]
The company said that it expects sales of $7.16 billion, roughly in line with consensus estimates of $7.2 billion. It also said it expects earnings of about $1.00 per share, significantly below expectations of $1.10 per share. Investors shouldn't be too surprised though since Apple consistently is conservative with its guidance.[26] To that end, Apple's own targets for the fiscal second-quarter were for just 94 cents per share in earnings and $6.8 billion in sales.[26]
During the same period a year ago, Apple earned $770 million, or 87 cents a share, on sales of $5.26 billion.[14]
Years of strong sales have helped Apple eek up the market share chart, most notably in the United States, where the Mac now commands as much as 6 percent of the market for PCs.[30] Shares have recovered in recent weeks on hopes that Apple would report strong Mac sales. Along those lines, technology research firms IDC and Gartner recently reported that Apple's computer sales in the U.S. grew faster than the overall industry in the first quarter.[26]
Apple created a value added difference vs. =their competition (image) based primarily on advertising and "Branding". They followed up that success by supporting their Macintosh line of personal computers and highlighted the ease of use vs. the Vista operating system and other computer manufacturers. Their recent quarterly results for Mac's +51% shows this effort has also delivered. Consumers have bought into their branding efforts for Mac's -- they are easier and simpler to use and also more cool than traditional personal computers from Hewlett-Packard ( HPQ ) and others. In this situation Apple, also benefitted from what's known as the "Halo" effect. In advertising terms this is when when one product or brand from a company benefits in sales from a 2nd product or ad campaign from the same company.[37] The iPod has had a halo effect on the Macintosh brand by bringing in younger, more image conscious consumers. The iPod brand has also provided some of this same "halo effect" to the iPhone. Consumers clearly know that all 3 products are made by Apple (the corporate brand) and this translates to consumers believing Apple's products are more hip and technologically superior than competitive products. The benefits to Apple as company for this superior branding strategy are immense. It provides a fantastic platform for future new products. Consumers will constantly seek out their new products and view them as the next generation with a cool image and technological superiority, It will also provide them with superior pricing power over the long term.[37] Apple's quality is the heart of its stability. I agree that it will survive the iPod slump because the iPod & iPhone are the proverbial floodgates to the rest of their product line. I am one of those early adopters and promoters. Since I made the switch and used their full product line in my very public job, I have seen atleast 50 ipods purchased, 15 iphones, 20 macs, and several apple tv's sold due to people seeing me demonstrate its quality. Its a virus infecting steadily through my social network. In addition my company has integrated its products into our own (outdoor cinema equipment) due to its superior media handling.[9] Apple usually divides computer users into two camps: consumer and professional. Its product lines reflect that division: notebooks, MacBook and MacBook Pro; desktops, iMac and Mac Pro; mobile devices, iPod Touch and iPhone.[32]
A Mac starts out around $600 and goes up to around $2,500. Sure you can upgrade past that all you want using "exactly the same parts" as PCs so don't let a PC user confuse you on this. Lastly, Macs hold their value much longer than PCs, it's mainly because Apple engineers the entire product so it will run around 3-9 years longer than a PC that might cost $100 less.[9] Sure, back in the 'Apple v. IBM-DOS' days, the first Apple PCs handled graphics more fluidly due to the elegance of the Motorola CPU that the Apple used. That has been decades ago. The current crop of Macs are definitley not any more powerful than a 'PC', and if they are'safer', it's only because the Unix-based OS around which they are designed is perhaps a bit safer than XP/Vista, since most hackers apparently have not yet turned their full attention to that OS, but have concentrated their 'efforts' on Microsoft's OS. And as far as being 'easier', the shovel is intellectually easy to use, but it has very few user options. Steve Jobs had the opportunity to take the Apple/Mac where the 'PC' is today, if only (a) he hadn't been so greedy, which has led him to consistently overprice every product he has ever introduced (anyone remember the 'Lisa'?), and (b) to make them all as proprietary as he possibly can. He still hasn't changed. Jobs is fabulously wealthy and I'm sure he doesn't care, but his 'closed box' mentality has resulted in his always playing catch-up via marketing hype. If you buyers out there want to contribute to his empire, go for it.[9] I love showing my wife how to use it and all the cool features. I use VMWare Fusion to run Windows and it's great to have both machines run on one desktop. I know it's not a fair argument since Apple won't let anyone else run their OS on different hardwarelegally. I think they're smart. Someone here said Jobs is greedy to have Apple stay on only their hardware but I think that's very "ungreedy". Apple used to let their OS run on other machines but when Mr. Jobs came back he stopped that, why? The machines were not giving proper performance for the OS. If Apple wanted to greedy they would let anyone run their OS but they are more committed to make a great product. They have! The marriage of a great spec machine and OS X is unmatched! I would actually love to see Microsoft do the same, they never will, but if they did they could make their products run the way they wanted. It's like the smartphone market, I used Windows Mobile from v.2002-WM5.[9]
Now I run an iPhone and it does wonderfully! Why? Because Apple does control everything about it and makes sure it runs right. Not giving their software to everyone is not greedy but great restraint and I respect that. Now it looks like Mr. Jobs can keep things going where he can smash the rumor that "to be successful you must let everyone use your OS". Apple is an exciting company, they make mistakes? You betcha! (Recessed iPhone headjack comes to mind) But do they on the whole try to do something really well? Of course! As long as they keep it up I'll keep using Apple products. If they quality goes down and someone else comes along I'll switch.[9] Apple is a hardware and software company. Right now it's Apple's time and Microsoft is in decline and Google will someday follow Microsoft into decline. Will Apple fall again? Yes but right now people are enjoying their products and they are moving several industries forward. Did Apple invent touch screens, or music services, or music players? No they just made them work well.[9]
The company didn't say much about iPhone sales on the call, but it did say that the shortage of iPhones in the United States in March resulted from higher-than-anticipated demand. A "significant" number of the 1.7 million iPhones Apple sold in the quarter, the company said, were to people who unlocked them and shipped them to countries in which Apple does not have deals with local carriers. (No news on any new iPhone models, but it did say inventory continues to be tight, a good way to manage things if you are about to introduce a new model.)[9] Analysts say sales of the popular smartphone should remain strong despite reports of shortages last month in Apple stores. They expect the company to report sales of 1.5 million iPhones for the quarter.[28] Apple said it sold 1.7 million iPhones -- the combination cellphone, iPod and Internet device -- and remained on track to sell 10 million by year-end. The company doesn't break out sales of music, TV shows and movies from its iTunes store.[6]
IPhone sales were even more alarming: Apple sold just 1.7 million iPhones in the quarter, far fewer than most had expected. Apple will need to make some changes to the iPhone in order to reach its previously announced goal of 10 million units sold in its first year on the market.[30] With the iPhone 2.0 software due out in June ''' near the end of the next quarter ''' and widespread anticipation of a 3G iPhone in the same time frame, one would expect diminished iPhones sales in 3Q while customers await the new goodies. In his remarks Oppenheimer reiterated the 10-million iPhone goal for 2008. Apple rarely lets its expectations get too far out of line with reality, so I'''m guessing it'''s figuring on several factors to alter the equation. The factors that could hamper sales in the coming quarter will accelerate them in the second half of the year.[17] IPhone revenue from all the iPhones Apple has already sold will still be coming in, even if the revenue from new sales is deferred until after the iPhone 2.0 software is delivered.[25] Software remains a high margin product, so as sales slow, margins suffer. It has been estimated that Leopard's margins are 85% to 90%. Apple's iTunes sales also became a larger part of Apple's revenue in its second quarter, which shrinks margins by adding to the overall mix lots more sales of a product from which Apple doesn't generate much, if any, profit. iTunes' gross margins are estimated to be 20%.[38] Lost in all the Apple earnings hoopla and morning-after analysis is another piece of the puzzle: "April 24 (Bloomberg) -- Microsoft Corp. declined 5 percent in extended trading after it reported an 11 percent drop in third-quarter profit and forecast earnings that may miss analysts' estimates as Windows software sales fell."[39] Illustrating that point, Apple reported a 51 percent increase in Mac shipments yesterday, contributing to a big increase in profits. Some analysts suspect that better-than-expected PC shipments may have boosted Microsoft's latest quarterly results, which are set for release this afternoon. It's a good time to revisit the trends in PC and Mac shipments.[39]
The sheer numbers were staggering: $1.16/share in profit on $7.5Billion in revenue. This compares with analyst expectations of $1.06/share profits on $6.9Billion in revenue. Apple beat on both the top and bottom line but investors aren't yet sure where to go given guidance and a wavering U.S. economy. Apple showed its ability to grow in tougher economic times due to their innovative products, brand value and successful retail integration.[25] Revenue hit $7.51 billion, representing 43 percent growth year over year. Apple made a $1.05 billion profit, increasing its cash stash to $19.4 billion.[17] For the third quarter, Apple is targeting revenue of around $7.2 billion, or 33% y-o-y growth over the prior June quarter.[21] For the third quarter, Apple, known to offer conservative guidance, said it expects revenue of $7.2 billion and earnings of $1 a share.[40] The figures surpassed analysts expectations but the company was less optimistic on the outlook for the rest of 2008. Apple said it expected revenue to total $7.2bn in the next quarter, less than some Wall Street analysts were expecting pushing its shares down 2.8% in after hours trading.[41]
Earnings as a result, it told analysts, could be as low as 65 cents a share; well below the trend line. When t he actual numbers came in, Apple reported $1.01/share. Last quarter, the first of their fiscal 2008 was more of the same.[29] NEW YORK (Thomson Financial) - Apple Inc. (nasdaq: AAPL - news - people ) reported fiscal second-quarter earnings of $1.05 billion, or $1.16 a share, exceeding the mean estimate of analysts surveyed by Thomson Reuters of $1.07 a share.[42] Apple ( AAPL, Fortune 500 ) posted net income of $1.05 billion, or $1.16 per share, up 36% from a year ago and beating analysts' forecasts of $1.07 per share.[26] Analysts surveyed by FactSet Research had estimated Apple would earn $1.05 a share on sales of $7 billion.[14]
The latest quarterly figures from Gartner, by the way, suggest that Apple now has about 6.5% of the U.S. market by units. Its market share just continues to grow and grow. Its share of the world market would be 6.5% too, if it had Apple Stores in countries across the world and it will in time. Apple'''s iMac sales have been growing at 30% or more for at least a couple of years - and now its beginning to show up in a big way. In its latest quarterly returns, the growth rate is actually 51%.[43] Sales growth rates in all regions are strong and once again sales of Macs in Apple's retail stores, 50% of the time, went to first time Mac buyers. That old faithful Halo Effect is at work once again.[25]
The MP3 segment led by the I Pod brand delivered growth of +1% while the iPhone sold 1.7 mm units. How is Apple able to deliver consistent sales and profit growth in tough recessionary times with premium pricing while many of its competitors deliver poor results. In a phrase --it's their superior branding strategy. A company's brand name is often its most valuable asset.[37] Apple will continue to lead and deliver above average sales and profit growth. As in consumer food products a superior brand name is worth its weight in gold.[37]
Apple's quarterly profit rose 36% and sales surged, fueled by strong shipments of Macintosh computers and iPod players, allaying concerns the company would be slowed by a consumer pullback.[44] NEW YORK (CNNMoney.com) -- Computer and consumer electronics giant Apple announced fiscal second-quarter sales and profits on Wednesday that beat Wall Street's expectations thanks to a 51% increase in Macintosh sales. The stock dipped slightly after-hours as Apple gave sales and earnings guidance for its third-quarter that may have disappointed investors.[26] In January, Apple Inc. (nasdaq: AAPL - news - people ) reported more than a 50 percent gain in fiscal first-quarter profits. Its outlook for the new quarter, however, was well below Wall Street expectations, sparking fears of slowing consumer spending and prompting an investor sell-off.[4]
Mac Pro strength. Cooke said that sales in both consumer and professional segments were strong and "across all geographies." Apple didn't release its detailed financial data, but he said that desktops sold well. The Mac Pro had its best quarter since the introduction of the Intel processor.[32] Sales of desktops grew 37%, driven by strong demand for the iMac, as well as increased sales of Mac Pro, which we updated in January. Sales of portables grew 61%, driven by continued strong demand for Macbook and Macbook Pros, both of which were refreshed during the quarter, as well as the successful launch of the Macbook Air. Macbook Air represents a new portable category for Apple and customers have responded very well to its breakthrough design and ultra portability.[20]
I agree, Mac's OS is less hungry for resources and MS has really boosted Apples sales with vista. no doubt about it. The fact remains as long as Apple locks its software to its higher priced proprietary hardware, most people will be attracted to the multitude of cheap price driven PC systems.[9] Okay Apple was singled out by Greenpeace as the worst ewaste polluter globally. The whole company is based on a "gated-community" concept, their hardware, their software, their OS. The GUI is a playschool dumbed down interface with a mouse with only one clicker. An Ipod forces you to use their intermediary iTunes so you have to install this invasive prog that sends you to their store where they SELL you music in their format. They spend zillions convincing marketing victims that they are somehow hipper than people that don't use their OS. I use an OS from one company, a computer from another, a music player from Cowon that is plug and play and lets me just drag my music into someone else's folder with no lame iTunes guarding the gates.[9] The less obvious branding strategy comes into play with television commercials and print ads that show Mac computers or OS X screen shots in the ad, but the ad is about product unrelated to Macs. Perhaps this is because creative people that produce the ads use primarily Macs. Brilliant long term thinking on Apple's part to keep these people using Macs.[37] Even the Apple people were skeptical. Look at it now, it's selling great, and not taking sales from other (Mac) models. The Author nailed the fact that all their products together form an incredible synergy.[43] "Apple has nothing to worry about. Their Ipod products have such a high failure rate, and short lifespan, that people will be forced to buy new ones every couple of years." Last year my youngest spent all his birthday money on an iPod. This year my youngest is spending all his birthday money on an iPod.[9] Successfully creating new markets (iPod) and revolutionizing existing market standards (iPhone) requires a commitment to excellence in the user experience from Research and Development all the way through to product support. That is what makes it so easy to market Apples brand.[37] I still have my beloved xterm. I also admire Apple's willingness to innovate and their grasp of design and ease of use. Repeatedly, they've been the ones to bring out the new, creative products and ideas (the iPod, the iPhone, the iTunes store, Apple TV) while others rush to imitate.[9]
I realize the time period for the 10 million figure has been debated for some time, but Oppenheimer was very specific. His quote: "We remain confident in achieving our goal of selling 10 million iPhones in calendar 2008." Apple probably doesn't consider the iPhone as an iPod because of its lease. Apple's accounting shows deferred earning for this product.[17]
Apple sold 2.3 million Macs in the quarter for $3.5 billion. That is an increase of 51 percent by units and 54 percent by dollars.[9] Computer revenue of $3.5 billion during the quarter almost doubled the $1.8 billion in iPod sales. Are iPod sales peaking? That's not a fair question to ask. Remember that those 1.7 million iPhones also double as high-end iPod players.[45] The company sold 10.6 million of the portable media players during the quarter, about the same as last year. Revenue from iPods rose 8% to $1.8 billion, an indication that consumers were buying more expensive versions such as the iPod Touch.[6] The tech giant and maker of hot-selling iPod music players and iPhones said it earned 1.05 billion dollars, or 1.16 dollars per share, on revenues of 7.51 billion dollars for the quarter as compared to 770 million dollars, or 87 cents per share, in the same quarter last year.[19] The Company posted revenue of $7.51 billion and net quarterly profit of $1.05 billion, or $1.16 per diluted share. These results compare to revenue of $5.26 billion and net quarterly profit of $770 million, or $.87 per diluted share, in the year-ago quarter.[22] Chief financial officer Peter Oppenheimer said Apple expects revenues of 7.2 billion dollars and profits of a dollar per share in the current quarter.[19]
The results topped Apple's forecast of a profit of 94 cents a share and $6.8 billion in revenue.[14]
Apple posted a second-quarter profit of $1.05 billion, or $1.16 a share, compared with profit of $770 million, or 87 cents a share, the year-before.[40]
Net income advanced to $1.05 billion, or $1.16 a share, from $770 million, or 87 cents, a year earlier, Cupertino, Calif. -based Apple said.[33] During the same period last year, Apple earned $770 million, or 87 cents per share.[5]
Since PC retailing gross margins are normally 10% or less, Apple would have to sell $12 million a year per store to pay for the space. Gateway does about $8 million annually at each of its Country Stores.[43]
Apple stores sold 458k Macs and returned an average store revenue of $7.1m (a 48% increase from the $4.8m reported a year ago).[29] Apple's CFO, Peter Oppenheimer reported a first-half ending cash balance of $19.4 billion and predicts a gross revenue of $7.2 billion for the company's third fiscal year.[24] The company had projected revenue of $6.8 billion. Longtime Apple watchers are known for parsing such announcements word-by-word and reading between the lines, much as Soviet-era analysts would follow who stood where on the podium during the May Day parade in Moscow's Red Square.[32]
Total deferred revenue from iPhone and Apple TV was $1.93 billion, compared to $1.44 billion in the previous quarter.[21] If you do the math, Oppenheimer guided to $7.2B in revs and 33% GM and $1.11 eps, a touch above estimates. He noted that no iPhone revs would be counted between March 6th and end of June when iPhone software ver2 would be released. That's a minimum $100M hit. Since the analysts' $7.2B revenue estimate did not include this $100M hit, then in fact, Apple guided $100M better, and another penny on eps, better.[29] You know what we sell the phones for and we recognize the revenue over 24 months." The analysts didn't know because Apple hadn't announced it, so they couldn't factor in that Apple was not going to factor in iPhone revs after March 6th until the Software ver 2 is delivered in late June. That's going to cost about $100M if they sell another 1.7M iPhones. Comparing apples to apples, you'd have to adjust Apple's revenue number up $100M to $7.3B, to compare it to the analysts' $7.2B. The bottom line is once the analysts look carefully at what Oppenheimer said, they'd realize that Apple's guidance exceeded analysts' expectations.[22]
Quarterly iPhone sales came in at 1.7 million devices, said Apple. That's better than analysts' expectations of about 1.5 million units sold. About 200,000 Software Developer Kits for the iPhone have been downloaded since its launch on March 6 and iPhone 2.0 software will be released in June, said Apple.[40] Street estimates for Mac sales is 2.06 million units though some analysts believe Apple could sell as many as 2.2 million Macs, according to a report from the NPD group that February Mac sales increased 60% from a year earlier.[28]
The guidance from Apple, considered one of the four horsemen of technology, along with Google GOOG, Research In Motion RIMM and Amazon.com AMZN, should help allay recent investor concerns that an economic slowdown and a weakening in consumer spending could take a toll on the company's sales. Apple remains confident it is on track to reach its goal of 10 million iPhones in calendar 2008, Tim Cook, chief operating officer of Apple told analysts on the conference call.[40]
Apple shipped 1.7 million iPhones in the first quarter, down from the 2.3 million shipped the prior quarter. That translated to a market share drop from.7% to.6%, according to Strategy Analytics. 'The upcoming (presumed) launch of the 3G iPhone in June is sorely needed and Apple must not repeat the mistake of overpricing its new, second-generation device,' said Neil Mawston analyst at Strategy Analytics.[16]
Analysts and traders who are still trying to figure out where to go from here consider that Apple's stock has grown from $120 to $160 in the past few weeks. Without a shadow of a doubt, this company is continuing to grow, has some very exciting events and products in the pipeline, and has the potential to drastically expand market share in the computer and cellphone business segments.[25] The stock dropped as low as $115.44 in late February after disappointing guidance, but the shares have since rebounded on optimism about the iPhone and signs Apple's computers are gaining more market share. The iPhone is getting a software upgrade this summer that will allow it to better handle corporate e-mail and place it in more direct competition with Research in Motion Ltd.' s BlackBerry and Palm Inc.' s Treo smart phones.[5]
Apple will fail like it failed the first time, because its making the same mistake. It's to greedy. They should let 3rd parties make the hardware and they should concentrate on the software, that is why Microsoft chewed them up when Apple first came out. The Apple OS was much better and sophisticated when they came out and competed against DOS LOL!!! But Microsoft won that race. With MS dropping the ball on Vista and Linux chewing away market share, its a great opportunity for Apple to step in.[9]
Some analysts wondered if Apple's conservative forecasts may turn out to be on the mark given the weak U.S. economy and component prices that may be stabilizing after months of declines. "Last quarter they guided margins to 32 percent and people didn't take it at face value," said Shaw Wu, analyst with American Technology Research. "This time it sounded like it maybe wasn't so conservative after all."[46] Investors' focus on weak gross margins takes away from the real Apple story of the quarter, the blistering sales of Macs, say analysts.[12] Updated from 4:45 p.m. EST SAN FRANCISCO - Apple AAPL blew past Wall Street's expectations for the second quarter on strong sales of its Mac computer line.[40] Apple's computer sales have been growing 2 to 3 times as fast as the overall market. This quarter the company says it grew 3.5 times faster than the PC market overall.[9]
Let me be clear, Oppenheimer stated, "ABOUT one dollar". He didn't say one dollar and zero cents. He said, "about". People are assuming he meant $1.00, when he said nothing of the sort. Imagine, what else he said, forward guidance on GM was 33%. That's almost exactly what this quarter's GM was at 32.9%. While it's indirect, there's no reason why we can't do a quick-and-dirty calculation on what EPS Apple is really expecting. Last quarter they had $7.5B in sales. Next quarter they expect 96% of that with $7.2B. Well, they just had $1.16 eps, and 96% of that is $1.11.[25] International sales made up 44% of Apple's revenue, which totalled $7.51bn in the quarter.[41]
Citi - "Apple remains our top hardware pick through calendar year-end, with a new $248 12-month target, following a 7-8% revenue beat with upside from all product lines in 1CQ08.[21] The NPD Group now counts Apple as the largest seller of music in the country, ahead of Wal-Mart. Apple, in fact, is on track to have greater revenue from selling music (and accessories) this year than the entire revenue estimated for the Warner Music Group. Apple has created product upgrades that are so different that they may well appeal to a significant number of iPod users.[9] Apple sold 10.64 million iPods ''' a gain of 1% in total units sold and (courtesy of pricier products like the iPod touch) revenue was up 8%.[29]
The company said it shipped 2.289 million Mac computers and 10.644 million iPods during the quarter, representing unit growth of 51% and 1%, respectively, and revenue growth of 54% and 8%, respectively.[42] Although no numbers are given by the company, some outside analysts and reports have pegged unlocked devices as high as 30% of units. The focus for analysts for this quarter was on Macs and iPhones and according to management, growth rates for both revenue streams are very high.[25]
Apple shipped 2.28 million Macs, posting a 54% revenue growth from the year-before, topping analysts' expectations of 2.06 million.[40]
Apple also reported having shipped 2,289,000 Macintosh computers and 10,644,000 iPods, representing a 54% and 8% revenue growth over last year, respectively.[24] SAN FRANCISCO -- Apple's AAPL iPod juggernaut is cooling off, but it has helped to drive scorching growth at the company's Mac computer business.[12]
Nintendo. That's Nintendo's profit for the last year. Not just a 48% rise on the previous year, but the biggest profit ever made by a games company. The Wii effect contunues to work its magic on a business which was thought doomed to irrelevance just a few years back - and is now one of Japan's most valuable companies. That's how many Mac computers Apple sold in the last three months.[34] As schools installed networks and then the Internet, Apple fell out of favor with PC-centric IT directors. Parents wanted kids using the same machines that they used at work. Macs were balkanized in classrooms (I did some research on this in 2000 for a financial analyst company). There may have been more Macs in education, but they weren't growing. It was a gloomy picture. Over the past few years, this situation has turned around.[32] Apple's move to expand its reseller locations should help the company stay strong, say analysts. Earlier this year, Best Buy BBY executives said they will have Macs in 500 Best Buy stores, up from about 270 at the beginning of the year.[12]
Apple's stores sold 458,000 Macs during the quarter, an increase of 67% from a year ago.[12] Apple sold 2.3 million Macs in the quarter, up 51 from percent from the same quarter a year ago.[30] Apple sold $881 million worth of music and accessories in the last quarter. That figure rose 35 percent from a year ago.[9]
Apple shipped 2.29 million Mac computers during the quarter, 51 percent more than it shipped during the same period in 2007.[19] Apple said it sold 2.29 million Macintosh computers during the quarter, 1.7 million iPhones and 10.6 million iPods.[23] If the iPod market has really matured globally, and if the iPod touch (or a new Sept-released version of the iPod touch or iPod touch nano) doesn't become a mainstream seller in the Christmas quarter, Apple's year-over-year growth will fall below double digits, and that'll be big trouble for AAPL stock. That's already assuming they'll sell 5M iPhones in that quarter.[9] Mac, iPod and iPhone maker Apple ( AAPL ) reported a very strong quarter for the 3 months which ended in March.[25] The next 2 quarters should be fine for Apple; driven by Macs, and the new iPhone, respectively. Looking ahead, it's the Christmas quarter that worries me.[9] AT&T; ( T ) is no doubt grateful for being the exclusive provider to the U.S. market of Apple'''s ( AAPL ) iPhone. AT&T; released first quarter earnings and the news from its wireless business was quite positive (see conference call transcript ).[47] NEW YORK (AP) — Apple says its fiscal second-quarter earnings jumped to beat analyst estimates as computer and iPod revenue grew.[15] The Cupertino, Calif-based computer and consumer electronics company said it expects fiscal third-quarter earnings of $1 a share, below analyst projections of $1.10 a share, and revenue of $7.2 billion, vs. analyst forecasts of $7.16 billion.[42] Analysts surveyed by Thomson Financial had expected the company to post earnings of $1.07 a share and revenue of $6.96 billion.[6]
Looking ahead, the company expects third quarter earnings of $1 a share on $7.2 billion in revenue.[23] The results outpaced the company's earlier forecast of earnings of 94 cents a share on $6.8 billion in revenue.[23] The company's revenue soared 43% higher to $7.5 billion, with earnings huffing and puffing 36% higher to $1.16 a share.[45]
Analysts polled by Thomson Financial had expected earnings of $1.07 per share on $6.96 billion in revenue.[15] Wall Street was looking for earnings per share of $1.11 on revenue of $7.17 billion, according to Reuters Estimates.[36]
The margin slip is also weighing on some broker expectations. Keith Bachman, a BMO Capital analyst, said Apple's second-quarter gross margin dashed his expectations. He expected to significantly boost his earnings target for Apple after Wednesday's report. He now expects fiscal-year 2009 earnings of $6.55, which is 13 cents a share higher than his previous outlook. "We do not see a snap back in margins," he said.[38] In a largely positive assessment of Apple's second-quarter earnings from Wednesday, Morgan Keegan analyst Tavis McCourt now sees Apple's gross margins shrinking even more on an annualized basis for the next two fiscal quarters; and that "will pressure earnings per share growth."[38]
Investors were also concerned because Apple's third-quarter profit guidance of $1 per share is below the $1.10 per share that analysts surveyed by Thomson Financial were expecting.[5] The results trounced analysts' predictions that Apple's profits for the quarter would be 94 cents per share.[19]
The Cupertino, Calif. -based computer and electronics maker's second-quarter profit totaled $1.05 billion, or $1.16 per share, compared with $770 million, or 87 cents per share, in the year-ago quarter.[15] Amazon.com Inc., the world's largest Internet retailer, said first-quarter profit rose on higher sales of electronics and video games. The company said full-year operating income may be as much as $940 million, compared with the $985 million it predicted earlier this year, sending the shares lower.[33] Reason given ("People are buy because expect v2.0") is in the "My parakeet ate my homework" category. What is going on? It must be something big. b) Company know for conservative guidance repeatedly insists on 10M iPhone sales this year. They must be pretty dog-gone confident in that. One analyst (sorry, forgot her name) is thinking 13M. Finally: iPhone is the only REAL internet-in-your-pocket device out there (aside from iPod Touch, of course). They will therefore ultimately move to the 70% market share range of smartphones, like the iPods.[11]
More to the point of the article, the other thrust that the author didn't mention is that AppleTV box as a way to extend and build Apple's business in the face of iPod saturation. While still quite tiny in sales, the Apple TV does have real potential to change the way people listen to music at home as now there's an easy and integrated way to get their iTunes content right on their home stereo. Like many Apple products, the overall experience of the thousand little cool features - photos, YouTube, hi-def video podcasts, movie rentals is more than the sum of it's parts on the Apple TV. This is another major potential for them.[9] The iMac is the platform from which other products spring. It gave birth to the iPod via the iTunes player and it gave birth to the iPhone via OS X. Eventually it will give birth to an Apple TV that people actually want.[43] My iPhone is pretty much a cross between the two, my iPod for the car. I can't ever see using the iPhone for working out as it's a bit large for that, and I wouldn't want to take the risk of dropping it. PLUS, I want to get away from the phone now and again! It will be interesting to see what Apple does with this evolving technology. The only weak part about this otherwise excellent article is failing to recognize how Apple is constantly able to innovate and create new and exciting products that customers desire.[35] Apple's brand was not built by advertising. It was the result of exception design and development, products that just work, superior support (AppleCare), the ability to look at old things in a new way (iPhone) and most of all to not listen to any of the naysayers but instead listen to the customers and give them what they want. With the release of the iPhone Apple did very little advertising, the product created it's own because of it's innovation, not the Apple name.[37]
The new Time Machine feature in Leopard works 10 times better than any Windows back-up I've used as well. What Apple realizes is that it's the little things that count and it's the CONSUMER that counts, and you shouldn't have to hire an IT pro for simple procedures like backing-up or creating a home network. They'll continue to be a consumer electronics juggernaut for years to come.[9] I bought my first Apple around 1998. I didn't become a Mac diehard until about 3 years ago and they're pulling further and further away formn the rest of the computer world. They network 10 times easier than any Windows machine.[9] The amazing thing is, even with the inept CEOs at Apple, the product was so much better than Windows for years that people kept buying Macs.[39] After the close of trading Wednesday, Apple reported its second-quarter gross margin fell more than Wall Street had expected, to 32.9% from 35.1% a year ago, largely on a higher mix of lower-margin products being sold. That is a departure, given that gross margin has largely been a non-issue over the last four fiscal quarters as Apple blew through its own projections, as well as those of Wall Street. "The second-quarter margins surprised people," said Shaw Wu, of American Technology Research.[38]
"Apple is clearly building products that are resonating with customers in a big way," says Michael Gartenberg, who leads Jupiter Research's team on emerging technology platforms. "It's a combination of the strong brand that Apple's been able to develop through the iPod, and their stores, which are great showcases for products--you go in there practically any time of day and it's crowded. are relatively simple for customers to understand; you can run Windows and it's safe. They've got strong marketing. I'm not surprised it's doing well."[18] Apple produce well marketed, robust (stylised but oh so similar) products at a (comparetively)high price. If you can afford it and you want a (currently) stable platfrom which is user friendy (to a degree - but also the main selling point) buy them. I own both so I think I am in a good position to comment. My family uses the Mac more as they find it quicker, simpler and more reliable.[9] IT is still fighting the good fight, but are increasingly unable to deny workers the obviously superior Apple products. Already, OS X is anywhere from 50% to 1100% (no typo there) faster than Vista on comon tasks such as (ahem) installing Office, copying files, launching programs, etc. it's 'ridiculous'. (This is not from a Mac web site either, in fact, Pop Mechanics has a great article on this.)[22] With Vista, MS has backed itself into a corner. If they really modernize their OS, they will lose backwards compatibility and thus lose their monopoly grip on the market and people will feel less compelled to stick with MS with the ascent of Mac and Linux. If they maintain their legacy cruft, they will continue to be severely limited in applying their OS to new markets (as Apple has done with the iPhone/iPod/AppleTV) and people will continue to get frustrated and migrate to other platforms as well.[9] Since the time OS X was released, I've gone from grudgingly supporting Macs at work to a big fan of Apple. My personal machines are now all Mactels, because I can do anything I need to with them. I've watched three groups of people slowly but steadily move towards using Macs as their primary machine.[9] Agree with first posting, it takes time for people to 'get it' with Apple. It has taken years for people to start to see Apple's as more than a 'toy' and a machine only for graphic designers and other 'non-serious' uses. Even my tech friends often don't understand that Apples have all the serious (Unix) underpinnings of the systems they favor for technical work.[9] The iPhone has the potential to be the world's first device that keeps people connected at all times, and third party software development will help it become the de-facto standard as the network effect cements it on top. With more work moving from the hard drive to the internet, fewer people will care what operating system they're using, which will provide many customers the freedom to choose Macs over PCs for the first time ever.[11]
There is also a plethora of Open Source software available as well. Though a bit pricier out of the starting gate, when you stack them up next to an equivalently equipped PC their cost effectiveness becomes apparent. They also have a long shelf life, capable of lasting for years, often long past the changes in technology. Even the government is thinking of rising the Mac wave, publishing a handbook on how to make their security comparable to federal standards. IT departments are coming to realize how easy MAcs are to set up and how simple they are to support, as well. Over time, any remaining reluctance to avoid Macs in businesses should be eliminated as they grow in popularity and demand for something better than Windows continues. Share and Enjoy: These icons link to social bookmarking sites where readers can share and discover new web pages.[48] What's going on? Don't rush to tell me how much easier, safer and more powerful a Mac is than a Windows PC. All that was true a year ago as well, and Mac sales are accelerating.[9]
Mac sales were spurred by new designs, the 'halo effect' from iPods and iPhones, and consumer frustration with Microsoft rival Windows Vista operating system.[2] The upcoming 3G iPhone is unlikely to ship before July, and new Macs won't arrive till a few weeks after that, indicating that the third quarter could be under stress due to the lack of new products to drive sales, says Shaw Wu, an analyst with the independent research firm American Technology Research, in a research note.[28] Sales of iPods were reportedly sluggish in the second quarter, and some analysts believe the company could lose momentum in the current quarter as customers await new products.[28]
Sales of the company's main products exceeded or were at the top end of analysts' estimates, with Mac shipments soaring 51 per cent to nearly 2.3 million units.[2]
Apple iPod sales were flat year-over-year at 10.6 million units, suggesting that the company has saturated a mature market.[30] Apple announces Q2 results today, and unit sales growth as well as iPod ASP will be areas of focus.[35] Any negative iPod sales growth that Apple sees won't be all sunshine and kittens, but it shouldn't impact the bottom line too drastically if it occurs.[13] While investors aren'''t expecting the iPod to be the chief source of growth going forward, sales still need to keep rising to not become a drag on Apple'''s overall growth.[35]
When AT&T; ( T ) reported net adds of just 1.3 million, there were concerns about iPhone sales crossing the 1 million mark. Unlocked iPhone sales seem to have bridged the gap and Apple seems confident of meeting the 10 million target for this year. The iPhone 2.0 software, which is expected to launch in June, would help in its goal.[21] Some impressive software is likely on the way. In addition to upcoming applications, Apple expressed almost certain confidence that it will make good on its projection to sell 10 million iPhones this year. They key to that success, they say, is international expansion. ( Considering 3G is almost essential for parts of Europe and Asia, Apple '''s confidence is a sign a second generation phone is highly likely by June, or July ). Another positive appears to be component parts.[29] I can hardly wait. Please sell 12 million iPhones this year, Apple. Shut those ugly analyst suckers up.[17]
The iconic California company sold 1.703 million iPhones during the quarter. "It was a solid quarter for Apple," said Silicon Valley analyst Rob Enderle. "It really shows them to be one of the brightest stars in the technology market right now."[19] The Cupertino, Calif., company said it sold 2.29 million Macintosh computers in the quarter, up 51% from the same period last year -- the strongest quarterly growth rate in about 20 years. Industrywide, personal computer sales rose an anemic 3.5% during the same period, according to research firm IDC. "It's an indicator of their expanding brand power around the world," said Andy Hargreaves, research analyst with Pacific Crest Securities.[6] Analysts expect iPod sales of 10.6 million units in the quarter, flat from a year earlier.[28] What may be surprising to some, however, is the lackluster sales figures of the iPod: 10.6 million iPods during the quarter, just a 1 percent increase over last year.[18]
Mere units sales of iPods doesn'''t tell the whole story. Revenue from the iPod increased 8 percent because many of those sold were more expensive iPod Touches. Let'''s not forget the 1.7 million iPhones ''' they also serve as fancy iPods. Oppenheimer said the iTunes Store holds 85 percent of the legal download market, hinting that rivals such as Amazon have not proven as formidable a threat as once feared.[17] Converting revenue into dollars helped turn a 7 percent increase in sales outside the U.S. into a 17 percent increase. Starbucks Corp., the world's biggest chain of coffee shops, forecast its first annual profit decline in eight years as sales at U.S. stores slowed, causing the shares to drop 11 percent in Nasdaq trading.[33] The average analyst estimate was $4.05 billion. Anheuser-Busch raised beer prices to blunt an increase in costs, such as for barley, aluminum and advertising. That helped boost U.S. beer revenue, while market share also inched higher, a positive sign for the brewer whose Budweiser and Michelob brands have seen sluggish sales.[33] Well, Roy, first off, Microsoft does not sell PCs. It we look at the OEM prices of Vista, they average (from my scant research) to about $142 - though discounts given to big name OEMs might bring that average down. That gives Microsoft sales worth $85 billion, according to your number of 600 mil units.[9]
Apple has seized this golden opportunity to capitalize on Vista's bad reputation, however warranted, by blitzing us with a multi-million dollar "PC versus MAC" ad campaign to reinforce this perception. and yet Microsoft still surpasses earning estimates.[39] Apple sold 2.29 million Macs with a growth of 51% y-o-y that is about 3.5 times the overall PC market rate of growth.[21] For what it's worth, the data point that most grabbed me was the rate of growth of the Mac business relative to the rest of the industry - 51% this year compared to last - a rate of growth 3.5X better than the PC industry. I see this growth rate as indicative of a halo effect starting to play out that touches so many aspects of Apple's business.[39]
Apple's innovative products, such as the iPhone, have helped fuel the tech giant's consistent growth in recent years.[26]
LOL there is no IPOD Slump I never bought an Ipod always had one of the old original pre apple that worked fine for years when i did finally decide to upgrade I also needed a new cheapie camera. i didnt own a cell phone but when i checked out the Iphone I was sold and have been in heaven ever since. Im a tech guru and choose my stuff wisely.[9] We frequently say we are a 'MAC' family. Because it's true. Two powerbooks, on iBook, a mini with a very nice Apple screen, three iPods, and an iPhone; and here's the kicker: We purchsed our 80+ year old parents an iMac long ago as we knew they needed something easy to use. Now, with another iMac for them, we can't pry them away from it. It's the OS, stupid.[9] Speculation abounds that Apple will use the technology in future generation iPhone and iPod devices. It's unclear, however, how that decision will fly with Apple's biggest partner, Intel, which creates most of the microprocessors used in Apple's products. Intel recently shipped its own low-power microprocessor, the Atom.[30]
Not everyone needs a new iPod, but if Apple continues to improve the product, people will just want it.[35]
The saturation of the iPod market and a trend toward people using mobile telephones for music and video validate Apple's launch of the iPhone, according to Enderle. "The typical problem in a sector like this is a company holding on to existing technology and resisting the next wave," Enderle said.[19] Pry open your pricey iPod / iPhone or remove 19 screws on your MacBook Air. Many remember that original iPod owners were left in the lerch when their batteries died. Apple assumed they would buy a new iPod. After consumer outcry, they decided to offer an expensive battery replacement plan.[9] No great surprise that, given the importance of the Christmas sales period for consumer handset sales. Apple's perhaps more susceptible to the traditional Q1 tail-off than others, given it's coming to the phone market on the back of the standing it has in the consumer electronics market thanks to the iPod family.[49] Starting back in the 80s, computer makers were not allowed to install anything except MS Windows on computers they sold to the public. It's pretty hard for anyone making a competing operating system to get any sales. I know Macs had their own hardware and their own sales channels. That is a different story. The clueless CEOs that Apple had took what Steve Jobs left them with and made a mess of things.[39] The Mac is a fine, high-end Windows machine. It'''s really cool that Macs run Windows XP. But the real issue is, when will OS X be good enough to not need to run Windows at all? That ability to boot up XP is not so much a Mac victory as it is Bill Gates''' triumph. He now has compatibility with his competitor, which was the whole idea in the first place. Apple should follow suit and make iLife available to Windows users in its entirety. Of course, they won'''t.[9] Some firmware updates, BY LAW have to be paid for, (Apple never charges for bug fixes) Google: Sarbanes-Oxley Act to learn why sometimes Apple must charge upgrade fees. Macs will probably never have a Virus at this late stage of OS Development, Apple used UNIX as the foundation while Microsoft tired to go it alone. The only reason Microsoft won the early rounds of the OS Wars was because they tricked IBM with a deceptive legal contract written by Bill's Dad in 1981. If you are still trying to use Windows, there is a much better life out there - it's called Macs running OSX, it's simply a far superior platform Ask ANYONE that uses it and they will tell you the exact same thing.[9]
Windows is garbage because no single corporation is capable of maintaining a modern OS all by itself. Mac OS is rock-solid because it lets academics and geeks trouble shoot its FreeBSD core for it. This business model exists because Apple is a "command/control organization driven by a single visionary".[9] The reason you can't dual boot Mac OS on a Windows machine is because Apple won't let you. The same goes for stability. Mac OS largely can claim its stability because, unlike Vista, it doesn't have to support every known piece of hardware under the sun).[9]
Are all of those Apple OS X vs. Vista commercials making an impact? Microsoft's client revenueVista and XP came in below expectationsand the company cited three primary reasons: A tough comparison from year ago levels, OEM inventory build and piracy.[20] According to IDC, Apple now has 6% of the U.S. personal computer market, up from 4.9% a year earlier. It trails Dell Inc., Hewlett-Packard Co. and Acer Inc. In January, the company revitalized its Mac offerings with the ultra-thin MacBook Air.[6] Apple shipped 2,289,000 Mac computers during the quarter, a rise of 51% from the year before.[41]
Piper Jaffray - "The key takeaway from Apple's Mar. qtr is that the Mac units grew at the highest y/y rates (units 51% and revenue 54%) in 17 years. Macs are the most meaningful category with the most potential and they are performing the best."[21] In a category that includes iTunes, Apple reported $881 million in revenue, up 35% from last year.[6] For the third quarter, Apple is expected to post EPS of $1.10 on revenue of $7.15 billion.[28] Apple's revenue rose almost 43 percent to $7.51 billion from $5.26 billion.[15]
"We're delighted to report 43 percent revenue growth and the strongest March quarter revenue and earnings in Apple's history," said Apple CEO and self appointed messiah Steve Jobs.[31] Rest assured that the Apple quote was buffeted by a bunch of Windows supporters as is often the case on ZDNet. Those pro-Mac comments are becoming increasingly common among IT types. It remains to be seen whether Apple can be a real enterprise player, but it doesn't have to do much to be a thorn in Microsoft's side. All Apple has to do is nibble and it will be harder for Microsoft to hit its client revenue growth targetsespecially against tough comparisons.[20]
Total revenue recognized for the phone, accessories and payments from partners amounted to $378m. Deferred revenue, which includes a sum of monies related to both iPhones and Apple TV units was $1.93b, up from $1.44b in December.[29] Essentially meaning next quarter numbers for the company will include ZERO dollars in iPhone revenue since the company expects to release the software near the end of June. This will put pressure on margins and the top line numbers when doing comparisons, but will add an additional bump to the following several quarters. The company will recognize this window on an adjusted basis for the full 2 years as with normal iPhone purchases. The company reiterated its internal goal of selling 10Million units in 2008 and their strategy of being in Asia this year.[25] About 10.64 million iPods were sold in the quarter, representing a 8% revenue growth from a year ago but just 1% unit growth and in tune with Wall Street expectations of 10.6 million devices.[40] The Company sold 10,644,000 iPods during the quarter, representing one percent unit growth and eight percent revenue growth over the year-ago quarter.[22]
Microsoft provided three explanations for the shortfall in Client revenue. That the OEM channel had built inventory ahead of the Vista launch last year, which drove 20% unit growth last year and made for a difficult comparison; second, that inventories at OEMs were higher than normal after fiscal Q2 (Dec.), which resulted in less OEM demand in the current quarter; and third, that it experienced higher piracy rates in Asia in the quarter.[20]
In a PC market that grew only 12% last quarter, Mac unit sales were up 51%, outpacing the market by three-and-a-half times and offering the strongest quarterly growth in almost two decades.[12] PC sales would be declining. Now reflect on the fact that Apple reported 51% growth in PC units in its quarterly figures.[43]
Order a new PC and what do you get? A UPS shipment, some trilingual manuals and color coded pictures to show how it all plugs together. Great if u are comfortable with this stuff but it leaves many feeling unsupported. Why is Apple pulling away - more customer support - they just added One to One and the number of helpers (wearing teal blue shirts) in the stores has quadrupled since Thanksgiving. Has their sales - gee, I wonder if there is a connection.[9] Great column, Sramana, I'd love for you to comment (or devote a report) on the impact of the iPhone SDK, the iApps store, and aapl's slice of 30% of all iApp sales at the store. My thinking is that this seems to be setting up as iPod/iTunes, the Sequel. I'm expecting Apple to move from it's exclusive telecom deals to open, unlimited sales to anyone.[21]
For iPhones, which are being closely watched in light of Apple'''s projections to sell more than 10 million units, quarterly sales were 1,703,000.[29]
We remain confident in achieving our goal of selling 10 million iPhones in calendar 2008." No wonder earlier this week Lehman Brothers initiated coverage of Apple with an Overweight rating and $195 price target.[11]
Worried that economic distress is pinching consumers' ability to pay for Apple's premium-priced products, investors lopped off 40 percent from the stock's value in January and February, though it has rebounded considerably since then. Apple is considered especially vulnerable to slower domestic consumer spending because of its stronger presence in the U.S. than overseas, and because its computers and gadgets typically carry higher price tags than competing products. Investors decided that they still need to take a cautious approach toward a company known for its conservative guidance but also heavily weighted toward the U.S. market, which is rife with turbulence stemming from the crisis in the credit and housing markets.[5] Touch screens were not invented by apple, mp3 players were not invented by apple, graphical user interfaces were not invented by apple, the computer mouse was not invented by apple and neither was cell phones. They also have not made the product better, they have just scaled down access and functionality so that consumers can't screw around with it and so that you have to pay high prices for spare parts or add ons.[9]
Apple is quickly reaching a tipping point. What will happen if they either A) release a low price model based on an inferior chip for the cheapskates, (e.g. Celeron) or, just decide to go ahead and sell OS X for any newish PC? (Of course, charging about what Microsoft tries to get, and rarely has any takers, for it's boxed product.) It would be the death knell for Microsoft, that's what.[43] As of now, a base model mac book still runs 1100 bucks. Thats 500 dollars more then basic PC laptops. IMO, the only way Apple can replace MS as the leader in OS's is they need to be competitive in price and also allow others to license their OS on different systems.[9]
If Macs are truly meant to be the 'computer for the people' and Apple wants to avoid leaving huge wads of cash on the table by not offering a stripped down version without all the bells and whistles for the masses then it may very well be another lucrative opportunity spurned. [8] David Zeiler follows all developments related to Apple, Inc. Having spent his early computing years on the Apple II platform, he moved to the Mac in 1993.[17] Then there'''s the cost of construction, hiring experienced staff. '''I give them two years before they'''re turning out the lights on a very painful and expensive mistake,''' says Goldstein. Apple started the Apple Stores because it saw that its retailers were doing a poor job of showcasing the Mac.[43] We made the switch to Mac over a year ago primarily because of our experience at the Apple store.[9]
Brisk sales of Mac desktops and MacBook laptops helped fuel yet another market-thumping quarter for Apple (Nasdaq: AAPL ).[45] Gross margin fell to 32.9% from 35.1% in the year-ago quarter. Apple attributed the slide in part to softer sales of its Leopard operating system, which launched in October. New operating systems post the highest sales when they debut, said Apple, and Leopard, in its second quarter, slowed down.[40] Apple, it appears, sees the MBA as a new, distinct category, separate from the other notebooks. The results of its first quarter of sales may bear that out. When asked about the demographics of MBA buyers, Tim Cooke, chief operating office, said that the new model was appealing to road warriors, but also to college professors and student "It seems to have universal appeal."[32] Although Apple did not provide sales data, Cook said the new Mac "seems to have universal appeal."[6]
In sum, Apple can'''t depend on new users to supply the sales volume as in previous years.[35] IPhones have been snapped up in the United States. It remains to be seen whether the innovative mobile devices will be as popular in Europe, where they recently began rolling out. Apple plans to expand sales of iPhones to more parts of Europe and enter the Asia market later this year, Oppenheimer said.[19] The only way I see iPhone cannibalizing iPod sales is if Apple starts loading it with more memory.[35] Sales of matchbook-size iPod Shuffles continued a "sequential decrease" despite Apple cutting the price.[19]
Apple sold 10.6 million iPods in the first three months of 2008. It has a 73 percent share of the music player market in the United States and a growing share abroad.[9] Apple'''s iPod has more than 70% of the unit share of the PMP market. That number has held steady for past several years. With such a large share, Apple has already taken business from its competitors, thus less remaining to take now.[35] Starting with only a 4% market share when it was launched last year, Apple now has 9% of the smartphone market share against Research In Motion'''s ( RIMM ) 42% according to ChangeWave Research. With the iPhone being made compatible for use in the enterprise, it would be interesting to watch its race with RIMM.[21] Apple drove innovation in the early years of the PC market and was universally admired for it. Its ground-breaking products delivered neither a defensible share of the PC market nor a firm financial foundation.[43] For the moment, most of Apple'''s market share wins are coming at the expense of Palm'''s ( PALM ) Treo and Motorola???s opnbrktMOT ) RAZR, another product that we have two of in our house. Those two, in due course, are also moving on to the iPhone.[21] Gartner'''s figures are way off the mark and Apple'''s figures account for an even higher share of the growth of the whole market. The initiative belongs to Apple, and there'''s little that the competition can do about it, because they are not selling the same product.[43]
Investors may be getting ahead of themselves, says Toni Sacconaghi, an analyst with Bernstein research, which makes a market in Apple shares. "Although the Mac's momentum has remained strong, we believe it is not immune to a consumer slowdown given its high-end positioning and near exclusive dependence on consumer sales," says Sacconaghi in a research note.[28] Analyst Ben Reitzes wrote: "Despite the economic environment, we do not believe that Apple's momentum has waned in Macs. Macs may have reached a tipping point with share on its way toward doubling over the next 3-5 years."[11]
Quite a few MS astroturfers posting to this topic, with subjects ranging from the old canard "just wait till Macs get market share." to "iPods failure rate will boost Apple's sales."[9] Apple holds several market shares for consumer purchases not just computers, or not just iPods, etc The quintessential example of Apple's trend would be the Virgin Conglomerate owned by Richard Branson.[9] Profits at U.S. technology giant Apple have jumped 36% as consumers snap up its MacBook computers and iPods.[41] Once the iPod became cool with mainstream audiences, the Macintosh platform followed. It's called the halo effect, and it has helped guide Apple to 21 consecutive quarters of beating the market's profit expectations.[45] In summer 2007, when Apple issued third quarter guidance, it forecast dramatically decreased margins and profits as a consequence of a then ambiguous product launch. It was going to be costly, it said.[29] Apple's gross profit margin was 32.9 percent of revenues, better than the company's guidance but below the 35.1 percent in the year-ago period.[5] Investors were worried that Apple's gross profit margin — a key measure of how well a company controls manufacturing costs and pricing — came in below what many on Wall Street were expecting, despite Apple beating the net income estimate.[5]
Apple's guidance in six of the last eight quarters for the company has been below Street estimates, points out Mike Abramsky, an analyst with RBC Capital Markets, and each time Apple has beat consensus by a healthy margin.[12] RBC Capital Market's Mike Abramsky and American Technology Research's Shaw Wu emerged atop the list of Apple analysts in providing the most accurate estimates for Apple's second fiscal quarter of 2008, and both are out Thursday with new research notes on the company.[1]
"The stock was all over the place, but I thought it was a great quarter," said Jane Snorek, senior technology stocks analyst at First American Funds. "The most important part is that the Apple consumer seems to be immune to economic weakness," she said. "This is a very U.S.-centric story.[5]
Approximately 45 new stores will open in 2008. About half of these will be likely be outside the U.S. The new international outlets will include the first Apple stores in China, Australia and Switzerland. Other important financials: Cash flows generated from operations equaled $4 billion.[29] "With over $17 billion in revenue for the first half of our fiscal year, we have strong momentum to launch some terrific new products in the coming quarters." The Macintosh continues its strong performance in the market, despite a weakening economy.[30] "We have strong momentum to launch some terrific new products in the coming quarters." Fueling Apple's gains this quarter was a strong performance in the U.S., despite a slowing economy.[44] Music product services accounted for about 36% of total revenue during the second quarter, said Apple.[40]
Loving it so much, I got myself an ipod video with an ipod hi-fi then after 3 months an apple TV. 2 weeks ago I got myself a macbook air. Ok, you all may say, this is a dude who's been infected by all sort of Apple's advertisement. The truth is - the only reason I like it is because I feel that I look good carry this product.[9] Initially I was reluctant to buy any Apple products, untill I decided to buy the IPOD touch. Now I feel only "Apple" can compete with other "Apple" products, they are simply great in all aspects from quality to creativity.[9]
You just can't really do mobile computing with one button, I don't care how big and pretty your touch screen is. iPods are great a great product, but you've got Zunes and other brands coming up with equal to or greater products (finally). Apple products are designed to do what they're designed to do, and to do it well and with little work; I prefer something that is designed to be as capable as possible and rewarding to an experienced and knowledgeable user.[9] My first apple product is the ipod nano - the skinny first generation rectangular one then I was so excited by the product I got myself a macbook.[9] AMAZING. No, when the goofs looking at spreadsheets, STOP and learn to watch CUSTOMERS with money to spend, ACTUALLY STANDING IN LINE ALLNIGHT to be the first to buy ANY new Apple product.[43] As being an IT consultant, I see the everyday problems with MS products. I believe that Mac will be strong as long as they stay in the game. Apple will change what they need to stay top notch. Look at their products, no one has been able to match their hardware profiles. Macs will always climb the latter.[9] I've used Macs from time to time and I'ce had no problems getting what I need done on either platform. Before you go ranting about which is which, consider these pointers. Web browsing, e-mail and regular homework without too much headache? I'd lean more to the Mac on this one out of the box seeing as Apple Works ships with most Macs.[9]
Momentum is going MAC. In the non-Jobs era, Simply software moved away from MAC compatible software because of the complexity of doing so, the demands of MAC people for exact conformity to MAC standards, and our inability to get the "code" from Apple to make everything work.[11] One should also not discount the effects of the food problem and how that will cause people to buy more the Mac and less of the Vista or even consider the Linex Red Hat or Ubuntu platform devices. In Summary: There is more upside in the Apple prices than in the Apple stock prices can give for the high cost of the money available for buying such expensive devices.[9] NEW YORK (AP) - One analyst raised estimates on Apple Inc. (nasdaq: AAPL - news - people ) Thursday, and another a price target, citing a bullish outlook for Macintosh computers despite a fiscal third-quarter outlook below Wall Street's expectations.[50] Analysts have recommended lowering the price of the expensive device, creating a new version that is compatible with more modern 3G wireless networks, and adapting the iPhone business plan in Europe to the unique needs of that market. Apple also revealed this week that it has purchased a tiny Silicon Valley chipmaker called PA Semi, which has been developing low-power microprocessors.[30]
For some companies, a mature market and downward pressure on prices could lead to a nasty death spiral. Apple has used its amazing six-year run with the iPod to nurture enough new business lines that it will be able to withstand a collapse in the MP3-player market as well as can be imagined.[9] I think the idea of a "halo effect" is spot on. At the beginning of this school year, I needed a new laptop. Apple was running a deal where if you bought a new MacBook, you got a free iPod.[9] The iPod has contributed significantly to Apple'''s growth the past several years.[35] A year ago Apple earned $0.87, which represents 33% growth on an EPS basis.[25]
Here are our standing charts, updated with the latest data from Apple and IDC. The numbers show the Mac experiencing significant growth in recent quarters.[39] The exclusive relationships that Apple has obtained to launch iPhone might well end-up being an obstacle to growth over time. At this moment it is still unclear that iPhone is poised for unimpeded growth until and unless the market outside the U.S. shows real traction.[35] Ben Wood at CCS Insight said that T-Mobile Germany's recent price cut and, thus, introduction of a subsidy, to the iPhone signaled more than inventory management ahead of a 3G launch. Wood pointed out that Apple's attempt to expand its international markets for the iPhone have stalled, with its recent launch in Ireland and Austria merely an extension of pre-existing agreements with Euro operators. Expectations that the iPhone would enter markets in the Asia-Pacific region early this year have not come to fruition, he said. 'Other operators appear to have decided that Apple's contractual terms (which include revenue-sharing of resulting data usage) are not attractive,' Wood said. '(We) believe Apple needs to rethink its approach.[16] Apple sold 1.7 million iPhones in the quarter taking the total to 5.7 million since the launch.[21] According to Apple, the company shipped nearly 2.3 million Macintosh computers during the quarter.[26] The iPhone: On the one hand, the 1.7 million iPhones Apple sold exceeded the company'''s expectations, leading to shortages in some areas. Unless the pace picks up significantly, Apple can'''t meet its target of selling 10 million iPhones in 2008.[17] Apple executives reiterated the company's goal to sell 10 million iPhones by the end of 2008.[5]
Apple blamed the recent shortages of iPhones in company stores on the greater-than-expected demand for the phones.[40] The Kindle is just so clunky and ugly! I dream of an Apple elegant digital reader that will also play audio books and do every else the iPhone or iPod Touch does. With text available as a download at the iTunes store they'd might have to change the name, but they would probably really cut into Amazon's business.[9] Many commentators view Apple'''s dynamic commercial success through the success of the iPod or the iPhone, expressing vague disappointment with the Apple TV and some disdain for the '''bread and butter''' business of computers.[43] There's the good old halo effect. Mac sales continue to be strong, a trend that may be due in part to iPod and iPhone owners buying Macs when they're shopping for their next computers.[13] The boost didn't come from iPod or iPhone sales as one might expect. It was the strength of Mac computers that provided the lift.[18]
As iPod sales began to cool last year, Mac growth accelerated becoming the primary growth supplier.[35] Revenue from Macs surged 54% from a year ago. Munster said after the company's earnings were released that the "Mac business is defying gravity" and added that the strong Mac sales are a sign that more and more Mac users appear to be convincing their friends to buy Macs.[26] The computer and electronics company posted a 36 percent gain in second-quarter earnings, driven by robust sales of Macs.[4]
Apple said it was the strongest second-quarter sales and earnings performance in the company's history.[5]
Gene Munster, an analyst with Piper Jaffray, said in a conversation before the earnings announcement that Apple likes to make sure that Wall Street analysts don't set targets for Apple that the company can't match.[26] There has since been speculation as to how long the margin contraction might last. Apple executives, addressing analysts after the company reported its earnings, were bullish about their chances.[38]
The profit outlook was weaker than analyst forecasts for earnings of 1.10 dollars a share. Apple is known for setting earnings expectations at levels it can comfortably beat in order to avoid having its stock punished by a disappointed market. "Other than the overall economic situation, I'm not seeing any weakness in Apple," Enderle said.[19] Apple shares fell 58 cents to $162.31 in after-hours trading, climbing back from a dip of nearly 5% right after the close of trading and the release of the earnings report.[7] Apple shares gained $2.69, almost 2%, to $162.89 then slipped to $162.31 in after-hours trading.[6] Shares of Apple, which have climbed more than 10% in the past two weeks, were off 14 cents in after-hours trading to $162.89.[40]
Apple's shares have been on a roller-coaster ride, soaring to near $200 at the end of December, falling as low as $119, and rebounding in the last month. Analyst Shaw Wu of American Technology Research Inc. lowered his rating on the stock Monday, from "buy" to "neutral," because he said the stock was too volatile.[6] Results came out after the market closed and Apple shares fell $1.68, about 1 percent, to $161.21 at the open of trade Thursday.[5] Investors seem to be unfazed by the issue, with Apple shares ending Thursday's trades adding $6.05, or 3.7%, to reach $168.94.[38]
Each segment buttresses, enhances, feeds, and supplements every other factor. The stores are "the Window to the World" { W2W } where doubters, sceptics, and loyalists can wander in, and do the hands on thing, without pressure, and if and when they have a question, there REALLY IS someone there that can, and usually WILL stop, hold your hand, and show you how your PROBLEM is a few clicks away from the APPLE SOLUTION. Unlike the horrid experiences with other computers, and the telephone linked to some gal in Banglalore who has never even seen the USA, let alone your community or school. As an investor {2,000} shares, I was one of those Apple II geeks, that moved off and went Windoze for decades, I was totally skeptical of Apple, been burned once, you know how that one goes.[43] Superb article. Some key points in MY thinking: 1) at 7-ish percent U.S. market share, AAPL has huge potential upside 2) AAPL's key competitor, MSFT has significant problems going forward: A) They have not modernized their OS; Windows is still not UNIX based, which puts it way behind BOTH OS X and LINUX. B) antitrust scrutiny, based on previous illegal activities C) Lack of modern development tools (like Apple's free "Xcode"). D) unsolvable security issues on the desktop. These issues, additionally, will probably preclude MSFT from ever being a "player" in the "cloud".[43]
Upon reading over several of the comments I noticed plenty of wrong information being distributed so wanted to correct anyone that was wrong. OSX is based on "UNIX" it's simply not an OS that lends itself to viruses in the first place, two Apple does ALL the security in the OS and doesn't rely on 3rd parties like Microsoft does.[9] Apple uses the very OPEN OS of UNIX which was DESIGNED to be on World Wide Networks 24/7/365, in fact, the "WWW" was created on the Father of OSX, NeXTStep. Microsoft on the other hand used (stole) a very limited "corporate" OS from DEC called VMS to base their security on, so no wonder Apple has won the security prize when it comes to world wide business security.[9] Just wait till they unbundle OSX, in a "limited" version of a stable operating system, and offer a version for use with other PC builders. OSX is so clearly superior, and I am sure they have thought of many ways to keep apple machines running a "deluxe" version of OSX on the top of the heap, while offering an OS "lite" that works for the "rest of us".[9]
Company IT departments are usually keen on keeping the hardware in a company as uniform as possible to prevent issues with incompatibility, malfunctions and problems like viruses. These are all problems that plague the more ubiquitous Windows systems. Macs are gaining a toehold in corporate America because they are prone to none of the incompatibility issues that Windows based PCs are. Mac's insistence on doing everything from design and hardware to software in house keeps their computers in top shape right out of the starting gate. They are built to be easy to use, and will "see" whole networks regardless of platform once installed.[48] MacBook Air was hacked in 2 minutes at the CanSecWest security conference contest compared to 1.2 hours for Windows Vista which got hacked through 3rd party software (Adobe Flash). The only system which couldn'''t be hacked during this contest was Ubuntu Linux. It's only a matter of time before the second most popular system (Mac's) gets hackers attention. For those interested Quick Time from Mac was the software used to hack the MacBook Air in 2 minutes this issue exists for Windows users running Quick Time. My recommendation stay away from Mac products until they start submitting their software and products to 3rd party security testing companies, used by Microsoft and Linux distributions use.[9] We have a new MAC at home; two iPhones (what a device; how can you say enough good things about it). As a software provider, we KNOW they should have just renamed XP Vista--and moved on. They have inflicted such pain on the public. It is so unfair. That and $1.59 will buy me a Grande at Starbucks--but it is important that Microsoft has done an awful thing to the public--forcing this Vista mess on everyone.[11]
Revenue was $7.51 billion, down 22% q-o-q and up 42% y-o-y driven by strong demand for Macs and the ever-popular iPhone.[21] Total revenue from sales of iPhone, iPhone accessories, and payments from carriers was $378 million.[21] The iPod maker posts better-than-expected increase in revenue and profits on strong Mac sales but stock slips after-hours on conservative guidance.[26] There is no question that my experience with the iPod led directly to three iMac sales. My parents are considering a new laptop and asked whether they should consider a Mac.[9]
The big news, IMHO, is that corporate america is really warming up to Apple in the enterprise. Employees are demanding it of IT. IT would rather keep spoon feeding MS'solutions' but they have no reason to deny anyone an Apple as the Macs are far more compatibly than anything else (used to be MS's strong point but only because of their sheer numbers).[25] Lastly, the way Apple separated "root" from "Admin" doesn't allow for a virus to spread, so there is no technical way for a virus to move from one mac to another. It simply can't happen, so it has NOTHING to do with being the 2nd largest marketshare the world's top deviant minds have tried and tried for years to break into a Mac but none have been successful.[9]
Apple's Forums, Knowledge Base, Phone Support are 2nd to none & have been invaluable to many users old & new, another reason to buy Mac. many times Apple Care has answered simple questions when my gear/software was out of warranty.[9] The very efficient yet powerful PA Semi chip or new ones sound like something that is maaaybe headed for the Mac Air but probably more likely into smaller portables (a 720P HD playing jumbo Touch with 3G video iChat? a gaming portable? a mini-tablet?) -- esp. since it's supposedly derived from and compatible with PowerPC and Apple requires applications to be written for Universal. as in still PowerPC compatible and for Intels, too.[21]
Apple will be making a play for dominance in Smartphones and pocket PCs (and a yet-to-be-shipped MID device). If Apple succeeds in dominating these new markets, Apple's Mkt Cap should exceed $500B by 2011.[21] In forward guidance for Q3, Apple is projecting revenue of $7.2b and earnings of about $1.00. Those numbers seem a little low, and it'''s likely they will be.[29] Apple had also projected revenue would be short at $6.8b versus analyst consensus of $6.99b.[29] About Apple's guidance: Apple's CFO stated forward revenue guidance was $7.2B, inline with expectations, and EPS of "about $1", while expectations are $1.10.[22]
"Apple, in fact, is on track to have greater revenue from selling music (and accessories) this year than the entire revenue estimated for the Warner Music Group." But this revenue generates Very little profit.[9] Total revenue of $7.51bn and impressive profit of $1.05bn meant a huge rise on the same period last year where the company reported figures of $5.26bn and $770m respectively.[31] The showing smoked Wall Street's expectations of $1.07 a share in profits on less than $7 billion in revenue.[45] Net income declined to $510.9 million, or 71 cents a share, the first quarterly profit decline in two years.[33] Net income rose to $276.2 million, or $1.09 a share, in the period that ended March 31, from $242.5 million, or 95 cents, a year earlier, the company said.[33] All sign can be used to justify further share price gains throughout the year. The company added about $1Billion in sheer cash, putting its war chest at about $19.5Billion.[25]
Apple is not a perfect company, none are, but they are, at this moment, making all the right moves and are gaining market and mind share.[9]
Again Apple outside of America is a non entity, barely scraping 2% market share. I'm afraid you're not objective Kings, you are a Microsoft hater, Apple lover and such me writing this is pointless as I am well aware Apple lovers aren't open to reason. P.S. Kings, I work for a a very large multinational bank and they don't have a single OSX machine.[9] "The big difference between Google, RIM and Apple is that the other stocks had been weak prior to the report," says Darren Chervitz, director of research at Jacob Internet Fund, which holds shares of Apple. "Apple's stock price has already anticipated pretty decent results, so they have to do very well for an upside."[28]
Apple still is a niche player in the personal computer business though, trailing Dell ( DELL, Fortune 500 ), Hewlett Packard ( HPQ, Fortune 500 ) and Acer, the Taiwanese computer manufacturer that acquired Gateway Inc last year, in U.S. market share.[26] I'm almost embarrassed at how much Apple has taken over my home. I like to buy my computers when they die (3 years for a laptop, I've discovered), but not this time.[9] As an Apple user for more than 25 years (I started on an Apple II) I have truly enjoyed this thread. Until there is some sort of universal platform, this argument will never stop. Everyone has their preferences and their needs. I've been teaching school for 37 years and for the last 25 of them have used an Apple computer of some sort.[9]
Apple Chief Operating Officer Tim Cook said sales in the Americas were up 52 percent year over year; in Europe up 48 percent; and in Japan up 47 percent.[17] Apple said it had strong sales in the education market, with 35 percent year-over-year growth in individual and institutional sales. There is "significant momentum in this area," Cooke said.[32]
The upcoming back-to school-sales season and increasing reports of consumer dissatisfaction with Microsoft's MSFT Vista operating system should drive consumers further into the arms of Apple. That trend will go a long way to dismiss concerns that Apple's sales could be hurt by weakening consumer spending.[12] Now that things are moving forward again at Apple, it took awhile for Steve Jobs to get things rolling, Apple's sales started moving up again and lately _really_ moving up. On the other side, OEMs (Compaq, Dell, etc.) are now allowed to install other operating systems when the courts finally deemed the contracts Microsoft forced on them as illegal.[39]
As an aside, Cooke mentioned that Apple had surpassed Dell in education sales of portables last year.[32] Sales of Apple's Leopard operating system tapered off during the quarter, as Apple had expected.[38] Another thing that may have accelerated the sale of apple computers is the fact that they now use Intel Processors.[9] Apple credits continued strong sales of Macintosh computers and high retail store traffic for the surge.[30]
Apple knows that itunes are low-margin, and even said so in the Conf Call. They are low margin sales with a good upside, locking people into (or attracting them to) the hardware.[9] Early adopters are always quick, but to get the masses to switch from one brand to another takes longer. While we knew about Vista's troubles a year ago, and Mac sales began to increase a year ago, it's only now that we are seeing the rapid increase in sales as more and more people switch. The more folks switch, the more their relatives, friends and co-workers hear about it, and this word of mouth starts to increase as well. The thing about this inertia, it is hard to change in the other direction too. I think we'll see this movement toward Macs continue at least for the next year or two, and likely accelerate in the short team.[9] The surge in Mac sales we are seeing now are the people who decided about three years ago that their next computer (and computers) will be a Mac.[9]
Lets say the data shows that Mac portable and desktop sales are averaging at around 1500, multiply that by 40 mil units and you get $60 billion.[9] There's always a rumble in the jungle whenever Amazon.com (Nasdaq: AMZN ) reports. Despite its stocky frame -- and we're talking about a company that may ring up as much as $20 billion in sales this year --''it has''the''speed of a sprinter.[45] Sales rose to $7.51 billion from $5.26 billion in the same period a year ago, topping analyst forecasts of $6.96 billion.[42]
Sales excluding excise taxes rose 6.2 percent to $4.1 billion, the St. Louis-based company said.[33]
Mac sales of almost 2.3Million units are very strong, coming very close to the record sales number posted by the company for the previous holiday quarter.[25] The big deal here is over 50% growth in Mac sales to almost 2.3Million units in the quarter.[25]
Total revenue growth for the latest quarter was +36% led by the Mac brand in personal computers at +51%.[37] If Apple can continue to boost ASP, then the slowdown in unit volume growth will less adversely affect overall revenue.[35] IPod unit growth has been slowing, as nothing can grow forever. Apple has made some modifications to its iPod line which should help boost iPod demand.[35]
I've also thrown in a bonus chart at the bottom, showing the growth in iPod (and iPhone) shipments compared with Mac shipments. Check back this afternoon for details of Microsoft's quarterly results.[39] Keep in mind that I'm still a PC stallwart, and gave up on Macs for work some 15 years ago after seeing one too many cherrybombs. It is true that I'm more willing to consider a Mac now, but not because of the iPods, which are pretty crappily made. It's because of the iPhone.[9] I bought an MP3 player because I didn't want an iPod: now I have two iPods? My wife bought me the iPhone. It is much better than the Windows phone I bought 4 years ago for $500.[9]
The main point here is that the iPod business really isn't just about iPods anymore. Take the iTunes Store, for example. It's already a bigger music retailer than Wal-Mart, and sold nearly $2 billion worth of songs worldwide last year.[13]
A few years ago, the iPod's breakthrough was Apple's ticket out of stagnancy.[45] Still the iPods showed the same seasonal rate of decline compared to a year ago, said Apple.[40]
Cheese based products under the Kraft brand have done very well. When Kraft Foods has used the Kraft brand on other categories (salad dressings, barbecue sauce etc) their results have not been as strong and effective. Apple's success in the last year is based on two strong strategic moves they have made over the last several years.[37] As a branding specialist I can tell you that you only have half the equation right. Yes indeed Apple is among the best in positioning and exploiting their brand; however, it doesn't matter how good your brand is if the product doesn't deliver an exceptional experience. In Apple's case, it's the best of both worlds, thus the brand and product feed off each other synergistically; the product line meshes well, seamless, and all product lines representing the edge of technological achievement.[37] Rick. You missed a major point.Apple's products are simply BETTER. They look better, the work better, and the user has a much better EXPERIENCE all the way around.[37]
Pricing for DRAM and Nand Flash hit low levels in March, '''historically low''' according to the analysts call. This favorable pricing is expected to continue and should help margins in the present quarter. As for new products and all the gossip and rumor about iPhone shortages, analysts did their best to get insights.[29] Apple'''s conservative guidance for the June quarter did generate some hand wringing among analysts, particularly the bit about Apple'''s gross margins hovering around 33 percent.[17] Apple Inc. said Wednesday that second-quarter profit rose 36 percent, more than analysts estimated, after winning customers for its Macintosh personal computers.[33]
Apple's second-quarter results are expected to be boosted by a strong performance of Apple's Mac division, especially Mac Pro desktops and the thin, lightweight Macbook Air laptop, analysts say.[28] For only a couple hundred dollars anyone can buy PC hardware and literally install OSX on it. This is upsetting to apple, but as they say you cant have your cake and eat it too. Perhaps its time for Mac clones to resurface.[9] I understand most of your points, but if Apple continues to gain ground, won't the virus deviants begin to make viruses for Macs, hence eliminating this much-touted advantage over PC's? Just a comment, I'm not die-hard for either one of them.[9] Since the early 90s the mac was considered better than PCs but lets face it apple hasn't done anything revolutionary except in marketing.[9]
With factors from a greater number of users embracing the Apple interface to greater availability of cross platform options, IT is running out of excuses. More and more people in the work force are asking their IT departments to either switch to or offer Macs as an option.[48] The Vista nightmare will vanish and happiness will spread from happy customer to people who are ignorant to what Apple is all about. Apple need to move extremely fast in this area. The Eee PC, MSI Wind, HP Mini note and Dell's offering to be are all promoting Linux and XP. There are conversations going on about hacking the devices to support Leopard and this underlines further that the future users of these platforms desire an Apple OS. Come on Apple.[9] I was amazed - the Apple offerings are faster, have no crapware, "just work", and the switching costs have been largely eliminated. I tried and tried to find a decent machine and all of them were Vista "hobbled".[9] They all have a place and no one is better than the other. You might have had a point if it were XP as that is full of holes but Vista is actually very good and stable (again don't get confused with bad drivers and bloatware, OEMS need to sort their poor builds out). You must also always take into account the fact that OSX has an unfair advantage due to the highly controlled nature of it's platform and it's complete lack of flexibility to do anything other than what Apple intended. It would be interesting to see how it would perform if OSX was subjected to the same multitude of hardware as Linux and Windows therefore more drivers needed and potentially more holes.[9]
We are a web development firm and on a Intel based Mac you can also run Windows at the exact same time. This is great for testing on all platforms without multiple computers. That was the main reason for my switch. First and foremost is it's stability. When you run Vista on an Intel Core Duo it's idle speed takes up about 20-30% of each processor.[9] To be honest, the up-pricing of the hardware is only worth it if, as many people don't, you don't know how to repair and troubleshoot your own systems. Just be aware, Mac OSX is just as insecure as the windows OS in almost all the same spots, they don't get the virii and spyware, simply because they don't have the marketshare to make it worth potential jailtime. Thats like a professional con-artist who cons millions of dollars, deciding to steal your checkbook and write fake checks.[9] I have seen five coworkers all buy Macs in the last two years, people that were all committed to Windows before. It's spreading around the office, slowly but surely.[9] Before the switch, I had 9 Macs in my classroom, mostly the old ones no one else wanted to mess with.some as old as 12 years old. Guess what? They all worked flawlessly and provided my children with many hours of real learning since I have more educational software than our school does. In more than 20 years of using Macs in my classroom, I've never had a hardware failure! And these machines were being used daily by small children! What do we have now? Four windows machines that our school system set up so that kindergarten students have to memorize a truncated version of their names and a random 7 digit number so they can sign on to the school network.[9]
I have used both platforms over the years, but have stayed with the Mac platform after I retired. It works well and I don't get the strange error messages that Windows seems to acquire over time.[9] The integration between the two is why it works so well and why it has succeeded. I actually think its funny all the windows people who complain about the ipod and the itunes music DRM format. Meanwhile they use Microsoft Windowswhich is exactly the same form of lock in.[9] If it were not for Microsoft and IBM, PC's were not be a household item and the internet would not be what it is today. Apple takes other people's idea and market them so well that you forget about the purchasing and maintenance cost and limited functionality.[9]
While Apple is not the only reason for the Microsoft Client shortfall, it seems plausible that it could be a larger factor than acknowledged by Microsoft. We are somewhat skeptical of Microsoft's assumption that its Client revenue will snap back next quarter.[20] Apple Stores constitute the most successful retail chain launched since Wal Mart. Apple now has a sure fire method for growing its revenue. It just opens new Apple Stores in new areas and new customers appear.[43]
Bigger news is the recent One Laptop Per Child (OLPC) migration to a Windows OS, and why Apple didn't beat Windows to the punch.[9] Every new Apple product has a "must have" feature, so I am happy to buy the new ones and give the old ones away. The single visionary had the foresight to rewrite the whole OS on top of an open-source UNIX foundation, so that Apple does not have to develop or maintain its own core OS. FreeBSD is not proprietary.[9]
While Mac OS is very nice it simply is not as capable as Vista. Until Apple unlocks its hardware support, it never will be as capable.[9] All of us Mac fanatics were there and "remember" the kind of technology we used. This is the truth behind our Apple love.[9] I thank God that Apple has not been able to gain any foothold in the manufacturing of memory. If they could, they would make all non-Apple memory incompatible with Macs.[9]
Much of what I do on the desktop I simply could not do with an apple (and no, dual booting is not the solution. BTW, this argument really bothers me. Many Apple fanboys claim that one of the reasons Macs are superior is because of it's ability to dual boot. That's great.[9] Would you expect to see a Mac in a Police station in the real world? No, but Apple is making that experience seem real to the general public.[11]
The first noticeable change that Steve Jobs made (if you remember) was to manufacture Apple Macs and Apple laptops in different colors.[43] First the operating system was swapped out, with OS X being based primarily on what was good in Jobs''' NeXT computer, then the hardware was revised by swapping out IBM'''s Power processor for Intel'''s line of processors - not because the Power chip was deficient, but to allow the iMac to be compared directly with PCs. This makeover has given Apple dominance of the PC market and this dominance is starting to show.[43] Apple is succeeding because it has developed a great OS AND it is a master of hardware/software design and integration. Sure their marketing is great but if MS had marketed the Zune like Apple marketed the iPod, it still would have bombed.[9] "Apple has been aggressive about catching the next wave and shifting from the iPod to the iPhone."[19] Apple launched the iPhone in Austria and Ireland during the quarter, but things are not so rosy in Europe.[21] Let's do the math. Apple guided to $7.2B in revs. That's 96% of this quarter's $7.5B. GM was 32.9% this quarter and Apple guided to 33% next quarter, essentially the same.[29] Add a fraction for the GM difference between 32.9% and 33%, and you can see, Apple's actual eps guidance is about $1.12, with analysts expecting $1.10.[22] Adjusted revs were $7.3B to the analysts $7.2B and eps was $1.12 to the analysts' $1.10. These are minor details, but the story in the media changes significantly when Apple's actual guidance is a little higher than analysts' expectations rather than 12% lower.[22] Apple reported Q2 EPS of $1.16, 9 cents better than the analyst estimate of $1.07.[21]
Apple'''s stock is trading around $162 with a market cap of around $143 billion. After dropping to nearly $120, it started picking up in March since its enterprise announcement, and on Thursday morning, the upward climb looked resolute.[21] The move has also plumped Apple's coffers, now bursting with $19.4 billion in cash.[45]
Apple lowered the price of the 1-gigabyte shuffle from $79 to $49, helping to stanch the decline. Apple executives speaking on a conference call Wednesday afternoon gave few details, as is their custom.[9] Apple sees Q3 EPS of about $1.00, versus the consensus of $1.10. Raised Price Target: Merrill Lynch raises its price target from $180 to $186, maintaining their Buy rating. Deutsche Bank raises its price target from $225 to $235, maintaining their Buy rating. Citi raises its price target from $218 to $248, maintaining their Buy rating. ThinkPanmure raises its price target from $165 to $195, maintaining their Buy rating. WR Hambrecht raises its price target from $218 to $238, maintaining their Buy rating. Maintained: Needham maintains its $234 price target and Strong Buy rating. FTN maintains its $215 price target and Buy rating. Caris & Co maintains its $170 price target and Above Average rating. AmTech maintains its Neutral rating. Cross Research maintains its $225 price target and Buy rating. Piper Jaffray maintains its $250 price target and Buy rating. Soleil Securities maintains its $200 price target and Buy rating.[21]
Apple executives cited a number of reasons for the margin performance. It is the result of recently lowering the price of Apple's Shuffle music player, which is on the low-end of Apple's signature iPod family of music players.[38] The price cut in the low-end iPod shuffle and other price cuts internationally also helped drive down margins, said Apple.[40]
There are plenty of potential ipod users in China, India, Central America, etc. who are in the non-users category who would buy an ipod at the right price. That said, Apple has traditionally ignored international markets.[35]
Apple has a little iPod problem. It is doing an amazing job of rising above it. O.K., we should all have this sort of problem.[9] The iTunes store, Apple TV and the iPhone are all legally inaccessible to me, due to my country of residence.[9] Reports that iPhones were out-of-stock at certain U.S. Apple stores in the past month raised questions of whether the cause was tight inventory control ahead of a 3G launch, component shortages or another factor.[16]
Beyond that, Apple will continue to introduce the iPhone into new international markets throughout 2008.[17] News from Apple ( AAPL ) is often big news. Apple released its second quarter results on Wednesday.[21] SAN JOSE, Calif. (AP) — Apple Inc.' s fiscal second quarter was another blowout, with results that easily surpassed Wall Street's expectations, but it wasn't enough for investors to warm up to the company's stock any further.[5] Apple also announced Wednesday that it planned to buy P.A. Semi Inc., a small Santa Clara, Calif., chip designer known for energy-efficient, high-performance microprocessors. Apple's financial results beat the expectations of Wall Street, which had worried that the company would falter as consumers closed their wallets in a tough economic climate.[6]
Microsoft is a dying company, nobody disputes that, but for you to misunderstand the world's best security on Apple's 32 year battle tested OSX and mix it up with Microsoft is unethical.[9] To depict Apple'''s ( AAPL ) extraordinary growth over the past 6 years as a "revival" is to understate the truth.[43] Gross Margin was 32.9 percent, off from 35.1 percent a year ago but still slightly ahead of Apple '''s projected result.[29] When asked if Apple is feeling any effects of the slowdown, Oppenheimer said that traffic in Apple's retail stores continue to grow. He added that Apple plans on opening 45 stores this year, including stores abroad.[26] Apple said it had expected that demand would decline more than it did following the holiday shopping season, leading to "stock outs" in some Apple stores and in the channel. Cooke said that Apple had expected a "sharper seasonal decline," attributing this forecasting error to its inexperience in the phone market. He said it was Apple's first Q1 to Q2 as a phone company. There's strong demand for this phone in Asia.[32] You think this will be an 'de facto entertainment (slash) fashion accessory company for the next generation'. That is laughable. Apple will be the _computing_ company for the next generation first, and those other things as well.[22]
Apple could not have done much better in the March quarter, the best 2Q in company history.[17] It's all smiles at Cupertino. This week Apple has announced its best ever financial results for its second quarter which ended 29 March.[31] From the device's debut last June to the end of the second quarter, Apple has sold 5.4 million.[5] While there's little doubt among analysts that Apple will post a solid quarter, investors are still worried for a number of reasons.[28] Despite the strong results, Apple investors seemed to hold back on Wednesday, likely as a result of the quarter's decline in gross margins (32.9% from 35.1% in the year-ago quarter) and what has been perceived as weak third-quarter guidance.[12] In the current quarter, Apple expects gross margin to increase to 33% from 32.9% in the previous quarter, since component pricing is expected to remain favorable.[40]
Apple posted a 33% jump in U.S. shipments last quarter, the biggest gain among the top PC makers, according to Gartner.[7] When Apple'''s iMac sales are gathered up with PC sales, it creates a misleading impression.[43] There are reports of Apple pushing for price cuts in France with the carrier Orange to increase sales.[21]
The quarter also included flat iPod unit sales of 10.6Million and very good iPhone sales of 1.7Million units.[25] If people are buying iPhones in place of traditional iPods, why are analysts complaining about dwindling iPod sales.[17] The Chinese made iPod breaks and has bad sound. No wonder it's sales are declining. People, even teenagers, have found that they do not need to retreat behind some earbuds all the time.[9]
Why waste your time doing damage to 10% of the computers when you can do damage to 90%? I meanif you want to do damage, it is not worth it on the Mac. I love when people evangelize the Mac with those reasons. Because the more people go on Macsthe less there is to brag about because the bigger target they become. Ipods though.very innovative when they came out originally.[9] I design microelectronics for a living, so you'd think I'd have some competence when it comes to setting up home networks, upgrading PCs, finding drivers for odd peripherals. Well I gotta say, I dread visiting family because every time I do, they say, "Hey, you're a computer guy - help be do this blah blah blah." It invariably sucks up half the visit and leaves everyone frustrated and annoyed. Last November I bought a mac for myself, and Geez, it's been the best thing ever. It's really made me happier, much less stressed, even proud of my profession. It spanks the baby, it walks the dog.[9]
No really, there laptops are ok, but other than that I wouldn't touch a mac with a 10 ft pole. The operating system is ok, solid unix underneath, but as a computer nerd working on them, I hate how EVERYTHING is changed around every time they put out a new version.[9] Many? However many maybe even most new macs are running Windows part time so I'm not sure how much buying a Mac cost Microsoft.[20] The alternative is a Mac, Bootcamp & XP, especially if one is looking to purchase a new notebook. If they get Vista "good enough" (which looks doubtful) one can include that platform on the Mac in the future. It allows one to use their investment in Windows software while slowly upgrading to Mac software.[9] The only remaining bite comes from buying Mac software you can't just use your old copy of MS Office on the new machine unless you want to run Windows (which requires a purchase of an XP license).[9]
Novice users have a very easy to use interface. Both users have a more reliable system that doesn't whine and complain every 2 seconds about which site you visit, which patch you downloaded, which driver version is incompatible with what else I have Windows on my mac for all of 2 programs my company refuses to port to a web standard.[9] I'd also like to note that despite any stability claims, I have never seen the blue screen of death on my Vista machine. For me, at least, it's been just as stable as my laptop. All of this is not to say that I don't love my Mac OS laptop. I use it just as often as my desktop and love it too.[9] For all the Mac-hater who believe that the only reason Macs don't suffer viral attacks like PCs is because of their mall market share, read this article. It will show you that Mac are inherently more secure because of the underlying architecture.[9] Macs continue to gain market share against PCs, accounting for 6.5% of unit shipments in the first quarter compared with 5.2% in the year-earlier period, according to Gartner. Amazingly, Macs even worked their way inside IBM ( IBM ).[11] In the first quarter, 24 IBM researchers tested Macs and 18 concluded that the experience was better than that provided by PCs. IBM is now expanding the Mac testing to 100 of its researchers.[11]
We currently have IT departments across the country (including mine) trying to push forward a plan to give everyone a Mac. Why you ask? Forget deciding on whether the staff needs a PC or a Mac or both in some instances. Now, we give them a Mac Pro with Parallels running both Operating Systems! Viola! We just saved our company millions by combining both platforms on one machine. And, this is all besides the fact that the Mac is simply the most elegant and best workstation on the market. Mind you, this is only what is obvious to the educated observer.[9] The simple truth is no other phone has smartphone marketshare like the iphone except for the blackberry. No sooner the iphone gets its enterprise software upgrade, very soon, you'll see a monumental shift in IT. Why? Because all other smartphones suck. I've used them all. My opinion is the iphone has them all beat hands downits not even close. If this wasn't somewhat true then you wouldn't be seeing every other smartphone company trying to mimic the device with all their new designs.[9] The company will not recognize any revenue from iPhone sales from after the iPhone 2.0 Software upgrade announcement until the software is delivered.[25] People buying iPhones in the interim will be provided a free upgrade. Therefore, revenue recognition of iPhone sales will be delayed till iPhone 2.0 software is delivered.[21]
" The iPod Touch which is an iPhone without the mobile capabilities helped in the 8% y-o-y iPod revenue growth." iPod Touch does actually have mobile capabilities. It's got WiFi and works just like an iPhone without the PHONE capabilities.[21] The eight percent rise in iPod revenues was credited to demand for the iPod Touch model, which is essentially an iPhone without the mobile telephone capabilities.[19]
First of all, it has a continuing revenue stream from the iPods that have already been sold because of the iTunes Store.[9]
ITunes works with all song formats not just songs "purchased" from Apple's music store. I noticed several mistaken comments on this.[9] While the title of the article indicated some insightful thoughts about Apple's future, direction and obstacles, it was mostly just a regurgitation of all the other news I've seen all over the place.[21] Even as Apple and Microsoft expand into new markets, the computer business remains a big financial driver for both companies.[39] And perhaps most significantly, Apple's entire adventure with the iPod is helping it sell computers, although the magnitude is impossible to calculate.[9] With two Toshiba tablet computers running Windows, it takes FOREVER to do just about anything. Apple and Steve Jobs are both well ahead of the curve.[9] Despite the scale of the dip, Apple's share of the world phone market drop just a tenth of a percentage point to 0.6 per cent. That's well below even fourth-ranking Sony Ericsson, which took 7.9 per cent of the market, down from 9.4 per cent in Q4 2007. It was displaced by LG, which saw its market share increase sequentially from 7.2 per cent to 8.6 per cent.[49] Microsoft certainly did not admit to losing share to Apple, but the most recent NPD data, which is provided below, suggest that there could be some share shift from Microsoft to Apple.[20]
RE: Microsoft's elephant in the OS room: Apple jay@. It's only going to get worse if they kill XP and force everyone into Vista JohnMcGrew@.[20] The thing that never gets properly addressed in these win-mac slam dances is that apple is a hardware company that makes the best OS they can for their own hardware.[9] People who know Apple know that the company isn't perfectsome have had bad exeperiences (as is true of any company, btw).[9] Apple designs lots of different chips designs other than microprocessors. They could develop coprocessors to add to the Intel processor, they could be doing some ASIC chip design, etc. There are plenty of possibilities other than trying to take business away from Intel. It could be that they just add additional chip designs onto the Intel processor road map and it isn't a big deal to pontificate as to what and how they are going to use the design talent. They are basically chip designers being added to a company that does design various chips for various reasons.[21] For the latest Apple products use Ciao a comparison website to find laptops like MacBook Air.[10] At 4:50 pm on 25 Apr 2008, Rovex33 wrote: The Wii is amasing. Im not into console gaming but a few friends who are have converted from sitting for hours mindlessly playing their playstations to actively playing and interacting wit the Wii. It might not be for hardcore gamers, but they are a small minority. Apple, well i still dont like their products, to bland looking and they have a smug image.[34]
One of Apple'''s key strengths is innovation and the ability to improve its products in short time. This is evidenced by the five upgrades to the Classic model since originally introduced in late 2001.[35] I would never again buy an Apple product without at the same time buying the appropriate AppleCare package. Trust me on this.[9]
Apple is doing a amazing job of dealing with the situation, according to Saul Hansell with the New York Times. For some companies, this could spell big trouble.[10] Apple didn't fail the first time because of Steve Jobs mistakes'''he was gone by the time they went into a death spiral.[9]
One of the biggest reasons for Apple's upswing is Steve Ballmer. He must be a truly crappy CEO, and I, for one, am glad of it. He has no vision or understanding of technology or it's potential. Always on the cash grab, MS spends an inordinate amount of time figuring how to squeeze it's consumers.[9] Apple is not just revived, but energetic, ambitious and kicking ass. At no time in its history did Apple achieve the success or momentum that it now has.[43]
The majority, like myself, will not buy into proprietary locked hardware. In many ways, MS is evil but Apple is no better in how they rip off their customers with over priced hardware and limited software choices.[9] What a pleasure; started; didn't crash; sweet. Like the early editions of Quicken (which, by the way, no longer makes the top 100 brands, because they too emphasize complexity v. simplicity of the folks with the magic touch--at Apple).[11]
Last month, Apple overtook Dell DELL as the No. 1 PC supplier in the educational institutions market.[12] No contest. They don't call it plug and pray for nothing in the Windows world. To the PC genius (Mainstream bank IT support manager) who told me recently that until Macs have a mouse with more than one button and iPods let you put MP3 files on them he will stick with Windows.[9] While Windows based computer have always been cheaper, warranty service is a bitch with a number manufacturers. I'm talking from experience as the store I worked used to service both Macs and PCs.[9] I also suspect that penny pinchers have most Windows problem. Those who invest the price of a Mac in a PC with good hardware, drivers and security software probably have few problems.[9] Based on what my brother told me (who is a software engineer) Windows built the OS first and then thought about security later whereas on a mac, security was first thought then the OS. So there is a big difference, plugging security holes on a Mac is few and far between, because it is natively built with security in mind. In Windows it's more like we found another hole, let's plug it up.[9] Macs are based on OSX which is the most popular UNIX in the world. It's the OS used by the more technical people, very few use Windows which is considered more of a quirky low end system.[9] Basically, in one form or another everyone uses a Mac today, but people that don't know much about computing end up with "Mac Clones" called Windows or Linux.[9]
OK, well I think I'll go burn a Bluray movie on my Mac, because we all know that 'creative' people use Macs.oops, can't do that either.[9] Just not worth the risk for the profit to be made. Now, when you go and become the next millionaire, they'll come to you, it's just a matter of time. The mac spyware will come when they gain marketshare. the Unix kernel they use while good, I'm sure all the "Real" hackers out there will tell you, that there are ways, just as there are ALWAYS ways to get in.[9] Mac software is easy to use and, more importantly, easy to teach to my IT employees. Macs and their server software are quite sophisticated, really, but I think back how many times did I actually try to make some kind of circus-like trust-object-hoolahoop-like security rights in Novell? Maybe once or twice in 10 years.[20] I calculated it has saved me close to $10,000 a year in lost time (trying to make the myriad pieces of AV software I use work properly) that has gone from wasted time to billable hours instead of being frustrated, versus my older wintel machines. It is stable, and it just works.[9]
Ballmer's comments came as Yahoo faced a Microsoft-imposed deadline of Saturday for accepting a $44.6 billion bid for Yahoo--or face a proxy battle to oust Yahoo's board. For its part, Yahoo reported earnings of 9 percent over the same period last year. [18] Revenue hit $7.51 billion, compared with $5.26 billion a year earlier.[6] Revenue climbed 43% to $7.51 billion from $5.26 billion a year ago.[40]
Revenues for the quarter were $7.51 billion, versus the consensus of $6.96 billion.[21] A: Leopard revenues $170 million in January quarter, $40 million in March quarter.[9]
Just last quarter, music and accessory sales brought in $881 million, which isn't a bad haul from what started out as a sideline business.[13] Internet retailer Amazon.com said profits rose 29% to $143 million, helped by solid sales in the U.S. and abroad.[7] Profit reached $1.05 billion, or $1.16 a share, up from $770 million, or 87 cents a share.[6] Net income increased to $143 million, or 34 cents a share, from $111 million, or 26 cents, a year earlier.[33] A disappointing operating income outlook for the year pushed shares down $3.59, or 4.4%, to $77.41 in after-hours trading.[7]
Overall, net income rose by 22% over last year'''s first quarter and income per share was 57 cents compared to 1Q2007'''s 45 cents.[47]
The firm made a net profit of $1.05bn ('0.53bn) in the quarter ended 29 March, compared with $770m in the same period a year earlier.[41] If we were to give ''Starbucks (Nasdaq: SBUX ) a spot on the roster, the fallen java darling would probably be a greasy-handed receiver. It's been dropping the ball a lot lately, and last night was no different. The premium coffeehouse chain isn't supposed to post its quarterly results until next week, but it wants to pour the bad news while it's still hot. Starbucks is now talking down its guidance, expecting profits to clock in lower for both the quarter and all of fiscal 2008.[45]
The iPhone is a welcome addition. This quarter's healthy advances were all about the Mac, baby.[45] Each of the past several quarters has set some sort of record for Mac sales. I see this trend continuing for quite some time.[17] Hmm, sales of Macs really started spiking in 2007, right around the time Vista was released.[39]
Oppenheimer as usual noted that half of the stores''' computer sales were to customers '''new to the Mac,''' a statistic that makes more sense now that Mac sales are exploding.[17] Currently, the iPhone is a personal communicator but could morph into a real "computer" if the new apps fit the description of our current and newfound "computing" habits. That would certainly lift iPhone sales beyond the smartphone market.[9]
According to Oppenheimer, the sales of phones with the intention of unlocking is "significant" and a "proxy for worldwide demand for the iPhone." The company will enter the Asian market later this year, he repeated.[32] The bump in late '06 not only added 20% to the total, but also delayed the flat-to-declining section of the curve. I have no interest whatsoever in an iPhone, both because AT&T; is a company I happily abandoned some years back, and because I want a small, very portable phone with great battery life that won't be cannibalized by other uses.[35] My iPhone is in another league altogether and was cheaper to boot. My electric toothbrush cost as much as my old iPod and has no means of replacing the battery after its two to three year lifespan. It has to be destroyed to remove the battery for safe disposal. It is so good at its job I will replace it with a newer model when it finally dies.[9] Remember, the iPhone was not available at this time last year, and iPhones can be considered iPod substitutes.[9]
I never thought about Macs until I bought the iPhone. Then I thought, if their phones can be this much fun, surely their computers could be more fun than the Dell craptop that is 3 years old and slow as mooooollaaaaaasssis to boot up.[9] We didn't get another computer though until our PCs started to get too old and slow. Last year we bought our second Mac, this year we bought our third one.[9] After 13 years of buying and building PC for work and home, I've purchased 3 Macs in the last 3 years. I got tired of doing maintenance on my Dad's Win98 box and got him a Mini - zero problems in over 2 years. That was enough to make me switch to a Macbook, and this year a Mac Pro.[9] "With more work moving from the hard drive to the internet, fewer people will care what operating system they're using," Exactly one reason weak thinkers were saying the Mac was no longer relevant 10 years ago.[11] Anything like that on Vista. Nope. iWork is an appropriately prices Office suite that satisfies the needs for 80 percent of people (certainly those outside enterprise environments) AND it doesn't hog up serious disk space. Either Macs work for your needs or they don't.[9]
"Yes Microsoft has fumbled Vista. It will sell 600+ million Vista based PCs in 2012 compared with 40m Macs.[9] Any Mac you buy can run Windows XP, Vista, OS/2, any version of Linux, Solaris, and obviously OSX. So that makes Macs the most compatible PC in the world by a large margin.[9]
I have about 40 Macs, some of which mostly boot XP Pro. They save me the approximately $70K/year I'd have to spend on a full-time sysadmin for a PC network. They do need to come out with a mini-tower, though.[9]
However I still prefer the pc. Reasons? Its simple. pcs are more powerful, they are easier and cheaper to upgrade (cost effective and apple is basically a fascist), they are better for games, they are better as media machines (before you all start crying about this - DVR. shhhh.) "It's Still a PC World Out There.[9] Apple'''s design is the slickest around, but what I want to see is an even more wide-open computer, one where everything it does is better than a PC'''not just most things. Until then I'''m going to envy those PC users just a little bit.[9] While Macintosh computers are on the high price, and yes are stuffed with absolutely amazing hardware, it is just as vulnerable as a PC(perhaps except for viruses). I think what's truly effective about both the Apple business model and this article is that it forebears an example of American Business at its best.[9] It's all about managing investor expectations, which manages stock price. Apple must employ a conservative strategy in order to quell the volatility that would ensue due to their secretive nature. Personally, I believe their strategy and execution of the strategy is brilliant.[29] Some analysts wondered if Apple's conservative forecasts may turn out to be on the mark given the weak U.S. economy and component prices that may be stabilizing after months of declines.[36] Apple constantly calibrates the price to be the same as any of the top tier PC vendors.[9]
Will it be enough to hit 10 million units by December? Apple must think so. Apple Retail: The performance of Apple'''s retail stores has gotten scant mention, but this segment continues to amaze.[17] Apple's own stores and the company's push through big box retail channels are paying off, too.[12] Overall, Apple executives said second-quarter margins came in better than the company expected, but that isn't helping to salve the issue, given Apple's historical practice of offering very conservative guidance.[38]
Apple shipped 1.7m iPhones globally in Q1 down from 2.3m in Q4 2007. That's a decline of 26.1 per cent.[49] On the retail side, Apple continues to be the best revenue per square foot retailer in the world.[25]
With revenue mix shifting towards the Macs, music products and services accounted for 36% of revenue in the quarter, down from 50% last quarter.[21] Macs accounted for 59% of the revenue in the quarter, up from 47% last quarter. Our household now boasts a beautiful, large-screen iMac on which we'''re playing with photos and music to create iMovie clips of our travels, horse, and such.[21]
"Next quarter numbers for the company will include ZERO dollars in iPhone revenue" You don't really expect us to fall for this statement, do you? You even mention later that iPhone revenue is recognized over a two-year period for accounting purposes.[25] I love how the iPhone revenue keeps ramping up. They keep selling more and the revenue is 'in the bank' set up ramp up future quarters.[25]
Chipotle''put up yet another strong quarter last night by layering heady expansion on top of cool industry-envying comps. Find me another eatery posting double-digit gains at the unit level, the way Chipotle just did with its 10.2% comps gain. In a climate of rising food costs and wages, it's just as hard to find a concept sporting wider margins, but that's just what Chipotle did in growing revenue and earnings by 29% and 39% respectively.[45] The company guided for earnings of $1.00/share for the next quarter amid steady guidance as component costs will continue to be favorable, according to the company.[25] Net sales climbed 37% higher during the quarter, while earnings came through with a 30% spurt. The company benefited from a weak dollar relative to its overseas business (which now accounts for 49% of the revenue-mix pie), but even its North American sales grew by a robust 31%.[45] A solid earnings report would go a long way to soothe investors' recent fears about the impact of the economic slowdown and tighter consumer spending on the company's sales.[28]
It'''s an obvious enough pattern: first Apple gives conservative guidance about future earnings. [29] Having banished the goose that laid the golden eggs, Apple entered a period of graceful decline and Microsoft took off like a rocket. The golden goose returned from exile in 1996, just before Apple adopted the advertising slogan '''Think Different''' and he began to demonstrate what that slogan meant.[43] Microsoft wants very much for Apple to do well. Microsoft has proved to be incapable of copying Apple's ideas, because of its own technical shortcomings and inability to face up to them.[9]
Most of the internet is garbage as well. It has replaced television as a good way to waste your time with meaningless, transitory pleasures. Apple is doing well in a slump? Of course it is: it has created its own army of slaves to keep it going.[9] Well, iPod, you've had a good run. Now it's time to hand the baton to the Mac for the next leg of the relay race.[45] The surge in Mac requests has come hot on the heels of the popularity of the iPhone, iPods and the newest lines of MacBooks, MacBook Pros and iMacs.[48] I believe there is a new product in the wings that will be as big as iPod or iPhone.[43] A steady stream of new product announcements between June and September should allow the company to continue to gain significant market share in PCs and handsets during 2HCY08.[21] NEW YORK (AP) - A Citi Investment Research analyst downgraded shares of Take-Two Interactive Software Inc. (nasdaq: TTWO - news - people ) Thursday, saying buyout talks will not lift the video game maker's stock price much further.[50] NEW YORK (AP) - Shares of fertilizer maker Mosaic (nyse: MOS - news - people ) are up slightly in premarket trading after a competitor reported strong first-quarter results, and a Soleil Securities analyst said the stock has risen to a fair price.[50]
Some analysts had raised questions about the iPhone's success after O2 and Carphone Warehouse reduced the UK retail price of the standard handset by '100 to '169 in an effort to attract new customers. [41]
My wife, who has ZERO interest in electronics is very happy about the Mac Mini on the desk (it just works, honey). Oh, and now she wants my old iPhone when I get the new 3G in June.[9] I have owned macs since 1988. The reason is that there is one company for both the hardware and software, so there is no finger pointing as to responsibility when things don't work. The only complaint that I have regarding macs is their safari (browser) there are too many compatibility problems with many web sites. That is a nit incomparison to the system stability.[9] The move was derided by no less an industry expert than Bill Gates, but it was actually the first maneuver in a long campaign to truly differentiate the Mac and establish it as the ultimate consumer computer.[43] No computer company had ever designed a PC for the consumer and, remarkably, no company had ever seen the need to. In fact the whole of the PC industry had adopted a structure that defeated attempts to pursue such a goal.[43]
No small feat. I find it interesting as competitors; Dell a good example that I'll use here (who's had a decent "brand"); they fall all over themselves trying to reinvent themselves thinking it's their stale brand that's made them fall behind, Dell extends this thinking into revamping the industrial design of the products, in their mind this and increased emphasis on improved marketing efforts is what it will take for them to regain their luster. They will fail because they're just a box maker who's past success was efficiencies passed on to the consumer. Those days are gone because it's the experience that's suffering, they're beholden to others for that.[37] There's no reason why a quick and dirty calculation can't just extrapolate eps from revs, since GM is virtually the same. 96% of last quarter's eps of $1.16, gives us $1.11. Note, Oppenheimer did not say there would be any unusual charges that would make operating margins different, so there's no reason why we can't use this GM proxy.[29]
Indeed that'''s all it was, another freaking MP3 player that established a $6 billion revenue stream.[43] Revenue jumped to $7.51 billion, better than the $6.96 billion analysts were expecting.[5] Analysts polled by Thomson Financial were expecting revenue of $6.96 billion.[26]
A figure which confounded expectations of a slowdown in the remarkable Google growth story - and set the scene for a week of good news about the technology economy. As we reported, the firm is now Britain's biggest earner of advertising revenue, overtaking ITV. But one small shadow - Google's revenue in its home U.S. market failed to grow much. That was the revenue earned in three months by the Microsoft division which develops its Office software. [34] Now we wait 3 months and await the same dog and pony show next quarter, as short- sighted investors miss the forest for the trees and overreact to every line item in a multi-year story. This is the type of stock I don't even go to Yahoo Finance to read any daily news about, except for maybe once a month - I am that confidant of the "long term" (i.e. in this era long term being more than 48 hours) prospects. We'll keep buying this on the inevitable dips; still pricey at 30x this year's estimates but the scarcity value of this type of growth deserves some premium.[22]
Sales of iPods at 10.6 million seem to have saturated with a growth of just 1%.[21] Assuming that ipod sales have reached a saturation point ignores the huge international market that can be reached with a lower priced product (like the nano).[35] Product Life Cycle: iPod sales have mirrored the S-curve, which generally depicts the product life cycle.[35]
Sales keep rising while new products are consistently released to create a demand for products where there wasn't before.[9] To avert the Decline (or mature) stage, product innovation is needed to rejuvenate sales growth.[35] In the slowing growth stage, sales increase at a decreasing rate, finally to a point where sales turn flat as the product enters the maturity phase.[35] The product enters the rapid growth stage, where sales increase at an accelerating rate.[35]
Introducing improved models with new features can sprout a new curve from sales growth reaccelerating.[35] Your comments explain my statement " Introducing improved models with new features can sprout a new curve from sales growth reaccelerating.[35]
Motivating current customers to buy a new iPod more frequently and/or buy multiple units are the primary methods for boosting sales among current iPod owners. [35] "IPhone sales beat our unit expectations and towards end of quarter we experienced a stock-out."[40] IPod sales were flat, while iPhone sales were far lower than most expectations.[30] The iPhone will cannibalize a sizable amount of iPod sales, specifically the Touch.[35] Learn how to set your machines folks. OSX has been on the whole pretty terrific. iPods are way durable, and that is why their sales are slowing, along with iPhone overlap, as has been pointed out.[9] That the iPhone will cannibalize a sizable amount of iPod sales is more likely than the reverse. That being said, the assumption that a touch-screen interface and a larger display will continue to propel iPhone into unimaginable heights needs revisiting.[35]
Mac sales were up 51%, compared with a 36% jump during the same period last year. [6] Desktop sales were up 37 percent, powered by strong iMac sales and a refresh of the Mac Pro.[17] More than the 'halo effect', I think OS X is the reason for increasing Mac sales.[9]
The key to the whole Apple story is to move people onto the vastly superior OS X Leopard. [9] The only downside right now is the hardware cost, but even that is coming down as Apple sells more units. Better buy a copy of XP soon if this direction works for you.[9] Read Commentary: Sorry, Steve: Here???s Why Apple Stores Won???t Work for a convincing explanation of why it'''s a crazy idea.[43] Apple continues to expand the chain, adding four more stores for a total of 208, including 15 in the United Kingdom. Oppenheimer said Apple plans to open its first stores in Australia, China and Switzerland in the next few months.[17]
Apples vs oranges anybody? Apple makes hardware Microsoft makes software.[9] What wonderful software? We have MS Office,and about 5 really good programs for the children. All of that great software my kids were using? It's boxed up in a closet until I can manage to find some very cheap Macs to put back into the room! We've already had hard drive failures on the new machines.[9] Yup, all 4000 of us; we are going to be one of the largest enterprise software Mac shops around.[29]
Perception is reality. This brand exposure onslaught through the entertainment industry will slowly change people's attitude towards Macs from a niche, really cool, super intuitive, incredibly beautiful machine, to an every day work horse, suitable for all occasions.[11] Not all people - in fact, fairly few - want to spend their time on earth monkeying around trying to get their computers to work properly. It's usually not what they sat down to do in the first place.[9] The only thing holding Dell and HP back now is marketing money. If they start pushing Linux, Microsoft will start pulling a lot of marketing money and give it to the other computer makers. Unless all of them work together (which is illegal), Microsoft can do their best to ruin Dell, HP, or whoever is publicly trying to give people alternatives.[39]
If I was in business I would be using Windows, but it seems the Mac is self healing were Windows always seems to be a major work in progress. That fact doesn't seem to change, and I get the feeling Microsoft has lost its edge.[9] I have been a Windows user since forever at work and became a Mac user when I started graphic design classes.[9]
The Mac's ability to run Windows applications following the October launch of Mac OS 10.5 has brought in a number of Windows users that have in the past been skeptical about the Mac platform, says Charlie Wolf, an analyst with Needham in a research note.[12] The idea that small marketshare is the key to Mac OS not being as susceptible to viruses is faulty. Its an interesting thought experiment, and would be true if the level of security on both Mac and Windows was the same. They are not.[9] Any Mac that I plugged into the Windows network worked instantly. They're always three steps ahead of MS regarding OS features.[9] With the advent of Parallels Desktop I'm running Leopard and XP and seem to have the Windows vs Mac OS problem permanently solved.[9]
OK - Stop the press. I am - um was a huge Windows fan and I resisted these amateur Macs for years.[9] "What'''s going on? Don'''t rush to tell me how much easier, safer and more powerful a Mac is than a Windows PC." Hmmmmmm, I think in that sentence is the answer to this whole article.[9] As the windows environment and pcs deteriorate in quality, the contrast with macs is amazing.[9]
In comparing that to PC growth, the effect is magnified because the Mac is growing from a smaller base, a sliver of the overall personal-computer market. It's still an interesting trend to observe. It will be interesting to hear what people think of the numbers.[39] Everyday I use a PC, but from time to time I will use a Mac when I am able to get my hands on one.[9] I am fairly new to using a Mac, and I have to say were it not for 2 friends that have committed to converting someone to using Mac every time they upgrade, I would not be here.[11] Now I have my new Mac and I no longer need the Digegram card 'cause the new Mac has 24 bit sound input as well as 64 bit processing, and I still can upgrade it as I need to.[9]
The Mac works so well BECAUSE it is an integrated hardware-software product.[9] Device enhancements from adding new features and expanded capabilities speed up the replacement cycle. A number of iPod owners buy a new generation model because of better features even when their current device works fine. Innovation is key driver in the replacement cycle for this type of product.[35] The iPhone, of course, is a product bundle that '''- if you want it ''' is completely different from a standalone iPod.[9] Now I have an iPhone too, and I love it. "Mobile computing with 1 button"? Wake up! It's basically an on-off switch, which I believe most PCs & PDAs have, right? If you're going to critique something, at least have the decency to understand the product first.[9] Deutsche Bank - "We expect multiple product cycles (MacBooks, Air, 3G iPhone, etc) to sustain strong FCF and EPS growth."[21]
Toast has always been a great product for creating burned discs of every type since the days when a CD burner would set you back over $2,000. It is a much better product than any comparable software for Windows or Linux but your mileage may vary.[9] Microsoft had a lock on the component that best enabled innovation - the GUI. You can have any PC you want as long as it'''s Windows. Jobs designed and implemented a different product for a different set of buyers, using what he had at hand.[43] Which goes to show that Microsoft's core products are still extraordinary moneyspinners. That figure was actually a shade down on last year. When I looked at the rubric which accompanies Microsoft's forecast of future earnings, one item stood out: "Actual results could differ materially because of factors such as challenges to Microsoft's business model". The real threat to its business model comes from the firm at number three in our chart - and that's why Microsoft wants to buy number five.[34]
In fact that business segment posted a 2.1% drop in earnings, as well as the worst line loss in the company'''s history, netting a loss of 1.2 million phone lines. This is a sign of the times, and gains in the wireless segment more than made up the difference.[47] The company blows away analysts' earnings estimates as quarterly revenue jumps 43%.[12] Industry analysts carefully track the average monthly revenue per subscriber, which increased by a healthy 2% in the quarter.[47] Low-margin iTunes Store revenue was a more significant percentage of total revenue for the March quarter.[9]
The number of iPods sold in the quarter grew only 1 percent from the same quarter a year ago. [9] The company sold 10,644,000 iPods during the quarter, a 1% rise, which dispelled some fears that the market for the media players was saturated.[41]
The Mac is so much easier to use, with considerably less hassle in terms of freezing, crashing, etc. The iPod is much more fun than my previous mp3 players and (fingers crossed) has yet to experience any battery issues.[9] As for myself I use an iPhone and love it, but still choose a non mac laptop due to it being superior specs at literally half the cost.[9] As a technologist, I have noticed that most tech books also use OS X or Mac software related screen shots.[37] I would use one myself, but there are certain software that I need on an everyday bases that is not developed for Macs.[9]
More and more people are writing software for Macs, eliminating the software compatibility argument.[48] Of late, MAC people have been more forgiving and we have introduced several products with MAC. We are just putting up a MAC section on our website.[11] I love all these people suggesting that Macs inherent security is related to it's marketshare.[9] I specifically mention XP because the truth is Vista is as good as OS X re virus susceptibilities. Vista still has its rough spots and sad to say a reputation all out of proportion to its faults but the days of virus cascades, viruses sending email from outlook to other machines in a chain reaction are over. That said, so many people have been burned by XP, by bad experiences for which they blame microsoft/dell/insert pc vendor here, that they wait till their current machine displeases them again, then they make The Switch.[9] I know a number of programmers who snapped up the macbook's when it was able to run XP, Vista, Linux and OSX all on one machine. It wouldn't suprise me if that was responsible for a large chunk of their PC sales.[9]
The expected sales of $7.2 billion, however, would be slightly higher than Wall Street's average forecast of $7.16 billion.[5] Net income was $1.05 billion, or $1.16 per diluted share, up 36% y-o-y.[21] Wednesday, it reported net income of $1,050 million or $1.16 per share.[11]
Adjusted earnings of $1.09 a share beat the average estimate in a Bloomberg survey by almost six cents.[33] Earnings at the nation'''s largest wireless provider nearly doubled to $2.9 billion.[47]
Much of that increase is attributable to the iPhone and other data-ready smart phones. iPhone customers pay an average of $90 each month which is a substantial increase over the $50.18 average for all other AT&T; customers. [47] If you don't believe me, try to install spyware on some university UNIX server. 50% of all the web servers are UNIX based, and boy you could make some $putting spyware on there, but it doesn't happen because UNIX isn't a toy like Windows.[9] There is no other OS that combines power, reliability, ease of use, and killer apps (iLife) like OS X. Young folks (who dominate the tech world) are choosing OS X more and more. Now that a majority of americans are REALLY getting into personal computing (thanks to ubiquitous broadband and compelling on line media), they will no longer tolerate Windows.[9] No OS is invulnerable, but OS X is orders of magnitude more secure than Windows XP. So is Linux, and so is Vista with UAC turned on. There are many real technical reasons for this that have nothing to do with market share.[9] Most issues people encounter with Vista are from poorly written drivers are bloatware applications. OSX is certainly not the "most secure" OS, it is just as vulnerable as any other, it's just not targetted as no one uses them.[9]
John W - You might want to review your links before you post erroneous information. It's similar to giving "2 burglars keys to a house", then moments later you are surprised they "broke in" So you might want to learn about the contest before you make further posting mistakes. Fact is, no Mac has ever been broken into from the outside, no viruses, no malware, etc. OSX is the most secure mainstream OS there is, and that's just another reason why it's so popular.[9] Mac OS was ripped from the FreeBSD project (www.freebsd.org) and they threw in a new kernel (not their own either) and interface and called it X.[9] TR's audience is comprised of the folks that actually implement stuff. It's not the fanboy crowd. I started out as a Windows/Novell man, but now I advocate for Mac purchases and make them as much as I can. Two main reasons I do this: 1) on the whole, they require less time to support, much less time, actually, because the OS runs better and there are fewer malware concerns; 2) I practice the philosophy of keeping it simple.[20] Its just a matter of time before Mac becomes the corporate computer of choice.[11] UNIX is dumbed down? Open the terminal and try installing mySQL, Java, PHP, Velocity, Struts, or any one of the hundreds of open source programming frameworks, databases, or technical computer programs which runs on Mac. Maybe some people's Macs are dumbed down, but that is only because its capabilities are limited by the skills of their users.[9] Most who bash the mac are people who've never use one. This is a common form of ignorance.[9] Corporate leaders will soon realize how high the cost of lost productivity is with the Windows platform. If you talk to most people who use Windows, the common word among them is that their computer is running so slowly.[11] Software choice might be a problem for some folks who need specialized apps that are Windows only. Note: The average user won't consider Parallels right off the bat and this is coming from a former computer sales and support person.[9] The Windows experience was a slog but the iPod was divine. Soon my wife had an iMac, my daughter had an iMac, and I am writing this on my iMac (which I can run Windows software with using Parallels). I took the final step this week when I switched to a MacBook Pro at work.[9] My Windows system at work crashes as many as 3 times per shift - and I am a medical transcriber! Often it seems that I can't get up to speed because I am trying to get the computer to just work.[9] My increase in useability and functionality is easily tenfold since switching. I show my iPhone to friends who work in larger corporate environments all the time and all they do is lust and drool. The only thing stopping them at this point is exchange support, and that is coming in June.[35] The generation that has adopted the iPod, the iPhone, and all the other "i" devices are exactly that, the "i" generation, i.e., the 'follow-the-marketing' Job lemings, not the technically well-studied.[9] The interface was minimally tweaked but now that I have an iPhone, seen an iPod Touch, how can I use that "old" system? 160 GB is mind blowing but I just wasn't wowed by the device.[9] When I go out I just grab my iPhone and use that for my music needs. I really think my iPod will end up staying in the bathroom except for long car trips, then it shall make an appearance.[9]
I would not be surprised to see the iPhone market share DOUBLE in the next several years. [35] Profit in the year through September probably will trail the 87 cents a share the company posted last year, the Seattle-based company said.[33] Already, the company had reset expectations to a forecast for Q2 profits of 94c/share, 13 cents less than analysts''' prior expectations of $1.09/share.[29]
On the iPhone front, the company has added some complications to revenue going forward due to accounting issues. [25] Revenue for data services jumped 57%, and now data services account for 22% of wireless revenue. From a valuation standpoint, AT&T; stock has not has as rough a time as many so far this year, being down about 8.9%.[47] Total units represents a 51% increase in volume and 54% increase in revenue over the same period last year.[29]
Something that the article doesn't mention are the new iPhone native apps that should be appearing during the second half of this year. [9] I made the change 2 years ago and now I get to enjoy and use my computer instead of fighting with it. Its clear with the huge growth that others are seeing it too.[11] Overall, Q1 phone shipments were up 14 per cent year on year - but still a long way off the 44 per cent year-on-year growth seen in Q1 2004, or the 29 per cent growth recorded for Q1 2006.[49]
The introduction of the iPod Touch, and the Shuffle'''s reduced price point, should help support iPod growth in the near-term.[35] The Touch presents the opportunity for attracting new PMP users plus influencing current owners to '''trade up''' to a device at a higher ASP. The Shuffle should appeal to price sensitive consumers who previously weren'''t willing to pay the high prices for iPods. These two factors should strengthen demand in light of a maturing market.[35] The iPod potential market is expanded by the Touch'''s new capabilities, which may attract new consumers who had little interest buying a device strictly for music and video. Current iPod owners may buy a Touch for its PDA and web functionality.[35]
With 140 million iPods sold and likely more than 200 million total PMPs sold, it'''s increasingly difficult to keep expanding the market to new users.[35] Moving 2.3 million computers is far more lucrative than moving a ton of low-priced iPods.[45]
Still works great. I am trying to talk my youngest out of buying an iPod again with this year's bday money. They are pieces of junk.[9] Four in seven iPods die in the first year. It's not right. iPods are very expensive. My youngest had the most expensive iPod on the market and handled it with care, as he bought it with his own money.[9] With my oldest's iPod, it was just a case of a loose ribbon. That was before the first year was up.[9]
The first was branding and marketing support behind the launch of the iPod. They created a segment (MP3 players) using a very cool, image based television campaign featuring big name music stars to appeal to the image crazed teenager crowd. They provided a good product (not superior in my mind) but correctly branded it and provided a high level of marketing support to cement their image as the only cool MP3 player. I have 3 teenagers and consistently tried to get them to settle for the less expensive Sansa brand (Sndk) but was told it was an iPod or nothing.[37] Simple to operate, and opening the box is a wonderful exercise in product fetish if there ever was one. Their product works, from the first time, seamlessly and without having to call anyone.[9]
Shares of Clear Channel are rising 5.3%. Rucks Wireless expands its existing product, which means bigger businesses can benefit. As the satellite radio operators, which plan to merge, prepare to report their results, some analysts are worrying about subscriber adds and rising churn rates.[28] The results show the ability of AT&T; to navigate a highly evolving and competitive business environment and also remain profitable in a tough consumer spending environment. A key piece of its wireless success has been thanks to the '''must-have''' technology of the iPhone, which continues to benefit from consumer willingness to spend aggressively when they believe a product worthy of the added cost. AT&T; has shifted its emphasis away from the traditional and increasingly antiquated wire-line business.[47] Simply put a "Brand" is a name that consumers associate positive or negative benefits or attributes about a particular product, service or company.[37]
Windows users thinking about switching should realize that no product is perfect. I believe it's an intelligent choice, but it will not provide computer nirvana.[9] Windows has always worked fine for me. One of the biggest reasons I want to build a new computer is so I can actually play MS Flight Simulator X. This is the main reason I choose PCs.[9]
" Please, let it be so. Anyone who's used Windows for years would love to see MSFT receive some punishment for having held back the computer user experience for DECADES. With EU scrutiny and nobody with brains at the helm, they may well be the next Dell (Wall St. Darling to dog).[11] Embedded control systems have also now largely been replaced by customized personal computers. Most of these computers are based on Windows so as the market expands Microsoft is the largest beneficiary. It wasn't that the Macintosh market wasn't growing, but the personal computer market as a whole was growing faster, and Microsoft was taking over market share from failing platforms to a much greater degree than Macintosh.[39] The new machine has my config settings, preferences, passwords, etc. When I get a new Windows machine at work, it requires a week of swearing at Microsoft before I get everything working again.[9] In fact a recent review of a mac virus program basically advised only getting it if you work in a environment where Windows is also used so you don't spread windows viruses to windows users.[9] ActiveX is probably the number one reason Windows is insecure, and it doesn't work on Macs.[9]
All the techies I work with had changed to Macs at home. I asked them why.[9] As the leases come up for the Dells, IT is replacing with Macs. Why, you ask, Security! The resources it takes to defend against all the stuff the baddies throw at a PC, it'''s just cheaper/easier to pay a few bucks more for a Mac and not have any of those issues.[29] Light, bright, rugged, faster than most PC laptops. He never used the Mac side at all.[9]
All information presented on this site is copyrighted by The Mac Observer, Inc. except where otherwise noted. No portion of this site may be copied without express written consent. Other sites are invited to link to any aspect of this site provided that all content is presented in its original form and is not placed within another frame.[10] Ok a few last hurrahs for the "safe" applesbut did you notice the recent hack contest where all comers could attack a Mac, a Vista machine or a Linux Box.[9]
If MacOS and Windows had each other's malware issues, no one would care that the MacOS had a nicer UI. In the real world the malware difference is unbelieveable and affects the experience more than any other factor. If MS ever gets nervous, they should create some serious Mac malware.[9] Hey Espostal, you say your windows idles at 20-30% per cpu while the mac idles at 1-2%.[9]
Luckily gathering some simple data and quoting some analysts falls well within his grasp - and the case for Mac marketshare growing is indisputable.[11] While we cannot confirm the piracy rates, we have looked into inventory levels at the OEMs, and the Pacific Crest hardware analysts do not believe that the OEMs built inventories a year ago or in the last quarter.[20] Looking ahead: Last quarter in the earnings call Peter Oppenheimer was crystal clear. He told analysts, ''' giving very strong guidance.[29]
From 18.4 per cent of the market in Q1 2007, it now commands a share of just 9.7 per cent, the figure falling each quarter through 2007. Samsung, on the other hand saw its share hover just above 14 per cent through 2007, but experienced a big jump in Q1 2008, from Q4 2007's 14.1 per cent to 16.4 per cent.[49] Every team needs a quarterback, so let's bring in Select Comfort (Nasdaq: SCSS ). No, it's not as if the air-mattress maker has excelled in leading investors down the field these days. I'm just tapping it as quarterback because if the stock heads any lower, it won't be long before shareholders start asking for their quarter back. It was another dreadful quarterly report out of the Sleep Number company.[45] Comparatively quite impressive for a company that is being outsold 15:1 on OS sales.[9] Laptop sales were up 61 percent, helped by the new MacBook Air and a refresh of the MacBook and MacBook Pro lines.[17] In actual music sales, iTunes officially surpassed Wal-Mart ( WMT ) (according to NPD) to become the largest music retailer in the U.S. The store had more than 50 million customers and 85% of the market for downloaded music.[29]
The company plans to open several high profile stores in the remainder of the year, and its "Store within a Store" concept and increased presence at Best Buy ( BBY ) stores has grown to 400 stores.[25] The third group is the non-geeks, especially since Vista was released. Over the past year, I've helped at least a dozen people switch away from their old PCs.[9] Vista runs faster than XP on my 3 year old PC. I suspect that the Symantec security software runs faster on Vista.[9]
However on the flip end Macs are more like PCs than ever. They are using the same exact off the shelf components as everyone else. Given its installed in far better designed cases. [9] If you're fed up with software crashes, slow startup and shut down, viruses, stuff that doesn't work or requires endless messing with, move to mac.[9] While I am almost exclusively a Mac user, (I have bought about a dozen Macintoshes for me and my extended family over the past seventeen years), things do go wrong, hardware fails, OS X occasionally loses its mind. At least once we got a lemon; the replacement unit was dead on arrival. The second replacement has worked fine.[9] Feature for feature, a Mac is economically priced compared to a similarly outfitted Wintel box. It is no small wonder that consumers are switching in droves.[9]
SA blamed high European prices - countered now by recent price-cut offers - and limited supply on the drop in iPhone shipments, which ended a two-quarter run of solid growth. [49] Last quarter, Q1 2008, units increased 5%, compared to 50% growth in Q1 2007.[35]
Most, however, have found themselves in need of a new computer, and absolutely hated the idea of moving to Vista, and would rather learn an entirely new OS than deal with Vista. [9] Maybe you should install Ubuntu Linux on your "lonely" PC. They just released a brand new version of Ubuntu today (4/24) and from what I hear, it's quite nice. It should work quite well in your CyberCafe.[9]
Probable arrival time of the 'daily use' version is within a couple of years. [9] How many windows smartphones are now coming with software hats that mimic the iphone interface? If it were crap the competition wouldn't be copying it. Think about this, by ignoring the enterprise market iphone has become the number 2 smartphone.[9]
SOURCES
1. AppleInsider | RBC's Abramsky, AmTech's Wu lead Apple analysts for Q2
2. ireland.com - Breaking News - Apple profit margin down despite gains
3. AppleInsider | Apple's ultra-thin MacBook Air also slim on profits?
4. Unlike 1Q, Apple shares rise after 2Q report - Forbes.com
5. The Associated Press: Apple's 2Q results beat Wall Street views, but stock wobbles
6. Apple profit jumps 36% in second quarter - Los Angeles Times
7. Sour bite to Apple profits
8. Hello Dolly! Should Apple Allow the Return of the Clones?
9. How Apple Is Preparing for an iPod Slump - Bits - Technology - New York Times Blog
10. NYT: Apple Well Prepared for iPod Slump || The Mac Observer
11. Apple Earnings: The World Is Going Macintosh - Seeking Alpha
12. Apples iPod Works Magic on Mac Sales | Hardware | AAPL AMZN BBY DELL GOOG MSFT RIMM - TheStreet.com
13. Halo effect picking up slack from iPod slowdown
14. Apple earnings rise 36%; Mac sales lead revenue growth - MarketWatch
15. The Associated Press: Apple fiscal 2Q profit jumps to beat street on Mac sales
16. Apple posts strong financial quarter - RCR Wireless News
17. baltimoresun.com - Apple a Day: Apple forecast: mostly sunny, with increasing chance of profits
18. Apple, Yahoo and Microsoft Report Upbeat Earnings | Newsweek Technology | Newsweek.com
19. AFP: Apple posts billion-dollar profit as Mac sales rocket
20. Microsoft's elephant in the OS room: Apple | Between the Lines | ZDNet.com
21. Apple'''s Dramatic Risks and Ambitions - Seeking Alpha
22. Apple Shines on Earnings, Still Two Steps Ahead - Seeking Alpha
23. Apple's Q2 profit up 36% to $1.05B - Atlanta Business Chronicle:
24. IGN: Apple Reports Record Breaking Q2 Results
25. Apple Earnings Sweet in Sour Economic Times - Seeking Alpha
26. Investors take a bite out of Apple - Apr. 23, 2008
27. After the Bell-Apple shares extend decline | Reuters
28. Apple Needs More Than an Adequate Quarter | Hardware | AAPL AMZN GOOG RIMM - TheStreet.com
29. The Oppenheimer Effect: Conservative Guidance, Stellar Earnings from Apple - Seeking Alpha
30. Apple Earnings: Mac Soars, iPod and iPhone Stall
31. Apple Announces Record Q2 & 4th iPhone SDK - TrustedReviews
32. Hints of Apple's new strategies in its Q3 financial call | The Apple Core | ZDNet.com
33. BUSINESS BRIEFS | APP.com | Asbury Park Press
34. BBC NEWS | dot.life | A blog about technology from BBC News | Who's top of the tech chart?
35. The Outlook for Apple's iPod Business - Seeking Alpha
36. UPDATE 3-Apple profit rises but margins a letdown | Industries | Technology, Media & Telecommunications | Reuters
37. Apple's Branding Strategy Delivers Superior Results - Seeking Alpha
38. Slip In Apples Gross Margins Is Hot Topic For Market
39. Data: Macs vs. PCs, shipments and growth
40. Apple Keeps Humming | Hardware | AAPL AMZN GOOG RIMM - TheStreet.com
41. BBC NEWS | Business | Mac sales push up Apple profits
42. UPDATE: Apple 2Q results top expectations, 3Q EPS to fall shy; stock turns down - Forbes.com
43. Will Apple Keep On Keeping On? - Seeking Alpha
44. Free Preview - WSJ.com
45. Apple Slices, Amazon Reprises, Starbucks Surprises
46. Apple profit rises but margins a letdown | Reuters
47. AT&T; Gets Earnings Boost From iPhone - Seeking Alpha
48. IT departments running out of excuses not to use Macs - MAC.BLORGE.com
49. Q1 post-Xmas lull reverses iPhone growth curve | Register Hardware
50. Premarket Roundup: Apple, Take-Two - Forbes.com
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