Apple records another record quarter -- $1.61B profit
By Nilay Patel 
posted Jan 21st 2009 5:16PM
posted Jan 21st 2009 5:16PM
Apple just announced its quarterly results, and it looks the brutal economy isn't bruising the fruit at all -- the company posted a record $1.61B profit on $10.17B in revenue. Adjusted to reflect the subscription accounting Apple uses for the iPhone and Apple TV, that's $2.3B of income on $11.8B of revenue. Sales were all strong -- Macs were up nine percent to 2.5M sold, iPods up three percent to 22.7M sold, and iPhones were up 88 percent to 4.3M sold. If you're keeping track, that means Apple's now sold well over 10M iPhone 3Gs on top of beating its goal of 10M total iPhones in 2008, which is pretty tremendous. Acting CEO Tim Cook and CFO Peter Oppenheimer are taking questions from analysts now, we'll let you know if anything interesting happens -- as you'd expect, the first question was "How's Steve?" and it got basically a non-answer.2:18PM - After rattling off Apple's core goals and beliefs, Tim Cook said that "regardless of who is in what job, those values are so embedded in this company that Apple will do extremely well." Neither him or Peter would speak to succession plans or comment on Steve's health.
2:22PM - Apparently no immediate plans to lower iPhone's $199 pricepoint, since Apple still feels "years ahead of the competition," though Tim agreed that the iPhone's price is "elastic" like iPods, as opposed to the static Mac pricing.
2:30PM - When asked about netbooks, Tim said "we're watching that space" but feels like products in that market are too slow and cramped, and that people won't be pleased. "But we'll see." Apple has some ideas for the space, and is aware of the crazy sales numbers, but doesn't like the "inferior" consumer experience that's there right now.
2:31PM - Apple TV sales are up 3X, partly thanks to iTunes movie rentals. Still considers it a "hobby," but will continue to invest in the market
2:33PM - No comment on Snow Leopard progress. "We're very excited by this next release, but we have no launch date at this time."
2:45PM - Mac growth was two percent in the US year-over-year, but 16 percent internationally, and over 20 percent in several countries.
Stop spamming. He knows the iphone isn't going to verizon. He just wants you to go to his site.
Late this year or early 2010 as long as Verizon abandon the idea of stripping it's WiFi off and to bundle their crap software.
Sorry but the Social you mocked up for the documents is for someone of a much younger age than Steve Jobs.
Nice try though.
Impressive
iPod=$200
Steve=$The Company
Another huge success for Appleture Science
Maybe some of that profit can be a bonus to the programmers who are still alive.
-whistles "Still Alive"-
If I'd have been apple, I'd have made the iphone $300 instead of $200.
They'd have still sold just as many.
Subscriptions for apple = pure profit O.o
What subscriptions?
If you mean media sales you are completely wrong. Apple gets about 30% of the revenue for the songs, shows, movies and apps. The studios and developers gets 70%.
Apple builds and maintains the iTunes online store infrastructure from that 30%, which is probably not a small expense. Apple probably, realistically speaking, sees about 10% profit on the sales from iTunes. Far from "pure profit O.o"
Well how about this for subscriptions... mobileMe. If the current results are till Dec 31st then I'm picking all the mobileMe revenue will show up in the next set of results.. I mean how many might have singed up for the free trial around July 11 when they got their iPhone and after all the free extentions I'm picking payday for Apple started on Jan 7th. That's when my mobileMe fees were due for my phone purchased July 11. If only 5% of 10Million iPhone owners start to pay for their mobileMe at maybe $100 USD a year, that would be $50M. And then iPod Touch users can use mobileMe too right? Maybe 5 Million people like their push(?) technology and pay Apple $500,000,000 this quater. Knew I should have found money for shares.
hot damn!!!!!!!!!!!!iphone is 40% of apples business.talk about a depression-proof product.this is so hard to believe.if palm pre dethrones iphone,it'll be pretty darn impressive to say the least.wonder if it will.,?can it ?will it?
"Subscription" refers to iPhone and AppleTV sales in which they (Apple) promises to offer free "improvements" over the commercial life of the product, in this case, 2 years. The revenue from these products are "subscribed" over this period and will not be recorded until 2 years from the sale. This has nothing to do with subscription media.
Apple records subscription revenue *and* expenses for the iPhone and Apple TV monthly over 24 months. I was specifically refuting the pure profit point. If the OP meant subscription revenue model, which I doubt, that statement makes even less sense. Deferred revenue and expenses != profit.
If he meant media subscriptions, those don't exist.
If he meant Mobile Me, which I overlooked, then it's not pure profit, but it's very high margin I'm sure.
@spam free
Yeap. Apple TV and iPhone. The original iPhone revenue is pure profit, since the costs were covered by the high POS price.
The iPhone sold well by default. No worthy competition. Most people had to decide what not crappy handset to buy and the only remaining choice was the iPhone. Apple might not be so lucky in 2009, what with all the new competition such as the elegant Palm Pre. Hehehe.
Recession? What recession?
Your hairline?
@Samboini: Hey, I resemble that remark!
Don't you mean "resent"?
Folks, what you see is the tragedy of the Humor Impaired.
Imagine. These people travel through life never understanding a sly reference, never getting the subtle irony of a situation, not even understanding *puns*. It sounds too incredible, but sadly, these people are around us everyday. Many don't even realize they are suffering from this affliction.
Fortunately, there is hope for the Humor Impaired: You.
Yes, for less than a dollar a day you can adopt a Humor Impaired Person. You will receive your own personalized packet that includes a packet with your adopted HIP's picture, specific ailment (i.e. too literal minded), and the training regimen they will undergo. You will receive periodic updates of the jokes, riddles and humorous anecdotes used to treat your HIP. With luck, you may even get a report of your HIP chuckling his first chuckle.
One day, your HIP will come to realize "I resemble that remark" is *not* a misuse of vocabulary, but an old, tired joke.
@finnith
Nope he meant resembles. As in his hairline resembles that remark.
OH WOW. POSTING IN FAIL THREAD.
...The recession in your pants.
I wonder what the spread was on sales of their desktops vs. laptops. Last I read, their desktop sales were off nearly 40% from the same quarter last year.
I'd have to assume some of that is because consumers are moving to laptops vs desktops?
off about 20%, not 40%. Peter said laptops accounted for close to 70%, I think. Maybe he said 60%. Whatever, it's a lot.
CraigJ - Not according to the Wall Street Journal, December 16th 2008
"Sales of Macs in U.S. stores last month declined 1% from a year ago, while industry-wide PC sales rose 2%, according to research firm NPD Group Inc., which tracks retail sales.
NPD analyst Steve Baker blamed a 35% drop in sales of desktop Macs"
http://online.wsj.com/article/SB122938758242108907.html?mod=testMod
I don't really care what the WSJ gives as an estimated performance number when the CFO just reported the actual numbers.
CraigJ - The WSJ reported that Apple desktop sales in the 4th *quarter* were down 35%, compared to the previous quarter. The Apple CFO today said the *year-to-year* sales of desktops were down 25%. That's the difference.
That's based on NPD numbers. Although NPD gets data from a lot of companies, they do not receive any actual data from Apple, so their "research" is just a bunch of fancy guesswork.
71% laptops. Highest ever.
Are you guys seriously arguing about the percent rate drop of desktop sales Vs. laptop sales 'according to The Wall Street Journal?' WOW.
@Fanfoot: Is that something to be proud of?
I'd love a desktop Mac, and I hate Apple for not making a proper one in about a decade (iMac doesn't count if you already have a big ass monitor).
I realized this when I was in the Apple Store (NYC) around Novemer 2008. Place had hundreds of people in it at all times. Still, didn't expect these types numbers. Quite impressive.
http://www.engadget.com/2009/01/16/nintendo-sets-us-sales-records-in-2008-collects-200/
I'm starting to think people really like shiny white gadgets.
You mean like the G2?
Sorry, what color was the iPhone again?
See its doing it again. I reply to one person and it goes to someone else.
Apple deserved it! They are the most innovative company... Apple leads and others follow.
... as witnessed by people named "iKurt"...
Again? Apple seems to be a money-making machine even in these bad times!
A big congrats to Apple to posting positive numbers during a recession. What is interesting is that their revenue was $10.17 billion, with a net profit of $1.61 billion. However when looking at last year's numbers, revenue was $9.6 and net at $1.59 billion. Their revenue rose 6%, while profits only rose 1.3%. That means their overhead costs are rising more rapidly then their sales percentage. At the current rate, without any change in the trend, their revenue will still rise, however their net profits will start to stagnate or shrink. They need to watch out for this.
I think this is part of the evolving philosophy. They have said they want to make products people can afford, so they offer things like the iPhone at the subsidized price as well as the macbook at the entry price of 999. Why not take a little less percentage of profit when it gives you greater market penetration and control?
I think that the subscription method of revenue recognition probably has something to do with that. You incur the expense in the period it was manufactured and the revenue gets spread over 8 quarters.
Also there is the new unibody manufacturing process. It looks amazing, but it can't be cheap!
So does this mean they have to get windfall profit tax put on them like the oil companies? Obviously their profit margin is way higher.
iPhone sales down 40% on the previous quarter. Ouch.
Are you listening to the same call I'm listening to?
"iPhones were up 88 percent to 4.3M sold"
The iphone did pretty good believe it or not, the only reason the sold so many in the previous quarter was because that was when the new model was release but if you look at last years data they sold 88% more this year during the same time, not to mention we are now in a Recession, i don't own a iphone yet but what ever the heck they're doing they're doing it right
@CraigJ
UP 88% year-on-year, DOWN 40% quarter-on-quarter.
Aaron,
3rd quarter was the 3G launch quarter, so you'd expect them to be down. I'd expect to see another drop in the Jan-March quarter, since sales are highest during the holidays.
That's the basically the same thing I was going to post. I listened to the call, and I don't remember the 40% drop discussion, but CQ3 (FQ4) was the 3G launch and they had a huge spike in sales. Quarter to quarter comparisons aren't hugely useful in retail due to seasonality. That's why it is always reported as year over year. The interesting thing will be the FQ4 YOY come this October...
88% YOY is damn impressive.
Down 40% in the holiday quarter? That's unheard of in any of its rivals - RIM, Nokia, HTC et al.
Seasonality is usually biased towards Q4, not against it - making the drop even more surprising.
I think we've reached the point where I tell you to get a clue.
Great news for Apple. Will be glad when the economy starts to pick up even remotely again because reading this blog lately and watching the news is a huge downer.
Damn!!!! I though to buy Apple stock yesterday, when it was $78... too late now.
Damn!!!!
It wasn't too late at $78, but it's too late at $85?
That's some savvy investing skills right there... :/
@Jeff
It's too late to buy for the lowest price. The rest depends on your investing strategy.
I did buy at $78. Seemed like Apple was being unduly punished for Steve's leave. I took that as a sign to buy. Even if Steve never came back, I'm very confident in Apple's ability to stay at the top of their game.
I've always thought Nintendo and Apple were very similar, very cool that they both posted profit in the recession! Here's to no layoffs!
hot damn!!!!!!!!!!!!iphone is 40% of apples business.talk about a depression-proof product.this is so hard to believe.if palm pre dethrones iphone,it'll be pretty darn impressive to say the least.wonder if it will.,?can it ?will it?
I guess you didn't heard Apple's conference call, Tim Cook said it real clear, Apple is not going to stand still, Apple today is not the same Apple as 10 years ago, they really got money now
Apple, could we get 28" iMac with quad-core CPU, please?
Apple, could we get 28" iMac with quad-core CPU, please?
The sad thing is that people forget build quality. It's just not what's in the box, it's how it's designed. A good design goes a long way in determining whether a computer gets the proper amount of cooling. The software in the box (OS X) determines the amount of shut-downs you have to do, which is connected directly to the life of your computer.
http://images.macworld.com/images/news/graphics/133028-insidemacb.jpg
In these situations, a PC just doesn't hold a candle to a Mac. I know this after owning several PCs to my best friend's Mac Pro, 1 of which he bought five years ago. The thing is still going strong.
I'm sure I'll get voted down for saying this... but this is jjust proof that Apple "fanboys" are getting ripped off. The is nothing magical or completely innovative about their products.... OSX is really cool but has a lot of flaws (ran it for a few monts). Other than the gloss white venear you can buy comperable hardware and a copy of OSX for less than Apple charges.
Wake up.
well that comment went to the wrong place...like a lot of other people's
IMO, the whole "you can get a computer with better hardware for cheaper" is a tired argument. Most people aren't technically savvy enough to install OS X on a computer at all, let alone one without EFI. I realize its easier now than ever, but it still isn't easy or legal.
Better hardware spec-wise doesn't excuse companies like HP and Dell who ship out thousands of computers a day with terrible build quality, whose warranties expire a year later and then the display flops off of the hinges and they need to buy a new computer because they (average users) can't fix it themselves. Companies like Lenovo and Sony make great quality built wise, but compare the specs to the prices and for the most part, they are very comparable.
OS X is just a bonus.
Sure, but it's not worth the effort.
First off, in the laptop market (70% of sales) you simply won't.
In the desktop market you have more of a point, because with Apple you're either stuck with a high end workstation, a consumer all-in-one desktop, or a "desktop" with laptop guts.
I've built plenty of desktops in my day, and I understand the fun of tinkering with things as a hobby, but as a productivity machine it doesn't make sense to do a DIY. It makes much more sense to plop down your cash and have a usable computer right out of the box, rather than saving a few bucks here and there and spending a ton of time trying to support it.
OK. For the last time: (print this out and put it up near your monitor if you can't remember it. Thanks in advance)
If a consumer decides to buy a product at a particular price they are not being ripped off by anyone unless the product is faulty or does not function as advertised.
Now let me give you an example you can apply to your own life:
Please send me a list of every transaction you've made in the last year and I'll find cheaper alternatives to prove you are "getting ripped off" Why did you goto a nice restaurant and spend $100? McDonalds costs like $10. You got ripped off. Why did you buy a used 2006 Civic for $8k? You could have got a used 1986 Ford Escort for like $1k or less. You got ripped off. Why did you buy BRAND NAME toothpaste for $4? You can get it for $1 tube at the Dollar Store. You got ripped off.
Thank you for your time.
Unix you must not be very good at making systems, making systems that run well, or making systems that are vastly superior to Apple's offerings and cost noticeably less.
The machines that I build for myself and clients have worked virtually trouble-free over the years, you know why?
Because I know what the hell I am doing.
Furthermore, the machines that I build run circles around Apple's latest offerings, and cost hundreds upon SEVERAL hundreds less.
In some cases, I have saved not only myself, but also clients > $1000 when building high end rigs (i.e. workstations and gaming rigs), over what a comparable Apple system would have cost (and yet would have still been inferior because Apple is ALWAYS lagging when it comes to GPU offerings and even CPU's, since their systems are usually an afterthought by manufacturers such as Intel, AMD, and NV).
So, don't give me this BS, trying to justify Apple's inflated prices on their desktop hardware by trying to marginalize and discredit builders such as myself who have the know-how and due diligence to put together systems that make Apple's look silly by comparison.
@Ham
Do not confuse ability with desire. I used to enjoy building my own systems. I used to spend a lot of time making sure everything worked right, and it always did. Some of the UNIX boxes I built for customers in the mid 90s are still in operation. Here's the deal. I just don't want to screw with it any more. I just want to use the damn thing to get my work done - I don't want to fuck with it any more. I have the ability to tweak the registry and track down and install all the proper drivers, fix up the bios, etc. I just no longer want to. I know how to cut grass, trim trees, change my oil, and paint my house too. All stuff I no longer have the desire, nor the time to do.
Unfortunately I still have to wipe my own ass, but I'm hiring if anybody is interested.
And you comment about performance, while probably true, just doesn't matter to most people (read non-geeks). My MacBook performs quite well and is very portable. I run OS X and with VMWare, and I can run a Linux server, a copy of Windows, Photoshop, Dreamweaver and multiple browsers with no lag. If I want to play a game I'll use my Xbox or my Atari 2600.
btw its a wikileaks link
Apple rules out "iPhone nano," but what we need is an Iphone free providers.
Impressive numbers, although a little misleading. Apple is up 88% YoY but in the previous quarter they sold 6,892,000 units up from 1,192,000 a year ago in the same quarter. So during the holiday shopping season they saw a drops in quarter-over-quarter sales and a large drop in YoY growth. But given the combination of the economic situation, the end of the initial launch buzz, plus the release of new devices from BlackBerry, it's hard not to consider it a solid performance.
I'd be curious to know how many of their sales this past year were new customers vs upgrades of original 1G iPhones to get a better idea of how many iPhone subscribers there actually are. Also knowing if the sales count shipments to AT&T, which may remain in stock, vs sales direct to customers would be helpful.
I wonder what if feels like to be screwed by Apple? Paying extra for a product that isn't worth the extra money. They have good products, don't get me wrong, but for the average user it doesn't really do anything better than the average product.
Tons of stuff better than the iPod, the Touch and the iPhone have the App store going for them which puts them above others like them, but the computers and such are over priced. OS X looks pretty and has stuff it does better than Windows but Windows does some stuff better than OS X too.
Let me start off by saying I have no Apple products in the house. There is nothing better than the iPod Touch in that specific feature (mp3 + wifi). I haven't seen the new Sony Walkman though - lets see how that turns out.
This is why you won't drive a BMW. Or Audi. Or Mercedes.
Ever.
Mitch, your comment lacks a cohesive argument.
First you say that we're paying extra for a product that isn't WORTH the extra money (this is subjective and can't be proven).
Next you say they have good products, but for the *average* user it doesn't do anything better than the average product, from which one can extrapolate that it *does* do some things better than the competition, for some users. This seems to fit fine with OS X versus Windows market share -- OS X sales still just fill a small niche, so you're talking about a subset of users, not a broad market base.
Following that is a comment which claims that tons of devices do stuff better than the standard iPods, which is true in terms of features, but is an argument of dubious merit. Then you concede that the Touch and iPhone have some advantages, which of course is true, just as they have some drawbacks.
Your next-to-last point is that their computers are overpriced, which is a subjective rehash of your first argument, and doesn't really hold water if you do a comparison at, say, the low-end laptop level, or the high-end workstation level. In any event, if someone feels that the price they paid for the product is fair, then they are better off with that purchase. That could be because they like the features, or the fact that it's white, or the fact that it annoys people named Mitch.
You wrap the comment up with a really anticlimactic statement that OS X is better than Windows in some ways, and Windows is better than OS X in other ways. Genius.
Overall grade: C-
What is next for Apple is what is really interesting... iPod Touch with more power and totally transformed into a gaming device, new iPod with stronger processor, netbook just when Apple believes is time, better desktop computers loaded with Snow Leopard... Want more?
Palm Pre is not a threat to Apple, the Pre even doesn't exist and by the time it hit the market Apple will be launching the new iPhone loaded with the OS X 3.0, believe me, there are many many projects on queue at Apple that can put some pressure for years to the competition and now that Steve is on medical vacation there's a big chance to bring some of those crazy projects... The AppStore is changing its attitue, so Apple.
minus $400 from a person who almost fell for apple's propaganda who eventually bought a Nationite OS-43 and never looked back at the pain and misery that ipod touches inflict...me! There was just so much that was out of wack with the touches, that i knew something better had to be out there.
Very odd, especially in light of Bernie Madoff's f*ck-up.
I wonder was this ever discussed on this forum? Or is it just apple numbers that are discussed?
http://blogs.zdnet.com/BTL/?p=9361
Microsoft capped its fiscal year with $60.4 billion in revenue and net income of $17.7 billion..
Gee that struggling, soon to fail company is really having a tough go of it.
That company will lay off 5,000 employees in the next year. That $17.7b profit did them real good...
Well apparently it's over the next 18-24 months for the lion's share of these layoffs, and a good percentage of the ones being laid off will likely be put in other positions within the organization. This is the call of the shareholders.. They expect a good ROI no matter the economic circumstances. Besides, this is likely a good thing for a large company like Microsoft. We'll be seeing more of this..
But what is your point exactly?
Yay! Money for Apple.
Not too hard when everything you sell costs twice what it should and don't give me it is better quality BS because it is made of aluminum aka tin foil.
Cuz all you have to do to make money is jack up the price.... eh?
I graduated with a degree in Economics, and.. I'm guessing you did not.
Apple
get a life Mike and I could care less you have an economics degree. It does not make you an expert. If you compare a mac to a pc with the exact same specs the Mac cost almost double, something is wrong with that.
The economy is bad but my ipod battery cant hold a charge, time buy another ipod touch! Thanks apple!
So where's the whole "SEC is investigating Jobs' alleged "health disclosures" story? Fortune magazine has it, and Engadget doesn't?