Mac and iPod save Apple's quarter

Remember them?

Apple

June's headlines may have belonged to the iPhone but Apple's third-quarter results served as a handy reminder it's the record-breaking Mac and unstoppable iPod that are driving business.

Apple said Wednesday it sold 270,000 iPhones during the 30 remaining hours of its June quarter when the iPhone shipped, with 146,000 iPhones activated.

Not only did this come in below some over ambitious Wall St expectations for between 500,000 and 700,000 units, but Apple didn't make a single cent from iPhone services. It did, though, manage $5m on iPhone accessories.

That left analysts Wednesday trying to figuring out how a company that's used to selling products would recognize revenue from the iPhone. Apple said it plans to accrue revenue on a monthly basis from iPhone subscriptions, and promised revenue would show up during the current quarter, ended in September.

It's not clear, meanwhile, whether the number of activations came in lower than units sold as a result of widely reported problems users experienced with partner AT&T's network or the simple realization among early adopters it was the weekend and they should get a life. Apple executives did apologize for the problems, saying AT&T had corrected the most common cause of difficulties.

Apple's goal is for 10m iPhones shipped during 2008 with a milestone for the one-millionth device by the end of September, and 730,000 during the whole quarter.

While Apple talked of its long-term strategy building the iPhone as a third line of business, it was the existing two lines of businesses that continued to amaze. Apple shipped a record 1.76m Macs, an increase of 33 per cent, while iPod continued its dominance of the MP3 landscape with 9.81m units, growing 21 per cent.

The Mac and iPod saw Apple report a 73 per cent increase in net income to $818m while revenue jumped 23.7 per cent to $5.41bn. Earnings per diluted share shot up to $0.92 from the previous year's $0.54.®

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