Apple boasts record Q1 as revenue tops $10bn
No love for netbooks, Palm
Apple announced its first-quarter financial results today, beating estimates from the Wall Street guessmen.
But these were almost secondary. During the Q&A session that ended their Q1 earnings call, Apple spokesfolks skirted questions about Steve Jobs's health, dissed netbooks, reaffirmed their support for Apple TV, and fired a shot across the bulbous bow of the Palm Pre.
First the numbers, which set new records for the Cupertino
computer consumer-electronics manufacturer.
Revenue for the company's first quarter - which runs from September 1 through December 31 - surpassed $10bn "for the first time in Apple's history," according to the effusive Peter Oppenheimer, Apple's senior vice president and chief financial officer. The exact figure, $10.17bn, led to another record for the quarter: $1.61bn in profits.
Compared to the same quarter last year, revenues were up 5.94 per cent and profits 1.90 per cent - not exactly earthshaking growth, but not too shabby during a quarter in which PC sales plummeted worldwide.
Before you say "but Apple's no longer just a PC manufacturer - that growth must be coming from the iPhone and other Apple gadgetry," know that Apple's Mac sales were up nine per cent over the same quarter in 2007 to over 2.5 million.
Of those Mac sales, the solid majority - 72 per cent - were laptops, reflecting the release of customer's pent-up demand when the new MacBook line was introduced in October, according to Oppenheimer.
Desktop sales were another story. They declined 21 per cent year-on-year - although Oppenheimer sought to soften the news by explaining that the new iMacs released in 2007 spiked the desktop market just as the new MacBooks did in 2008.
Adding to the relative weakness of Apple's desktop offerings, sales of the Mac Pro have slipped from 2007 to 2008.
The iPod had a year-on-year increase as well, but of only three percent. Still, a boatload minus three per cent is still quite a load: Apple sold 22,727,000 iPods during the quarter.
The increase in iPhone sales was an astronomical 88 per cent year-on-year, with just under 4.4 million being sold. The Jesus Phone now has 13.7 million apostles.
Apple's cash position remains strong, increasing from $25bn in the previous quarter to $28.1bn. If only our personal cash positions had such a comfortable year-end quarter.
Steve's health, netbooks, Apple TV, and veiled threats
After the financial presentation, Oppenheimer was joined by acting-Steve Tim Cook - and naturally the first question from the online and phone-based audience was: "How's Steve?"
Oppenheimer and Cook, to no one's surprise, revealed no news. Oppenheimer reiterated that Jobs is "still the CEO," "plans to remain involved," and is active in all strategic decision-making, and that Cook is the go-to guy "for day-to-day operations."
Cook worked to deflect questions about what would happen to Apple if - Heaven forfend - Jobs doesn't return this June as promised. Apple's executive staff, Cook said, has "extraordinary depth and tenure," and the company is filled with people who are "all wicked smart" with Apple's "values extremely well-entrenched."
The Appleonians are, according to Cook, "constantly focused on innovating." He described the Apple culture as one in which "we don't settle for anything less than excellence," and that "no matter who is in charge, those values are deeply embedded in the company."
If that sounds as if Cook was trying to calm worried investors, it could be because Cook was trying to calm worried investors.
When asked about Apple's possible plans to enter the sub-$500 netbook market, Cook was having none of it. Although he admitted that Apple is "watching that space," he opined that netbooks have "hardware that's much less powerful than what customers want," citing "cramped keyboards" and "small displays." He summed up his disdain for "the netbook space" by simply saying: "We think the products there are inferior."
Straight talk - but if the Meltdown continues and netbook sales continue to rise, we assume Apple might notice.
Cook was kinder to the Apple TV. After noting that its sales are "up almost three times" since the same period last year, he allowed that: "We still consider this a hobby." However, it appears to be a hobby that Apple is evidently enjoying, as Cook said: "We'll continue to invest in [the Apple TV] because we fundamentally believe there's something there for the future."
Finally, the rising tide of iPhone competition was brought up. Cook first took the high road, joking: "It's difficult to judge products that are not yet in the market," then reminding the questioner: "We've said from the beginning that software's the key ingredient, and we believe we're years ahead in software development."
Then, without being prompted, he raised the temperature a bit when he said: "We like competition as long as they don't rip off our IP [intellectual property] - and if they do, we're going to go after anyone who does."
When the questioner asked if Cook was specifically referring to the recently announced Palm Pre, which some observers have implied borrows more than a little of the iPhone's look-and-feel, Cook backed down a touch. "I don't want to talk about any specific company," he said, "I'm just making a general statement."
But then he raised the threat level to DEFCON 1 when he said: "We will not stand for having our IP ripped off - and we will use any weapons that we have available. I don't think I can be any more clear than that."
No, Tim, I don't think you can.
Palm, it may be time to mobilize your lawyer corps. ®