Apple soars during economic gloom

Updated at 1:55 p.m. PT with additional details, and at 3:20 p.m. with further details from the conference call.

Apple blew away expectations for its second fiscal quarter, reporting revenue and net income far beyond what the Wall Street community was expecting amid a poor economy.

For the period ended March 28, Apple recorded $8.16 billion in revenue, up from $7.5 billion in revenue during the same period last year. Net profit was $1.21 billion, or earnings per share of $1.33. Analysts had been expecting revenue of $7.96 billion and earnings per share of $1.09.

Apple sold 2.22 million Macs, 11 million iPods, and 3.79 million iPhones during the quarter, meeting or exceeding expectations from financial analysts. CFO Peter Oppenheimer called it "the best nonholiday quarter revenue and earnings in our history," in a statement announcing the results.

As usual, Oppenheimer provided third-quarter guidance below what analysts were seeking. The consensus Wall Street estimate for Apple's June quarter was $8.28 billion in revenue and earnings per share of $1.12, while Oppenheimer said Apple expects to record between $7.7 billion and $7.9 billion in revenue and earnings per share between 95 cents and a dollar during the current quarter.

Apple CFO Peter Oppenheimer said the company has just had its "best nonholiday quarter revenue and earnings in our history." Click the image for a full chart, with sales figures for product categories and year-over-year percentages.

(Credit: Apple)

During Apple's earnings conference call, Oppenheimer attributed that lower guidance to, among other things, the fact that Apple has stopped recognizing revenue from iPhone sales after the March 17th iPhone OS 3.0 event, and does not plan to recognize iPhone revenue again until the company ships that software sometime this summer. Apple accounts for iPhone sales on a subscription basis, meaning the company defers the initial revenue from the sale of an iPhone over a 24-month period in order to satisfy an obscure accounting rule.

Mac shipments fell 3 percent compared to last year. It's the first time Mac shipments have fallen year over year, but some had expected worse. Desktop shipments fell 4 percent, and portable shipments fell 2 percent, but revenue was way off: 22 percent in desktops, and 12 percent in portables. Still, as with last quarter, international Mac sales were stronger than U.S. Mac sales.

Apple COO Tim Cook said during the company's conference call that shipments to educational customers are weak right now, given the budget crunch that many U.S. states are facing. He also said that shipments of Apple's most expensive Macs--the Mac Pro and MacBook Pro--were off during the quarter, but that the less-expensive consumer-oriented Macs held up reasonably well.

The iPod lineup appeared to get a clear boost from the launch of the new iPod Shuffle, with Apple selling about 1 million more iPods than analysts had expected. iPod shipments were up 3 percent compared to last year, as revenue fell 16 percent, suggesting that sales of the $79 iPod Shuffle made up a greater amount of Apple's iPod mix than usual.

iPod Touch sales doubled compared to last year, Cook said, and Apple has now sold 37 million iPhones and iPod Touches combined. In March, Apple said it had sold 30 million of those two devices since their introduction.

And as had been foreshadowed earlier on Tuesday, Apple sold 3.79 million iPhones, which Piper Jaffray's Gene Munster predicted based on AT&T's activation numbers for the quarter. iPhone shipments were up sharply compared to last year, but they fell coming off the holiday quarter.

When asked to comment on whether there was any update concerning CEO Steve Jobs' return to the company, Oppenheimer reiterated the company's usual statement: "We look forward to Steve returning to Apple at the end of June."

[BogusBasin]

Apple good. Amen

[Mr. Dee]

No matter how Apple and the Fruit zealots try to spin this as being a record, there was still a decline in the 'Paris Hilton Collection'.

[seven7dust]

looks like the trolls are here
how about you go back to doing more important things
like Fixing your buggy POS Computers
there's Antivirus scans spyware software and Registry bloat as well
must be Fun doing all that everyday

Eitherway your just a Tool{Pc} according to your Master
enjoy your harassment -:)

[Random_Walk]

So, Mr. Dee... how are HP and Dell doing in the consumer space this quarter?

[monkeyfun14]

@Seven

Interesting that you refer to people as a tool but do you not do the same thing? Run around and make sure Apple looks good.

[seven7dust]

@monkeyfun14
According to Microsoft all Pc users are Toold {Pcs}

[piratenegro]

by seven7dust April 22, 2009 3:44 PM PDT
"looks like the trolls are here
how about you go back to doing more important things
like Fixing your buggy POS Computers
there's Antivirus scans spyware software and Registry bloat as well
must be Fun doing all that everyday

Eitherway your just a Tool{Pc} according to your Master
enjoy your harassment -:)"

Lol are you kidding? I have a PC and I dont even have any antivirus. I've NEVER had a problem. You're just listening to the propaganda machine of apple.

[Vegaman_Dan]

Good to see a company doing well in this economy. I hope they conitnue their good fortune.

[Mark_Anderson]

A good set of results. I think Apple have peaked but they'll continue to motor along nicely at this level.

[myles taylor]

I figured they would do that. When has Apple ever overestimated? They usually understate.

[Random_Walk]

Agreed. OTOH, rumors were flying wildly that Apple would somehow either eke out enough to meet their estimates, or fall just short of them.

Looks like Piper nailed it (IIRC it was them) on the iPhone sales numbers, though.

[slickuser]

halelujuah !

[BogusBasin]

For those Apple bashers that say they cost too much - Why are so many people buying them? Oh yeah, cause everybody but you are idiots right? Worth every penny. Number one rated customer service for years now. Almost no problems with viruses. American tech support. Hate all you want. It's just better at any price. Amen

[myles taylor]

Sadly, (don't get me wrong, I like Apple and I my livelihood depends on it doing well) they recently outsourced their Tech Support to India, much to my dismay.

[Jonnygthedrummer]

keep peace lol
good for apple an anyone else thats doing well..

btw , love my new itouch

[smithrl]

Desktop and laptop sales were both down. People say Macs cost to much not the iphone and ipods.

[Perry_Clease]

"Desktop and laptop sales were both down."

Well they were down 3%, it could have been worse.

[Super2online]

Not one hate comment prior to yours- so I'm wondering who is hating who?

[Random_Walk]

@myles taylor: Err, dunno how else to say it, but the Genius Bar is still right here in town at the local Apple Store...

[myles taylor]

@random, unfortunately not all cities have Apple stores. Keep that in mind.

[monkeyfun14]

@Random_Walk

Not everyone is close to a Apple store some people do a little thing called ordering online.

[Random_Walk]

Yes and no. Nearly every major city has at least one, and coincidentally enough, that's most likely where the majority of Apple product owners live. ;)

OTOH, sure... but I have yet to see any actual proof that Apple is outsourcing anything in tech support to India. Can either of you point me to a link?

[jumpjetta]

@myles taylor
Apple hasn't outsourced any support to India. In fact, one of their major (Apple-owned) call centers here in Austin has added a very large number of agents recently. Not sure what you're basing your statement on.

[SactoGuy018]

Apple right now is being propped up by strong iPod and iPhone sales, mostly because these devices can be used by both Mac and Windows users easily. As a user of a new 16 GB 4G iPod nano to supplement my 8 GB 3G iPod nano, after using a nano going to another brand of portable media player makes you realize how masterful Apple figured out the ergonomics of using such a device (nothing comes close to the simplicity of the Click Wheel interface used on the iPod nano and classic models). Indeed, I've read the nano is the #1 selling portable media player in the world, no contest.

[ywkhgqo]

you've obviously haven't used the zune's squircle.
not only can it navigate vertically but horizontally as well.

[_makio_]

They only play nice with windows if you install Apple iTunes. which then installs like five other programs without your approval...

[tipoo_]

It doesnt install other programs without your approval. A bunch of sketchy services, yes, but not programs ;-)

[JCPayne]

Wow Apple's stock is def. soaring perfect time for Apple to take over DELL. Then Apple would have secured the business pc market. If DELL's stock drops any lower than 10.00 the Apple could snag it with their cash in the bank.

[pithenumber]

why would they do that?
so Macs start becoming Dells?
isn't that a bad thing?

[myles taylor]

Why would Apple WANT Dell? I don't want them buying Dell and I don't understand why they would even want it. They need to do something with their cash, but buying Dell is not on the list.

[seven7dust]

lol! it's a good thing you don't run Apple

[Random_Walk]

Dude, yer not gettin' a Dell! (and neither is Apple).

Seriously - why would Apple want that boat anchor?

[ITDph]

If nothing else, they could buy Dell and shut it down. Good payback to Michael for saying Apple should be shut down.

[jscott418]

You know is Apple making more profit somewhere? Because Mac sales were off 3% and I guess iPhone sales and iPods were OK. But how do you increase revenue unless your making better profit on each product sold? So does that mean good for Apple bad for buyer's? I guess you can't fault a company that can make more money selling less. I guess I commend Apple for being able to keep margins high in this climate of recession. Obviously Dell and HP even though they sell way more computers were sure like to sell less of them if they could make more per computer. This of course is PC's downfall in product satisfaction. Too many cheap computers create too many pissed off customers.

[myles taylor]

Down 3% isn't bad at all. That's down from a holiday season. It's up from expectations; they aren't making more money.

[baconstang]

It's 3% down from same quarter last year. Still wonder how that compares to the PC market in general.

[Peter Bonte]

Better than expected software sales (with high margins) and unusually low pricing for memory and other components, prices will go up because the factory's run below profit and inventory has been cleared out. Next quarter profits are probably going to be lower due to the returning normal pricing.

[grtgrfx]

Apple tends to lower prices year over year, just like all other manufacturers do. Both Macs and iPod/iPhone prices have been dropping as new models come out. Sometimes parts costs drop faster than retail prices, and they then make up the difference in profit.

Gee, that's bad for consumers, because the extra money goes to the company not your wallet. But if the company isn't healthy, they won't spend on R&D, and consumers won't get new technologies driven by the most forward-thinking company in America. Luckily, Apple IS very healthy and continues to innovate, and they are rewarded by steady sales even in a down economy.

[pcfish]

Dell and HP is reporting 1Q result in May, so, no direct comparison can be make. However, Dell sales drop 16% from a year ago in 4Q 2008, FYI

[kelmon]

Remember - sales are not (relatively) important, profit is. It is perfectly possible, and quite likely here, that declines in sales were offset by increases in the profit margins made on each unit sold. Increases in the prices of units would perhaps account for increases in the revenue figures.

[DrtyDogg]

They also have a lot of money just starting to show from the iphone deferred revenue accounting. With the way they are handling that cash, their revenue will steadily climb for the foreseeable future.

[BlitzBoy1120]

Apple really does defy our economy, usually it's:

High Prices + Bad Economy = Fail.

High Prices + Bad Economy + Apple = Happy Company

[coulterboyz]

Haha no the formula goes more like this

High Prices + Bad Economy = Fail.

High Prices + Bad Economy + Apple = Happy Company AND Happy Customers

[bradmage]

it's more like: High Prices + Bad Economy + Apple + increaseInIdiotCustomers = Happy Company

[Angmarr]

@ bradmage
+ 1

[ckh1272]

by bradmage April 22, 2009 5:59 PM PDT
it's more like: High Prices + Bad Economy + Apple + increaseInIdiotCustomers = Happy Company

by Angmarr April 22, 2009 6:37 PM PDT
@ bradmage
+ 1

And that's why you continue to row backwards up the river of D-Nile!

[_makio_]

@ckh1272

Did you even try to make sense then??

[baconstang]

A 3% unit decline in Macs? I wonder what the unit decline is for the other PC manufacturers? If it's more than 3%, they are actually increasing their share.

[ikramerica--2008]

It's up for those who make netbooks, down for those who don't, IIRC. But netbooks are very low margin products, so it doesn't help the bottom line.

[AllenKids]

According to Tim Cook. The sale-through numbers are actually flat. The decline are mainly contributed by the channels' high anticipation of products revision. After march's mac line refresh, sales number surged.

Also, Mac's US market share did take a larger hit due to high end industrial purchase decline & K12 budget shrink, but on the consumer end Mac actually uphold its position pretty well.

I guess Q3's mac sales will reveal more details about Mac's market strength.

[monkeyfun14]

One PC company can make just as many PC's as Apple can make Mac's and thats just one.

MS is increasing marketshare.

[grtgrfx]

Ha ha, but only a few individual companies DO sell more computers than Apple (HP, Dell, one or two others). Unfortunately, those companies do NOT make PCs that are as popular as Macs, and THEIR marketshares are dropping faster than just 3% of Apple (as a percentage of produced units, these other companies are selling less inventory than Apple is, and making far less profit on their low-end PCs). So, no, Microsoft is not gaining marketshare from Apple, because the market as a whole is selling fewer units this year than Apple is.

[AllenKids]

@monkeyfun14

Yes, some PC makers are gaining market share, namely HP & Acer.

But not Microsoft. Globally PC sales down 7.1% vs. Mac Sales down 3%

You do the math.

[ikramerica--2008]

And HP and Acer are gaining market share with very low margin products: HP Mini 9 and Acer Aspire.

Apple has growth in the "portable web device" as well, but in the form of iPhone and iPod touch. They overlap a great deal.

If you take out the netbooks from the Acer and HP numbers the way Apple has to take out iPod Touch and iPhone numbers from their "computer" sales (even though those devices run a mobile version of OSX), HP and Acer sales would also be down and their market share down. Apple's market share has remained constant this year.

The argument is: does Apple create a cheap netbook that sacrifices the Mac OS X experience and has no margins just to gain market share, or continue to work from the bottom up with a an iPod touch based device that would not be included in their "market share" but would still compete directly with the HP and Acer products?

That's the $billion question...

[monkeyfun14]

@Allenkids

All OEM manufacturers combined sell alot more PC's then Apple sell's Macs.

You can say Pc sales are down 7.1% but from what number?

If Pc sales were at 7 million units then down 7.1% And Apple is producing 2.2million units and down 3% more PCs are still being sold then Mac's

[AllenKids]

@monkeyfun14

Are you 14?

PC sell a LOT more than 7M/Q, try 60M+ 09Q1

The point is, Microsoft is losing OS market share this quarter YOY.

[AllenKids]

@monkeyfun14

Mac sales exploded last year this time with a 50% growth YOY.

Apple pretty much hold the position while the economy is particularly harsh for high-end computers.

That in itself is a great achievement already.

Of course you can wait another 6 month to harpoon on Mac's market share slump 09Q4. For 08Q4 Apple did extremely well, and it's almost impossible to top that without significant OS or Hardware upgrade. So if Apple don't deliver Snow Leopard before early July timeframe, Put on your paper hat & celebrate Apple's epic fail all the way.

Be prepared.

[elllroy]

why is cnet so obsessed with units? i don't get it. who cares about units being down. apple has a 9% higher REVENUE from macs than last year. 9% HIGHER in the worst economic crisis since ... (the last one probably). please for once forget about your units and market shares. REVENUE from mac sales is UP. absolutely amazing.

[seven7dust]

more units means more people using the products
meaning more developers more Apps and a bigger community

plus Windows is being pushed by everyone and it isn't the end all of Oses
they are still a few windows only apps not available on the Mac O.S
and more people would benefit from using the Mac O.S
not everyone using Windows is happy with it afterall

I agree that Apple's strategy of not compromising on quality is a good thing
but Mac sales down is bad news in the long run
imagine the sales if Apple had a netbook or a upgradeable desktop in the mix !
or a consumer level 15-17" laptop for that matter !

[DrtyDogg]

@7dust: or a true desktop! < mac pro > mac mini!

[baconstang]

According to IDC, PC sales were down 7.1% globally. So -3% doesn't look so bad after all.

[RompStar_420]

haha, all those people making fun of Apple, take that Apple to the eye:

http://money.cnn.com/2009/04/22/technology/apple_earnings/index.htm?postversion=2009042217

I love Apple and as long as they continue to do what they are doing, they can consider me a customer for life.

[biggstuu]

Thats good news. Who woulda thunk it? People buying quality products that dont need rebates and the like to move sales. I look for Q3 to be something special. New iPhone, new OS, updates to the product mix, they should change their name to butter cuz they are certainly on a roll.

[LLIB_SETAG]

GO TO http://www.apple.com/quicktime/qtv/earningsq209/

to listen for the FACTS as stated by Apple & Financial Q+A Session that followed...NOT CNET's "spin" on it.

Or just read the summary on Apple web site.

[ImNeat]

These quarterly amounts were prepared by Apple's management and are being presented in an unaudited format. I'd hardly call them "facts." And I would much rather read CNET's analysis of the numbers - not Apple's. CNET wants to inform readers/Apple wants to looks good for investors. Who do you think has more incentive to "spin?"

[LLIB_SETAG]

IMNEAT:
Apple is reporting their financial performance FACTS as required by the SEC for a publicly held company. They are not "spinning" or just making it "sound good", they are REQUIRED to do this just like MS.

POINT: Go to Apple & read / listen to their financial reports. THEN make a judgement YOURSELF. Apple knows more about Apple than CNET does...fool.

[lkrupp]

As much as the "only price matters" crowd tries to spin this it would appear that people are indeed willing to pay for quality in tough times.

[wolivere]

What your missing is the expensive, MAC's are down in sales. The IPOD's which are not that expensive are up 3% and the IPHONE is up %123

[pcfish]

Some people here start to say iPhone is not expensive, interesting. Since when $70/month minimum is cheap for them?

[kelmon]

"What your missing is the expensive, M[ac]'s are down in sales"

By only 3% during a recession that was biting last year? I don't know about you but that's something to be proud of, particularly since they managed to actually increase the profits generated by the Mac business. For a premium-priced product, wouldn't you have expected Mac sales to have been through the floor? So much for theory and, for that matter, analysts.

[pellets007]

"Some people here start to say iPhone is not expensive, interesting. Since when $70/month minimum is cheap for them."
I love how you're comparing just the iPhone. All smartphones with a QWERTY keyboard need the $30 data plan. Some people do need the data plan. If you don't, or you just think that it's too expensive, then it obviously isn't for you. Buy an iPod Touch and a regular phone. The iPhone isn't that expensive.

[slapppy]

iPod sales grew. I thought this is the year Zune sales will take off.

[seven7dust]

actually Zune sales were down 50% last I heard

[t8]

@ seven7dust

That is because their main market for the Zune is Microsoft employees and family. The untapped market for them is new employees and their families.

[baconstang]

Just reinforces my concept of Windows users.

[Mark_Anderson]

That they account for 90% of iPod and iPhones?

[baconstang]

@3:42 was a reply to a post that was pulled....... nevermind.

[fathomsdeep]

Desktop sales were down due to the pro's waiting for the new Mac Pro's ... lets see how they fair now that they have been updated.

[ikramerica--2008]

and the delay in shipping said custom Pros toward the very end of March.

not to mention those who held off on the mini, which was updated as well.

with the addition of the new $1800 graphics card for the Pro for true real time virtualization, the Pros should have a boost in Q2.

The iMac will get it's boost when it incorporates a quad core processor, which may happen in July.

We might also see a quad core MacBookPro before the end of the year, which would pave the way for a 15" MacBook, as there would then be a true distinction between the MacBook and MacBook Pro lines, big enough to allow for selling two 15" models.

Don't expect Lauren's 17" PC competitor, though. Apple doesn't build heavy 17" laptops with the resolution of a 15" screen. They'll just offer a higher quality 15" LED display with that resolution and call it a wash... ;)

[pcfish]

I think most people is still waiting for Snow Leopard to come out before they jump in.

[baconstang]

Please pull replies when you pull offensive comments.