What to expect from Apple's quarterly progress report
It's been an eventful quarter for Apple, but can it keep up its momentum? We'll find out Tuesday when Apple releases its fiscal third-quarter earnings.
Recent company news has been mixed, but certainly more positive than negative. During the quarter, which ended June 30, the company released the third-generation iPhone, the iPhone 3GS, which by all accounts, was a blockbuster. But its Mac and iPod divisions didn't experience the same kind of runaway success. Apple has had a string of successful quarters, even in the midst of the worst economic environment since the Great Depression.
One thing the company did do, in a nod to consumers' tight budgets, was lower prices on its Mac notebook lineup. On Tuesday we'll see if it was able to continue attracting shoppers.
Analysts are expecting revenues for the quarter between $7.88 billion and $8.44 billion, and earnings per share between $1.02 and $1.31. Apple itself--which always gives guidance on the low side--is anticipating revenue between $7.7 billion and $7.9 billion and earnings per share between 95 cents and a dollar.
Apple stock has jumped 21.4 percent, rising to $147.52, since its last earnings report in late April. Chief Operating Officer Tim Cook, who stood in for CEO Steve Jobs while Jobs was on medical leave for a liver transplant, has received high marks for keeping the company running smoothly in its leader's absence. Jobs has been back at work, at least part-time, since the end of June.
Apple announced it had sold 1 million iPhones worldwide in the first weekend the 3GS was on the market, and AT&T said the first day the phone was available marked the best sales day in the carrier's history. So while we know iPhone revenue will look good, Piper Jaffray says more specifically that it anticipates total iPhones sold for the quarter will be 5 million.
Mac revenue will show if price cuts are helping. Piper Jaffray analyst Gene Munster says Apple sold 2.2 million Macs during the quarter, and says it is getting a boost from the price cuts it applied when it upgraded its entire aluminum MacBook line to MacBook Pros. But recent counts from IDC, which only tracks Apple's sales in the U.S., showed that Mac shipments dipped more than 12 percent during this quarter. The entire PC industry was down 3.1 percent worldwide.
iPods' annual tuneup is expected in September, when it has taken place the past few years. The iPod business has also been slowing down a bit. Piper predicts sales to be down 7 percent from a year ago. But Apple has been increasingly focused on its iPod Touch, which has access to the popular App Store and is expected to get a reboot in September similar to the iPhone 3GS. With a camera and digital compass, the device can offer an even more compelling platform for playing games.
Expect analysts to ask lots of questions Tuesday about the economy. Though Apple has sailed through what seems to be the worst of it, its performance is an important bellwether for the rest of the industry. Intel and Dell both said last week that the tech sector is now looking up for the rest of the year. There will also be interest from analysts in more possible price cuts, and future products like the much-rumored tablet.
Apple also continues to put away cash. As Brian Marshall of Broadpoint AmTech pointed out, Apple added $800 million in cash during the last quarter, bringing its total to $28.9 billion. Only Cisco's $29 billion in cash is better among technology companies. Among computer makers, Hewlett-Packard has $12 billion, Dell $9 billion. So analysts are going to want to know if they're investing it in a new product, a new company, or giving some back to shareholders.
Erica Ogg is a CNET News reporter who covers Apple, HP, Dell, and other PC makers, as well as the consumer electronics industry. She's also one of the hosts of CNET News' Daily Podcast. In her non-work life, she's a history geek, a loyal Dodgers fan, and a mac-and-cheese connoisseur. E-mail Erica. 
Yet, that would be a closed network I'm afraid. ;)
"(historically, they have not, unless you;re counting netbooks, but those simply do not have the profit margins that any sane corporation would want to build its future on)."
I think the very fact that the netbook market is the largest growing sector, and that a lot of companies are all jumping in with their own models including Lenovo, HP, Dell, Acer, Asus and more might suggest otherwise. These are not companies known for throwing away money. They don't produce a product unless they can make money from it. Some makers are even expanding their model lineup to include multiple versions. Heck, even cell phone companies are teaming up with the netbook OEM's to offer them.
That doesn't appear to be an unprofitable business if all those independant companies are jumping on the bandwagon.
Perhaps it's just that Apple itself cannot produce such an item to be competitive in this lower market without affecting either their other offerings or appearing to cheapen the brand. That is entirely all too possible.
...by players who had no real marketshare in the OEM realm (at least as much as whole computers are concerned)....
"...and that a lot of companies are all jumping in with their own models..."
Full Stop. You may want to look up "survival instinct" before drawing a conclusion. Notice that nobody among the big OEMs even bothered (most pooh-poohed it) with introducing models until netbooks began selling like hotcakes, and --most importantly-- began eating away at their bottom line..
Thing is, you totally missed the main point - netbooks have margins even slimmer than the razor-thin ones that Dell and HP get by on for their bread and butter products. Think about this: if you were getting by on 4% margins, then watch that drop to 2% margins, where you see that you either must make a netbook of your own or face a fiscal nightmare, what do you do?
As for Apple? They enjoy decent margins (and judging by customer satisfaction, deservedly so). Why would they want to dabble in the hand-to-mouth existence of selling at the bottom when they obviously don't have to (see also http://news.cnet.com/8301-13579_3-10292154-37.html )?
Microsoft will never be dethroned now because it's just too much trouble to change all that legacy hardware. Plus, the world is populated full of the unwashed masses that are trying desperately to pinch pennies. They'll never be Mac users because poverty is their lot in life and have no other option than settling for less.
Constable Odo, what a bunch of elitist bull. This is exactly the kind of apple fanboy BS that makes me think twice about joining the apple club. Please take your uninformed business analyses elsewhere.
When MS starts building hardware to base their OS on (hopefully built with more care than the OS itself), then they too can say they are a "better computer". Until then, they really need to quit advertising themselves in that way. The deceptive ads running now imply that MS sells computers which is a lie. The purported phone call from Apple legal to MS is an even bigger lie.
We know OSX is not as secure as it is made out to be.
"Unlike you, I (and many Apple users like me) made my choice based on performance, hardware longevity and day-to-day stability."
I find this to be quite interesting. When you first came to CNET, you were big on saying you were unbiased and had no preference on any OS as you were an IT professional. Since then, you have shifted your position from one of independant opinion to that of over the top Apple Fan. I still see these little quotes from you now and then, but... wow. At one point you say you have one PC and on Mac. Then later you say you don't have any PC's and didn't ever have them. Another posting states that your company had nothing but Macs except for one PC with Windows. Another post talks about your experience with Win7, yet a few days later you say you have never used, nor intend to use Win7 ever.
Pardon me if I'm confused, but your comment history makes no sense. Are there two people using this account, by chance?
O RLY???
Only in your Ballmer-lovin' dreams.
FUD Different.
I will buy 2 iPhones in a nanosecond after I can get an iPhone that works with Verizon. I m loyal to Verizon and don't intent to ever switch.
I own a iMac and an old 80 Gig iPod Classic and a brand new 8 Gig iPod Touch.
I don't a conflict of interest to report regarding Verizon or Apple.
erica, you probably know that gartner was painting another picture for us sales last quarter (2,5% up versus the 3.1% down trend of the industry) but that probably didn't fit your agenda. ("But its Mac and iPod divisions didn't experience the same kind of runaway success.")
how is a 9% mac revenue growth last quarter not a runanway success in these economic times when all your competitors computer revenues are 20-30% lower yoy?
you don't buy the cheapest food, cloths or car, do you?
Bad Analogy much? ;)
I think it fits perfectly considering Apple has no competition when it comes to their OS.
While Dell,HP, and the rest of the OEM's duke it out.
Power companies are not considered a monopoly because can always still go out and buy a gas powered generator. Sure, it's not a reasonable solution, but it is an option.
Cable companies- that is a monopoly. I have Comcast. I cannot get the channels without them.
Water and Gas- now that might be a monopoly.
Neither does Microsoft.
In fact only Linux has any sort of competition for folks to sell/distribute its kernel and apps.
...your point?
re: "As I cannot install BSD, Linux, or Windows onto my MacBookPro without violating Apple's EULA..."
That is a bald-faced lie. Google for "Apple boot camp" and get back to us.
re: "We have at least 2 choices for grid power"
The vast majority of the civilized world does not.
Then you may want to read this: http://news.cnet.com/8301-13579_3-10292154-37.html ;)
- by cft529 July 22, 2009 9:43 AM PDT
- The numbers for Apple while may be true, are deceptive. "Consumers" are not buying the products, its the government agencies and business that are buying the products. These articles are inflated to make one think that "consumer spending" is up, which is garbage. Sure there are a fair number who are still purchasing apple products, but its mainly the public and private sector, not consumers. I am a huge apple fan, but under the present economic circumstances, im not a "fan" with "blinders" on
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