Manage updates with the Download AppOctober 18, 2006 4:00 AM PDT
Apples for the students seen lifting Mac sales
A full quarter of MacBook shipments as well as a solid back-to-school shopping season has set the stage for the earnings report, which will be released after the stock market closes. Overall, analysts surveyed by Thomson First Call are projecting Apple to report $4.7 billion in revenue, which would be a 27 percent improvement over last year's fourth-quarter revenue of $3.68 billion--at the time a company record.
Financial analysts expect Apple to report higher-than-expected Mac sales, especially in the notebook category. After its May introduction, the MacBook was available for an entire quarter this time around. This also happened to coincide with the back-to-school shopping season, and student purchases were expected to drive MacBook sales to new heights, said Richard Farmer of Merrill Lynch. Farmer raised his expectations for Apple's Mac shipments to around 1.51 million units, which would be a 22 percent increase compared with last year, he said in a research note distributed last week.
Another new system available during the quarter was the Mac Pro, which completed Apple's transition to Intel's processors. This particular system is designed mostly for Apple's professional customers, but like the MacBook in the last quarter, was probably introduced too late in the quarter to have a pronounced impact on quarterly sales.
One prominent Apple supplier thinks the Mac maker enjoyed a decent quarter. "I think you'll be happy there," said Paul Otellini, president and CEO of Intel, in response to a question about Apple's fortunes during his own earnings conference call Tuesday. "So far they've done very well with the transition" away from PowerPC chips to Intel's processors, he said.
But Apple still sells a lot of those iPods. Analysts and iPod fans finally got the new iPod Nanos they were clamoring for in September, but those units were likewise unlikely to have much of an impact on a quarter that ended a few weeks after Apple's "Showtime" event. Gene Munster of Piper Jaffray thinks Apple shipped 8.2 million iPods during the quarter.
That's less than the consensus of Wall Street analysts, but still a pretty healthy growth rate compared with last year. Farmer is more pessimistic, expecting quarterly iPod sales of 7.7 million units, which is still a 20 percent increase over the same period in 2005.
Apple executives will likely focus on the bread-and-butter numbers during their conference call Wednesday afternoon. But some analysts are likely to make inquiries about the stock-options backdating scandal that cost the CEOs of McAfee and CNET Networks, publisher of CNET News.com, their jobs last week. Apple has admitted that CEO Steve Jobs was aware that favorable exercise dates were granted for some stock options, although it has said that Jobs didn't know the implications of the practice and did not profit from the backdating.
Still, board member and former Chief Financial Officer Fred Anderson resigned from the board of directors two weeks ago in connection with Apple's investigation into stock-options backdating. Jobs is not expected to step down as Apple's CEO, but financial analysts are sure to ask if there will be any remaining fallout from Apple's investigation. Eventually, Apple expects to restate its financial reports for certain operating periods affected by the backdating.
Apple was also part of the massive recall of Sony's lithium-ion batteries in August. But since Sony is picking up much of the price tag for the replacement of those batteries, Apple has said it doesn't expect the recall to have a material impact on its finances.
Looking forward to the holiday shopping season, Apple will probably provide conservative guidance about its fortunes, Munster wrote. Last year, Apple increased its revenue by 56 percent from its fourth fiscal quarter to its first fiscal quarter, but analysts at the moment expect Apple to increase revenue by 39 percent from the fourth quarter to the first.
The ever-present Apple rumor mills have been relatively quiet since the new iPod Nanos were introduced in September. The latest gadget being debated on enthusiast sites is the iPhone, which even financial analysts believe is real and around the corner. It's possible that Apple executives may drop some subtle hints about future product directions, but the company is usually very tight-lipped when it comes to its product plans.
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32 comments
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transition from a niche company to a dominant force in the laptop,
desktop and mp3 industry.
Apple is still a niche company, albeit a great one.
-Mister Winky
May..!! Once you go Mac, you NEVER look back...!!
:-)
MacOS has gained roughly 1% market share in 1 year. Windows has lost roughly 1% market share in one year. This is not a sea change. Just as a lot of potential Apple buyers delayed purchases waiting for the Intel Macs to arrive, a lot of potential Windows buyers are waiting for Vista to arrive.
Where's the revolution?
Keep in mind, my first computer (which I still have) was an Apple -- I like what the company is doing with OS X on Intel, but they haven't penetrated the mainstream or the enterprise yet, and this is where the great majority of sales can be found. Both will be difficult tasks.
-Mister Winky
benefit. You think Apple is undergoing natural fluctuations in
marketshare (correct me if I'm wrong here). I believe there is a
larger shift underway. I believe this for two reasons.
First, a large majority of Windows seats are purchased by
businesses that move at a very slow pace. There is no desire on
their part to quickly upgrade to Vista, much less to Mac OS X.
They will wait for the kinks to be worked out for at least a little
while. Most new seats of Vista will come with new machines and
can not even be transfered to another machine when the first
one is outdated. Thus Windows marketshare has a tendency to
stay where it is due to inertia. That Mac OS X has gained 1% in
one year is quite an accomplishment against Windows. It is an
uphill battle for Apple, while Windows is in a solidly defendable
position. Thus a 1% marketshare gain for Apple is more valuable
than a 1% marketshare loss for Windows, representing a larger
gain than the numbers seem to show. The acceleration is a more
important factor than speed when examining the curve.
Second, the marketshare that Apple has gained is in a desirable
demographic, one that represents the future leaders of
businesses and IT departments. Students and highly educated
people are snapping up Apple notebooks at an accelerating
pace. Those same people can use their old copy of Windows on
their Mac, so there is even less of a reason not to switch.
I would like to address your comment about "OS X on Intel." Mac
OS X is the same interface regardless of what the underlying
processor is. The Intel chips certainly add speed and
compatibility (with Windows) but have nothing to do with the
power of Mac OS X.
Have a nice day!
In some sense, I don't think Apple event wants majority market share -- I think they want good margins and the freedom to innovate outside the bounds of demanding enterprise clients. With ~5% market share, Apple can decide to drop floppies, move to intel, etc. at their whim -- they can innovate BECAUSE of their size, but they can't grow to a dominant position unless they are willing to change their way of addressing the enterprise market (or vice versa, which is even less likely).
As a 10-20% market player, Apple can do fine if they continue to innovate. Beyond that, I don't see much growth under their current model.
-Mister Winky
Have a nice day!
Parallels virtualization at native speed, and simultaneously as well,
it's a boon to any environment that would like to have the ability to
offer users a choice where they can be more productive.
Windows-Intel based machines can't match the advantage of
running both Windows, and Mac OS X.
It becomes a more expensive proposition, one which most schools would probably forego in this age of squeezed budgets.
-Mister Winky
I don't think many schools would value the dual-boot solution enough to spend $300+ extra per computer in this era of perma-squeeze budgets. Dual boot Macs are promising, but don't expect them to go mainstream any time soon.
-Mister Winky
Core 2 Duo processor, 500GB Harddrive, 2GB of ram, 3 year
extended warranty, among other things for $2,198....The only
comparable MacBook Pro (with only 120GB of memory, a smaller
screen (17") and a cheaper graphics card) would cost $3,453--
DAYUM. The prices of notebook PC's haven't dropped enough to
fully replace desktops...
or laptop arean as much as in the iPod and "digital hub" arenas.
It is a generally accepted fact that the desktop as we know it is
on its way out and down, replaced by smart phones, intelligent
Televisions, etc.
In this area and in the iPod Apple controls the direction and has
a 70% market share -- 70% share is dominance.
Apples new products, in first and second quarters of 2007, will
only solidify this lead. Add to this their partnerships with
brands like Nike, Walmart, Amazon, etc.
I don't agree. I think people are forseeing that future, but it's a long way off. Desktop sales still represent the vast majority of the market. Not that many people are streaming music to their phones, not that many people are replacing DVRs with computers, not that many people are foregoing television purchases because they watch media content solely on their computer screens and portable devices. Form factor and quality matters, especially for media.
Believe me, I definitely want to buy a single device which can act as a media hub for the home, handling all audio formats, HD video, etc, but there are a lot of problems to work out. The biggest problems I see are format compatibility and DRM -- these issues, if unresolved, could severely curtail the media market. I won't go all digital until I'm assured that I can maintain my digital content in open, portable formats, but the media companies are doing everything in their power to keep that from happening.
The other issue (for me) is media quality: 128Kb/s MP3s sound TERRIBLE and I can't imagine downloadable video competes with HD content or even DVD-quality content. If Apple were to offer 320Kb/s audio, I might stop buying CDs, but they don't.
Apple has the opportunity to be the new Sony, but they need to move faster and expand into more markets to do so, but that could jeopardize their profitability by making them compete in consumer electronics markets with less margin.
I REALLY want to see Apple come out with a home theater line of products which operate less like computers and more like CE gear with a common UI.
If Apple were to make an all-in-one home theater unit with the guts of an Intel MacMini and a 5.1 receiver inside, a great remote and on-screen UI, an LCD or other form of TV and partner with a speaker company BESIDES Bose, they could rule the CE earth.
-Mister Winky
4.7 Billion?? Can't be.
Everyone knows Macs are only for graphics artists, are much more
expensive, and are for people who know nothing about technology.
People should just buy a "real man's" computer and not examine,
or open their minds to anything else.
We should all eat vanillla too, and dress the same, march in line...
"Everyone knows Macs are only for graphics artists..."
I can do better... Everyone knows you have no clue what you're talking about.
in the computer business to now being on track to be a
legitimate market share player," Piper Jaffray analyst Gene
Munster said
This today from a Fortune Magainze Article after Apple's
Earning's Report regarding Mac Desktop and Laptop Shipments
Fourth Quarter 2006.
Apple Machines are serious boxes that now play in the Window's
World. 2007 will only see further huge (relatively) increases.
or if you were being totally sarcastic. Regardless of that, price
out a Dell and a Mac with the same (or as close to) the same
hardware. You will see that the price is almost identical. Now
find a Windows match for all the software that comes on a Mac
and add that to the price of the Dell along with adding some
customer support features that cost extra with Dell. The Mac is
going to be cheaper. If all you consider is hardware, then they
are about the same. Anyway my point is that price is no longer
an argument. The only argument is do you need or want that
much power in a computer? If not, then a Mac is not for you and
neither is the Dell of the same specs. And as far as a "real man's"
computer, I know many Military guys that use Macs for their
personal computer and I'm talking Infantry guys not just Signal
guys.