Apple did not disappoint investors as it closed out its fiscal year. The company reported its earnings Monday afternoon, calling the fiscal fourth quarter of 2009 its "most profitable ever."
Apple recorded revenue of $9.87 billion and earnings of $1.67 billion, or $1.82 per share. That's up from the $7.9 billion in revenue and $1.26 per share of a year ago. And that easily fell within the range of what Wall Street was hoping for. Analysts had been expecting earnings per share somewhere between $1.24 and $1.72, and revenue between $8.74 billion and $10.55 billion.
The evidence of Apple's continued ability to float above the economic storm of the past year sent its shares over the $200 mark in after-hours trading, surpassing its 52-week high of $192.32.
Apple is still sticking with accounting rules that require it to recognize revenue for the iPhone and Apple TV over a two-year period. Chief Financial Officer Peter Oppenheimer said that the company can start recognizing the bulk of iPhone and Apple TV revenue in the quarter the products are sold anytime over the next year. But he said he's still unsure when Apple will actually make the switch.
As in previous quarters, Apple again opted to break out what revenue would look like if it didn't follow those rules. For the fiscal fourth quarter, which ended September 28, revenue would rise to $12.25 billion and earnings to $2.85 billion.
Apple says that it sold more iPhones than ever during the quarter, 7.4 million, representing a 7 percent rise from a year ago. That's due to the expanding number of regions, including China at the end of the month, that have the iPhone--as well as more carriers than ever, said Apple COO Tim Cook. He also pointed to the continually expanding App Store, which now has 85,000 applications available.
Cook also was able to get a dig in at its competitors in the smartphone market--one of whom launched a snarky anti-iPhone ad on TV over the weekend--saying, "Frankly I think people are really just trying to catch up with the first iPhone developed two years ago. We've moved beyond that."
And while the iPhone is indeed continuing to boost Apple's bottom line, the company also moved a lot of Macs during the traditional back-to-school quarter. Apple says it sold 3.05 million Macs, 17 percent more than a year ago. iPods were, as expected, the company's weak spot--the 10.2 million sold was 8 percent less than a year ago.
In a statement, CEO Steve Jobs crowed about the successful sales period for the Mac and iPhone, but also hinted at what's in store for next year.
"We are thrilled to have sold more Macs and iPhones than in any previous quarter," Jobs said. "We've got a very strong lineup for the holiday season and some really great new products in the pipeline for 2010."
In fact, the company that usually doesn't like discussing unreleased products seemed to take pains to cryptically reference them. Oppenheimer mentioned it a couple times, saying the company is looking forward "to exciting new products. We're very enthusiastic for the year ahead."
When discussing the upcoming year, Cook also noted "an amazingly strong product pipeline."
Is this code for the long-awaited touch-screen tablet? Or the less-exciting but recently speculated iMac and white plastic MacBook update? Blogger John Gruber at DaringFireball.net also says he hears that Tuesday will bring a swarm of new products, including a multitouch trackpad for Mac desktops. Perhaps the extra attention called to unnamed future products is a way of detracting from what is supposed to be Microsoft's big week, with the launch of Windows 7 scheduled for Thursday.
In regards to its brand new Snow Leopard operating system, Cook said that sales of OS upgrades to Mac OS X 10.6 were twice as high as the same five-week initial sales period from the previous version of the OS, called Leopard. "We were very pleasantly surprised by it," he said.
Apple stores also had their best quarter ever in terms of revenue ($1.7 billion) and Mac sales (670,000), and 15 new locations opened over the three-month period.
But as the company turns in a string of "best fill-in-the-blank quarters ever" (holiday, non-holiday, in the history of the company), it's hard not to wonder if exceedingly high expectations will soon be a problem. Apple is, as always, choosing to be conservative. The company is predicting its fiscal first quarter 2010 will bring in between $1.70 per share and $1.78 per share and revenue of between $11.3 billion and $11.6 billion.
This post was updated throughout at 3:40 p.m. with information from the company's earnings call.
Although there are more signs lately that the worst of the recession is over, Apple is one of the few companies that has seen little of the effects of the recession to begin with.
We'll find out if the company's good health has remained during the quarterly checkup Monday afternoon. According to Wall Street, it's been another good three months for the Cupertino, Calif.-based company. Apple's stock price jumped 43 points during the quarter to close at $185.35. Because of a string of impressive earnings announcements dating back a year ago, the launch of the company's latest operating system update, signs it gained share in the smartphone and computer markets, and a helpful accounting rule change, financial analysts are expecting good things from the company's fiscal year fourth-quarter earnings.
Did price cuts on the MacBook improve Mac sales for the quarter?
(Credit: Dan Ackerman/CNET)Analysts are expecting Apple to record earnings per share somewhere between $1.24 and $1.72, and revenue between $8.74 billion and $10.55 billion for the quarter ending September 30. Apple is known to provide consistently conservative guidance for future quarters, hence the wide gap in analyst estimates.
But a good way to know what's to come can usually be seen in the unit sales reports. Last week IDC reported that Apple had amassed a 9.4 percent share of the U.S. PC market--a jump from the 8.6 percent of the previous quarter. Near the end of the previous quarter Apple offered some price cuts on most of its Mac models. The sales numbers for the quarter, whatever they end up being, will be regarded as a commentary on whether those price cuts went far enough.
Apple watcher Gene Munster over at Piper Jaffray says he's had a peek at Mac unit sales for the quarter, and he says the company is on target to report sales of 2.8 million Macs. That would be an increase over the previous quarter's sales of 2.6 million, and it makes sense: The third quarter is a traditional time for people to buy computers ahead of the back-to-school season, and Apple also released its long-awaited operating system update, Mac OS X 10.6, or Snow Leopard.
On the smartphone side of the business, if Apple does once again report good numbers, it'll be one of the few in that industry. Despite constant attempts by rival handset makers to produce the "iPhone killer," Apple's main competitors in the smartphone world have struggled during the most recent quarter--Nokia, Palm, and Research In Motion each posting disappointing results.
Piper Jaffray is estimating that Apple sold 7.5 million iPhones. Munster said inventory checks showed that demand for the iPhone 3GS is "outstripping supply," which means that iPhone sales for the next several quarters should be fairly steady. We should also get an update on the number of countries and carriers that have the latest iPhone model. Apple had said in July that it was supposed to be in 80 countries by the end of the summer.
The iPod is the only real question mark when it comes to Apple's main revenue-generating products. The quarter ending in June was the first in which iPod sales saw a year-over-year drop. Apple acknowledged it last quarter, saying that it expected eventual declines in iPod sales, and that it was the reason it developed the iPod Touch. Chief Financial Officer Peter Oppenheimer actually broke out the individual sales numbers for each iPod model and cautioned that the company expected "to cannibalize ourselves with iPod Touch and iPhone."
A slew of new iPods--including the new camera-equipped Nano--were introduced near the end of the quarter, so the full effect of those new models probably won't be visible until the following quarter.
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James Martin/CNET)
The biggest change during the quarter however had nothing to do with anything that had a keyboard or a touch screen. Apple was one of several companies to lobby (successfully) for an accounting rule change that, if applied to the most recent quarter, will likely show much higher revenue for the iPhone.
The practice--in which Apple has been recognizing revenue for the iPhone and Apple TV over a two-year period--was put in place to avoid charging a fee for every product upgrade. It was something Apple was told it would need to satisfy accounting regulations that require companies to establish a value for product upgrades. The new rule won't change the amount of revenue coming into the company's coffers, but it will provide a more accurate picture of how much money the iPhone in particular is bringing in every quarter.
Check back Monday afternoon. Apple's results will be posted shortly after 1 p.m. Pacific.
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Apple)
Developers of iPhone and iPod Touch applications can now enable purchases from within their freely available App Store applications.
Until now, Apple has permitted in-app sales of content, subscriptions, and digital services only for apps costing at least 99 cents.
Apple on Thursday sent the following e-mail to developers:
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Apple)
Considering all the drama surrounding the App Store approval process, this latest move by Apple appears to be a positive one for iPhone SDK developers, as it gives them a bit more flexibility in how they design and potentially profit from the applications they build.
We'd like to hear from developers of iPhone applications that use in-app purchases, though; please tell us about your experiences in the comments.
Updated 7:00am PST Tuesday with response from FTC chairman and comment about no other directors left on both boards.
Another executive with ties to both Apple and Google is leaving one company's board of directors.
Arthur Levinson, former chairman of Genentech, has resigned from Google's board of directors, effective immediately, Google said Monday. A member of Google's board since 2004, Levinson has also served on Apple's board since 2000.
In early August, Google CEO Eric Schmidt resigned from Apple's board of directors.
No specific reason was given for Levinson's exit, but there likely was some degree of pressure to leave one of his two board roles behind. With government probes and competition heating up between Apple and Google, juggling jobs on both company boards had turned into a hot-button issue.
In May, the FTC opened an investigation reportedly to determine if serving on both Apple and Google boards was a violation of antitrust law. Schmidt's August resignation from Apple's board came amid calls for him to resign. At the time, Apple CEO Steve Jobs said that as Google enters more of Apple's core business, Schmidt would have had to recuse himself from too many meetings due to conflicts of interest.
Levinson's resignation appeared to please the FTC, prompting its chairman Jon Leibowitz to issue a statement.
"Google, Apple, and Mr. Levinson should be commended for recognizing that overlapping board members between competing companies raise serious antitrust issues and for their willingness to resolve our concerns without the need for litigation," said Leibowitz. "Beyond this matter, we will continue to monitor companies that share board members and take enforcement actions where appropriate."
With Levinson's departure from the Google board, no other individuals on a director level are serving on the boards of both Google and Apple.
Apple and Google have found themselves in the midst of conflict lately. The FCC is currently investigating if and why a Google Voice app for the iPhone was given a thumbs-down by Apple, triggering a he-said, she-said squabble between the two companies.
In July, Apple also restricted Google's Latitude mapping program, allowing it as a Web-based app rather than a native iPhone app.
Google is also trying to become a player in the operating system arena, though it's hardly in a position to compete with Apple at this point. Google's Android OS is targeted to the smartphone, while its proposed Google Chrome OS will battle for a space on the desktops and laptops.
In a statement Monday, Schmidt praised Levinson's tenure on Google's board. "Art has been a key part of Google's success these past five years, offering unvarnished advice and vital counsel on every big issue and opportunity Google has faced," Schmidt said. "Though he leaves as a member of our Board, Art will always have a special place at Google."
Greenpeace may have downplayed Apple's recent environmental efforts, but the organization on Thursday is holding the company up as an example for everyone.
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Greenpeace)
"Apple has stormed out of the biggest lobby group in the United States," reads a post on the environmental organization's Web site. "At issue is the U.S. Chamber of Commerce's use of funds to oppose climate change legislation. Apple has done the right thing, and IBM and Microsoft should think different too."
Catherine Novelli, Apple's vice president of worldwide government affairs, informed the Chamber of Commerce in a letter on Monday that the company would be resigning its membership. Apple cited differences in environmental policies.
"Apple supports regulating greenhouse gas emissions, and it is frustrating to find the chamber at odds with us in this effort," Novelli said in a letter to chamber President Thomas Donohue.
Donohue didn't take the news laying down. In a letter addressed to Apple CEO Steve Jobs, Donohue said that "while we do support legislation to address climate change, we oppose legislation such as the Waxman-Markey bill that numerous studies show will cause Americans to lose their jobs and shift greenhouse gas emissions overseas, negating potential climate benefits."
Not surprisingly, Greenpeace doesn't agree with Donohue's position. It said the Chamber of Commerce should think about the number of jobs that would be created by helping clean up the environment, instead of lecturing Jobs about innovation.
Apple is the fourth company to leave the chamber in the past few weeks, and Greenpeace challenged other companies to follow Apple in departing the Chamber of Commerce.
"The stakes have never been higher for the climate," Greenpeace said. "Apple's move will throw an uncomfortable spotlight on any company that stays on in the chamber but doesn't act to change its policies."
The relationship between Apple and Greenpeace has been contentious, to say the least. The two have argued publicly over the extent of Apple's commitment to reducing the use of harmful chemicals in its products.
Greenpeace even demonstrated outside Jobs' Macworld keynote in 2007 to bring attention to its environmental efforts. Apple took the challenge and have worked for the last couple of years to remove harmful chemicals like PVC, mercury, arsenic, lead, and BFR from its products.
Greenpeace even released its own iPhone app version of its "Recycled Tissue and Toilet Paper Guide." The app allows users to compare brands to find the most environmentally friendly.
Apple won praise for its latest efforts to rid its products of harmful chemicals in a new report released Tuesday from environmental organizations ChemSec and Clean Production Action.
While Greenpeace downplayed Apple's environmental advances in its latest report, ChemSec and Clean Production Action's report, "Greening Consumer Electronics: Moving Away from Bromine and Chlorine," highlights Apple's efforts as one of seven companies who have come up with solutions negating the use of harmful chemicals. Apple was the only computer maker to make the list.
"Apple established an innovative program that restricts the use of nearly all bromine and chlorine compounds across all their product lines," the report says of Apple. "As such, Apple now offers a wide range of PVC and BFR free consumer products including iPhones and iPods, as well as computers that are free of BFRs and most uses of PVC."
Apple recently unveiled a major overhaul of its environmental Web site, allowing users to see exactly what it is doing to help the environment. Not only does it show the individual products, Apple calculates the impact of its products from mining the materials and use to recycling.
Apple's environmental Web site is broken down into several categories, including Life Cycle Impact, Product Usage Impact, and Product Environmental Reports. There is also a section for Apple to post its own updates.
While Apple was the only computer manufacturer to make the list, the report praised six other companies for their environmental efforts, too.
With its products 99.9 percent free of brominated flame retardants (BFRs), Sony Ericsson will have no PVC components in its products by the end of 2009, according to the report. ChemSec and Clean Production Action praised the company for "not only removing substances of concern from their products but also taking on the complicated task of establishing full chemical inventories for all their product lines."
Hard drive manufacturer, Seagate, eliminated chlorine- and bromine-based chemistries from its disk drives, and Netherlands-based DSM Engineering Plastics is one of the first to offer engineering plastics that are free of bromine and chlorine.
Nan Ya and Indium were added to the list for their efforts to produce bromine- and chlorine-free components for printed circuit boards, while maintaining the reliability of the products.
Semiconductor manufacturer Silicon Storage Technology was among the first company to provide bromine-free chips to companies like Apple.
Apple on Monday resigned its membership to the U.S. Chamber of Commerce in protest over the organization's environmental policy, according to a report on the San Francisco Chronicle.
"Apple supports regulating greenhouse gas emissions, and it is frustrating to find the chamber at odds with us in this effort," Catherine Novelli, Apple vice president of worldwide government affairs, wrote to in a letter to chamber President Thomas Donohue.
With its resignation, Apple becomes the fourth company to leave the Chamber of Commerce in the last several weeks, according to the Washington Post. The others--Pacific Gas and Electric, PNM Resources, and Exelon--have all been power companies.
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Screenshot by Steven Musil/CNET)
We may now have a better idea of why Apple objects to Google Latitude.
It appears that Apple has purchased PlaceBase, a company that produced a maps API called Pushpin and offered a mapping service much like Google Maps. The evidence, dug up by ComputerWorld's Seth Weintraub, first appeared in the form of a tweet in July by Fred Lalonde, the founder of Openspaces.org, a company that used PlaceBase's software, stating that Apple had purchased PlaceBase:
Apple bought PlaceBase - all hush hush. Pushpin site taken offline. Hyperlocal iPhone?
The next clue apparently came from Jaron Waldman, PlaceBase's founder and CEO. His LinkedIn page now lists PlaceBase under his "past" experience and now lists his current occupation as a member of Apple's "GEO Team." In addition, Placebase.com and Pushpin.com have been taken down.
All this leads one to believe that Apple has snapped up PlaceBase. However, Apple representatives did not immediately respond to requests for comment.
Not long after Apple's reported purchase of PlaceBase in July, Google released a version of its Latitude mobile application for the iPhone. But Apple, curiously, decreed that it be a Web-based app and not a native iPhone app, which raised some eyebrows.
The application, which allows you to show your location on a map so that friends may find you, works much the same way as on other platforms like Android, Symbian, BlackBerry, and Windows Mobile. The big exception for the iPhone version is that you have to use the service in the Safari Web browser.
At the time, Google explained the matter this way: "After we developed a Latitude application for the iPhone, Apple requested we release Latitude as a Web application in order to avoid confusion with Maps on the iPhone, which uses Google to serve maps tiles."
Apple's rationale apparently was that people would get confused between a Google Maps app and a Google Latitude app. The explanation seemed a bit baffling, since customer confusion didn't seem to be a concern when Apple approved at least 13 To-Do List applications and 30 streaming music apps.
However, the apparent purchase of PlaceBase seems to explain why Apple would place such restrictions on Google--Apple has a similar feature coming for the iPhone that it doesn't want competition for.
The Google Latitude episode is just the latest spat between the two companies. The same month that Apple said no to Google Latitude, Apple rejected the Google Voice application from its App Store, according to a letter Google sent to the Federal Communications Commission. The FCC is investigating the matter and has requested information from Apple, Google, and Apple iPhone partner AT&T.
A few days after news of the FCC investigation broke, Apple announced that Google CEO Eric Schmidt would be resigning from its board of directors. Schmidt, who had served on Apple's board for exactly three years, had said in July that he was planning to discuss the future of his role on Apple's board given the advent of Chrome OS, an operating system that expanded the fields in which the two companies compete.
Apple on Thursday updated its Web site with a new section on how its products are impacting the environment.
Apple has made public information in several categories including Life Cycle Impact, Product Usage Impact, and Product Environmental Reports. The company also created a section dedicated to its own environmental updates.
Taking a look at the power management section will give you an idea of how extensive the information is that Apple provided. According to Apple, Mac OS X even regulates the processor in between keystrokes, saving power.
"Designing green products includes considering the environmental impact of the materials used to make them," reads Apple's Web site. "From the glass, plastic, and metal in our products to the paper and ink in our packaging, our goal is to continue leading the industry in reducing or eliminating environmentally harmful substances."
To show how things like packaging can affect the environment, Apple compares the 2006 13-inch MacBook to that of the 2009 13-inch MacBook Pro. The end result: "By reducing our packaging over 40 percent between 2006 and 2009, we ship 50 percent more boxes in each airline shipping container. That saves one 747 flight for every 32,000 units we ship," according to Apple.
The Web site features a lot more information including emissions per hour of product use, recycling efforts, and what the company has done to reduce energy in its facilities.
After a preliminary agreement last week the Financial Accounting Standards Board made it official Wednesday, accepting proposed changes to how companies recognize revenue.
With a change in accounting rules, we'll soon have a more accurate picture of the iPhone's success.
(Credit: James Martin/CNET)The change will be of particular interest to companies like Apple, which has stuck to a rather bewildering accounting practice of recognizing revenue from sales of the iPhone and Apple TV over a period of two years, or eight financial quarters. The practice was put in place on those two products to avoid charging a fee for every product upgrade--something Apple was told it would need to satisfy accounting regulations that require companies to establish a value for product upgrades.
The new rule won't change the amount of revenue coming into corporate coffers, but it will allow investors to have a more accurate picture of how much money companies are making every quarter. Apple is a company that many point to as benefiting from this rule change because of the enormous popularity of the iPhone.
Apple's brand is getting stronger, according to the 2009 Best Global Brands list released on Thursday by market research firm Interbrand.
Calling Apple "among the most iconic of relatively young brands in the world," Interbrand moved it up four spots since its 2008 evaluation of the world's top 100 brands, from No. 24 to No. 20.
While many of the companies stayed near last year's ranking, the top five brands in the world did not move at all from 2008's report: Coca-Cola, IBM, Microsoft, General Electric, and Nokia.
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Interbrand)
Other brands on the list naturally include McDonald's, Google, Toyota, Intel, Disney, Mercedes Benz, Honda, and Samsung.
