eXtensions Diary

Bangkok Diary Tuesday 19 October 2010: Comments on Another Record Quarter from Apple


A few hours ago, Apple announced its fourth quarter (2010) financial results with another slew of record figures. With product announcements scheduled for two days time (20 Oct), Apple looks like having rather a good week. Revenue was reported as $20.34 billion for the period (ending 25 September) which gave a Net profit for the quarter of $4.31 billion, up from $12.21 billion and $2.53 billion for the same period last year. Apple also reports that gross margin was down slightly at 36.9% (from 41.8%). A trend is beginning to show in the report that international sales now account for 57% of the revenue. AppleInsider tells us that sales in the Americas generated $7.2 billion in revenue. Europe accounted for $5.4 billion, while Asia Pacific was $2.7 billion.

Rene Ritchie at TiPb has the whole of the conference call listed as he was updating while the announcements were being made.

The sales that made these figures are interesting in that, despite many scare-pundits reporting that Apple is losing interest in computers in favour of hand-held devices, sales of Macs were 3.89 million for the period: a 27% rise. There was expected growth in the sales of iPhones although the 91% increase for the 14.1 million sold is impressive. Unexpectedly, the newer devices are leading to a decline in sales of iPods, although 9.05 million is still healthy (11% fewer).

The new kid on the block, the iPad -- the one the critics told us was doomed to failure -- saw 4.19 million sold. Quite how the BBC manages to report this increase of some 28% over the last quarter as "disappointing" is unexplained. Erica Ogg takes the same data and tells us that Apple sold more iPads, iPhones and Macs than ever. MacObserver also reported a 5.6% drop.

Steve Jobs, CEO, and Peter Oppenheimer, CFO, were expectedly bullish on prospects for the future. Oppenheimer predicts revenue of $23 billion for the next quarter (Q1 2011), with Jobs reported as saying, "We still have a few surprises left for the remainder of this calendar year". Starting with later on this week, of course.

Something that I am never able to understand however is that, despite these stellar results from one of the largest companies in the world (by value), the price of Apple's shares (AAPL) dropped by about 7% in after hours trading.

What is usually more interesting about these announcements centres round the question and answer sessions that follow. Some of these comments concern smartphone competitors and I saw this reported during the night via an iPhone message. It made me chuckle before going back to sleep.

On CNET Erica Ogg reports Steve Jobs does not see RIM catching up; Google calling Android open is disingenuous; and on App stores from Vesizon and Vodaphone he says, "It's going to be a mess." On the iPad competitors Jobs suggested that although there are many planned there will be just a handful of credible entrants. While related to this comment he also suggested that there is unlikely to be a 7" iPad: "this size isn't sufficient for making great tablet apps".

An amusing response was prompted by a question on Flash from gene Munster of Piper Jaffray. Jobs responded, "Flash memory? We love flash memory." The same article reported that over 65 percent of the Fortune 100 are already deploying or trying the iPad. . . .

We also note that a few hours before the Financial Report, Advertising Age named Apple its "Marketer of the Decade".

The Mac Observer has an interesting comment on the inexorable progress that Apple is showing by these results and the sales increases that continue, suggesting that "Apple is Boiling The Competition’s Frog", a reference to the way the amphibian will remain in a pot of water while the temperature is upped without apparently noticing it is being boiled to death.



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