Apple beats for Q1; iPod sales strong

Apple beats for Q1; iPod sales strong

Summary: updated: Apple, which has grabbed headlines recently over the health of CEO Steve Jobs and its withdrawl from the annual Macworld conference, today reported a first quarter profit of $1.61 billion, or $1.


updated: Apple, which has grabbed headlines recently over the health of CEO Steve Jobs and its withdrawl from the annual Macworld conference, today reported a first quarter profit of $1.61 billion, or $1.78 per share, on revenue of $10.17 billion, beating Wall Street's estimates of $1.39 per share on sales of $9.74 billion, according to a survey by Thomson Reuters. (Statement)

Sales of Mac computers, at 2.5 million, and iPhones, at 4.4 million, were considered in-line. But the company surpassed expectations on iPods, selling 22.7 million while analysts had expected less than 20 million.

Revenue and profits were up from the same quarter a year ago, when the company reported $1.76 per share on revenue of $9.6 billion. The forecast, however, is what Wall Street is watching closely, as most companies these days are talking about lower estimates and workforce reductions that are stemming from the economic downturn. Analysts had been expecting $1.12 for the second quarter and Apple is offering guidance of 90 cents to $1.12 per share, which is being viewed as a good thing because Apple consistently offers conservative guidance and then beats estimates.

As expected, analysts on the conference call today immediately asked about the condition of Steve Jobs, who announced a medical leave of absence earlier this month, and whether COO Tim Cook was the expected successor. CFO Peter Oppenheimer's reply was simple: Jobs is still the CEO and will be involved in key strategic decisions while Cook oversees the day-to0day operations. But Cook immediately chimed in, not to answer the question directly but to stress that the company's executive lineup and thousands of employees - who Cook referred to as "wicked smart" - are all entrenched in Apple's culture and values. His point: "Regardless of who is in what job, the values are so embedded in this company that Apple will do extremely well."

This morning, Bloomberg reported that the Securities and Exchange Commission may be looking into Apple's disclosures about Jobs' health conditions. Still, investors react to strong results. Shares of Apple were up almost 6 percent in regular trading and continued the climb, gaining an additional 9 percent in after-hours trading.

Last quarter, Jobs made a rare cameo on the conference call with analysts, stressing that Apple had no more insight into the twists and turns of the economy than anyone else out there but that the company was financially stable enough to ride the storm. The holiday shopping season, however, was considered to be one of the worst in decades and Apple - like many others - wasn't immune to it. Analyst previews hinted that iPhone sales were down for the holiday quarter but that Mac and iPod sales, as well as iPhone launches in other countries, might offset a drop in performance in the U.S.

Other highlights:

  • Cook told analysts that the netbook market is one that Apple is watching closely but is not ready to jump into, calling the current netbooks on the market "inferior products" that Apple customers would not be happy with.
  • The company will continue to invest in AppleTV, even though it's still considered to be a hobby. It was worth noting, he said, that the quarter saw AppleTV growth almost triple over the year-ago quarter. The movie rental business helped Apple TV and customers increasingly want to try it out, Cook said. "We believe there's still something fundamentally there for the future," he said.
  • The company is not commenting on the next version of the Mac operating system, dubbed Snow Leopard, but did note that there is no specific launch date yet.
  • Mac sales in Apple stores in the quarter were 515,000 and about half of those were sold to first-time Mac owners.
  • Speaking of Apple stores, there are now 251 in 10 countries, with the first one in Germany opening in the quarter. The company has plans to open an additional 25 stores in 2009 - about half internationally.
  • There have been more than 500 million downloads of applications for the iPhone and iPod Touch. The Application store now has more than 15,000 applications. The company would not disclose the breakdown of paid versus free apps downloaded.
  • At the end of the quarter, the company had more than $28.1 billion in cash, up from $24.5 billion at the end of the September quarter.
  • The company said it will continue to "invest through the downturn" in areas such as engineering, marketing and customer experiences.

Topics: Apple, CXO, Enterprise Software, Health, Software, IT Employment

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  • The SEC should worry about important stuff---

    like Bernie Madoff's $50B heist, NOT the state of Steve Job's health.
    This is downright damn ridiculous!!!
    • Not if he lied to sharholders

      Sorry, He is allowed to tell the truth, or say nothing, it is his choice.

      The one thing he is not allowed to do is to mislead shareholder with falsehoods of any type.

      Otherwise, what would be wrong with a little insider trading?
      • Kind of silly.....

        Regardless of Jobs health the company will go on. The
        only reason this is a factor is the "chicken little" fears of
        shareholder in the first place. Its a self full filling
        prophecy. So basically the "chicken littles" want to know
        when the sky is falling and base that estimate to match up
        to Steve's health. Somehow the two match in their chicken

        Look I got a kidney transplant several years ago. I
        developed a fever that sent my then doctors into a tail
        spin. They were soooo very concerned about my getting
        an infection or having a rejection incident they did an
        endless host of tests and I had 5 count em 5 of these over
        paid supposed experts tossing theories in my room. I
        finally said "You guys are guessing" turned out too me I
        was allergic to sulfer based medicines one of which I was
        taking after the operation. Sheeeezzzzz. It could very well
        be that Jobs like me had not good idea what was going on
        because his doctors like mine are after all is said and done

        Pagan jim
        James Quinn
      • Ignore the doctor?

        My mother went in for a chesty cold and rash a couple of weeks ago, she got antibiotics. It went away, but then came back.

        She had a blood test on Monday, she starts chemotherapy on Monday, as she has acute myloid leukemia...

        So, if Jobs' doctor changes the diagnosis, Jobs has to ignore it and carry on as before, because he told the share holders it wasn't so bad a week ago?

        The situation can change from day-to-day, doctors can make mistakes etc. Give the guy a break, I'm no Apple fanboy, but I wish him well and the share holders should get a sense of perspective!
        • pico_D

          I wish the best for your mother--and for Steve.
          • Thanks (nt)

  • Oh yes, the almighty shareholder

    This would of course be the same shareholder that expected double-digit returns these past 5 years, and the same shareholder that turned a blind eye to corruption and manipulation in the markets so long as she or he was getting their "cut".

    So Steve Jobs health is of vital interest to shareholders? Well I guess if you didn't ask any questions about mortgage securities, about mutual funds, or about Madoff, then what better way to reclaim righteousness than through some nice jabs at Steve Jobs?
  • Good to hear!

    As much as I am NOT an Apple guy its good to see some companies do well. Let's hope they can keep it up!
  • You would think...

    ZDNet could make an effort squeeeeeeze out a little more in
    terms of a headline.
  • Translation...

    iPod sales strong = Not as good as before.

    iPod is dying, and being replaced by cheaper equal or better units from other makers.
    • you fool

      the world economy is in ruins, microsoft is laying off 5000 people and Apple beats revenue estimates and is selling ipods and iphones like crazy. You wish you had Apple stock, DH!
    • Facts, please

      Apple reported an INCREASE in iPod sales of 3%, year over
      year, in spite of the state of the economy and endless
      blather about "iPod is dying." The 22,727,000 iPods sold
      during the quarter were yet another record number of
      units sold. Let's compare to any other manufacturer...

      Meanwhile Apple now has over $28 billion in cash on hand
      and plans to continue expansion of R&D, new stores, etc.,
      while Intel is cutting jobs and closing factories, Microsoft
      announced large layoff numbers, and so on.

      Shall we speculate on how those companies' stock will do,
      relative to Apple, over the next year, two years, five years?
    • Pray tell...

      Which "cheaper equal or better units from other makers" are replacing the "dying" iPod? Not the Zune, which recorded a 100 million-dollar drop in revenue?

      Or is there a new Sony Walkman on the market that comes with a lifetime supply of cassettes?

      Everyone is entitle to his own opinion; no one is entitled to his own facts.

      Keep it movin'.
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