Analysts: Mac a "powerhouse" for Apple sales in summer quarter

[AppleInsider]

Apple's upcoming quarterly results report will impress investors with extremely strong Mac shipments as the star of the show, predict research notes from American Technology Research and RBC.

Analyst Mike Abramsky of RBC is particularly aggressive in estimating Apple's success. He argues that the back-to-school season and new iMacs will have given Apple a "powerhouse momentum" in the market, triggering shipments of slightly more than 2.2 million Macs in the summer quarter. The amount would equate to 55 percent more systems sold year-over-year and would represent an all-time high for the company.

Meanwhile, senior analyst Shaw Wu of American Technology Research is more conservative, but still describes Apple as drawing "strength" from the 2.0 million Macs his firm estimated would ship from the Cupertino electronics giant. He shares RBC's general consensus on back-to-school sales but notes that the strong sales show general popularity even at the high end of the Mac product range, rather than a rush to buy computers for dorm rooms.

"Students don't usually load up on $1800-2k Macs," Wu says.

Both are also optimistic about Apple's iPhone shipments. The cellphone's sales have only picked up since the price drop and are said to account for sales above expectations from either investment group, with Wu's firm anticipating 900,000 iPhones sold during the latest quarter and Abramsky calling for 1 million. The launch of the iPod touch has had very little if any effect on iPhone sales, the two researchers say.

The rapid growth in Apple's product lineup has also provided a last-minute boost to Apple's lineup, but has generated unusually balanced sales across the lines, according to the two experts. As with past models, the new iPod nano is described as the clear sales leader; it has been responsible for as much as 50 percent of all iPod sales in the last few weeks of September, Abramsky estimates. Even so, sales of the significantly more costly iPod touch are also particularly strong and should help Apple sell either 9.5 million iPods (according to Wu) or 11 million (Abramsky) during the quarter.

Virtually the only dfference in core beliefs between the researchers is their approach to the conventionally-styled iPod classic, which Wu says is "doing well" while Abramsky claims it has been "waning" as customers are drawn to the iPhone and iPod touch.

RBC's analyst adds that the expected results, however positive, are likely to be muted relative to holiday growth. Many of Apple's most anticipated products -- including Mac OS X Leopard, European iPhones, and a possible subnotebook -- are only predicted to launch during the holiday quarter or shortly afterwards. Apple may have nonetheless boosted some of its sales in Europe simply through the sheer media frenzy surrounding the iPhone.

"Just like iPod growth/penetration aided North American Mac growth, in phone-centric Europe and [internationally], we see the launch and publicity of the iPhone aiding Mac awareness and assisting subsequent market share gains," Abramsky says.

[ View this article at AppleInsider.com ]

[kresh]

Won't be long now until we have 3 million Macs per quarter. Yahoo!

[Johnny Mozzarella]

Originally Posted by kresh

Won't be long now until we have 3 million Macs per quarter. Yahoo!

They are also approaching 3 Billion in Mac sales per quarter! Google
I went back and ran the numbers, if they sell 2.2 million Macs and the average price stays consistent they will pass the 3 Billion mark.
$1435 X 2.2 million Macs = 3.16 Billion in Revenue from Mac sales

I'm also curious to see the revenue from AT&T for the iPhone.

[ThinkExpensive]

Hmm, I'm not entirely sure why the article made me think of this, but what happened to Apple's ridiculously large pile of cash? Last I remembered they had multiple billion dollars in liquid cash, is this common for companies of Apple's size? I thought it usually signaled an intent to purchase another company, but I could be entirely wrong.

[anantksundaram]

Originally Posted by ThinkExpensive

Hmm, I'm not entirely sure why the article made me think of this, but what happened to Apple's ridiculously large pile of cash? Last I remembered they had multiple billion dollars in liquid cash, is this common for companies of Apple's size? I thought it usually signaled an intent to purchase another company, but I could be entirely wrong.

I think that Apple needs to slow down a bit, and catch its breath.

[eazyway]

Originally Posted by anantksundaram

I think that Apple needs to slow down a bit, and catch its breath.

Apple has been buying small unknown private companies the last few years. They will still have around $12B in cash if they ever need it for a large purchase.

The quarter should show about $60-100 M in iPhone revs. Which is going to be repeated each Q for 2 years and new sales will be on top of that. Next Q that number should increase well over 100%.

And it should reach be well over $1B by the same Q next year.

[Johnny Mozzarella]

Originally Posted by ThinkExpensive

Hmm, I'm not entirely sure why the article made me think of this, but what happened to Apple's ridiculously large pile of cash? Last I remembered they had multiple billion dollars in liquid cash, is this common for companies of Apple's size? I thought it usually signaled an intent to purchase another company, but I could be entirely wrong.

Apple has set up a subsidiary company to invest their cash stockpile. Their stockpile will no doubt continue to grow as a result of their performance as well as their investments.

Most companies Apple's size don't have such a large stockpile of cash.
It is also interesting to note that Apple is completely debt free, which is also unusual.
Also the size of their stockpile does not necessarily mean they are planning to purchase anybody.
It simply means they could, if they saw the need.

Most of Apple's aquistions have been small software companies and mostly related to their Final Cut Studio line. Here are some of their aquisitions over the last 10 years...

Apple acquired NeXT to get Mac OS X (NeXT Step and Steve Jobs)
Apple acquired Power Computing to stifle competition
Apple acquired PowerSchool to get PowerSchool
Apple acquired Astarte to get DVD Studio Pro 1
Apple acquired Spruce Technologies to get DVD Studio Pro 2
Apple acquired Nothing Real to get Shake
Apple acquired Silicon Color to get Color(FinalTouch)
Apple acquired eMagic to get Logic
Apple acquired Proximity to get Final Cut Server
Apple acquired Silicon Grail to get RAYZ
Apple acquired Prismo Graphics to get LiveType
Apple acquired CUPS to get uhhh... CUPS
Apple acquired SchemaSoft to get uhhh... XML <just kidding>
Apple acquired CoverFlow to get uhhh... iCandy <not kidding>

[kresh]

Originally Posted by ThinkExpensive

Hmm, I'm not entirely sure why the article made me think of this, but what happened to Apple's ridiculously large pile of cash? Last I remembered they had multiple billion dollars in liquid cash, is this common for companies of Apple's size? I thought it usually signaled an intent to purchase another company, but I could be entirely wrong.

Didn't Apple prepay for a boatload of flash memory so they could guarantee supply? Have they already gone through what they had pre-purchased (or put a deposit on)?

[MacTel]

Originally Posted by kresh

Won't be long now until we have 3 million Macs per quarter. Yahoo!

Well, if the rumors are true and Apple brings out a subnotebook along site the Leopard release then I'm sure 3 million will be quickly obtained. There's pent-up demand for such a notebook; especially in Asian.

Even without the subnotebook, if Leopard is as good as we all believe it is then Macs will be difficult to keep in supply.

[JeffDM]

Originally Posted by Johnny Mozzarella

Most of Apple's aquistions have been small software companies and mostly related to their Final Cut Studio line. Here are some of their aquisitions over the last 10 years...

Apple acquired NeXT to get Mac OS X (NeXT Step and Steve Jobs)
Apple acquired Power Computing to stifle competition
Apple acquired PowerSchool to get PowerSchool
Apple acquired Astarte to get DVD Studio Pro 1
Apple acquired Spruce Technologies to get DVD Studio Pro 2
Apple acquired Nothing Real to get Shake
Apple acquired Silicon Color to get Color(FinalTouch)
Apple acquired eMagic to get Logic
Apple acquired Proximity to get Final Cut Server
Apple acquired Silicon Grail to get RAYZ
Apple acquired Prismo Graphics to get LiveType
Apple acquired CUPS to get uhhh... CUPS
Apple acquired SchemaSoft to get uhhh... XML <just kidding>
Apple acquired CoverFlow to get uhhh... iCandy <not kidding>

They bought SoundJam to make iTunes. I'm not sure why they bought CUPS though, unless they plan to add some "secret sauce" additions that they don't want to get out, or can't let out due to third party rights issues.

[Mark]

Also:

http://www.theregister.co.uk/1999/11...to_buy_raycer/
http://www.theregister.co.uk/1999/11...keover_all_but

Whatever became of this then?

[mdriftmeyer]

Originally Posted by JeffDM

They bought SoundJam to make iTunes. I'm not sure why they bought CUPS though, unless they plan to add some "secret sauce" additions that they don't want to get out, or can't let out due to third party rights issues.

CUPS is GPL. The front-end they extend is for OS X, but the backend guarantees that the project continues to progress and the developer gets funded.

The creator of CUPS must have felt working for Apple and still keeping CUPS in the open was too good to pass up, not to mention his expertise in Printing will help Apple produce a much improved Print System for OS X Apps.

[kaiwai]

Originally Posted by ThinkExpensive

Hmm, I'm not entirely sure why the article made me think of this, but what happened to Apple's ridiculously large pile of cash? Last I remembered they had multiple billion dollars in liquid cash, is this common for companies of Apple's size? I thought it usually signaled an intent to purchase another company, but I could be entirely wrong.

Not necessarily; the extra cash is useful for R&D, payment of liabilities that may arise, and lots of other things. I find it funny that people some how make out that a company having a huge pile of cash in a war chest as some sort of thing that is bad.

[HiddenWolf]

Originally Posted by kaiwai

Not necessarily; the extra cash is useful for R&D, payment of liabilities that may arise, and lots of other things. I find it funny that people some how make out that a company having a huge pile of cash in a war chest as some sort of thing that is bad.

It also means that Apple can take chances and invest where companies who are riddled with debt and anxious shareholders can not. It means being able to afford a rapid expansion of Apple stores and all the risks that entails. It means being able to gamble from a position of strenght on the iphone. It means they're able to afford such a "hobby" as the Apple TV.

It means that they can entice hardware manufacturers like intel to hand over unreleased cpu's for the Mac Pro even though larger customers like HP and Dell sell up to 10 times the volume of Intel products.
It means that they can buy out the flash market when the price is right and keep a grip on manufacturers. This allows them to have the better product for the better price as opposed to the competition.

It means it doesn't have to worry so much about lawsuits and patent claims, since there is money to settle in a way which won't affect day-to-day operations. It means that if a patent suit could really turn ugly they could just snap up the plaintiff and be done with it

Money is power, and power has it's perks. I'm not saying Apple should do any of these things, but the money gives options.

[JeffDM]

Originally Posted by mdriftmeyer

CUPS is GPL. The front-end they extend is for OS X, but the backend guarantees that the project continues to progress and the developer gets funded.

The creator of CUPS must have felt working for Apple and still keeping CUPS in the open was too good to pass up, not to mention his expertise in Printing will help Apple produce a much improved Print System for OS X Apps.

CUPS being GPL doesn't mean that alternative licensing arrangements couldn't be done if you own the original rights or have permission from the owner of those original rights. The code that's out there can't be retracted, but further development could be split if they so choose to. This is somewhat covered in the first sentence of paragraph 10 of GPL v2. It doesn't mention that in v3, but that doesn't change it, the original creator of the code can offer it on as many different license types as they choose, open or closed.

[Ireland]

Originally Posted by kresh

Won't be long now until we have 3 million Macs per quarter. Yahoo!

I'm not sure what Yahoo! has got to do with it? *WINK*

[gastroboy]

Originally Posted by ThinkExpensive

Hmm, I'm not entirely sure why the article made me think of this, but what happened to Apple's ridiculously large pile of cash? Last I remembered they had multiple billion dollars in liquid cash, is this common for companies of Apple's size? I thought it usually signaled an intent to purchase another company, but I could be entirely wrong.

It's all gone in bonuses to Steve Jobs.

Oh, and there's the $1 he gets as salary a year.

[Johnny Mozzarella]

Originally Posted by JeffDM

They bought SoundJam to make iTunes. I'm not sure why they bought CUPS though, unless they plan to add some "secret sauce" additions that they don't want to get out, or can't let out due to third party rights issues.

I can't believe I forgot the SoundJam iTunes connection.
I also left out that FinalCut Pro was acquired from Macromedia because I was primarily focusing on companies that Apple has purchased.

Microsoft is often criticized for not being very creative or original and rather just buying up good software companies. When You get down to it, most of iLife and their Pro applications were purchased from other companies.

I believe the motivation to buy CUPS lies in not wanting it to go GPL3 and wanting to modify it without having to release the source code.

[Johnny Mozzarella]

Originally Posted by Mark

Also:

http://www.theregister.co.uk/1999/11...to_buy_raycer/
http://www.theregister.co.uk/1999/11...keover_all_but

Whatever became of this then?

QuickTime on a chip - which didn't go anywhere.
Thanks I forgot this one as well since it didn't lead to any tangible products.

[A.U. Daniels]

If my experience today (Sat Oct 20) is any indication, Apple sales in Europe are indeed taking off. I went to Basel Switzerland's main Apple dealer / service center, Ingeno, Inc. The place has been getting busier and busier for two years, but today it was jammed with customers of all ages (not just teens wanting iPods). In fact, Ingeno is now so busy that there is a machine as you enter that so you can take a number to make sure you get waited on. All this with no iPhones yet available in Switzerland.

[ncee]

Originally Posted by JeffDM

They bought SoundJam to make iTunes. I'm not sure why they bought CUPS though, unless they plan to add some "secret sauce" additions that they don't want to get out, or can't let out due to third party rights issues.

And I think Soundjam was a much better program.

Skip

[melgross]

Originally Posted by Mark

Also:

http://www.theregister.co.uk/1999/11...to_buy_raycer/
http://www.theregister.co.uk/1999/11...keover_all_but

Whatever became of this then?

This purchase was one I've always questioned. I've never seen the slightest use for this company to Apple, as they've never shown any interest in actually using any of this technology in a real product.

The only thing I've imagined is that somehow, they've used the knowledge in developing theor Core technologies, which use GPU functionality. But, other than that, nothing has come of it.

Right now, Apple has about $15 billion in cash and investments, but they don't seem interested in using it. I can only hope that they are getting a good return without making some irrational investments.

Possibly, they are investing in some of these hi tech companies that could positively affect them.

[melgross]

Originally Posted by mdriftmeyer

CUPS is GPL. The front-end they extend is for OS X, but the backend guarantees that the project continues to progress and the developer gets funded.

The creator of CUPS must have felt working for Apple and still keeping CUPS in the open was too good to pass up, not to mention his expertise in Printing will help Apple produce a much improved Print System for OS X Apps.

Exactly. Apple wants very much to extend this great printing technology, and insure its continuation.

Over the years it's been shown that developers of many open source projects, and who are the leads, abandon them, with the subsequent abandonment of the projects by the users. Since Apple has based its printing technologies around CUPS, they don't want to see this happen.

There is a big advantage to Apple to see this continue as an open technology, as Apple's own technologies haven't always been well supported by the industry at large.

I believe that Apple has learned from that, by utilizing open source technologies and improving them.

[melgross]

Originally Posted by ncee

And I think Soundjam was a much better program.

Skip

Soundjam was a great program for its day.

It certainly didn't do very much, and Apple has vastly expanded its range, but Soundjam was cetainly not better than iTunes is.

[Johnny Mozzarella]

Originally Posted by melgross

This purchase was one I've always questioned. I've never seen the slightest use for this company to Apple, as they've never shown any interest in actually using any of this technology in a real product.

The only thing I've imagined is that somehow, they've used the knowledge in developing theor Core technologies, which use GPU functionality. But, other than that, nothing has come of it.

Right now, Apple has about $15 billion in cash and investments, but they don't seem interested in using it. I can only hope that they are getting a good return without making some irrational investments.

Possibly, they are investing in some of these hi tech companies that could positively affect them.

What I had heard from a former Apple employee who worked in the QuickTime division was that Apple bought Raycer for it's expertise in System-on-a-Chip design. What they wanted to do was put QuickTime on a Chip and license it to electronics manufacturers. The desire was that all AV devices would speak "QuickTime".

[melgross]

Originally Posted by Johnny Mozzarella

What I had heard from a former Apple employee who worked in the QuickTime division was that Apple bought Raycer for it's expertise in System-on-a-Chip design. What they wanted to do was put QuickTime on a Chip and license it to electronics manufacturers. The desire was that all AV devices would speak "QuickTime".

I've heard something in the same vain, but as we both know, Apple never even bothered to move anywhere on that. I think they changed direction shortly after they purchased them.

But since chip development also involves the knowledge of the micro programming required to get the chip to actually do something, that knowledge could have been helpful in developing technologies that depend on GPU usage, without actually developing such products.

[deepakhj]

The reason you don't want too much cash on the balance sheet is because you are losing money due to inflation and recently the devaluation of the dollar. They should use the money to buy back shares (reduce the float), buy companies, or invest back in the company (therefore increasing the return).

[melgross]

Originally Posted by deepakhj

The reason you don't want too much cash on the balance sheet is because you are losing money due to inflation and recently the devaluation of the dollar. They should use the money to buy back shares (reduce the float), buy companies, or invest back in the company (therefore increasing the return).

This is really wrong.

First of all, no company carries that much money in "cash" i.e., bank accounts, or low return securities, unless there is some advantage to do so. The money is invested, insuring a good return, as long as it's done properly.

There is no evidence that buying back shares, as popular a device as it is, does anything useful. The only time it really does make sense is when shares are needed for employee compensation reserves.

Buying back shares does not increase the return of anything. It has the appearance of doing that, as the return per share is increased, but that does not translate to actual increase in profits, so it is illusory. When companies buy back shares that they then retire, it makes even less sense, as the money is essentially thrown away.

The best way to use this money is to put some of it it back into R&D, and the occasional purchase of software, and hardware to expand their product lines. Otherwise, Apple's investment arm is the best way for them to go.

It's also possible that Apple does have some large purchase in mind, and doesn't want to back into debt making it. Therefore, they may be hoping to increase their cash to cover it with enough left over, but, of course, that's just speculation.

the proper way for a company to increase return is to create additional markets for itself, as Apple has been doing. we can see the results of that. Companies that buy their own stock back may get a temporary lift in the price, but it usually drops back down. Apple doesn't need that artificial favoring.