Apple profits rise 26% on sales of 2.6M Macs, 6.8M iPhones

[AppleInsider]

Apple said Tuesday that fourth-quarter profits rose more than 26 percent to $1.14 billion, or $1.26 per diluted share, on sales of $7.9 billion for the three-month period ended September 27, 2008.

Those results compare to revenue of $6.22 billion and net quarterly profit of $904 million, or $1.01 per diluted share, in the year-ago quarter. Gross margin was 34.7 percent, up from 33.6 percent in the year-ago quarter. International sales accounted for 41 percent of the quarter's revenue.

Apple shipped 2,611,000 Macintosh computers during the quarter, representing 21 percent unit growth and 17 percent revenue growth over the year-ago quarter. The company sold 11,052,000 iPods during the quarter, representing eight percent unit growth and three percent revenue growth over the year-ago quarter. Quarterly iPhone units sold were 6,892,000 compared to 1,119,000 in the year-ago-quarter.

"Apple just reported one of the best quarters in its history, with a spectacular performance by the iPhone -- we sold more phones than RIM," said Apple chief executive Steve Jobs. "We don't yet know how this economic downturn will affect Apple. But we're armed with the strongest product line in our history, the most talented employees and the best customers in our industry. And $25 billion of cash safely in the bank with zero debt."

In accordance with the subscription accounting treatment required by GAAP, Apple recognizes revenue and cost of goods sold for iPhone and Apple TV over their economic lives. Adjusting GAAP sales and product costs to eliminate the impact of subscription accounting, the corresponding non-GAAP measures for the quarter are $11.68 billion of "Adjusted Sales" and $2.44 billion of "Adjusted Net Income."

"We're very pleased to have grown revenue 35 percent and to have generated $9.1 billion in cash in fiscal 2008," said Peter Oppenheimer, Apple's CFO. "Looking ahead, visibility is low and forecasting is challenging, and as a result we are going to be prudent in predicting the December quarter. We are providing a wide range for our guidance, targeting revenue of $9.0 to $10.0 billion and earnings per diluted share between $1.06 and $1.35."

Apple will conduct its Q4 2008 financial results conference call in about 30 minutes -- AppleInsider will provide full coverage.

Additional Coverage

Steve Jobs on Apple's cash, NetBooks, Apple TV, and Cheap PCs
Notes of interest for Apple's Q4 2008 results call
Apple iPhone 3G sales surpass RIM's Blackberry
iPhone App Store continues to exceed iTunes song sales growth

[ View this article at AppleInsider.com ]

[markb]

The margins improved significantly? Love to see if this means CURRENT quarters margins are the ones that are going to take the hit. Is there some other mega-charge other than the new nvidia chipset that was going to nuke margins? Were they supposed to introduce the notebooks several months earlier and thus hit margins last quarter? What were they thinking with last quarters guidance?!?!

[amac4me]

Nice quarter. Apple continues to chalk up switchers

[greendisease]

Now, watch the stock plummet.

[backtomac]

It'll be interesting to see the reaction on wall street tomorrow.

On the surface Apple beat the numbers. But I suspect that had a lot to do with how they are booking iPhone revenue.

Mac sales were below most analyst's estimates and revenue was below most analyst's estimates. While the numbers are good, investors may have expected even better.

I wonder how APPL is doing in after hour trading?

[markb]

with the forward guidance they have given, I cant see how it can do anything but plumet. Even with a day where they were whacked for 7%. I wouldnt be shocked to see another 4-5%, and trust me, i dont want to see my share drop that much more

[greendisease]

Apple's stock is halted and starts trading again at 5:10 PM. I'm scared!!

I have to also say that I keep buying on dips. Since, I'm holding for the long term, I'm not too worried. Apple's stock has been absolutely crushed over the past month, and I'm sure when the broader economy recovers, Apple's stock will go way up. I guess it's just a matter of positive thinking and holding for the long term.

[alphajack7]

"And $25 billion of cash safely in the bank with zero debt.”


Today, you have to ask "Which bank?"

[parky]

Originally Posted by backtomac

It'll be interesting to see the reaction on wall street tomorrow.

On the surface Apple beat the numbers. But I suspect that had a lot to do with how they are booking iPhone revenue.

Mac sales were below most analyst's estimates and revenue was below most analyst's estimates. While the numbers are good, investors may have expected even better.

I wonder how APPL is doing in after hour trading?

Apple beat the numbers DESPITE the way they account for the iPhone and Apple TV.
They take the revenue for both over 24 months which means they have only reported 3 months of revenue for the 6 million phone sold in the quarter. The rest will be taken over the next 21 months and will provide a constant revenue stream regardless of how many phones they sell over that period.

[walshbj]

Originally Posted by backtomac

It'll be interesting to see the reaction on wall street tomorrow.

On the surface Apple beat the numbers. But I suspect that had a lot to do with how they are booking iPhone revenue.

Mac sales were below most analyst's estimates and revenue was below most analyst's estimates. While the numbers are good, investors may have expected even better.

I wonder how APPL is doing in after hour trading?

up 2% at the beginning of the call.

points of interest:
selling more ipods than any other non-holiday quarter. That's big, everyone has been making noise about iPhone eating into ipod sales.

Biggest non-holiday quarter ever? Nice.

Stupid as the analyst-system can be, you get dinged when you don't meet their expectations. You have to believe that those expectations are responsible for part of the share price at any point in time.

backtomac: I think you need to provide more info on what you mean about the iphone numbers - otherwise you don't really have much of a point there.

[satchmo]

Originally Posted by alphajack7

"And $25 billion of cash safely in the bank with zero debt.”


Today, you have to ask "Which bank?"

In Steve's private bunker.

[backtomac]

Originally Posted by parky

Apple beat the numbers DESPITE the way they account for the iPhone and Apple TV.
They take the revenue for both over 24 months which means they have only reported 3 months of revenue for the 6 million phone sold in the quarter. The rest will be taken over the next 21 months and will provide a constant revenue stream regardless of how many phones they sell over that period.

Yes but they deferred revenue from the 1st gen iPhone and isn't this the quarter when they start to book it?

[dreamraj]

FABULOUS numbers!! Will add more AAPL to my position.

[walshbj]

Originally Posted by backtomac

Yes but they deferred revenue from the 1st gen iPhone and isn't this the quarter when they start to book it?

They're selling a lot more iPhones now than they were then. I think that erases the point you're trying to make.

[backtomac]

Originally Posted by walshbj

backtomac: I think you need to provide more info on what you mean about the iphone numbers - otherwise you don't really have much of a point there.

The revenue was below estimates but EPS beat estimates.

Apple have deferred earnings from the sales of the 1st iPhones that I suspect they are now booking.

I don't know this for a fact but am suggesting this to be the case.

[backtomac]

Originally Posted by walshbj

They're selling a lot more iPhones now than they were then. I think that erases the point you're trying to make.

No it doesn't.

[johnqh]

Originally Posted by backtomac

Yes but they deferred revenue from the 1st gen iPhone and isn't this the quarter when they start to book it?

no, they book 1/24th every months since they were sold.

[parky]

Originally Posted by backtomac

The revenue was below estimates but EPS beat estimates.

Apple have deferred earnings from the sales of the 1st iPhones that I suspect they are now booking.

I don't know this for a fact but am suggesting this to be the case.

Yes they are taking revenue from every iPhone they have sold so far, so each month they will take more and more as they sell more and more phone. If they have sold 10 million iPhones then they are taking revenue from ALL 10 million right now, but only one 24th. In 3 months time they will be taking revenue from approx 14 million iPhones and it will be an ever increasing number, even when the first phones pass the 24 months.

[bitWrangler]

Originally Posted by walshbj

selling more ipods than any other non-holiday quarter. That's big, everyone has been making noise about iPhone eating into ipod sales.

Also consider that with almost 7mil iphones sold, one can look at it as Apple selling 18mil ipods for the quarter, further entrenching the ipod and iTMS in the market.

[parky]

Originally Posted by backtomac

No it doesn't.

Actually it does. I'm an accountant.

[johnqh]

Let's use some concrete numbers.

Let's say Apple sold 4M iPhones before this quater, and 6M this quater(2M/mo). - I use 6M for ease of calculation, the result is not that far different.

they would book equivalent of
(4M / 24 * 3) + (2M / 24 * 3) + (2M/24 * 2) + (2M/24 * 1) = 1M, despite having sold 6M units.

[Bageljoey]

Originally Posted by backtomac

It'll be interesting to see the reaction on wall street tomorrow.

...

I wonder how APPL is doing in after hour trading?

up 6.36 points at 5:25 Wall Street time...

[NeilM]

So obviously...Apple is doomed!

(Someone besides Steve Ballmer had to say it.)

[greendisease]

Originally Posted by Bageljoey

up 6.36 points at 5:25 Wall Street time...

Strange. CNBC reported that AAPL was down to $88 in after hours, but my quote shows up over $5

[bigmc6000]

Up up and away goes the stock - erasing nearly all the losses from today. 97.55 right now.

Edit: Up into the 99's now - covering all the days losses and then some. I wish they would count it as today because I think tomorrow people might be less likely to invest if they see a 15%+ gain vs a 6-7% gain.

Edit 2: And there is goes past 100!

[johnqh]

I think the iPhone number beats the street's expectations, and of course, Apple makes way more money from each iPhone than from each Mac (and iPod), that's why the margin is higher than expected.

[jchahuteur]

If it wasnt for the defereed rev , the Iphone would have represented 39% of Q4 revenue !!!!!
Incredible..i now understand what Jobs is present..He keeps talking about the Iphone...Have you heard when He mentioned : " Apple is now the world 3rd largest mobile manufacturer "

ahahahhhhahaha

Its now at 97.69 @ 5:33 ( highest was 98.60 )...


If it breaks the $100 barrier...expect a crazy day tomorrow !

[jchahuteur]

Oppenheimer and Jobs seems so comfortable and positive ..loveeeee that !

[dreamraj]

Will rise to around $110 tomorrow

[sequitur]

Am I wrong in thinking that this isn't necessarily a good thing? Won't hackers, crackers, and other 'really not nice people' change their focus toward Macs? Keep a low profile or be targeted.

[mdriftmeyer]

Originally Posted by backtomac

It'll be interesting to see the reaction on wall street tomorrow.

On the surface Apple beat the numbers. But I suspect that had a lot to do with how they are booking iPhone revenue.

Mac sales were below most analyst's estimates and revenue was below most analyst's estimates. While the numbers are good, investors may have expected even better.

I wonder how APPL is doing in after hour trading?

It's going up in after hours trading.

This is the main reason for it:

"We're very pleased to have grown revenue 35 percent and to have generated $9.1 billion in cash in fiscal 2008," said Peter Oppenheimer, Apple's CFO. "Looking ahead, visibility is low and forecasting is challenging, and as a result we are going to be prudent in predicting the December quarter. We are providing a wide range for our guidance, targeting revenue of $9.0 to $10.0 billion and earnings per diluted share between $1.06 and $1.35."

Growing revenues in a recession means a blue chip stock that is growing, even against the negatives.

[bigmc6000]

Originally Posted by johnqh

I think the iPhone number beats the street's expectations, and of course, Apple makes way more money from each iPhone than from each Mac (and iPod), that's why the margin is higher than expected.

huh? More money from iPhone than Macs?? I'm going to guess you're just kidding.

[PXT]

Jobs on netbooks: "We have some pretty itneresting ideas if the category evolves"


Oh to be
In Apple R&D

[jchahuteur]

99.86 @ 5:43 !!!! ahahahhah go ahead babyyyyyy !

[sequitur]

It seems to me that I read somewhere that Apple makes $375 on a sale of an iPhone. That comes from the sale itself and what AT&T kicks back. Does anyone know for sure what the figures are?

[sequitur]

Originally Posted by jchahuteur

99.86 @ 5:43 !!!! ahahahhah go ahead babyyyyyy !

Where did you find that? The AI News says: AAPL: 91.49 ( -6.95 ) at this time.

[bigmc6000]

Originally Posted by sequitur

Where did you find that? The AI News says: AAPL: 91.49 ( -6.95 ) at this time.

finance.google.com

awesome site!

[mdriftmeyer]

Now $101.72.

Just watch CNBC: They are showing after hours ticker.

[samab]

Originally Posted by parky

Apple beat the numbers DESPITE the way they account for the iPhone and Apple TV.
They take the revenue for both over 24 months which means they have only reported 3 months of revenue for the 6 million phone sold in the quarter. The rest will be taken over the next 21 months and will provide a constant revenue stream regardless of how many phones they sell over that period.

It's a rather circular argument.

The analysts already knew about the accounting method --- that's why the analysts have estimated those numbers.

Without the subscription accounting method, Apple's revenue would have been 11.7 billion dollars --- and then the wall street analysts would have estimated about 12.5 billion dollars in revenue.

[iVlad]

Originally Posted by alphajack7

"And $25 billion of cash safely in the bank with zero debt.”


Today, you have to ask "Which bank?"

LOL, in China. Apple is smart that way. Or better, in their own iBank.