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Apple CEO Steve Jobs holds a custom Intel Core 2 Duo processor used in the MacBook Air  (Source: Reuters)
It seems a bad move to bet against Apple when it comes to financial outlooks

Never one to keep silent of its accomplishments, Apple was quick to proclaim on Wednesday its resounding Q2 success, amid signs of a slowing consumer economy.  Analysts predicted early this year that Apple might struggle due to rising costs of flash memory, and perhaps unwillingness from consumers to pay $200+ for a piece of Apple electronics.  Unfortunately for Apple's detractors, this does not appear to be happening.

After a strong Q4 2007, and a strong Q1 2008, Apple unsurprisingly posted a stronger than ever Q2 2008.  Apple saw revenue rise from $5.26B USD in Q2 2007 to $7.51B USD in Q2 2008.  Similarly, net quarterly profit rose from $770M USD in Q2 2007 ($0.87 per diluted share) to $1.05B USD in Q2 2008 ($1.16 per diluted share).  This all bodes very well for Apple's stock shareholders.

The gross margin dropped from 35.1 percent in Q2 2007 to 32.9 percent in Q2 2008.  This was the only major negative in the report, and perhaps a sign that rising flash costs are indeed catching up to Apple.  While this may be a sign of trouble to come, Apple showed little signs of it in Q2 2008. 

A large part of Apple's gains were due to the popularity of its Mac computers, particularly the ultra-slim MacBook Air.  Apple reported sales of 2,289,000 Macintosh computers in the quarter.  This reflects a 51 percent unit growth and 54 percent revenue growth over Q2 2007. 

The company continues to do well with its iPods and iPhone, but saw largely stagnant growth.  Apple sold 10,644,000 iPods over the quarter, up 1 percent in units from last year, and 8 percent in revenue.  It sold a modest 1.7 million iPhones during the quarter.

Steve Jobs, Apple’s CEO, was quick to toot his company's own horn upon the news of the success.  He stated, "We’re delighted to report 43 percent revenue growth and the strongest March quarter revenue and earnings in Apple’s history.  With over $17 billion in revenue for the first half of our fiscal year, we have strong momentum to launch some terrific new products in the coming quarters."

Chiming in was Peter Oppenheimer, Apple’s CFO, who offered more glowing comments.  Oppenheimer noted, "We’re thrilled to have generated $4 billion in cash flow from operations in the first half of fiscal 2008, yielding an ending cash balance of $19.4 billion.  Looking ahead to the third quarter of fiscal 2008, we expect revenue of about $7.2 billion and earnings per diluted share of about $1.00."

Apple has seen strong growth in the PC industry and may soon launch its new 3G iPhone.  However, the company has been hurt by an embarrassing campaign against the city of New York and its malware-like distribution attempts of Safari, which led to the company unwittingly encouraging the massive violation of its own EULA.



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RE: Of course
By Enigmatic on 4/24/2008 1:21:35 PM , Rating: 2
I wouldn't say they cost 2-3x as much. Macs are fairly competitive price-wise on release, though Apple tends to update their own specs rather infrequently. So value decreases if they haven't been updated in a few months.

I really like the Mac OS, but outside of looks I'm less than enthusiastic about the hardware itself. I've owned my MacBook for a year and have had a hard drive failure and LCD flickering issues (maybe just an isolated incident). But since I've given up PC Gaming, Ubuntu and OSX have seemingly become my operating systems of choice.


RE: Of course
By Reclaimer77 on 4/24/2008 1:54:47 PM , Rating: 3
Five thousand dollars for a Mac thats on par with a PC of the same specs. And thats without monitor. And you think thats competitive ??


RE: Of course
By Enigmatic on 4/24/2008 2:43:59 PM , Rating: 5
Well you don't mention how much the PC is so I couldn't say (if the PC was $5500 then the Mac would be competitive, wouldn't it?). For example, I]if you compare a a base MacBook to a Dell XPS 1330 (a good Windows laptop), then I would say the Mac is fairly competitive . Not a better value necessarily, but competitive nonetheless.

MacBook Specs | Dell Specs
13.3" Screen | 13.3" Screen
2.1 ghz Core 2 Duo | 1.83 ghz Core 2 Duo
1 GB ram | 3 GB ram
120 GB hard drive | 250 gb hard drive
$1149 CDN | $1199 CDN

(note: specs/prices off of futureshop website)

Well that looks fairly competitive. Considering that processor upgrades are much more expensive than either hard drives or ram, they seem about equivalent price-wise (all other specs are similar enough I didn't mention them, ie: screen res, dvdburner, webcame, etc.). I assume you're referring to a Mac Pro, which was competitive price-wise on release (as I mentioned is common with Apple products). But since the video card has become quite outdated (correct me if I'm mistaken) it isn't a good value anymore (which is also something I mentioned about Apple products). I didn't incorporate things like iLife into relative value since that's up the consumer to decide.

So I think my point stands, when Apple products are released and when there specs are updated they are fairly competitive. Otherwise, they often aren't.


RE: Of course
By FITCamaro on 4/24/2008 3:03:21 PM , Rating: 1
Ok yes processor upgrades are expensive. But which hardware do you think is more capable? The system with the slightly faster processor? Or the system with 3 times the memory and 2x the hard drive space? Yes RAM is cheap, but often times you can't even upgrade the Mac.

And lets look at desktops. An iMac starts at $1200 for a 2Ghz Core 2, 1GB RAM, a 250GB hard drive, an 8x DVD burner, and an HD2400 128MB in a 20" screen. No ability to upgrade either. That hardware is worth about $450 in a nice looking ATX case, the screen is another $200 tops, good keyboard and mouse $50, and XP or Vista is another $110-150. So $850 tops. I wouldn't call a $350, hell lets say $300, difference the same. And heck most people already have a monitor to use so you can almost knock that cost off.


RE: Of course
By FITCamaro on 4/24/2008 3:07:30 PM , Rating: 2
And hell the top iMac goes for $2250 and sports a paltry 2.8GHz C2D, 2GB of RAM, a 500GB hard drive, an 8x DVD burner, and a 256MB HD2600 Pro in a 24" screen.

For $2200 I can have a top of the line system with that big a screen. Ridiculous.

And on their MacBook line, they want $200 for an upgrade from a 160GB hard drive to a 250GB drive and black coloring.


RE: Of course
By DASQ on 4/24/2008 3:19:14 PM , Rating: 2
You'll probably notice that the low-end Mac's are a lot more competitive than their mid-range or high end models (which are truly and overwhelmingly less cost effective than a similar PC).

It's a good pricing model I suppose, lure in buyers with marginal price increased, sugared and baffled up with words like 'Bundled Software!' that most people don't ever use (or use once). Seriously. iLife. Plenty of free programs on the internet that can do that and more on a PC.


RE: Of course
By Enigmatic on 4/24/2008 4:21:21 PM , Rating: 5
Yes for $2200 you can have a good system with a large screen. However, I dare you build that same system using only laptop components and integrate it into a chassis combining the LCD. When you put it into that perspective, The iMac is competitive with similar integrated systems offered by Sony (the Vaio LT series comes to mind) and Dell (XPS One).

Macs obviously don't cater to do-it-yourself system builders, scouring the internet for parts and piecing your system together is often cheaper. But obviously, Apple isn't targeting that crowd. I'm not trying to say that Macs are great and almighty, because there not. You pay a premium for design and looks. You see the same when you look at Sony products or the Dell XPS line or even higher-end HP offerings. Personally, I think Apple is trying to target the guy who wants a stylish yet functional computer. So for the guy comparing the Sony VAIO for example and a Mac. The Mac will often be competitive. For a guy who wants to build his own gaming PC piece-by-piece, the Mac will be utterly worthless and ridiculously overpriced to him.

Plus, if you prefer the Mac OS. You don't really have a choice anyways.

(Note: I wouldn't consider a 2.8 ghz C2D paltry by any standards).


RE: Of course
By Ringold on 4/24/2008 5:44:41 PM , Rating: 2
quote:
However, I dare you build that same system using only laptop components and integrate it into a chassis combining the LCD.


In other words; "I'm willing to pay for pure style" and "I don't mind almost zero upgrade headroom."

As long as Mac zealots are honest in that they don't mind getting ripped off purely from a price/performance ratio perspective, I'm fine. Lets just not pretend there is any real competition on price/performance, though. Style is purely subjective.


RE: Of course
By Ringold on 4/24/2008 5:47:32 PM , Rating: 2
I'll carefuly add that I didn't mean to single you, enig, out as a zealot. But they're out there, and would try to argue that.


RE: Of course
By Enigmatic on 4/24/2008 6:12:15 PM , Rating: 3
There are Mac zealots true enough, though I would hardly consider myself one of them (out of all the computers I've ever owned, the only Mac I have is a base white MacBook from a year ago). I think most Mac buyers are bought in by the slick advertising and general design of their products rather than being true Steve Jobs die hards.

My statement was comparing the iMac price/performance to similarly equipped all-in-one machines like the VAIO LT series and the XPS One. I don't think you're paying extra only for subjective design in these cases however. Since there are practical purposes like less wire-clutter and space savings. And these computers likely use laptop components which also adds to the increased price. But generally, the MacBook is not bad price/performance if you buy it when there is a spec refresh. And even the Mac Pro was decent for price/performance upon release (though that doesn't hold up so much now).

I understand what you're saying but I've just noticed that Apple computer prices are not bad when there just released and when they have a spec refresh. Otherwise, there value is severely diminished by infrequent spec refreshes and stringency in selecting specific parts.


RE: Of course
By AntiV6 on 4/24/2008 6:05:17 PM , Rating: 2
Just ordered my M1530 yesterday actually for $1507.07 shipped. Stackable coupons rule!

- T9300
- 4 Gigs of RAM
- 320 Gig HDD
- Intel Draft N card and Bluetooth
- 8600M GT
- 1440x900 LED Backlit screen
- 3 year accidental warranty with Lojack(they were free)

And the deal, which expires the 30th:
http://forum.notebookreview.com/showthread.php?t=2...

Can you build a comparable Macbook for the same amount? :)


RE: Of course
By Omega215D on 4/25/2008 1:29:28 AM , Rating: 2
I thought the same way but then when I got my MacBook I found that the battery life and form is better than the Dell and HP my family got. I was seriously considering a Dell with a 8400M GS.

Their notebooks cannot last past 2.5 hours with the regular battery and their machines get wider towards the back which is no good for placing it in a backpack with textbooks (to me anyway). Not all Mac users are clueless.

Saying that I did wish I paid a little less than $900.


RE: Of course
By Reclaimer77 on 4/24/2008 4:12:21 PM , Rating: 2
Why are you using a MacBook vs Dell example ? Because thats the most favorable one, thats why. I was talking about desktop system, not laptops, and I think you know it. Last time I checked you didn't hook monitors up to laptops.

I see your point about the lower to mid end stuff. But when you said Apples pricing was competitive to the PC market, I'm sorry, you just have to get called out on that. Thats just not true.


RE: Of course
By Enigmatic on 4/24/2008 4:29:22 PM , Rating: 3
I just chose what is likely the most popular Apple computer and compared to a well-reviewed and well-priced Windows equivalent.

I've been repeatedly saying Macs are competitive under certain scenarios. When there products are just released and when they have a refresh of the specs. That doesn't happen very often. So most of the time they aren't competitive. You're misconstruing what I'm saying here. When the Mac Pro was just released it was cheaper than a similar-spec Dell (I think DailyTech had an article about this). And that's the highest-end Mac. But now, it isn't competitive. That's my point. I think most people are missing what I'm saying.


RE: Of course
By DASQ on 4/24/2008 6:46:46 PM , Rating: 2
Not to mention Dell's, at regular pricing, are overpriced. The only time I would touch a Dell is with a whole slew of discounts, freebies, bags, printers, etc.

Comparing a MacBook to an ON SALE Dell is a fair comparison. How often does Dell NOT have a deal on laptops? And when was the last time you saw a sale on Mac's?


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