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Apple posts historic earnings for Q4 fiscal 2008

The stock market is taking a pummeling and many computer makers are feeling the pinch. Dell has been unable to hit its projected earnings due to a soft market while HP maintains it can meet quarterly projections. Apple has kept mum on the state of the economy and has turned significant profit growth for its latest quarter.

Yesterday, Apple reported its financials for Q4 fiscal 2008 that ended on September 27. Apple posted revenue of $7.9 billion and a net quarterly profit of $1.14 billion or $1.26 per diluted share. Comparing those numbers to the same period in 2007 when Apple reported revenue of $6.22 billion and a profit of $904 million for the quarter shows significant growth.

Apple's gross margin for Q4 2008 was 34.7%, up from 33.6% in 2007. After removing cost of goods for iPhone and Apple TV over the products economic lives, adjusted sales for the quarter are $11.68 billion and adjusted income is $2.44 billion.

Apple says that it shipped 2,611,000 Mac computers during the quarter for a 21% growth in shipments over 2007. Cupertino says that it sold 11,052,000 iPods during Q4, which is an 8% growth compared to 2007. IPhone sales over Q4 are 6,892,000 compared to 1,119,000 in Q4 2007. That is a massive growth that can be attributed to the increased desirability of the iPhone 3G over the original iPhone.

Apple is now ahead of Smartphone maker RIM in units sold. Steve Jobs said in a statement, "Apple just reported one of the best quarters in its history, with a spectacular performance by the iPhone—we sold more phones than RIM. 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.”

DailyTech reported in late September that Apple held 20% of the PC market in America. Apple says that 41% of its sales for Q4 came from international sales.

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RE: An Unapologetic Microsoft Fan
By Lord 666 on 10/22/2008 10:41:39 AM , Rating: 2
Reduce the price for the full retail copy of Vista Ultimate to $50.

Take a lesson out of the Apple playbook by cutting prices to make software appealing and "sexy." iPhone sales really took off when the price was cut, the iPhone 3g was regarded as a steal at $199.

RE: An Unapologetic Microsoft Fan
By bhieb on 10/22/2008 10:56:37 AM , Rating: 2
True price is a driving force for consumers, even if they are too stupid to realize the $199 iPhone is actually more expensive over the 2yr contract.

I think the real reason for the boon in iPhone sales was the inclusion of Exchange. As a network admin iPhones where not supported by IT period. Now I encourage ppl to check them out. Why pay for a RIM server when I already have an Exchange server that is super easy to setup on a Windows Mobile, or iPhone device. We are a fairly small company about 100 users or so, and we had 5 iPhones purchased in the last month alone.

RE: An Unapologetic Microsoft Fan
By QueBert on 10/22/2008 4:25:10 PM , Rating: 2
more expensive than what? I'm confused, if a person has AT&T an iPhone plan is no more than a plan on a Blackberry, or a WM phone. The iPhone isn't magically more expensive every month. Yes they could get a cheaper plan with Sprint or T-Mobile but if they're already with AT&T the iPhone is a good choice. The fact they have to get a data plan with it is a moot point, I don't know a single person who would want that high level of a phone without having internet on it.

RE: An Unapologetic Microsoft Fan
By omnicronx on 10/22/2008 11:30:34 AM , Rating: 2
What version of OSX costs 50 dollars? In fact between the time XP was released until Vista was released (6 years) There have been 7 different OSX 'upgrades' and although some were free, others you had the choice to pay for an OS revision, or buy a new Mac because your old Mac was no longer supported.

Mac's don't sell because of the price of the OS, which should be pretty obvious, as you have to buy a Mac in order to use OSX legally. They sell because of their image, that should be pretty obvious by now.

RE: An Unapologetic Microsoft Fan
By Lord 666 on 10/22/2008 11:45:46 AM , Rating: 2
Exactly my point... none and it would be the best PR Microsoft can generate now. Spin it however you want, but if Microsoft says we are now charging $50 for Vista, that would be historic. Remember how much positive PR Microsoft received when they extended the 360's warranty?

To protect future Windows 7 sales, the $50 Vista copies should include a $75 coupon off of future sale towards Windows 7. Microsoft always does well "gimmicks" like this; look at their MCP exams that allow retakes or the getting paid to list stuff on Ebay schemes. Consumers always like a good value.

Macs always had an issue selling due to price point compared to equal PC hardware. Now that the image of excess is no longer in fashion, Apple will have issues justifying the price differential in ALL of their product line.

However, combating Apple with more advertising in the current economy is foolish since there are better ways to spend that money. Microsoft would get FREE adverising by word of mouth if a simple email to all MCPs about the $50 to pass along - just like those Starbucks coupons sent to random people not long ago. How much did they spend on Seinfeld? That could have easily covered the cost of $50 Vista by adverising via email.

RE: An Unapologetic Microsoft Fan
By omnicronx on 10/22/2008 12:25:52 PM , Rating: 4
You are totally overlooking Microsofts entire business model, business licensing first, home user second. They already have the entire business market cornered, and Apple has not even come close to being considered competition. What you don't get is the battleground for Microsoft is in the business world, and the battleground for Apple is in the Home and personal use market. Lowering prices for Windows to home users will only force them to lower pricing for their proven model that accounts for most of their profits.

In other words, I completely disagree with you, Microsoft offering a OS that cheap would undermine their entire business strategy. Where I do agree with you is that it would be a historic decision, as that day would mark the beginning of the end for Microsoft.

Microsoft will compete with Apple in the home market by releasing a better OS suited for the casual users needs, not by lowering the price of their OS, especially when you consider that most casual users get their copy of windows with their new PC, and not from a retail store.

RE: An Unapologetic Microsoft Fan
By Lord 666 on 10/22/2008 1:23:13 PM , Rating: 2
Do you remember when MS exchanged XP 32bit copies with XP 64bit for free? Doing the similar for XP to Vista would increase the population of Vista and legally nullify exisitng XP licenses on both the corporate and consumer markets.

In the not-for-porfit world where I am a CTO, MS already provides Charity licensing at less than $50! However, few business (profit and ngo) are using Vista for several reasons, including desktop support and training.

Let's be honest, the Vista deployment was flawed and the Apple ads are capitalizing how Vista is a "dirty" word.

Businesses and consumers will find it hard to justify upgrading to Vista now that Windows 7 is around the corner. The only way to increase acceptance and respond to Apple is by undercutting the price.

RE: An Unapologetic Microsoft Fan
By TomZ on 10/22/2008 2:50:17 PM , Rating: 2
Let's be honest, the Vista deployment was flawed and the Apple ads are capitalizing how Vista is a "dirty" word.

The flaw in Vista was that it lacked a clear value proposition - in other words, it did not have clearly visible new capabilities or features that really justified an upgrade for most people.

And in my opinion, Apple is further damaging Vista's reputation by portraying it as flawed, unreliable, problematic etc. Those portrayals are wrong, but Microsoft has done nothing to counter them in terms of trying to change public opinion about Vista. Their new marketing campaign, while I think is generally good, doesn't effectivly address this perception problem.

By mikefarinha on 10/22/2008 5:51:13 PM , Rating: 2
Those portrayals are wrong, but Microsoft has done nothing to counter them in terms of trying to change public opinion about Vista.

Right on the money IMHO.

Who can fault Apple for trying to expand it's business? As far as I can tell there is very little market growth. The name of the game now is taking customers from competitors.

This is Microsoft's game to lose and since they waited so long to do any worthwhile marketing of their product they are the ones to blame for whatever market share they lose.

If you were ever bored one day you could check back on my previous posts here at DT and see that I've called Microsoft out on this lack of marketing before there was ever an announcement of $300M on this current campaign.

Their initial "The wow starts now" campaign was pathetic and laughable.

RE: An Unapologetic Microsoft Fan
By KnightCG on 10/22/2008 5:02:29 PM , Rating: 2
Macs always had an issue selling due to price point compared to equal PC hardware. Now that the image of excess is no longer in fashion, Apple will have issues justifying the price differential in ALL of their product line.

Macs have always cost more, and it doesn't seem to be causing them issues. People who are looking to buy Macs aren't looking to save money, they want the mac and they're willing to pay for it. Dropping the price of Vista won't likely stop those folks. It might, however, lure XP users who have been wary of switching to Vista to perhaps give it a shot. But I'm not sure it would be worth the loss of revenue.

And you might tick off all the folks who just recently had to pay a lot more for Vista. When Apple suddenly dropped the price of the first iPhone, they ended up having to give out vouchers/coupons of some sort to placate those who paid full price just days earlier.

Despite the regularly heated debates on DT and the entertaining PR battle, Apple is still relatively small compared to MS. I don't think MS is really worried about large business losses to Apple, just annoyed at the image war, and possibly a little defensive about the perceived Vista shortcomings.

"If a man really wants to make a million dollars, the best way would be to start his own religion." -- Scientology founder L. Ron. Hubbard

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