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Despite record earnings and iPhone sales that broadly surpassed analyst efforts, optimism about Apple's quarterly report was dampered by poorer-than-expected iPad sales.  (Source: Tablet Tutor)
IPad sales showed some signs of weakness, though

Another quarter has passed and Apple has yet again blown away analyst earnings predictions.  You'd think that the tired Wall Street gurus would have learned by now.

Leading the way was an incredible 14.1 million iPhones shipped.  Analysts predicted that Apple, beleaguered by fierce competition from Google's Android army and fallout from the iPhone 4's faulty antenna, would only ship 11 million iPhones during the quarter.  As usual, Apple's customers unquestioning loyalty and willingness to overlook the company's quality slip-ups proved a valuable asset.

Macs sales also looked promising, with 3.89 million units shipped, versus an analyst prediction of 3.7 million units.  The strong iPhone and Mac sales propelled quarterly revenue soaring to $20.34B USD (versus a consensus estimate of $18.9B USD).  Similarly, profits were up to $4.31B USD, handsomely surpassing estimates.

Apple's earnings did showcase some troublesome signs, though.  Particularly worrisome for Apple, its brand-new iPad. I twas forecast to move 4.7 million units, but only moved 4.19 million units, a sign of slowing sales.  And sales of iPods came in a 9.05 million units, falling short of the predicted 10 million units.

Its prediction of $4.80 (USD) earnings per share for its quarter in December also fell short of the bullish analyst consensus of $5.04.

These results led to an unusual trading pattern in Apple's stock after hours.  Despite reporting what seems a blowout quarter, these telltale signs of weakness sent Apple stock approximately $21/share, approximately a 6.6 percent drop.  This drop returned the stock to beneath $300, a mark that the stock just passed for the first time early this month. 

Perhaps such is the fate of an unusual company like Apple whose customers are fiercely loyal, whose actions are over scrutinized, and who continues to deliver plenty of surprises come earnings day.



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RE: Hit the nail on the head
By Tony Swash on 10/19/2010 6:54:04 AM , Rating: -1
quote:
I'm not so sure about that. Apple products are like fashion. Once the novelty and coolness wears off sales will slow faster than it ever grew. History tells us that products like that never last. In the 80's it was the Sony Walkman and Swatch watches in the 90's we had Super Nintendo and PS1/PS2 in the 00's it was the GPS handheld's and MP3 players. Now we have all that in one unit, so whats next?


The answer to that comment is - it depends what you mean. In the long term all technologies rise and fall. To say such an obvious thing is to add nothing to our general knowledge of current technology developments or to our interpretation of Apple's just announced results.

I am sure that saying that "Apple products are like fashion" is tremendously reassuring for those disorientated and dismayed by the seeming relentless rise and success of Apple products. Such success conflicts with many deeply held (but unfortunately erroneous) views of the how the technology world and Apple works and so being able to grasp at a straw such as the belief that Apple's success if primarily down to fashion, and thus transient, is easier than rethinking ones understanding of the world. Thinking new thoughts is hard work.

Lets pick apart the statement that "Apple products are like fashion" using some actual data.

A few brief headlines from Apple's most recent results and then a little more data over a longer time period.

Headline One: iPhone sales have grown 91% over a year ago. Remember that this year was the year of the rise of Android and Antennagate.

Headline Two: Apple's already hugely successful retail operation grew by an astonishing 75% in revenue and 62% in visitor numbers. After an expansion slowdown during the recession, Apple opened 24 new retail stores during the fourth fiscal quarter of 2010, 16 of which were overseas. This included flashy new flagship locations in Beijing, Shanghai, London and Paris. The company noted that its four new stores in China are the highest trafficked in the world and among the highest performing. Apple plan to open another 40 to 50 store worldwide in the next year.

Headline Three: 60 percent of Apple’s sales are from products that did not exist three years ago. Even assuming an arc of growth, stagnation and eventual decline for all technology products these are new products early in their life cycle so one could safely assume they have much growth to come.

Do Apple's products show evidence of a decline over time? Are Apple's sales just the result of fickle fashion?

Depends on how you interpret reality.

The Macintosh was introduced in 1984. Macintosh sales have grown strongly in recent years and at a faster rate than the overall PC market growth rate.

The annual sales figures for the number of Macs sold for recent years (each year to Q3) has been

2005 1,182,000
2006 1,327,000
2007 1,764,000
2008 2,496,000
2009 2,603,000
2010 3,472,000

Just short of 4,000,000 Macs were sold in the most recent quarter. The latest quarter set a new new Mac sales record by over 400,000. Macs sales showed double overall market growth and there was double-digit growth in both desktop and portables, led by iMac, MacBook Pro, and MacBook.

Note that total Macintosh sales have more than doubled in the last five years.

So a 25 year old product, a life time in technology terms, shows accelerating growth. How long is this "fashion" going to last :)

iPods which were introduced in 2001 have sold a total of 275 million since release. In the first year it sold around 270,000. Recent annual sales have been:

2006 39,409,000
2008 51,630,000
2009 54,828,000
2010 41,265,000 (only first three quarters)

Apple sold 9.1 million iPods in the most recent quarter with the holiday season still to come. It's worth remembering that iPhone are also iPods although they are counted separately.

So in the product category where one would most expect sales to be most pressed down by the technology being superseded, and the oldest of Apple's new products, sales are still very, very strong.

The iPhone was released in 2007 and currently tops 65 million units shipped.

New iPhone models are introduced annually and this tends to slightly suppress iPhone sales in the first half of the year as people defer buying until the release of the new model.

By quarter iPhone sales have been:

2007 Q4 1,119,000
2008 Q1 2,315,000
2008 Q2 1,703,000
2008 Q3 717,000
2008 Q4 6,892,000
2009 Q1 4,363,000
2009 Q2 3,793,000
2009 Q3 5,208,000
2009 Q4 7,367,000
2010 Q1 8,700,000
2010 Q2 8,752,000
2010 Q3 8,398,000

The most recent quarter saw 14.1 million iPhones sold. For much of that period the iPhone sales were constrained by supply not demand

Since its release in April 2010 iPad sales were reckoned to be the strongest sales launch figures for any tech device ever. iPad sales continue to be constrained by demand exceeding supply. Total sales are likely to be in the 11-13million region for 2010. The most optimistic commentators at the launch of iPad forecast sales for the whole of 2010 at around 3-5 million. Estimates for iPad sales next year are in the 25-35 million region. Version 2 of iPad, expected early spring 2010, is likely to see significant enhancements and will be selling in volume in the market before the first real iPad competitor is available in the market.

You tell me - are the sales of Apple products the results of transient fashion or is something deeper and far more interesting happening?


RE: Hit the nail on the head
By Anoxanmore on 10/19/2010 8:34:16 AM , Rating: 2
The Iphone sales counted the Ipod Touch sales as well.

So you might want to adjust those numbers of yours. ;)


RE: Hit the nail on the head
By bruce24 on 10/19/2010 8:43:21 AM , Rating: 2
quote:
Anoxanmore : The Iphone sales counted the Ipod Touch sales as well.


No they don't Apple lists iPhone and iPod numbers separately in their earnings report.


RE: Hit the nail on the head
By Anoxanmore on 10/19/2010 1:14:58 PM , Rating: 2
Actually they do, there was an article on here about it just a few months ago. ;)

Just like they list the ipad as an iOS activiation since clearly the iPad competes against Android. :facepalm:


RE: Hit the nail on the head
By The Raven on 10/19/2010 10:55:46 AM , Rating: 2
quote:
Macintosh sales have grown strongly in recent years and at a faster rate than the overall PC market growth rate.


A wise man once told me:
quote:
You can't fall off the floor.


Apple growth speaks more to the fact that we can see the days of MS dominance waning. There are more options out there now (including but not limited to 'choosing not to upgrade' or switching to Apple.


"I mean, if you wanna break down someone's door, why don't you start with AT&T, for God sakes? They make your amazing phone unusable as a phone!" -- Jon Stewart on Apple and the iPhone














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