Edible Apple

Apple today released its earnings for its last fiscal quarter, and investors have a lot to cheer about.  Apple completely surpassed Wall St. expectations and reported record revenue of $10.17 billion and earnings per share of $1.78.  Net profits for the quarter came in at $1.61 billion, another record for Apple.  The general consensus among analysts was that Apple would have earnings per share of $1.39 and revenue of $9.74 billion, estimates that Apple beat handily. 

In an Apple press release, Steve Jobs noted:

Even in these economically challenging times, we are incredibly pleased to report our best quarterly revenue and earnings in Apple history—surpassing $10 billion in quarterly revenue for the first time ever.

iPod sales were extremely robust, coming in at 22.7 million sold, which is the most Apple has ever sold in any given quarter.  Apple sold nearly 4.4 million iPhones, which represents an 88% increase from the same quarter a year ago.  Apple also sold nearly 2.5 million Macs, representing the second highest number of Macs Apple has ever sold in a quarter.  Notably, nearly half of all individuals who purchased a new Mac were new Apple consumers.

Apple’s strong showing this past quarter couldn’t have come at a better time.  Yesterday, Apple traded below $80 a share for the first time in over two years, and wild speculation over the well-being of Steve Jobs recently caused a number of analysts to lower their outlook on Apple.

Apple Stores

During Apple’s earnings conference call, Tim Cook and Peter Oppenheimer noted that Apple had no plans to scale back its expansion of Apple retail stores.  Oppenheimer stated that Apple retail stores continue to be “amazingly productive”, and said that Apple plans to open 25 new stores in fiscal ’09, with half of those stores located overseas.

Low End phones

Cook made a point to note that Apple will not be producing lower-end voice phones, and stated that Apple has no desire to be the overall volume leader in units sold.  Rather, Cook said that Apple is focusing on building the best phones it possibly can. 

Netbooks

With regards to netbooks, Cook pretty much put to rest any ideas that Apple would be releasing an Apple-branded netbook anytime soon.  Though Apple continues to watch that market segment closely, Cook stated that netbooks provide an inferior user experience, and that isn’t something Apple customers want.

Looking forward to Apple’s next quarter, Apple CFO Peter Oppenheimer provided EPS guidance of $.90 to $1.00 and projected revenue to fall between 7.6 billion and 8 billion dollars.

Some other notable points from the conference call:

In response to a question about how Apple will manage while Steve Jobs is away:

Steve remains CEO and will be involved in strategic decisions going forward. Tim is COO and will be overseeing day-to-day operations. We are pleased with the depth of talent in our team, and that isn’t changing. We don’t settle for less than excellence in all departments, so regardless of who is in charge, our values will allow us to succeed.

In response to a question about when Snow Leopard might launch:

 We’re very excited about it, but we are not prepared to announce a launch date at this time.

In response to a question about iPhone competitors:

Software is the key ingredient, and we believe that we are years ahead of our competitors. Having different screen sizes, different input methods, and different hardware makes things difficult for developers.

In response to a question about what percentage of App Store downloads are free apps

We’re not disclosing, but we’re thrilled with the App Store..

Final Notes:

• Apple accumulated $3.6 billion in cash this past quarter, and now has a little over $28 billion in the bank. 
• If Apple didn’t account for iPhone sales on a subscription basis, it’s revenue would have been an astounding $11.8 Billion
• Mac laptop sales grew over 30% while desktop sales were down by almost 25%
• There are 251 Apple Stores in 10 countries