Apple has seen strong quarters in Q2 2008 (fiscal), Q1 2008, and so on for a couple years now, buoyed by its ever growing line of consumer products and modest sales of Mac computers. So it should hardly take the reader by surprise that its Q3 2008 beat expectations and set more records for the company.
Like Intel, Apple showed strong year-to-year growth, jumping from net revenue of $5.41B USD in Q3 2007 to $7.46B USD in Q3 2008, a growth of 38 percent. Profit jumped from $818M USD to 1.07B USD, a growth of 30.8 percent.
On the unit sales side, Apple shipped 2,496,000 Macintosh computers representing 41 percent unit growth and 43 percent revenue growth over Q3 2007. It also managed to surprisingly grow its iPod share, which some had speculated was stagnating. A total of 11,011,000 iPods were sold, representing a 12 percent unit growth and seven percent revenue growth. It also sold 717,000 iPhones, up from 270,000 quarterly last year.
Peter Oppenheimer, Apple’s CFO was encouraged by the results, stating, "We’re extremely pleased with the growth of our business and the generation of almost $5.4 billion in cash in the first three quarters of fiscal 2008. Looking ahead to the fourth quarter of fiscal 2008, we expect revenue of about $7.8 billion and earnings per diluted share of about $1.00.”
The only disappointments came in the fact that its gross margin was down to 34.8 percent from 36.9 last year, also a problem for Intel. Also, Apple lowered its projections for Q4 2008 to $7.8B in revenue, which resulted in some stock jitters, despite the strong performance.
Apple CEO Steve Jobs added to the press release a statement saying, "We’re proud to report the best June quarter for both revenue and earnings in Apple’s history. We set a new record for Mac sales, we think we have a real winner with our new iPhone 3G, and we’re busy finishing several more wonderful new products to launch in the coming months."
The last sentence was greeted by excitement, confusion, and curiosity by investors and consumers alike. What might Apple have in store; new iPods perhaps? Or will Apple debut an entirely new product? Some are hoping lower -priced Macs might be in store as well. No one really knows, though, what Apple has in store, but one thing's for sure -- Apple is unusually talkative. Before past product launches, Mr. Jobs never made such an announcement and for him to do so is extremely uncharacteristic.
The move may have been financially motivated, and if so it seems to have worked. After early jitters the stock picked up and currently is performing well. The news has also set the rumor mill in full swing, so expect to see all sorts of outlandish statements of questionable veracity about Apple's new products.
While Apple had a very strong quarter, it also had its share of problems. Its campaign to crush Mac-cloner Psystar seemed to some to be another example of Apple's desire to play dictator and a troublesome sign. Further, there was much speculation surrounding Steve Jobs health, due to him looking under the weather during the iPhone 3G unveil (he previously had pancreatic cancer).
Finally, some point out that it may seem a bit unfair that Apple enjoys strong stock performance for only earning $1.17B USD in profit and beating expectations, while rival Microsoft earned nearly four times as much -- $4.3B USD in profit -- but got hammered on the stock market for missing its lofty expectations.
