RSSApple reports best quarter ever, but gets snarly re Palm Pre
By Angela Gunn | Published January 21, 2009, 5:16 PM
For the first time in history, Apple surpassed $10 billion in quarterly revenue during its previous quarter. But a question late in Wednesday's earnings call raised interesting questions about IP and the company's multitouch interface.
Apple not only blew past its own guidance (and Wall Street expectations) for the quarter ending December 27, it sold a record 22,727,000 iPods, 4,363,000 iPhones and 2,524,000 Macs. But a question late in Wednesday's earnings call raised interesting questions about intellectual property and the company's multitouch interface.
The firm reported net profits of $1.61 billion, working out to $1.78 per share -- two cents more per share than Q2 '08 and 38 cents more than the analysts were expecting. Revenue was up 5.8% to $10.2 billion. And cash on hand in Cupertino totals an impressive $28 billion.
IPods were a particular bright spot worldwide. The company carries over 70% of the US, UK and Australian MP3-player markets, with many other nations showing well over 50% share. The iTunes store also had a record quarter, though the company declined to specify the totals or how the Apps Store's 15,000 apps (up from around 5,000) fits into that picture. The Apps Store has, according to the company, racked up 500 million downloads at this point.
The iPhone's working out, too; 4.36 million were sold during the quarter, with a total of 13.7 million sold so far. Sales are down 3% in the US, but elsewhere in the world things are more than fine. If there's any worry, it's that the economy might deter would-be customers for signing up for the bigger phone-service contracts.
But is that a rumble setting up in the smartphone jungle? The company made some cranky sounds about having its intellectual property ripped off -- specifically, a multitouch interface as seen in the likes of the Android and the Palm Pre.
Chief Operating Officer Tim Cook said that "We're very very confident with where we are competitively. We like competition, as long as they don't rip off our IP. And if they do, we'll go after anybody that does." Pressed specifically about the Pre, Cook responded, "I don't want to talk about any particular company. However, we will not stand for having our IP ripped off. And we will use whatever weapons we have at our disposal."
Apple also sells computers. Sales of portable units in the US grew by just 2%, but overseas they sprang ahead 16% year-over-year, with some regions (Canada, Latin America) up 20% or better. It was the second-best quarter in history for Mac sales overall.
And though the market didn't leave the company unscathed -- the 251 Apple Stores reported average sales of $7 million last quarter, down from $8.5 million per store in late '07 -- the guidance for second quarter was not unimpressive. Apple predicts earnings per share of between 90 cents and $1 for the quarter ending in March, and revenue between $7.6 billion and $8 billion.
Whatever, quoth the analysts -- how's Steve? The Jobs question was the very first to be asked, to the audible annoyance of Tim Cook, who unspooled a powerful stream of PR-speak concerning the pursuit of excellence and how it doesn't matter who's in charge. (To answer: No word on the call re Steve's condition, though CFO Peter Oppenheimer did state that Steve Jobs is the CEO of Apple.)
What was not mentioned was a mighty big elephant in the room -- or back in DC, rather, as the SEC on Wednesday announced that it will conduct a review of Apple's disclosures concerning Steve Jobs' health and the recent announcements made about his condition. A review doesn't indicate that the SEC necessarily thinks something shifty happened, or that the Commission believes the company knew something significant that it wasn't revealing, but questions will be asked. Neither Apple nor the SEC will comment further at this time.
A few other nuggets stand out. Apple's numbers confirm the continued decline of the desktop, registering a 25% sales decline year-over-year; on the other end of the scale, the company was derisive of the netbook phenomenon, claiming that the tiny computers are simply too underpowered and hard to use to trouble itself with offering. There'll be 25 more Apple Stores by the end of 2009, half of them located outside the US.
Apple is pretty sanguine about supply costs, looking at favorable pricing for contract-market and even variable-market prices on such components as memory. And finally, no -- there's no date to announce yet for the Snow Leopard OS upgrade.
The market ate up their Apple in after-hours trading. Shares closed at $82.83 at the end of the day, up 4.63; the bright earnings report resulted in a lively post-market session, with shares at 90.00 (up 8.66%) at press time.
People need to stop being so worried about Steve Jobs. Apple doesn't need him to stay in business and they would probably do a lot better without him. The iPhone was nothing more than a big blunder. It has no GPS software with voice guided directions. What is even worse is the fact that Apple decided to ban applications from the iPhone app store just because they don't like them. It's truly amazing that any third party apps make it into the iPhone app store. Look at what happened back in the day when Steve Jobs got fired from Apple. Apple started allowing other companies to clone the Mac. This was the smartest move Apple ever made in their entire history. Steve Jobs was a complete moron for eliminating the clones.
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|"The iPhone was nothing more than a big blunder."
Outselling *every* other PMP device on the market is a blunder. Gotcha.
"Steve Jobs was a complete moron for eliminating the clones."
Stopping the hemorrhaging before they died from lack of revenue was a bad idea. Gotcha.
1.) The iPod rocketed Apple's profits, sales, and even served as a gateway to the Apple PC for many. It's done more to help Apple than *anything* they have ever done. Calling it a blunder is the epitome of ignorance.
2.) When Apple first tried to allow clones, their sales of hardware dropped to next to nothing and they made very little off of OS sales. Had they continued allowing the clones to undercut them in every way, they would not have survived. Remember the hit MSFT gave them to keep them afloat? That said, things have changed. Their hardware is no longer "special", their OS is no longer tied to non-standard equipment, and they have products in other markets that could easily carry them. It might be possible for them to do something like this and *not* get hammered. Of course, history and experience are harsh mistresses and those wounds will likely take decades, not years to get over.
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|If you make a shiny phone of course people are going to buy it. People love shiny things. The PowerPC clones were not the only thing that made Apple lose a significant amount of money. A very long time ago Apple had three models of desktop Macs (I don't remember the model#'s) that were virtually identical in appearance but for some reason Apple chose to use a different motherboard in each model. This cost Apple a huge amount of money.
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|I am astounded by this comment. I am certain that Palm is not attempting to rip-off Apple. Similarity is not a patent infringement. Obviously, the Pre has made Apple nervous about their position in the market.
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|Let's see...what is it...some 14 million units sold versus a yet undelivered market hype?
And just which wireless service will be distibuting it?
Yup, Apple is skeered. Just as the Zune is going to take over the iPod maket - curiously as the entire MP3 and similar market are referred to as the iPod market...
I think you somewhat overstate your case!
;-)))
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|Palm did PDA and smartphone for 15 years, im sure they have some fundamental smartphone patents tehy want to show apple a bit.
pinch-zooming isn't a big deal on the Pre, but if Palm were to patent card system, below screen gesture area design, flipping app out of display to close, floating dock, etc, I doubt apple would be the one laughing at the end.
Apple is desperate, thats when they bought out all the innovative companies, and they themselves cant innovate anything at all...
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|Yup, it sure sounds like Apple is desperate!
But what is an act of desparation is your trying to draw Apple as the bad guy here.
Some other idiot asked about the Palm Pre. And Apple made no comment about it. But that doesn't stop YOU from trying to turn their 'no comment' regarding Palm and a general due diligence statement that they will protect their IP, as any responsible company should, into something nefarious on the part of Apple.
And everyone in the industry is attempting to copy the multi-touch interface. Why shouldn't they be sensitive to it if they do indeed have the rights to some aspect in the event that is has been infringed upon? That is simply taking care of one's business.
Amazing.
And in the same absurdist conspiratorial bent, should we suspect that you are an alter-ego of the Tweenboy himself, sjc001? LOL!
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|If Palm were to patent their card system, they'd find that Apple already have a patent on a technology called Stacks.
As far as the touch gestures, Apple might lead, but they should make it so that all devices work the same way, rather than arbitrarily fighting to keep them private to their own devices. It would seem that's how they painted themselves into a corner over the Macintosh GUI, etc. in the first place.
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|Let me see if I have this right.
Apple should fight to make all competing manufacturer's products function similarly to theirs in order to assure their own uniqueness and the success of their own product?
Now there is a fascinating strategic marketing proposal. Succeed, not through being the first to market with a new more innovative approach, but become indistinguishable from your competitors in order to achieve a strategic advantage.
I hope you won't be too upset if we differ in our opinions... ;-)
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|Re the card metaphor, I'd be curious to have a lawyer see how all this measures up against the Zoomracks patent of yore (60s-era?). But the card interface per se isn't the question, as I understand it; it's the multitouch gesturing by which one interacts with parts of the interface.
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|It is rather sad that the only time these companies show any interest in something is when Apple is leading the way. Then it's always them trying to play catch up to Apple and not them trying to individuate themselves with their own innovations.
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|I hope Apple gets the full attention of the SEC this year....
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|...for what?
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|This is only beginning...
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|I feel a great disturbance in the Force, DizTrancer.
Seriously, I wondered why they'd even say something like this in the call. Apple's message has always been that they innovate, not litigate, and I profoundly doubt that multitouch per se could stand an IP challenge; why put the bullet out there? Granted that $28 billion in the bank could make an ordinary company feel pretty confident re their challenges on the legal front, but since when is Apple an ordinary company?
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|The irony?
In 1995 when both IBM and Sun tried to buy Apple, they failed in large measure because Apple then (you know, as so many here say they were going under) had cash reserves of, coincidentally, $25Billion!
Its sorta hard to present a leveraged buyout when you are trying to offer, say, 75 cents on the dollar for a dollar cash!
And I love to watch as all the fanboys trash Apple as their favs rush so fervently to copy that which they claim to disdain so highly...GUIs (how long did we hear how a GUI was for kids? Until MS figured out how to do it after they failed to license the MacOS... And multi-touch...Yup... It will never fly... Poor, poor Apple. LOL!)
And don't tell me they are learning something from MS, who among other issues is cited for "Rather than innovate, Microsoft may litigate against open source ..." www.speedofcreativity.or...ate-against-open-source/
Don't you just hate it when quotes can literally be used to contradict a point you choose to make? ;-) Couldn't resist... ;-)))
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