RSSApple Q4 2009 by the numbers: Beats street, posts $1.67B profit
By Joe Wilcox | Published October 19, 2009, 4:57 PM
[Editor's Note: Post was updated with quotes from Apple financial analysts conference call and four charts at 6:20 p.m. EDT.]
Today, Apple delivered yet another gravity-defying performance, as sales surged across most product lines. After the bell, the Cupertino, Calif.-based company announced fiscal 2009 fourth quarter results that beat its guidance and Wall Street analysts' over-inflated consensus.
Apple reported $9.87 billion revenue and net profits of $1.67 billion, or $1.82 a share. A year earlier, Apple reported revenue of $7.9 billion and $1.14 billion net quarterly profit, or $1.26 per share.
Three months ago, Apple forecast revenue between $8.7 billion and $8.9 billion, with earnings per share ranging between $1.18 cents and $1.23. Analyst estimates were much higher than Apple guidance: $9.2 billion average revenue consensus and $1.42 earnings per share. Still, Apple blew past the Street.
It's unclear to me from a cursory review of the earnings how much deferred revenue contributed to the quarterly results. Currently, Apple defers some iPhone revenue for 24 months. The company recognizes a portion of the revenue every quarter. In the year-ago quarter, Apple deferred $3.5 billion in revenue from Apple TV and iPhone.
During a conference call with financial analysts today, Apple CFO Peter Oppenheimer described the results as the company's "most profitable quarter ever," including record iPhone and Mac sales. Mac shipments grew 17 percent year over year. Portables represented 74 percent of Mac sales, he said.
For fiscal 2010 first quarter, Apple forecasts between $11.3 billion and $11.6 billion in revenue, with earnings per share ranging between $1.70 and $1.78. Apple projects gross margins to be about 34 percent. In the comparable 2009 quarter, Apple revenue was $10.17 billion and $1.61 billion net quarterly profit, or $1.78 per share.
Segment-by-Segment Results
iPhone. Wall Street carefully watched the quarter, because of several important trends, including sales of new iPhone 3GS and late-quarter releases of Mac OS X "Snow Leopard" and new iPod models. Fiscal fourth quarter is the first full one with iPhone 3GS and discounted iPhone 3G sales. The latter product sells for $99, a price point many analysts claim would boost sales volumes. The iPhone 3GS added features lagging behind many other handsets -- even non-smartphones -- such as video recording and MMS (the latter capability is also available on older iPhones loaded with 3.x firmware).
Days before the earnings announcement, with many analysts forecasting big iPhone sales, Oppenheimer & Co analyst Yair Reiner dropped a caution bomb: He estimated that, based on Apple's September 9th disclosure of 3.5 million iPhones sold for the quarter so far, shipments would fall short of analyst predictions of about 7 million units. Reiner attributed potentially slower-than-expected sales to demand exceeding supply. [Editor's note: Oppenheimer & Co. should not be confused with Apple CFO Peter Oppenheimer; the names are coincidental.]
For most of the quarter, "demand outstripped the supply," Apple COO Tim Cook told financial analysts today. He estimated that Apple ended the quarter with more than 2 million iPhone units in inventory. "I would have liked to have had more," with Apple starting sales in China on October 30th, he emphasized.
Apple shipped -- what company executives really mean by sold -- 7.4 million iPhones worldwide. Apple shipments into the channel are usually several million units higher than numbers released by Gartner, which measures actual sales. Shipments exceeded analyst consensus, despite supply problems. Oppenheimer described the reception to iPhone 3GS as "tremendous." Apple distributed iPhone 3G in 80 countries and 3GS in 64 countries. The company expects to offer iPhone 3GS in 80 countries by year's end.
For the quarter iPhone revenue was $2.3 billion, up from $806 million a year earlier, for 185 percent year-over-year increase. Oppenheimer said that the value of iPhones sold was "$4.5 billion." The iPhone average selling price for the quarter was $600, on a "high mix of the 3G sell through," Oppenheimer said. Consumers pay less, because AT&T subsidizes the price. He reaffirmed the recent 85,000 number of applications in App Store and 2 million downloads.
Coming into today's earnings announcement, there were some ridiculous blogs and new stories inflating iPhone's global presence. For example, last week, Silicon Alley Insider used data from RBC Capital Markets to assert that 30 percent of smartphone owners have an iPhone. The figure contradicts Gartner and IDC data. For example, for second quarter, Gartner put Apple's worldwide smartphone share at 13.3 percent. Even if the 30 percent figure were true, it's for a very small market. In Q2, manufacturers sold 286.1 million handsets, of which only 40 million were smartphones, according to Garner. Whether 13 percent or 30 percent of 40 million, it's a small number in a market 7 times larger in total.
Computers. Mac sales continued to defy the economy's downward pull. Apple shipped 3.05 million Macs during the quarter, up from 2.6 million Macs in fiscal third quarter and fiscal Q4 2008. As viewed separately, Mac desktop shipments declined 16 percent year over year, while laptops increased 35 percent. Combined, Mac shipments grew 17 percent year over year. Apple had its best back-to-school buying season ever, Oppenheimer said.
Last week, analyst firms Gartner and IDC split on Mac shipments. In the United States, Gartner said that Apple shipped 1.572 million Macs, up 6.8 percent year over year. Market share rose to 8.8 percent from 8.7 percent in fiscal third quarter and from 8.4 percent in fiscal Q4 2008. By comparison, IDC said that Apple shipped 1.64 million Macs, an 11.8 percent year-over-year increase. IDC put Apple's US share at 9.4 percent, up from 7.6 percent a quarter earlier and 8.6 percent in fiscal Q4 2008. Both analyst firms ranked Apple fourth in US market share. Worldwide, IDC puts Apple at No. 7.
"What's Next?" matters more for Macintosh than "What's Now?" On Thursday, Microsoft will officially launch Windows 7. Best Buy already has new systems on display (but not for sale), and Dell is taking orders. The expected Windows 7 marketing blitz -- and the PC industry's desperation to boast sales pulled down by the econolypse's gravity -- will be big for Holiday `09. Apple won't easily compete ad-for-ad, but may hold surprising sales promise. Based on Gartner and IDC data for the last three quarters, low-cost netbooks are driving Windows PC shipments. It's a segment where Apple doesn't compete. In fact where Apple does compete -- the $1,000-plus computer -- Mac US retail market share exceeds 90 percent.
iPod. Apple shipped 10.2 million iPods during fiscal fourth quarter, flat from 10.2 million a quarter earlier and 11 million in fiscal Q4 2008. On September 9th, Apple released new iPods, including a new nano with video recording capabilities. Apple also lowered the entry-level iPod touch price to $199, albeit for a device with only 8GB of storage. The $299 model has 32GB of storage, by comparison.
Apple is putting more emphasis on iPod touch, which is the other leg on which stands the App Store platform. Apple claims more than 50 million lifetime iPhone and iPod touch sales. By comparison, iPod nano sales are sluggish.
Retail. Oppenheimer said "the stores had a record quarter." Apple opened 15 new stores during fiscal fourth quarter, for a total of 273. Average revenue per store was $7.1 million. As a segment, retail revenue rose 9 percent year over year and 25 percent sequentially. Retail revenue topped $1.86 billion.
Fall Into the GAAP
For this quarter, it is somewhat necessary to look at Apple's GAAP (Generally Accepted Accounting Principles) and non-GAAP performance. Apple officially started reporting earnings in GAAP and non-GAAP fashion in the year-ago fiscal quarter. Based on GAAP rules, Apple had to spread out some iPhone and iPod touch revenue because of subscription accounting rules. Apple deferred revenue to be realized in subsequent quarters. However, in late September, the FASB -- Financial Accounting Standards Board -- voted to change subscription reporting rules. Apple should be Apple to record most, but not all, revenue; small portion would still be deferred.
As early as fourth calendar quarter, which would be Apple's fiscal 2010 first quarter, companies can report certain kinds of subscription revenue with other results, meaning on a GAAP basis. The change isn't mandatory until 2011. Apple plans to change its accounting by fiscal 2011 first quarter but could start sooner, Oppenheimer told financial analysts. "Making this change will be complex," he said, noting that Apple's fiscal 2010 first quarter guidance is based on the current, deferred revenue model.
For Apple, the change will dramatically boost revenues and earnings and offer some unfair competitive comparisons to some competitors. For example, worldwide handset leader Nokia reports revenue on the global equivalent of GAAP/non-GAAP --International Financial Reporting Standards (IFRS)/non-IFRS as set by the International Accounting Standards Board.
On a non-GAAP basis, for fiscal 2009 fourth quarter, Apple revenue would be $12.25 billion revenue, with net profit of $2.85 billion. For the year-ago quarter, non-GAAP revenue was $11.68 billion, with a quarterly net profit of $2.44 billion. The difference is phenomenal, almost 40 percent in fiscal fourth quarter 2008.
Because of the accounting change, Apple will get an extra revenue boost from previous quarters, depending on when the company adopts the new rules. Based on FASB rules, already reported revenue must be realized over time. Apple can't take it all at once. So for a few quarters, Apple can recognize all iPhone/iPod touch in that quarter and some deferred revenue, too. But there will be a price paid in future quarters in year-over-year comparisons unless iPhone/iPod touch sales surge.
When one looks at their financial statement several aspects stand out:
1) GOP (Gross Operating profit)- 38.4%. Now by any business model this is high and is probablly the result of building products in China where labor cost are lower. Not a knock against Apple since a lot of companies do it.
2) Depreciation- Now all companies use this accounting gimmick in order to reduce tax. What is interesting in Apple's case is that the Number has gone up for the last 4 quarters. Depreciation usually works the other way around.
3) Advertising- This is one of the most puzzling aspects of Apple's P&L- For the last 4 Quarters, according to their P&L, they have spent no money on Advertising. Obviously, since we have seen Apple adds, this doesn't add up.What it does do is inflate the bottom line.
4) R&D- While this number has steadily grown, it still only represents 4.09% of revenue. This might be explain by looking at snow leopard as more of a SP1, only a little tweaking on the IPHONE, and a little tweaking on the IPOD: however, this is an extremely small number in an industry that is R&D cost heavy.
5) Net Profit as a % of sales- Because of the above, Apple posted a net profit of 14.75%. this is a high %.
here is a link to Apple's financial report-
http://money.cnn.com/quo...nancials.html?symb=AAPL
I am not knocking Apple or any company. I am just looking at the numbers.
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|I hope you are not a financial analyst, because your conclusions are so far from reality, it has to be a joke.
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|Thank you fatty. coming from you that means ..well..squat.
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|Good news if you have enough money to piss away from here to eternity. Enjoy your vendor lock-in! Hope you like the overpriced, proprietary, patent-encumbered iCrap they shove down your throats every update.
Looks like Betanews just could pass up yet another opportunity to put up a few more CrApple advertisements. Must be hard-up for money. So how much is CrApple playing you guys nowadays?
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|I'd feel ripped off if I actually bought Apple products.
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|And some would argue you would be "ripped off," given their margins.
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|I do. god, all that money i spent on Microsoft's crap software and cloner machines thinking i was getting a better deal.
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|Personally, the most impressive part of the earnings was the Mac side of the story, where growth is outpacing the rest of the market handily 17% to 2%.
Plus, when you understand how much of that growth is coming from Portables, you understand why the Tablet is inevitable, something that I blogged about in:
The Right Stuff: Analysis of Apple’s Q4 Earnings Call
http://bit.ly/RJAPA
Check it out, if interested.
Mark
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|It's not difficult to figure out how they do it. Simply, overprice your very popular product! They sell Macbooks for 2x the price of their non-Apple counterparts with the same or better hardware. This scales upwards for Macbook Pros which can easily demand an 800 dollar or more premium on their non-Apple counterparts. This is not taking into account the money made from extra paid support and the fact that the Iphone is hotcakes right now. So, you have Dell, HP, Acer/Gateway/EEE, Toshiba etc. selling budget/entry to mid/business range laptops for 400-600 while the Macbook sells for 999, that's roughly 400-600 more than the others and a hefty profit, considering the fact that the non-Apple companies are able to make a small profit in the first place on their prices, and you have them selling their Premium/Gaming lines for 800-1500 while Apple sells their Macbook Pros from 1200-2000+. No matter how you look at it, part for part, Apple is making a minimum profit of $2 for every dollar the other companies make per laptop :) They're downright brilliant. 1 Macbook = 2 Non-Apple laptops. 2 Non-Apple Vendors have to sell 2 laptops to make the same profit that Apple makes on 1 Macbook. There are all the scenarios.
If they can pull this off for the next few years, they truly deserve every dollar of profit they make.
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|**MASSIVE FAIL** What a lame attempt at being a troll hater. So much for the "Apple fanboys should be worried about Windows 7" scare nonsense. Here's an awesome article released today by Computer World as to why Apple has nothing to worry about concerning Vista 7: http://bit.ly/1rmRYZ
But let me guess, you armchair experts (PC_Troll) know more right? LOL.
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|Show me an Apple which is twice the cost of the _same_ spec cloner crap from Dell, Acer, [insert cloner here]. waiting for a link...
You are right, the cloners have to sell multiple machines to make the profit Apple makes from a single machine because the cloner PC's are crap and no one makes money off them, except for Microsoft with its super expensive software the cloners sold themselves into bondage for... PC's are in a race to the bottom...selling super cheapo low spec crappy machines to people under the fantasy they are equivalent to higher end Macs. [insert cloner here] makes lilke $20 per sale, and Microsoft makes like $50, while Apple makes the entire $70.
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|How about *you* put up and show us an Apple system that *is not* ~twice the cost of a "_same_ spec cloner crap?"
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|I have nothing to prove. You made the claim under one of your usernames, you show me the proof which led you to make that claim.
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|@internetworld7 That analysis you link to is totally wrong. My Mac fanboys story rebuts the ridiculous claims made by the data cited in the Computer World story: http://www.betanews.com/...common-sense/1255464046. The chart doesn't support the conclusions made in that story or by the originators at Broadpoint AmTech. Actions taken by Apple during those time periods explain why Mac sales surged and fell when they did.
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|"Show me an Apple which is twice the cost of the _same_ spec cloner crap from Dell, Acer, [insert cloner here]. waiting for a link..."
I'd do so but the apple store is currently not working. :)
Also I wouldn't show twice the price, but I would show a significant difference, especially in their desktop lines with lots of memory.
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|Oh boy, here we go with the "show me this" and "show me that". Hopefully these linkies work.
I'm not going to waste more than 10 minutes on this. I'm just to prove a point once and for all, and this isn't for fatty because he/she is a lost cause.
Not going to deal with comparisons on the Macbook, just about any 400 or 500 Laptop will blow it out of the water, just go to Best Buy and compare them. I've located several Core 2 Duo 2.1+ ghz and AMD models for pretty cheap and about the only thing the Macbook has for itself is the 13 inch screen, but this is a con for some as well so it's all relative.
For the Macbook Pros I decided to pick one site, Best Buy, because it's easiest and for the other comparison I chose Dell because it allowed me to link the comparison unlike the others.
Here are 3 Macbook Pros: http://bit.ly/Macbook-Comparison
Here are 2 Dell Laptops that semi match, the M15x blows the best Macbook Pro away easily. The Macbook is using a T9600 vs. the Dell using the I7 720QM. Adding 1GB of Ram increases the price by $50 and the hard drive by another $75 so in summary the M15x totals out at ~$1624 when speced as the most $2300 Macbook Pro: http://bit.ly/Dell-Comparison
For the record, there are also 2 huge Gateway laptops that apart from their ginormous lcds match up to the 2 cheaper Macbook Pros.
There are also 3 HP laptops that compete directly with the most expensive Macbook Pro and are ALL $1000 or more cheaper.
I haven't even looked at Toshiba, Sony Vaios, Acers (which will probably match the Gateway prices and specs) or brands like Asus/MSI.
I can only guarantee that there will be similar results.
Need me to show you anything else?
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|@joewilcox, your story rebuked nothing. Your conclusions are fantasy and based on cherry picked months rather than trends. this might pass muster with your Microsoft handlers and the brain dead Faux News viewers, but people with half a brain know different.
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|ROFL. When i configure the M15x to make it comparable to the 2299 MBP, i end up at $1924. And that is without software, and Dell offers no warranty or support like what you get from the Apple Store. Another and, it comes with no software. iLife comes with the Mac. Plus, you need Anti-virus, Intrusion detection, Anti-spyware, etc... which will drive the cost far above the $2299 for the MBP. So back tot he topic, show me a cloner PC which "...any 400 or 500 Laptop will blow it out of the water."
You clearly have no idea what you are talking about. But hey, ignorance is bliss.
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|@mjm01010101 : show me? of course you can duck behind your "significant" word to mean anything.
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|I'm not backing down on this.
Exactly how are you arriving at $1924. I didn't include software because there are free Windows based alternatives to iWhatever and there are free Antivirus/Malware/Firewall solutions as well.
Furthermore, the Dell comes with a year of FREE support. The MBP has no support unless you spend $329 for Applecare. So I think you got that completely switched around.
So, please....show me. I'd like to know EXACTLY how you arrived at $1924.
You're right, ignorance IS bliss. Spending 7-800+ EXTRA for a laptop because of a logo IS pretty interesting, and is why I've said already that Apple is brilliant. It's not like they're the BMW or Mercedes of the computer industry. At least these companies are made of premium, high quality and different parts. Apple sticks the same hardware in unibody, sexy cases, slap a logo on and automatically they're "worth more". They successfully sell Kias as Audis and get away with it. My hat's off to them.
That WAS the topic. I'm not going to do any more research, you can locate just about any 2.1+ GHZ Intel or AMD laptop on Best Buy/Manuf. sites and they will match the Macbook. Macbooks were refreshed today, but at the time I looked around they were 2.13Ghz C2Ds, don't worry, you can STILL find laptops that sell for 400-500 that match them.
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|wrong. I just got my aunt a new MacBook and it comes with Apple Care. She got the One on One which is a year of unlimited one on one help for $99. The Apple Store geniuses will help you with anything, learning stuff, etc... Big help for her on the computer and iPhone.
I got it to 1924 by trying to configure it to match the MBP. More memory, Vista Ultimate, better battery, printer (apple gives a free HP printer with every computer), etc... Not my problem you know nothing about that which you speak.
Again, that does not even include all the software you must get with Windows which all you fanboys convieniently leave out. So tack on another $300, plus the support you need for fixing the virus laiden, malfunctioning, toolbar infested, trojanized Microsoft OS, etc... So it is even more expensive than the Mac.
Not my fault you do not get it. You started off by saying the Mac is twice as expensive, then it changed to being a little more expensive, and now i showed how the PC is _more_ expensive. LOL. Amazing what having a clue does? Right?
But what does it really matter? You will continue living in the fantasy that Microsoft is cheaper and somehow better when Macs are sometimes cheaper and sometimes more expensive...but overall, the Mac has a lower total cost of ownership all the time. Not to mention OSX kills Vista 7 any day of the week.
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|I don't remember mentioning Microsoft anywhere, just PC.
And you're def. in your own world now and people can see that. Free printer or not, it doesn't mention that at the Apple.com store...a printer, the cheapest is 99. One on one is 99 (for 1 year). Not sure why you'd match OsX to 7 Ultimate when it's like comparing candy (OsX) to a cooked meal (7 Ultimate)...as a matter of fact, how dare you even compare them? They're not in the same league. OsX compares to directly 7 Home Premium. Better battery, laughable. They're the same, and if the Macbook Pro happens to last longer it's because it's running a low end CPU compared to the M15, but I doubt it.
So you've successfully added phantom parts to the Dell/Alienware to get the price up to the BASE MBP. Printer, Ram (which I already mentioned) and lord knows what else (since you certainly can't seem to specify in detail). Then why don't you do the same the other way around and increase the CPU on the MBP to the best possible (which is still not even close to as fast as the I7). While you're at it, go ahead and step up the video in the MBP to match the M15...oh wait! You caaaan't!
To each his own. I'm not knocking the actual quality of the MBP, if I did that I'd be knocking the quality of all lower and mid end non-Apple laptops, and I think many of them are great. Apple has no laptop to match the high end non-Apple variety as yet. A $2300 laptop is going to mop the floor with a MBP.
All I'm saying is that it's not difficult to understand how they've done it when they're selling 1 MB for 2x the price of it's non-Apple counterpart, and 1 MBP for a hefty premium to 2x the price of their non-Apple counterparts as well. And I stick by that.
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|The weirdest thing about this is that the stock price reached an all-time high after hours but the market capitalization makes Apple worth $170.1 billion vs $161.3 billion for IBM. It's pretty impressive for a company that has zero products that sell for millions of dollars, like IBM has.
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|different markets. IBM makes boatloads of money off professional services and their mainframe business makes a lot too. Not to mention all their patent licencing...
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|and they're still not worth as much as Apple.
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