Apple Riding a 51% Jump in Mac Sales - NY Times
- New York Times, April 24, 2008
By JOHN MARKOFF
SAN FRANCISCO Signs of a consumer slowdown abound in the
United States, but Apple customers appear not to have
Buoyed by unusually strong Macintosh sales, the company
grew notably faster than the rest of the computer market
worldwide in the first three months of the year. Revenue
increased 43 percent from the same period a year ago, the
company reported. Steven P. Jobs, Apple's chief executive,
characterized the quarter as the strongest in Apple's
He attributed the growth to higher traffic in the company's
181 stores in the United States. The company reported that
it had 33.7 million visitors to its stores in the United
States, up 57 percent from the same quarter a year ago. Mr.
Jobs said that belied the gloom that was being expressed
about the American economy.
"We're not economists, so we don't have any more insight
than everyone else, but there were sure a lot of people in
our stores last quarter," Mr. Jobs said in an
Despite new products like the iPhone, variations of the
iPod and the Apple TV set-top box, this was a Macintosh
quarter. Apple shipped 2.3 million Mac computers in the
quarter, 51 percent more than in the quarter a year ago.
Revenue on those computers increased 54 percent.
But it also said it sold 10.6 million iPods during the
quarter, flat with the year-ago quarter. Analysts said iPod
sales were within their expectations and that it was a sign
that the product category was maturing,
"The big question was, would Apple really feel the pinch
from a weakening U.S. consumer? And the somewhat
unequivocal answer was, no, not yet," said A. M. Saggonaghi
Jr., a senior analyst at Bernstein Research
Apple said that net income in its second quarter rose 36
percent from the year-ago quarter, to $1.05 billion or
$1.16 a share, on revenue of $7.51 billion.
The results far exceeded the expectations of Wall Street
analysts. They had expected $1.07 cents a share and revenue
of $6.96 billion, according to a survey of analysts by
Bloomberg.The company, based in Cupertino, Calif., also
forecast strong sales in the coming months. Peter
Oppenheimer, Apple's chief financial officer, said the
company expected third-quarter revenue of about $7.2
billion and earnings of about $1 a share.
Apple's stock has declined 17.9 percent since the beginning
of January when it peaked near $200 a share. After drifting
below $120 a share, the stock has begun to recover since
March. Shares on Wednesday closed up, rising $2.69 to
$162.89, but then declined 26 cents, to $162.63 in
after-hours trading over concerns that Apple's profit
margins were weaker than analysts expected.
If there is a weak spot in the company's battle plan, it
may be the iPhone smartphone, which has had stellar sales
in the United States, but has showed weakness in Europe.
Apple said it sold 1.7 million iPhones for the quarter. "In
my mind iPhone sales were soft," said Charles Wolf, a
financial analyst at Needham & Company. "It's a question of
the distribution model and of the price. The price clearly
has to come down."
Apple's executives said the sales of iPhones exceeded
internal company projections during the quarter.
Analysts and the industry are expecting Apple to introduce
a higher performing version of the iPhone within the next
two months, made for faster 3G data-oriented cellular
networks. Mr. Jobs is under pressure to meet his 10 million
iPhone sales forecast by the end of 2008. To meet that goal
the company needs a second-generation iPhone, and it may
also need to push the price of the existing $399 iPhone
down significantly or introduce a stripped-down
Analysts have said that as the second quarter progressed,
demand for Apple's iPhone increased and that the computer
maker was unable to keep up with demand. The supply issue
could have been affected by the limited availability of
16-gigabyte flash memory chips, Mr. Wolf
He said that the more interesting story for the quarter may
be the gains that Apple is making in PC market share,
predominantly in the laptop computer segment.
International Data Corporation's survey this month showed
Apple with a 6 percent share of the American market in the
first quarter, compared with 4.9 percent a year ago.
Apple's strong Macintosh growth comes as Microsoft
struggles with its Windows Vista operating system, which
was released last year to largely critical reviews. "I
think people are really noticing the difference between Mac
OS X and Windows to a greater degree than ever before," Mr.
Jobs said. "The more people understand that there is an
alternative, the more people are choosing a Mac."
On Wednesday, Apple confirmed that it had acquired PA Semi,
a Silicon Valley chip company with expertise in low-power
microprocessors, an essential technology for future
iPhones. Forbes.com first reported the acquisition, which
it said was for $278 million in cash. Neither company
disclosed the amount of the deal.
The chip maker had originally hoped to supply Apple with
chips intended for a microprocessor used in earlier
Macintosh computers and by I.B.M. However, when Apple began
using Intel microprocessors for the Macintosh, PA Semi was
left without a major customer.
The decision to buy PA Semi is likely to be a blow to
Intel, which recently introduced a new low-power chip