Apple issued its fiscal Q3 08 earnings report today showing its usual stellar results -- revenues rose 38% year-over-year to $7.4 billion while net income rose 31% to $1.07 billion thanks to strong Mac and iPod sales. But the same dark cloud that seems to be descending on the entire tech sector took a little bit of shine off the usually brilliant Apple, with the company predicting a weaker-than-expected fiscal Q4. And rumors that Apple's iconic CEO Steve Jobs has sadly once again fallen seriously ill aren't helping matters much.
Sales of the Cupertino giant's smash iPhone took a dive to 717,000, down from 1.7 million the previous quarter, as customers awaited the release of the 3G model. Apple's phenomenal sale of one million iPhones in the days following the launch of the newest model aren't, however, reflected in the quarter's numbers, although thanks to the magic of deferred revenue (recognizing the iPhone's revenues in 24-month increments), revenue for the iPhone rose 11% sequentially to $419 million.
The indisputable bright spots at Apple are the still-brisk sales of the iPod and the surprisingly buoyant sales of Macs.
Apple shipped 11 million iPods during the quarter, up 12% year-over-year, while iPod-related revenue (iTunes store revenue is reflected in this number) jumped 7% year-over-year to $1.68 billion. Mac shipments surged 41% year-over-year and even climbed 9% sequentially to 2.5 million.
Despite the good news and the strong outlook for growing iPhone sales, Apple projects that its gross profit margin will dip to 31.5% during the current quarter, down from 35% in Q3 08 and the lowest level for the company since Q1 07, due to back-to-school price cuts and some kind of mysterious "future product transition," which Apple failed to explain. Margins will hover around 30% during 2009 due to this new product, the development of which will depress profitability.
An already jittery Wall Street is interpreting this mostly solid earnings report in a perhaps a darker manner than it warrants due to open speculation that the driving force behind Apple's success, Steve Jobs, a pancreatic cancer survivor, is ill. A noticeably gaunt Jobs took the stage last month to unveil the 3G iPhone and unnamed sources say they have more recently been troubled his appearance.
During Apple's earnings call, CFO Peter Oppenheimer refused to address the issue of Jobs' health, saying only that it is a private matter and Jobs "has no plans" to leave Apple.
Cynthia Brumfield at 9:05 PM|Comments(1)
Steve Jobs health is certainly an issue to investors in this company. The man has done a tremendous job running the company and you have to wonder if someone else could do as well.
Posted by: Aaron at July 21, 2008 11:06 PM
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