Apple Inc. issued its fiscal Q2 07 earnings results this afternoon, beating analysts estimates through continued strong iPod and Mac sales. Revenues soared 43% while net income jumped 36%.
iPhone shipments dropped 35% from 2.3 million to 1.7 million sequentially, but that didn't stop revenues for the iPhone from shooting up by 57%, climbing from $241 million to $378 million. Through what magic did this seemingly inconsistent result occur? Ongoing revenue splits from Apple's phone carrier partners, mostly AT&T.
Apple purportedly receives $80 for each iPhone sold through a carrier plus at least $10 per month over the life of each subscriber's contract, or a total of $240 for a subscriber, three times the amount of the supposed iPhone sales price.
Assuming that Apple's monthly take is $10 (and my estimates suggest that figure is too low), then Apple received around $150 million in subscription revenue if its carrier customers served an average of five million active Apple iPhone subscriber during the quarter (through the end of the quarter, Apple had shipped a cumulative 5.4 million iPhones, and let's say 400,000 are in inventory.) That's 5,000,000 x $10 x 3 months.
There's more to this story, including the fact that Apple reported around $1.9 billion in deferred revenue from the iPhone and AppleTV (but let's assume it's mostly iPhone-related), pushing its total deferred revenue up to nearly $4 billion during the quarter. That means Apple received payments totalling $1.9 billion related to the iPhone (up from around $1.4 billion during the previous quarter) but will only recognize the revenue over some period of time.
Are the carriers paying Apple upfront for its revenue split? Maybe Apple is also amortizing the $80 hardware payment it receives from the carriers over the life of the phone subscriber's contract, but $10 per month plus $80/24 doesn't get you to this level of deferred revenue.
Whatever the case may be, Apple's other product lines also put in a strong showing during the quarter. Apple sold 10.6 million iPods, on par with the 10.5 million iPods sold during fiscal Q2 07. It sold 10.3 million Mac units, the second highest level of Mac sales ever. Revenue from iTunes, AppleTV and iPod accessories (and let's assume it's mostly iTunes revenue) topped $881 million, a small portion of Apple's overall revenues but four times the amount iTunes generated three agos, during Q2 05.
It's no surprise, then, that Apple's revenues rose 43% year-over-year to $7.5 billion, while net income rose 36% to $1.04 billion. Download at no charge our detailed financial and product data spreadsheets for Apple here. They're free but registration is required.
Posted by Cynthia Brumfield at 7:56 PM | Print | Comments (0)The WSJ reported last month that Comcast, Time Warner and Brighthouse Networks are forming a new WiMax consortium with Sprint-Nextel and Clearwire. Intel and Google are possibly joining in as investors.
Now GigaOm reports that Comcast is creating a new wireless division and hired CTO of Telefonica O2 Europe, Dave Williams, to be the CTO of the new group.
All of this comes on the heels of the cablecos pretty dismal track record in reselling Sprint service under the brand name Pivot. (Karl Bode at Broadband Reports got a hold of a memo that says that Comcast will stop selling Pivot this week, but other operators have already put the mobile service on hold.)
It's hard to imagine how an unwieldy consortium of inexperienced cable ops and a weakened Sprint can make a go of an untested technology, particularly when the competition is AT&T and Verizon Wireless. On the other hand, cable has little choice given that without a mobile business, the industry is going to be left behind in a wireless world.
Posted by Cynthia Brumfield at 2:55 PM | Print | Comments (0)
Blogs We Read
