Apple 2Q 2008 Results, Conference Call Highlights: $1.05 Billion in Profit

[Rocketman]

What is up with gross margin??? This is like the 3rd question in a row about it. Why are investors concerned about this?

Earning growth and net margins are big factors in the stock price multiple.

Remember ALL stock prices are based on perception, in/out flows of investors and investor sentiment. Stock shares have no inherent value unless it is liquidation value.

Rocketman

 

[cnote678]

Oh yeah... I just remembered that they said that they would be expanding to asia.. so does anyone know of any country in asia that would but iphones that would work with 3G? I wouldnt know so I was not saying that there WASNT any countries.

Japan, Korea, Taiwan and Singapore almost entirely 3G, China beginning to slowly shift.

And let me ask: when Steve talks about 'launching several new products', does he mean LAUNCH like "And now for something completely different" like we've never heard of or does 'launch' include redesigns and/or updates?

 

[inkswamp]

From AppleInsider:

Apple sold 856,000 desktops during the quarter and 1,433,000 notebooks. The figures signal Mac shipment increases of 37 and 61 percent for each category year-over-year. Notebook shipments climbed sequentially by 7 percent, while desktops decreased by 12 percent from quarter to quarter.

That's a little nugget of bad in the midst of otherwise good news. But it does seem to validate the complaints that some of us have about the new iMacs being a fairly halfhearted effort by Apple. It would be nice if those desktop numbers were broken down further, but the fact that it's barely growing more than half the rate of the notebooks and has dropped off since last quarter is pretty telling. I'm starting to wonder if the iMac hasn't already become an albatross.

 

[redgaz26]

Financial Officer Peter Oppenheimer said on Wednesday.

"We are very pleased with iPhone momentum and we remain confident of achieving our goal of selling 10 million iPhones in calendar 2008"

That doesn't seem to agree with you.

when steve introduced the iphone at the 2007 keynote he said they expect to sell 10 million by the end of 2008, that included sales for 2007!!!!!!!
sad as i am I'm going to watch it again just to make sure..

 

[gwangung]

From AppleInsider:

That's a little nugget of bad in the midst of otherwise good news. But it does seem to validate the complaints that some of us have about the new iMacs being a fairly halfhearted effort by Apple. It would be nice if those desktop numbers were broken down further, but the fact that it's barely growing more than half the rate of the notebooks and has dropped off since last quarter is pretty telling. I'm starting to wonder if the iMac hasn't already become an albatross.

Desktops are a shrinking segment for ALL computer makers.

 

[em500]

when steve introduced the iphone at the 2007 keynote he said they expect to sell 10 million by the end of 2008, that included sales for 2007!!!!!!!
sad as i am I'm going to watch it again just to make sure..

This has been clarified a number of times already.

But as Piper Jaffray analyst Gene Munster points out in a report to clients Wednesday, Apple did clear up one nagging ambiguity: does the company’s oft-stated goal of selling 10 million iPhones in 2008 mean that it hopes to sell 10 million phones within this calender year, or 10 million phones between June 29, 2007 and Dec. 31, 2008? It’s a question often argued in heated words in the comment threads of Apple blogs (including this one). “We confirmed with Apple,” writes Munster, “that the goal is to sell 10m iPhones ‘in CY08′ alone.”

http://apple20.blogs.fortune.cnn.co...o-exceed-10-million-iphone-goal-by-nearly-30/

 

[GQB]

While the economy is in a slowdown, the fact is that by definition, we are not in a "recession" in the United States at this point. The definition of a recession is a decline in the real GDP for two or more consecutive quarters. For the last quarter of 2007, real GDP in the U.S. was actually up 0.6%.

Tell that to the people out of work and/or losing their homes, and dealing with inflation FAR higher than the self-serving 'core inflation' numbers that don't include food and gas. (Yeah, that doesn't count I guess.)

Recession is when you lose your job.
Depression is when I lose mine.

 

[gnasher729]

So, does the "no comment on unreleased products" mean that there is a product yet to be released?

No. It means that as of today, there is no product released.

 

[csimmons]

when steve introduced the iphone at the 2007 keynote he said they expect to sell 10 million by the end of 2008, that included sales for 2007!!!!!!!
sad as i am I'm going to watch it again just to make sure..

If Apple has successful 3G rollouts in India, Japan, Taiwan, Singapore, as well as in the Europe, they will easily hit their target by the end of the year.

 

[GQB]

and pay capital gains tax

Better now than in a couple of years when it will be 20% or higher (as it should be.)

 

[GQB]

Desktops are a shrinking segment for ALL computer makers.

Desktop = Dodo.

 

[gnasher729]

Gross margin, as I understand it, is the percentage profit on manufacturing all the combined products that Apple sells. If Apple brings in 100 dollars and gross margin is 33 percent, then it cost them 67 dollars to make it and they get 33 dollars profit on that revenue. Gross margin only has to do with the cost of making the product, like the components (the NAND/DRAM flash memory, LCD screens, optical/disk drives they are talking about). Operating margin factors in other costs related to bringing the product to market, like transport and marketing costs.


Anyone else have a different explanation or anything to add?

Only that Apple's product with the highest gross margin is Leopard (because the only cost is the box, the DVD, and the cost of selling it, while the millions and millions of development cost don't count), and revenues for Leopard have dropped from $170 million to $40 million, as expected. Those $130 million difference in the highest gross margin product explain the reduced gross margin.

 

[IJ Reilly]

I haven't seen any numbers either on historically how conservative Apple is with their guidance either, but that would be interesting to see someone do to see if there is some sort of common number, like 10% or so or whatever it is, there are lots of other factors that could factor in from quarter to quarter but there might be a number in common somewhere. The only way for something to happen with the guidance would be for Apple to have to open up their books and for the SEC to see that they take their guidance and cut it down every time and are deliberately making it inaccurate but that isn't going to happen any time soon.

Based on this quarter's results, I'd say they guide about 20% low. So if they're guiding EPS of $1.00 for next quarter, that means they will actually come in at around $1.20, which just happens to be about 10% above the street estimates (my other magic number). How's that for extrapolating one data point beyond all sense and reason? Does that make me a real analyst?

 

[DeepIn2U]

The Golden years of Apple are BACK!

 

[inkswamp]

Desktops are a shrinking segment for ALL computer makers.

Perhaps because nobody, including Apple, is doing anything new or interesting with them, especially the low- to mid-range products.

Imagine if Apple put as much passion and energy into their desktop line-up as they have dumped into the iPhone. Do you think the new version of the iMac would have been simply a rehash of the previous design, hobbled with a low-quality display? Kinda doubt it.

 

[redgaz26]

Wirelessly posted (Mozilla/5.0 (iPhone; U; CPU like Mac OS X; en) AppleWebKit/420.1 (KHTML, like Gecko) Version/3.0 Mobile/4A102 Safari/419.3)

when steve introduced the iphone at the 2007 keynote he said they expect to sell 10 million by the end of 2008, that included sales for 2007!!!!!!!
sad as i am I'm going to watch it again just to make sure..

This has been clarified a number of times already.

But as Piper Jaffray analyst Gene Munster points out in a report to clients Wednesday, Apple did clear up one nagging ambiguity: does the company’s oft-stated goal of selling 10 million iPhones in 2008 mean that it hopes to sell 10 million phones within this calender year, or 10 million phones between June 29, 2007 and Dec. 31, 2008? It’s a question often argued in heated words in the comment threads of Apple blogs (including this one). “We confirmed with Apple,” writes Munster, “that the goal is to sell 10m iPhones ‘in CY08′ alone.”

http://apple20.blogs.fortune.cnn.co...o-exceed-10-million-iphone-goal-by-nearly-30/

so financial officer peter ain't singing off the same hymn sheet as Steve then????
either I'm happy with mine!!!!

 

[joeshell383]

Nope, its 10 by the end of 2008.

So, about 4.3M more...easy.

Wrong. It has always been IN CY 2008, from Steve's lips at the iPhone intro to comments made in today's conference call.

Please stop posting this misinformation as it derails threads, confuses people, and is flat-out incorrect.

 

[milo]

Nope, too low, less than 10% above consensus, which is never good enough for the speculators.

It's certainly looking pretty good right now. Still down, but less than a buck, which is pretty negligible.

no, but they stated off the cuff they wanted to sell 10 million by the end of this year. total. they've got a little under nine months to sell what another 5 million units?

Nope, that's wrong. They reiterated that they want to sell 10 million DURING this year. They have repeated this same statement many times, and yet people keep saying the wrong "10 million by the end of 2008".

Or was it 'we hope to have sold 10m in 2008?'

i.e. Have reached the 10m milestone at some point in '08?

Nope, they've never used that wording. It has always been 10 million in calendar year 2008.

 

[BongoBanger]

Desktops are a shrinking segment for ALL computer makers.

Actually they were flat in EMEA for Q4 2007.

 

[50548]

I don't know what Apple's global plan is, but a lot of economic growth is taking place outside of western markets. China, India and Brazil come to mind. All markets eager for western status products.

It could well be that Apple is simply swamped by growth. Their push into Europe has been lackluster despite the fact that over 40% of Apple's sales are outside US borders.

They need to start marketing the iPod separately to the rest of the world.

Ok, a little geography and social studies are needed here...there are few places MORE western in the world than Brazil...both in terms of territory, cultural heritage and social conventions...and no, it has NOTHING to do with China and India, apart from being a member of the so-called BRIC, the informal block of major emerging economies...

 

[twoodcc]

wow, those are great numbers. looking forward to those new products

 

[kresh]

Perhaps because nobody, including Apple, is doing anything new or interesting with them, especially the low- to mid-range products.

Imagine if Apple put as much passion and energy into their desktop line-up as they have dumped into the iPhone. Do you think the new version of the iMac would have been simply a rehash of the previous design, hobbled with a low-quality display? Kinda doubt it.

You have hit the nail on the head. Kudos.

It's a self-fulfilling prophesy. Apple says that notebooks are where it is at, so they hobble their desktop offerings and then point to lower desktop sales vs. notebook sales.

 

[Cinematographer]

In the financial statements, the company says:

Deferred revenue-current (iPhone & TV) $ 1,170 milion

Deferred revenue-non-current (iPhone & TV) $ 763 milion

Does anyone know what that difference means?

Thanks a lot in advance.

 

[stevearm]

Apple is gonna be the BIGGEST computer company in the world in less than 2 years...Microshaft, prepare to be bought within that period, because Apple is mopping the floor with you.

Oh please. And yet Microsoft still control 95% marketshare in terms of desktop and portable computing.

Apple buying MS?? In your dreams.

 

[milo]

Nope, its 10 by the end of 2008.

So, about 4.3M more...easy.

Is this so hard to get right? If it was really "by the end of 2008" apple would have said that - they never have.

A bunch of quotes have shown that you are wrong, please stop spreading this misinformation.

when steve introduced the iphone at the 2007 keynote he said they expect to sell 10 million by the end of 2008, that included sales for 2007!!!!!!!
sad as i am I'm going to watch it again just to make sure..

Absolutely not. You do need to go back and watch to it again, he said 10M IN 2008. The exact quote has been posted many times on various threads.