Apple Q2 Financial Results Conference Call

[xsnightclub]

Found this interesting bit at Bloomberg.com

The iMac remains the company's most popular model. Shipments more than doubled to 467,000 units as revenue from the iMac jumped 92 percent to $483 million.

from: http://quote.bloomberg.com/apps/news?pid=10000006&sid=ajYCGMJQRsHw&refer=home

 

[minimax]

Don't mean to be rude but you're totally off base. To determine if the numbers are any good you have to look at the year ago quarter, not the previous quarter.

Apple's Mac sales are up 43% from the year ago quarter. Those are very, very strong numbers indeed.

I'm not off base. If you look at the previous numbers for the consumer desktop line you see sales stayed flat from Q104 (227k) to Q404 (229k). Q105 (456k) saw the introduction of the imac and sales jumped almost 100% compared to both the previous quarter AND the year ago quarter. After that, sales stayed almost flat when you regard Q205. Seasonal changes have a relative minor effect when you compare Q104 (227k) that includes christmas sales etc with Q204 (217k). In other words, the mac mini is eating away big time from the imac, THAT is why there is a combined report of both.

 

[nagromme]

the rest of the industry is kicking the living snot out of their laptop line all the while people are eating it up based on....*shrugs* What? It’s nice and shiny?

No. Because for some people, the OS is more important to productivity than MHz are. 😀 We all wish a G5 PowerBook were possible now, but it's not. If someone needs a laptop now, choosing Windows over OS X is hardly without its price.

I'd recommend people wait for a G5 if they can--but not everyone can, so what's out NOW is the choice most people have.

For my money, a PowerBook is currently the best laptop buy on the planet.

But if you find Windows an acceptable alternative to OS X, then you have some other fine choices out there.

 

[egsaxy]

Jan 2007, Apple finally wises up, and releases OSX for PCs, thereby gaining the lead from Microsoft, Q2 profits reach $10 billion.

Only if Apple is stupid or charges an arm and a leg. And require high system requirements. If Apple targeted Pro (and I say that factiously) Windows users with 3.x gig machines, and decent graphics etc. and then charged the same license fee microsoft does (or slightly lower) people would switch to try it out but would then buy a mac (its like iPod) that people will try it first and then get a mac (if the OS on x86 is any good) or to give intel a run for their money only support AMD chips. I don't think thats the wisest decision to make. This is the trend I see, people continue to get fed up with microsoft, they switch to linux (no hardware change) and then look heavily into the Mac platform when its time to get new hardware.

 

[DTphonehome]

I think that's all about margin gotcha. Apple doesn't doesn't want to show its hand on products like Mac mini that are driving market share but aren't necessarily cash cows. I agree with the analyst's report earlier this week that we're fixin' to hear a whole lot about Tiger and applications.

I read somewhere that a 1 percent move in Apple's PC market share works out to about $2B in gross sales of PC and ancillary products. If Apple grows to 10-15% of the PC market in the next few years, we may see a radical rethinking of the platform by all sorts of software manufacturers, including Apple.

And the bigger Apple gets, the higher its stock price will climb and the greater its leverage is going to be for picking off software companies. Apple's model has been to buy smaller software companies, but we may see the days very soon when Apple could decide to buy a gaming company, Macromedia ($3B), Adobe ($16B), Intuit ($8B) or other companies that it wouldn't have had the market cap to swallow before.

It is a really exciting time to be following Apple.

Well said. I totally agree. I doubt, however, that Apple's market share will get to 10-15% anytime soon. Think about how big the market is, and who are major buyers. Corporations and governments (who buys PCs by the thousands) have a tremendous investment in Windows, and that will take more than a few years to change. Also, while Apple continues to do well in the US, Western Europe, and Japan, I don't think (correct me if I'm wrong), that they have too much traction in the rest of the world. That will change with time, but I think a 2-3% upward movement in market share is more reasonable for the near future. And, like you said, that increase will be tremendous. Apple will become a major player again.

--DT

 

[minimax]

Found this interesting bit at Bloomberg.com

The iMac remains the company's most popular model. Shipments more than doubled to 467,000 units as revenue from the iMac jumped 92 percent to $483 million.

from: http://quote.bloomberg.com/apps/news?pid=10000006&sid=ajYCGMJQRsHw&refer=home

What idiot is analysing the apple data at Bloomberg? Comparing imac g5 with g4 when the 100% leap already occured last quarter and even worse, stayed flat this quarter with INCLUSION of mac mini sales? The data from apple shows clearly sales of the imac g5 have collapsed when compared to the previous quarter.

 

[garotemonkey]

No I made the mistake. I'm saying that people who upgraded or purchase their first PowerBook didn't do their homework....basically I'm supremely jaded about Apple's lack of forward momentum and the fact that the rest of the industry is kicking the living snot out of their laptop line all the while people are eating it up based on....*shrugs* What? It’s nice and shiny? Whatever. That is where the phrase comes into play.

*shrug* I used to make a career out of Windows system maintenance, and recently had to set up a new widescreen Sony VIAO laptop for someone, and I was happy to return to my 17" PB afterwards. Apple still wins for durability because it's one of the few laptops with a nice thick metal enclosure. The slot-loading drive, lack of protruding buttons or hinges, and lack of silly hinge-doors over the sockets is helpful here too, and moving the ports to the sides instead of the back was also very smart (you can open the laptop over a non-uniform surface and not worry about snapping off your USB port when the screen tilts the computer backwards). All that jazz plus OS X is quite handy.

But there are several aspects where the PowerBooks just plain lose, compared to similar models in the PC world, and they are things I really wish Apple would keep up with. One aspect is screen resolution, and another aspect is speed.

Yes, speed. I keep a 2.4Ghz XP box at home for audio processing. I'd love to move that onto the PowerBook, but it would drive me CRAZY. You can't accelerate audio processing with a fast GPU, either. It's purely a matter CPU brawn and disk piping.

Something must be done.

 

[Fender2112]

- Hard Drive based marketshare 90%
- Flash based 43% (0% to 43% in the month of availability)
- 70% overall market share for Feb. Up from December Quarter

In these times of competing formats, it's interesting that it's still refered to as MP3 market.

 

[xsnightclub]

What idiot is analysing the apple data at Bloomberg? Comparing imac g5 with g4 when the 100% leap already occured last quarter and even worse, stayed flat this quarter with INCLUSION of mac mini sales? The data from apple shows clearly sales of the imac g5 have collapsed when compared to the previous quarter.

Maybe professional analysts with much more information from mulitple reliable sources, and the hard copy financial data in front of them.

News from a quasi-reliable souce ThinkSecret "Power Mac G5 sales have been down for the last quarters, partly due to strong iMac G5 sales and a stale platform"
http://www.thinksecret.com/news/0504g5.html

 

[jettredmont]

What idiot is analysing the apple data at Bloomberg? Comparing imac g5 with g4 when the 100% leap already occured last quarter and even worse, stayed flat this quarter with INCLUSION of mac mini sales? The data from apple shows clearly sales of the imac g5 have collapsed when compared to the previous quarter.

True, but you're also missing the normal drop-off from quarter-of-introduction sales. Typically, a machine will sell really well in its first quarter and then drop off fairly significantly to a more modest "steady state". This is especially true when the introduction of the new model was heavily anticipated, as it was with the iMac G5.

It's a bit dissapointing that Mac mini results haven't done anything more than counter this natural drop-off, however. I'd hoped to see an additional significant bump in unit sales. Cannibalizing, however, is a bit too strong of a description.

 

[xsnightclub]

It's a bit dissapointing that Mac mini results haven't done anything more than counter this natural drop-off, however. I'd hoped to see an additional significant bump in unit sales. Cannibalizing, however, is a bit too strong of a description.

Keep in mind the Mac Mini supply ramp up was not up to meet demand for most of this quarter. Also the Mac Mini demand will probably see the biggest demand for the upcoming back-to-school and holiday seasons when demand for new computers is highest.

 

[dashiel]

http://biz.yahoo.com/prnews/050112/sfw092_1.html
Read the wrong results...4th quarter of last year. So its true. 🙁 There's a idiot born every minute.
I'm happy the other numbers are strong but PowerBooks I'm sorry...stupid. Just stupid. Apple should throw in a LCD glass wipe. Watch sales go up 30%. OMG OMG it’s a glass cleaner. 🙄 *sighs*

you do realize that there are people out there who don't scour the message boards on an hourly basis for apple news right? and you also realize that some people needed a laptop computer last quarter and the current model of powerbook was all that was available. despite your implication that the current "band-aid model" isn't any good, it's plenty good for those people who wanted or needed a powerbook in the last 3 months. to call those people stupid or an idiot is just colossally naive, disrespectful and wrong.

 

[me_94501]

good numbers???

despite the introduction of mac mini sales of the consumer desktop line climbed a meager 11000 units. Also total macintosh sales stayed almost flat. In other words, it has NO effect whatsoever on windows users, potential switchers / adders.

I respectfully disagree, minimax. You have to keep in mind a few things:
1) Q1 was the holiday quarter, which is typically the busiest. Q2 is historically slow for Apple (and is generally slower for the economy as a whole); there are no Christmas sales, schools are not buying machines until later on, and the back-to-school rush is still a ways off. If there wasn't an impact, you likely would have seen sales backslide some (e.g. down to about 900,000).
2) While the sequential increase isn't spectacular, the year-over-year is. This is a better indicator, because it factors out seasonal fluctuations in product demand (which I outlined in #1) and therefore gives a clearer indication of trends in sales.

 

[mj_1903]

What idiot is analysing the apple data at Bloomberg? Comparing imac g5 with g4 when the 100% leap already occured last quarter and even worse, stayed flat this quarter with INCLUSION of mac mini sales? The data from apple shows clearly sales of the imac g5 have collapsed when compared to the previous quarter.

No. iMac sales may have fallen a little due to standard seasonal adjustments but I doubt the Mac mini has completely cannibalised the iMac line as you are assuming.

Remember, last quarter was both the holiday quarter and the introduction quarter for the iMac G5. Also, that iMac figure includes the eMac as well which most likely has been destroyed by the Mac mini.

 

[oskar]

still got your 3 grand loan?

No I made the mistake. I'm saying that people who upgraded or purchase their first PowerBook didn't do their homework....basically I'm supremely jaded about Apple's lack of forward momentum and the fact that the rest of the industry is kicking the living snot out of their laptop line all the while people are eating it up based on....*shrugs* What? It’s nice and shiny? Whatever. That is where the phrase comes into play.

Many people (300,000+) seem to be doing their homework and a lot of other things on their new PowerBook G4's while you've been bashing Apple for months now and whining about a PowerBook G5 or whatever... If Apple is taking this long it's because the wait will be worth it. Apple's sales and revenues simply make what you've been complaining about all this time incongruent.

At least you finally changed your signature...

 

[mj_1903]

No I made the mistake. I'm saying that people who upgraded or purchase their first PowerBook didn't do their homework....basically I'm supremely jaded about Apple's lack of forward momentum and the fact that the rest of the industry is kicking the living snot out of their laptop line all the while people are eating it up based on....*shrugs* What? It’s nice and shiny? Whatever. That is where the phrase comes into play.

Maybe computers are finally good enough for all users. Ever thought that the numbers may not matter anymore? They certainly don't for me. I care about what gets me from A to B in the least stressful path and that for me is a Mac. I might be able to do large things 10% faster on a PC but I have to deal with everything else it throws me.

 

[me_94501]

No. iMac sales may have fallen a little due to standard seasonal adjustments but I doubt the Mac mini has completely cannibalised the iMac line as you are assuming.

Remember, last quarter was both the holiday quarter and the introduction quarter for the iMac G5. Also, that iMac figure includes the eMac as well which most likely has been destroyed by the Mac mini.

Exactly.

Minimax, please understand what we are saying. This isn't an indicator that the Mac mini is a flop, pure and simple.

 

[mj_1903]

good numbers???

despite the introduction of mac mini sales of the consumer desktop line climbed a meager 11000 units. Also total macintosh sales stayed almost flat. In other words, it has NO effect whatsoever on windows users, potential switchers / adders.

I would let Apple make that call. If the Mac mini is being detrimental they will remove it. My assumption is the eMac was absolutely destroyed last quarter and that the iMac has fallen both because of the holiday quarter and because it is no longer new.

 

[dicklacara]

What about it? What was said?

Somewhere in the call Apple said that about 40% of purchasers (of some segment) were first-time Mac users.

Apple won't break out the sales by model, but they (accidentally or purposefully) give hints and you really have to pay attention.

Apple is quite happy with the acceptance of the mini.

 

[jouster]

...Its a little annoying that Apple is not releasing numbers for the mini or the shuffle, I bet Steve will announce those at WWDC 🙂

No chance of that whatsoever.

 

[hexcalibur]

apple's "flop" quarter

I'm going to suggest that if the company can sell over a million computers and make several hundred million dollars profit in a quarter, they can "flop" like this until the end of time.

Any bets as to when the next "Apple is doomed" analysis gets reported in the media (yes, I'm looking at you Rob Enderle)?

 

[Makosuke]

Hmm... no Xserve numbers anywhere. Wonder how sales have been?

(Curious in part because I just bought one--sitting right next to me--and it seems like a nice piece of hardware so far).

And I agree 100% with mj_1903; no the current PBs aren't particularly exciting machines. But they are more than enough for most people to get what they need done. I know someone who's planning on buying one in the next month or two, and she could care less whether it's been a while since they've been updated or whether there are somewhat faster PC laptops available--it does what she needs it to.

And she's not a generic user, either--she's both a soon-to-be-switcher and someone looking to do statistical analysis. Good enough is good enough.

 

[dicklacara]

Hmm... no Xserve numbers anywhere. Wonder how sales have been?

(Curious in part because I just bought one--sitting right next to me--and it seems like a nice piece of hardware so far)..

I think that if you listen carefully to the call (or read the results posted on many financial and Mac sites) that you can extrapolate the number of XServes...

Something like # of Computers - # of Desktops - Number of Laptops.

 

[dicklacara]

The iPod Shuffle Success story

One of the big success stories was the iPod Shuffle-- from 0% to 43% and leader of that Market Segment in a single quarter...


... but wait...

... the shuffle was announced in January and supply-constrained until February (remember the 3-5 week delivery?)...

... and Apple does not yet have the numbers for March!...

... so, that's 0%-43% is a single month (as reported by an independent company).

 

[mhouse]

Yepper

I respectfully disagree, minimax. You have to keep in mind a few things:
1) Q1 was the holiday quarter, which is typically the busiest. Q2 is historically slow for Apple (and is generally slower for the economy as a whole); there are no Christmas sales, schools are not buying machines until later on, and the back-to-school rush is still a ways off. If there wasn't an impact, you likely would have seen sales backslide some (e.g. down to about 900,000).
2) While the sequential increase isn't spectacular, the year-over-year is. This is a better indicator, because it factors out seasonal fluctuations in product demand (which I outlined in #1) and therefore gives a clearer indication of trends in sales.

I agree.

Another point I would like to make with a lot of folks on this board is in regard to the supposed cannabilization of iMac sales. Why would the Mac Mini cannabalize iMac sales any more than the eMac did? They are roughly the same price when you factor in display, keyboard, and mouse.

Personally I expect Apple to make the eMac an education-only option as they did for the G3 iMac and introduce a slick-but-inexpensive small display for the Mac Mini to complete the low-end consumer option.