Apple Reports $1.23 Billion Profit for Q3 2009, Best Non-Holiday Quarter Ever

[deconstruct60]

Here in Belgium iPhones do not come with a contract, so from that point of view iPod Touches and iPhones are the same, and YET apple still charges iPod Touch users for updates over here and gives away those upgrades for free for iPhone users.

What is the difference in the price of the iPhone and Touch?
One way of collecting an upgrade "tax" is take it out every month. (lower up front costs). The other way is just to add 3-4 upgrade costs to the price of the device and mark that as deferred revenue. (get money upfront and do some slush fund thing so don't recognize it right away. ). There are $99 iPhones in Belgium?

These price might be outdated:

http://arstechnica.com/apple/news/2008/07/unlocked-iphones-in-belgium-make-locking-look-good.ars

$900+ for a phone? Apple might sell a couple 100,000 of those in the US. No way, no how they'd sell millions here at that price. (other phone contracts and mothly service bills remaining the same). [ and yes I'm sure the monthly phone service rates are cheaper and might have lower total lifecycle costs. Many folks in the US are hooked on the initial cost threshold. Sprint just announced a $99 netbook. You can get a bigger screen and surf sites with flash for the same price as last years iPhone. If it was $99 netbook vs. $800 iPhone Apple would get its but kicked. ]


There should be a gigantic gap between iPhone and iTouch prices there. ( Or Apple is hustling you folks will inflated Touch prices. )


Did some deeper looking later at the more boring number charts:

http://www.apple.com/pr/library/2009/07/21results.html

Go down toward the bottom to the "Unaudtited Schedule of Deferred Revenue". Apple has $6+ billion in deferred revenue this last quarter alone. Note how that has skyrocketed as the iPhones have sold off into a wider set of countries.

Yes, of course they could try the same thing with Touches. Jack up the initial price. Problem is that the touch has more competitors and Apple wants the unit volume.


P.S. So thousands of iPhone users upgrading to iPhone 3.0 allowed Apple to automatically wink-in deferred revenue into the actual revenue for the quarter. The money already collected just moved to a different column. So that is one reason for the magic non-holiday quarter spike in revenue. So no magical recession proof Apple there. The effect of the recession would be felt later and be evened out a bit since there is more of a delayed impact.

 

[Avro]

Dunno. My pre-order copy of W7 was £45. That's fairly comparable to the £30 SL will cost me.

Last I heard the prices for Snow Leopard were £19 single licence and £35 5 user family licence.

 

[deconstruct60]

All of this reflects little on the state of their static shares for the past decade, however. Perhaps having the majority of its revenue generated from OEM sales seems somewhat uninspiring for investors.

Microsoft shares where overpriced. That also likely lead them to oversplit perhaps one to many times also.

There is some of amount of silliness on Wall Street where folks will price a company at the earnings it is going to make 3-4 years down the road. What happened to Microsoft is that folks thought it would grow at a rapid rate forever. You can't make double digit billion companies grow at double digit growth rates without voodoo. Just no way to add the GDP of a small country to your revenues every year forever.

Additionally, For the last two (?) years is that Microsoft started handing out a dividend. You don't need to grow your stock price at 10% per year if you had out a 6% per year dividend. Again Microsoft probably waited tooooooooo long to start handing out a dividend. If you don't hand out dividends the only way can "return" money to the stockholders is to dramatically increase the stock price. (so they can sell and reap a reward). With dividends you don't have to sell the stock to get money.

[ Oh yeah that is another "cost" that Microsoft has that Apple doesn't ... actually handing the stockholders a share of the profits. ]


Plus Microsoft has been doing dumb stuff (so yeah it could be higher than it is). As Internet division hasn't ever made any money ( in contrast to Yahoo which has made money ) ... extremely curious why so many folks wants to hand responsibility over to Microsoft who has never proven they can run one these. Ichan and others just want to take Microsoft's money and run. If they weren't distracted as much with that perhaps they would have delivered a better Zune and few other projects.

 

[macintoshtoffy]

Dayum. That was a good quarter! Recession? I think not.

It reminds me of the saying, "if your neighbour loses their job it is is a recession, when you lose your job it is a depression". If you've still got a job you're ok - the only thing I see around where I live are less impulse purchases of things (expensive cups of coffee) in favour of saving money and still purchasing items that are a requirement or something they can justify.

 

[ToM7]

the end of the ipod line

i think thats is the end of ipods line
because all the attention is on iphone & most & most of the people al around the globe dreaming about iphone ..

 

[GreatDrok]

What? Microsoft is going to announce earning tomorrow but in the last quarter Microsoft brought in $13B in revenue that quarter ( versus $8B for Apple this one) and approx $3B in profit (versus approx $1B ) for Apple. They probably won't set a quarter record for themselves, but will still most likely have made twice as much money. That's all pre Win7 release which should recharge the margin growth a bit year-over-year.

Well, MS have now announced it and their profits are down by 1/3rd and revenue has dropped by 17% (http://news.bbc.co.uk/2/hi/business/8166262.stm). Along with the news that Apple basically owns the $1,000+ part of the market where most of the profits are I would say that things are looking grim in Redmond.

 

[Vyriss]

Well, MS have now announced it and their profits are down by 1/3rd and revenue has dropped by 17% (http://news.bbc.co.uk/2/hi/business/8166262.stm). Along with the news that Apple basically owns the $1,000+ part of the market where most of the profits are I would say that things are looking grim in Redmond.

I guess you missed the part about Microsoft raking in more than $3 billion in a mere 3 months. Grim, indeed.

 

[GreatDrok]

I guess you missed the part about Microsoft raking in more than $3 billion in a mere 3 months. Grim, indeed.

No, I didn't miss that. The difference is that their profits are on the way down and they are losing market share. This is not the direction they want to be going. The only reason they are making this amount of money is because they are a monopoly. People who can move away from their products are doing so. They are getting hemmed in. The really cheap sector is increasingly looking at Linux so they have to keep selling cheap XP or Win7. The high end is going to Apple. This is not good despite the profits.

MS is in decline. We always knew it would take time but they are losing ground.

 

[DMann]

I guess you missed the part about Microsoft raking in more than $3 billion in a mere 3 months. Grim, indeed.

In regard to performance, projected earnings, next Q guidance, and Google's & Apple's current success, this current trend spells out grim and grimmer.....Kevin Turner has left the building...

 

[tabasco70]

wow.
and i thought apple called microsoft to complain that their ads were hurting their sales?
i feel like lowering prices helped apple and that microsoft's ad backfired.
think about it. the premise of microsoft's ads were that:

The buyer wants a nice computer. They look at a Mac. They want it. But they can't afford it, so they go with a PC.
--
The aim was to point out that PCs were more affordable.
--
This then causes Apple to lower prices.
--
Now that prices are lower, more people can afford the macs they wanted before.
So apple's sales increased. Thanks microsoft!

 

[AidenShaw]

In regard to performance, projected earnings, next Q guidance, and Google's & Apple's current success, this current trend spells out grim and grimmer.....Kevin Turner has left the building...

I don't think that a billion dollars a month in profit during the worst economic slowdown since the late '20s is that grim.

Especially in a quarter where Microsoft had no major new products, and particularly in a quarter where the next major release of the flagship client and server operating systems are being wrapped up - with rave reviews from the all sides of the fence.

The Mac iconoclast in our group said a couple of days ago that he was using Win2k8R2 and Win7, and that they were the best OS's that he's ever used. And this is a guy that has had to fight for exceptions to the Windows-only corporate standard all along to keep his Powerbooks and Macbooks. (He's been bi-lingual all along, btw)

Smart investors will notice good profit numbers in a difficult quarter, and great prospects for future quarters. The September quarter should be good - since any PCs sold get a Win7 upgrade included. The December quarter will be the holiday sales with normal retail sales of Win7.

Fanbois will focus on a percentage decline from year ago numbers, and claim that the sky is falling.

 

[DMann]

I don't think that a billion dollars a month in profit during the worst economic slowdown since the late '20s is that grim.

Especially in a quarter where Microsoft had no major new products, and particularly in a quarter where the next major release of the flagship client and server operating systems are being wrapped up - with rave reviews from the all sides of the fence.

The Mac iconoclast in our group said a couple of days ago that he was using Win2k8R2 and Win7, and that they were the best OS's that he's ever used. And this is a guy that has had to fight for exceptions to the Windows-only corporate standard all along to keep his Powerbooks and Macbooks. (He's been bi-lingual all along, btw)

Smart investors will notice good profit numbers in a difficult quarter, and great prospects for future quarters. The September quarter should be good - since any PCs sold get a Win7 upgrade included. The December quarter will be the holiday sales with normal retail sales of Win7.

Fanbois will focus on a percentage decline from year ago numbers, and claim that the sky is falling.

As fangirls will bend over backward to defend the lackluster quarterly performance and outlook of one company, while flippantly attempting to belittle the success of another by citing hearsay, sophomorically paired with a feeble allegorical statement:

Which is probably why Apple Legal was upset with Microsoft for the Laptop Hunter ads.

They don't want anyone to notice the emperor's clothes....

 

[BongoBanger]

In regard to performance, projected earnings, next Q guidance, and Google's & Apple's current success, this current trend spells out grim and grimmer.....Kevin Turner has left the building...

Unless they're counting revenue generated from W7 sales to OEMs in Q3 then it's going to be a poor quarter too - and by 'poor' I mean only making an enormous amount of profit rather than an astronomical amount - however once recovery kicks in and W7 goes on general release Microsoft's client revenue will increase dramatically which makes 2010 look pretty positive for them.

Anyone who thinks that the fact that a company who can still make a huge profit in the most trying economic circumstances for over 50 years is doomed is kidding themselves and really has no grasp of business models and economic cycles.

 

[AidenShaw]

Unless they're counting revenue generated from W7 sales to OEMs in Q3 then it's going to be a poor quarter too...

There's also expected to be decent back-to-school sales, helped by the "free Windows 7" upgrade for anyone buying a Vista system today.

Anyone who thinks that the fact that a company who can still make a huge profit in the most trying economic circumstances for over 50 years is doomed, is kidding themselves and really has no grasp of business models and economic cycles.

Agree - focusing on the comparison with year-ago numbers misses this positive interpretation.

Soon, those year-ago numbers will be from the downturn, and we can hope that *all* companies show huge improvements from the year-ago quarters.

 

[ThunderSkunk]

Soooo wait a minute here. Apple's having their best quarter, and Microsoft is having their worst year...

How much $ is this?

Apple's already made 9 Billion this year (what?), and MS's best quarter made them 3 Billion... ???

No way did Apple make more money than MS. But, can we get an actual dollar amount ytd or last 4 quarters? Where do you guys find that kind of info?

I've often wondered just how far apart the number are, considering how many things MS has to do to make its money, vs how many things Apple does. I can find out whose stock prices are up and down, and growth and blah blah blah, but in the great poker game, lets see the chips on the table.

 

[Goona]

Unless they're counting revenue generated from W7 sales to OEMs in Q3 then it's going to be a poor quarter too - and by 'poor' I mean only making an enormous amount of profit rather than an astronomical amount - however once recovery kicks in and W7 goes on general release Microsoft's client revenue will increase dramatically which makes 2010 look pretty positive for them.

Anyone who thinks that the fact that a company who can still make a huge profit in the most trying economic circumstances for over 50 years is doomed is kidding themselves and really has no grasp of business models and economic cycles.

You don't know what will happen in the future, all your saying is conjecture. Right now they have falling revenues and profits and have started laying off workers, that's what we currently deal with.

 

[G58]

MS: Doomed

I guess you missed the part about Microsoft raking in more than $3 billion in a mere 3 months. Grim, indeed.

And more interestingly, their future releases aren't predicted to have any major effect either:

"Microsoft is slated to release its newest and much-vaunted operating system, Windows 7, on October 22, as well as a new version of its popular Office productivity software in the first half of 2010. However, analysts don’t see either of these events as catalysts to reverse the company’s recent downturn."

Source: <http://www.dividend.com/blog/?p=11590>

That's Paul Graham's prediction coming true imo.

 

[twoodcc]

always nice to hear apple doing well

 

[DMann]

Anyone who thinks that the fact that a company who can still make a huge profit in the most trying economic circumstances for over 50 years is doomed is kidding themselves and really has no grasp of business models and economic cycles.

Microsoft was founded in 1959 you say, when Bill Gates was at the ripe age of 4 years old? I find that to be truly remarkable, considering that the term "software" had been coined circa 1958, when he was 3.

Although I never made the claim that Microsoft is doomed, it is clear that, despite their petty efforts to steer consumers away from purchasing Macs, Apple has continued to grow and prosper, even "in the most trying economic circumstances," while MS has continued to decline, all the while collecting the majority of its profits by default of its previously, ill begotten, exclusive OEM deals and licensing agreements - which is nothing to boast about, quite frankly. Erosion of this default income, both current and projected, has only further discouraged investors, and whether or not this changes in the foreseeable future, this current downturn, in lieu of the significant layoffs of company employees, is the reality of now.

 

[BongoBanger]

Microsoft was founded in 1959 you say, when Bill Gates was at the ripe age of 4 years old? I find that to be truly remarkable, considering that the term "software" had been coined circa 1958, when he was 3.

The reference is to the macroeconomic environment, not MS.

Although I never made the claim that Microsoft is doomed, it is clear that, despite their petty efforts to steer consumers away from purchasing Macs, Apple has continued to grow and prosper, even "in the most trying economic circumstances," while MS has continued to decline, all the while collecting the majority of its profits by default of its previously, ill begotten, exclusive OEM deals and licensing agreements - which is nothing to boast about, quite frankly. Erosion of this default income, both current and projected, has only further discouraged investors, and whether or not this changes in the foreseeable future, this current downturn, in lieu of the significant layoffs of company employees, is the reality of now.

Really? By 'continued to decline' do you mean the record growth and revenue in 2007/8?

You don't know what will happen in the future, all your saying is conjecture. Right now they have falling revenues and profits and have started laying off workers, that's what we currently deal with.

Yup but since this latest downcycle is following the classic patterns of every boom and bust cycle before it - albeit it's a deeper bust - I see no reason that a company who is still making colossal amounts of revenue and profit won't see it through and come out strongly when the next boom cycle kicks in.

 

[DMann]

The reference is to the macroeconomic environment, not MS.

This is not the way it reads, however.

Really? By 'continued to decline' do you mean the record growth and revenue in 2007/8?

As previously stated:

Although I never made the claim that Microsoft is doomed, it is clear that, despite their petty efforts to steer consumers away from purchasing Macs, Apple has continued to grow and prosper, even "in the most trying economic circumstances," while MS has continued to decline, all the while collecting the majority of its profits by default of its previously, ill begotten, exclusive OEM deals and licensing agreements - which is nothing to boast about, quite frankly. Erosion of this default income, both current and projected, has only further discouraged investors, and whether or not this changes in the foreseeable future, this current downturn, in lieu of the significant layoffs of company employees, is the reality of now.

The decline noted refers to the time period since the Laptop Hunter ads, which were not airing in 2007/08.