Apple may be the top music seller in the world, but that's not where the profit is. Apple's hardware sales – buoyed by high-margin iPhone and Mac sales – have led Apple to gross margin of 40.9% (up from an already lofty 37.9%) and an all-time record in quarterly profit of $15.68 billion ($3.67 per share), up from $11.88 billion ($2.50 per share) in the year-ago quarter.
Apple's increase in profit topped estimates in some measure because of new accounting changes that make Apple's balance sheet a bit more transparent, and have the effect of bringing into the quarter of sale revenue that previously was spread across the month of sale and the twenty-three months following. This explanation why analysts didn't foresee the profit number doesn't reduce the impact of Apple's feat: Apple's new accounting principle yielded a boots of 46.8% profit, compared to the year-ago quarter after it was adjusted to accommodate the new accounting principle. Apple's profit surge isn't an accounting artifact, it's real growth.
Under the new principle, revenue (and thus profit) will be accounted for in a manner that more realistically ties a quarter's profit to its sales. The new principle increases transparency. This is good for people trying to make sense of Apple's balance sheet. Comparisons between quarters will make sense because the accounting principle was adopted retroactively: prior quarter results have been provided under the new rule.
So, Apple Beats Estimates Again. What's the News?
The news is that Apple's non-US sales have grown to the point they now are larger than Apple's US sales, meaning that Apple's strategy to reach a global market is working more than at just a couple of customer sites. Apple's recruitment of a Microsoft exec to lead European operations may be part of a new phase of foreign growth effort designed to leverage the global-friendly infrastructure Apple built in its localization-friendly platform (I say "platform" when I mean Cocoa, but Cocoa exists on both the Mac and, in modified form, the iPhone).
The iPhone, which was an established quantity a year ago when it helped Apple set what was then a record quarter, helped Apple again with a 100% increase in sales over the prior year's comparable quarter. (The smartphone market didn't double; this is share growth.) While some had predicted even more of an increase (9m sold instead of 8.7m sold), 100% gain in a year isn't bad when one's comparative period was stellar to begin with. The new iMac is a likely high-volume participant in Apple's 3.36m units of Macs. Considering that the highest-end iMacs were available only from Apple as a BTO option, it's likely that Apple gained quite a bit of its high-margin sales from buyers who came directly to Apple and let Apple keep both the manufacturer profit and the profit ordinarily ceded to retailers.
Wait, there's more.
In a break from usual silence on unannounced Apple products, and in a nod to recent details-free notices of an Apple event tomorrow, Steve Jobs yesterday said in the earnings press release: “The new products we are planning to release this year are very strong, starting this week with a major new product that we’re really excited about.”
Apple is releasing the next product it believes will take the baton from the relay team people keep saying has run out of members: iMac, iPod, iPhone ... and whatever its newest addition proves to be. Apple is opening the first page on the next chapter of its "go big or go home" playbook, and if Apple keeps rolling out successes like those that carried the baton in the past, shareholders' future will look a lot like the past ten years.
No comments:
Post a Comment