Tech News | 21 Jul 2008 | Listen   | Print  |

Apple Reports Billion Dollar Profit for Q3 2008

by TidBITS Staff

Apple earned a profit of $1.07 billion on $7.46 billion in sales ($1.19 per share) in its third fiscal quarter ending 28-Jun-08. This represents a 31 percent increase in profits and 37 percent increase in revenue over the same quarter a year ago, in which the company earned $818 million on $5.41 billion of income ($.92 per share). These figures don't represent the increase in cash that Apple has hoarded, as earnings figures include intangibles and Apple has opted to book iPhone and some other revenue over a period of time. Apple had $19.5 billion in cash and equivalents on hand at the end of their previous quarter. The earnings webcast can be heard on Apple's site.

Apple also sold 717,000 iPhones, an increase of 63 percent over the year-ago quarter, which included 270,000 phones sold during just the opening weekend of sales of the first iPhone model.

These unit sales and revenue numbers are even more interesting because Apple doesn't recognize the revenue for the iPhone - show it in their earnings - when an iPhone is sold, but instead spreads out the income over many quarters. Apple chose to stop accounting for income from any new iPhone sales between 06-Mar-08, when the iPhone 2.0 software was announced, and 11-Jul-08, when it shipped along with the iPhone 3G. That means the $419 million in iPhone revenue noted for the quarter ending 28-Jun-08 excludes even the spread-out part of between $1.5 billion and $2 billion in hard cash taken in. This should make for an extraordinary fourth fiscal quarter.

This quarter is also part of the continuing renaissance of Macintosh computers, after years of having iPod sales overshadow the computer side. Apple's indirect strategy of gaining users through the halo effect of producing the iPod and the iPhone led to the all-time highest number of Macs sold in a quarter - just under 2.5 million, or a 41 percent gain over a year ago. Apple is now the third biggest computer seller in the United States with about 8 or 9 percent of market share (see "Apple Gains Larger Slice of Computer Sales," 2008-07-18).

The company didn't slack on iPods, though, pushing over 11 million out the door, which was a more humble 12 percent gain, not surprising with no particular holiday or iPod product announcements in the latest quarter.

Retail stores saw incredible growth, likely due to the influx of iPhone buyers, with a 58 percent year-over-year growth in sales, a result of 32 million customers in the third quarter, up from 22 million a year ago. The stores brought in $1.44 billion, selling 476,000 Macs in this latest quarter. Apple said that the NPD Group, which tracks retail sales, saw Apple's percentage rise from 15 to 20 percent of sales compared with a year ago.

The company expects a slight increase to $7.8 billion in their fourth fiscal quarter, which is, however, an increase of 25 percent over fourth quarter 2007. For fiscal 2008, Apple expects to recognize $32 billion, or 35 percent over the previous full fiscal year.

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