[7/13/2005, 10:17pm EDT: The following article is being brought to the top to highlight an amazing journalistic misstep made by Bloomberg News earlier today. The original article as posted on MacDailyNews exactly 12 hours ago at 10:17am EDT in italics.]
“Apple Computer Inc.’s iPod shipments probably dropped in the third quarter from the second, the first decline in more than two years and a sign the surge in demand for the music players may be waning,” Bloomberg reports. “Apple, which made its name selling Macintosh computers, will say today iPod shipments dropped to 5.29 million in the three months ended in June from 5.31 million in the second, according to a Bloomberg News survey of eight analysts. Sales of the iPod, which generated almost one third of Apple’s $3.24 billion in revenue, are up sixfold from 860,000 a year earlier.”
Bloomberg reports, “The drop in iPod shipments reflects a lack of new models and disappointing appetite for the shuffle player, a low-cost model unveiled by Chief Executive Officer Steve Jobs in January.”
Full article here.
MacDailyNews Take: What drop in iPod shipments? Is this a time warp? Is the market closed already?
We surveyed eight analysts once: they told us Apple Computer would be dead in a year. That was 10 years ago. How about we wait for the actual results from Apple due at market close today before making proclamations, okay?
MacDailyNews Take Update: Apple today announced financial results for its fiscal 2005 third quarter ended June 25, 2005, reporting the highest revenue and earnings in the Company’s history. Apple posted a net quarterly profit of $320 million, or $.37 per diluted share, and revenue of $3.52 billion. These results compare to a net profit of $61 million, or $.08 per diluted share, and revenue of $2.01 billion in the year-ago quarter, and represent revenue growth of 75 percent and net profit growth of 425 percent. Apple shipped 1,182,000 Macintosh units and 6,155,000 iPods during the quarter, representing 35 percent growth in Macs and 616 percent growth in iPods over the year-ago quarter.
Related MacDailyNews articles:
Wall Street wants to see Apple grow iPod unit sales – July 13, 2005
Comprehensive survey shows ‘iPod Halo Effect’ is increasing Apple Mac sales, market share – July 12, 2005
Smartmoney.com article sounds stupid about Apple’s ‘iPod Halo Effect’ – July 12, 2005
SG Cowen survey shows evidence of a significant iPod halo effect boosting Apple Mac sales – July 12, 2005
Analysts expect Apple to post $3.33 billion in revenue for Q3-2005 on July 13 – July 07, 2005
Merrill Lynch: Mac sales ‘appear robust,’ expects futher evidence of ‘iPod Halo Effect’ – July 07, 2005
BofA raises Apple earnings estimates, forecasts 5.4 million iPods, 28-percent Mac growth for quarter – July 07, 2005
TheStreet.com dubiously concludes that iPod demand has slowed, could impact Apple earnings – July 06, 2005
J.P. Morgan raises Apple estimates based on ‘more optimistic’ Mac shipments – July 05, 2005
First Albany raises Apple earnings, sales, iPod forecasts, cuts Mac mini forecast – July 05, 2005
Apple to webcast third quarter 2005 financial results conference call on July 13 – July 05, 2005
RealMoney: Apple’s iPod Halo Effect ‘quite profound,’ Macs taking good market share from Wintel – June 27, 2005
Morgan Stanley: Apple’s ‘iPod Halo Effect’ is ‘roughly double what the market expects’ – March 18, 2005
It is interesting to note that, when Apple celebrates its 30th anniversary, it will have survived longer as an independent designer and manufacturer of computers than either Digital Equipment (which was occasionally cited as a potential suitor for Apple in the late Eighties) or Data General.
Even Compaq only managed to maintain independence for 20 years, and out of the original BUNCH (Burroughs, Univac, NCR, Control Data and Honeywell), NCR only managed 39 years before becoming a unit of AT&T, Control Data was on the ropes in around 30 years, and Honeywell managed 36 years, the last several as a joint venture with Compagnie de Bull and NEC. Even Burroughs and Univac only survive now as Unisys as a result of their outsourcing & consulting businesses.
In contrast, Apple now looks more likely to survive than ever: it is heading towards being a $10 billion music business in the next five years or so in addition to being a $6 billion computer business, and it’s results yesterday even managed to make this lunchtime’s Channel 4 News here in the UK which even mentioned the dreaded “halo effect”.
I’m planning to buy a new Mac and at least one iPod in the next 3-4 months. I don’t think the demand has slowed at all. I plan on giving one to my 80 year old mother who loves her TiVo, and she loves music and has approx. 300 CDs, so I know she’d love an iPod.
I just wish I could get a new Mac with a new Intel chip before November????
Don’t let Bloomberg get away with this sloppy journalism. To contact the reporter on this story:
Connie Guglielmo in San Francisco at cguglielmo1@bloomberg.net
The analysts DO NOT have to take one side or the other before the conference call. What they need to do is SHUT UP and listen…. then ask their always LAME questions about new products that won’t be discussed in this forum.
The problem with analysts (at least most of them) is that they don’t spend enough time with the company and execs to KNOW what’s going on… THEY GUESS, based on the high flying Mac Rumor Mill which is almost NEVER right!!
Let’s see, what was that PROFIT $$$ number again? Buy the stock, we’re here to stay!!
I’ve sent this to the author:
Dear Connie,
This is truly the most laughable article I’ve read from an Apple naysayer in a long time. I find it amazing what lengths some journalists will go to to discount Apple’s success. This is up there with the article from tech pundit Rob Enderle last year when he said, “The new iMac G5 is poorly designed…It could topple over in the event of and earthquake and leave broken glass scattered about.” Yeah right, broken glass on a plastic computer…
Back to my point… Where did you find your sources? Seriously, this is completely irresponsible journalism. Purely conjecture. This should be illegal.
This just goes to show how little foresight most tech analysts have and why they will never understand Apple’s potential or what the company is about. They need to realize that Apple is not a commodity driven company. Apple’s focus is on design, ease of use, and bottom line.. Quality! Is it really so hard to fathom that the masses are finally figuring this out? Apple and Steve Jobs are creating one hell of a legacy!
More than 6 million iPods shipped and Mac sales have tripled the growth rate of the PC industry! It’s a good time to be an Apple Stock holder!
Mike Kraemer
I finally read the full text of the Bloomberg article. In addition to its irresponsible reporting, I found this comment as an explanation for the alleged drop in iPod sales: “It’s the law of large numbers,” said Jim Grossman. Neither Grossman nor the author of the story elaborate whatsoever. Now, if you go look at the full text of that article from not-so-smartmoney.com, you find the exact same thing: “And at some point the law of large numbers kicks in, naturally slowing down growth rates.”
Bzzzzt, wrong answer. Thanks for playing. That ain’t the law of large numbers. If I remember correctly, that law says that as sample size increases the actual results will approach the expected results. If I flip a coin four times, I might get three heads and one tail (a 75%-25% split in outcomes), which is not very consistent with the 50-50 probability of outcome. But if I flip a coin four million times, I might get 2,006,832 heads and 1,993,168 tails (a 51.2%-49.8% split).
What does any of this have to do with sales estimates, or Apple’s long-term prospects? Beats me. So why do analysts keep citing it? Am I missing something, or are they just morons who are trying to invoke a “law” to support their BS?
To MCCFR….
OUSTANDING COMMENTS!!!!