Apple today announced financial results for its fiscal 2008 second quarter ended March 29, 2008. The Company posted revenue of $7.51 billion and net quarterly profit of $1.05 billion, or $1.16 per diluted share. These results compare to revenue of $5.26 billion and net quarterly profit of $770 million, or $.87 per diluted share, in the year-ago quarter. Gross margin was 32.9 percent, down from 35.1 percent in the year-ago quarter. International sales accounted for 44 percent of the quarter’s revenue.
Apple shipped 2,289,000 Macintosh computers during the quarter, representing 51 percent unit growth and 54 percent revenue growth over the year-ago quarter. The Company sold 10,644,000 iPods during the quarter, representing one percent unit growth and eight percent revenue growth over the year-ago quarter. Quarterly iPhone sales were 1,703,000.
“We’re delighted to report 43 percent revenue growth and the strongest March quarter revenue and earnings in Apple’s history,” said Steve Jobs, Apple’s CEO, in the press release. “With over $17 billion in revenue for the first half of our fiscal year, we have strong momentum to launch some terrific new products in the coming quarters.”
“We’re thrilled to have generated $4 billion in cash flow from operations in the first half of fiscal 2008, yielding an ending cash balance of $19.4 billion,” said Peter Oppenheimer, Apple’s CFO. “Looking ahead to the third quarter of fiscal 2008, we expect revenue of about $7.2 billion and earnings per diluted share of about $1.00.”
MacDailyNews Note: Prior to the earning release, the consensus estimates of analysts surveyed by Thomson Reuters for Apple Inc. (AAPL) for Q2 08 were EPS up 23% to $1.07, revenues up 32% to $6.964 billion (vs. Apple’s guidance of $0.94 EPS on revenue of “about $6.8 billion”) and for Q3 08, EPS up 20% to $1.10 and revenues up 32% to $7.159 billion.
Can’t wait to see how TheStreet.com spins this negatively. Probably gross margin.
Only 1.7 million iPhones for the whole quarter. Jesus, that 3G iPhone better come quick.
Boo-Yeah!
— Hano
And, of course, AAPL is down after the news
Well, actually Apple is UP on the day $2.69. It may have dipped from its peak, but the trend is still up.
Afte the initial pop up to $171, AAPL is trading down to $155 and now back up to $158 for the following reasons:
1. Gross margin was 32.9% vs 33.8% expectations.
2. Guidance for Q3 earnings per share stinks, per usual. Interestingly, AAPL guided revenue in line, $7.2 billion vs $7.16 billion expectations.
3. Earnings beat was only $0.09, vs an average of $0.18 over prior four quarters. Earnings beat is trending down sequentially from last quarter.
4. iPhone sales were ~1.7 million vs street expectations of ~1.8 million.
Yeah, but it’s going back up!
Again, the low-ball guidance. They are pulling a Google. They will under promise and over perform, but The Street is not going to go for the lowball guidance tactics. Come on Steve, the 3G iphone is coming out and you know that people from all over the world will be lining up to join the party, yet you’re predicting only $1/shr in earnings for the next quarter? Either the 3G iphone isn’t coming out soon or this is just another ludicrous lowball figure. Either way, the stock is going to vacillate b/w its 25% and 50% Fibonacci lines, (base 115, peak 200) translated to (135 to 155) until this uncertainty works itself out.
rw.
AAPL conference call is now starting. AAPL trading at $158.50
iPhone weak.
Real weak.
That is the trouble with the phone biz – it is all fashion. What is in this month is out next month. And nothing seems to last longer than 6 months.
(Nokia sells more phones in a weekend than Apple sold in 90 days…)
Read at the bottom of CNNMoney where some idiot said “Apple is still a niche player”
These are M$ diehards at work, folks.
Reuters is reporting that AAPL CFO Peter Oppenheimer is guiding gross margin to be flat in the June quarter, compared to this March quarter.
This is being received negatively by the market. AAPL currently trading at $156.70.
(Strangely enough, this information is being published separate from the conference call, which is still ongoing.)
Very nice result indeed, it would be nice to know the iPhones sales in Europe for Q1/2008, I think it has been extremely low (because US sales have certainly been strong and most iPhones hacked abroad are most likely bought in the US as well)
Margin of 32.9% was primarily (~80%) due to expected decline of Leopard in its second quarter. (Initial quarter of major OS release always sees highest sales.)
Other factors affecting gross margin were:
Shuffle price reductions
International price reductions, due to currency fluctuations
iTunes sales mix favored lower gross margin
Sequential decline in revenues from holiday quarter.
Favorable commodity pricing (memory, LCDs) environment.
Long and short, Apple’s gross margin was 32.9%, which is 90 basis points higher than Apple’s previous guidance of 32.0%.
This commentary is being favorably received by the market. AAPL currently trading at $160.60.
Ohhhhhhhh- Fibonacci lines
I got ya Fibonacci line righeeet heee-ah!
Apple have a low guiding because they will not recognize ANY iPhone revenue next quarter until after the 2.0 software is released!!!
This is because of accounting rules.
Apple’s profit forecast missed analysts’ estimates in eight of the nine previous periods. The company topped its forecast in each of those quarters.
Regarding iPhone, Apple says: We expected iPhone to decline more on sequential basis than it did. Started to experience stock out. Inventories are low. US stores have relative more stock-out, probably because they are primary source for phones bought for unlocking.
AAPL reiterates its confidence in hitting its 10 million goal of iPhone sales in 2008. This will include new geographies, and includes both “locked and unlocked” units.
There will be revenue recognition delay for new iPhone hardware sold on or after its March 6 announcement of the 2.0 software free upgrade. When this 2.0 software is delivered, then the revenue will be recognized. Reiterate 2.0 software will be delivered in late June. The 33.0% gross margin forecast incorporates this revenue recognition delay.
This commentary is being favorably received by the market. AAPL is currently trading at $161.25
Okay, let’s see…
Apple sold 1,703,000 iPhones this last quarter. So they need to sell 2,765,667 for the next three quarters in order to reach ten million.
Doesn’t look promising…
Analysts are probing the quality of the earnings, but so far AAPL execs are doing a good job explaining the factors. “Wow, lots of detail” was the response by one analyst after Apple explained the Q2 margin break down.
Third question about gross margin is being asked. AAPL trading at $160.89
Revenue recognition issues for iPhone may lead analysts to reduce earnings estimates for Q3.
Analysts continue to question Apple execs about Q3 gross margin.
AAPL trading at $160.50.
Whether you’re a fanboy or a stock market short, the truth is that Apple beat consensus expectations handily. Growth may be slowing somewhat, but the performance is still stellar. We must take into account that more savvy consumers are holding off for the 3G iPhone. My take on margins is that a flood of Europeans are coming to the US and buying iPhones over here, rather than at higher prices in Europe.
Recently, I traveled to Minneapolis, and during my stay, I visited the Mall of America for the first time. I casually asked Apple Store staff there how many Europeans come over and buy iPhones. Their answer: tons of them.
(The Mall of America is located very close to the Minneapolis-St. Paul International Airport. And there are a ton of very cheap direct flights to Minneapolis from London, France and Scandinavia. I had seen promotions to Europeans to fly to America on shopping junkets, given how strong the Euro has become versus the dollar.)
It’s prudent to guide the street conservatively. I am completely opposed to guidance as a practice. It sets expectations that often cannot be met, and could result in badly beaten down share prices, even though earnings are very strong. And I believe that it’s an excuse for stock market analysts to be just plain lazy. That said, with a softening economy, it’s good to hedge your bets, so conservative guidance is prudent, even if the stock price is soft for a few weeks. Smart investors choose stocks (really, companies) for the long run anyway. If you don’t you’re merely a speculator, not an investor.
To say that earnings “beat” was “only” $.09 above consensus estimates is insane. Most companies would be thrilled to beat the street by a penny. But such are the heightened expectations of Apple.
As it is, Apple is beginning to encounter the law of large numbers. It’s hard for Apple to grow at the rate it has in the past few years. iPod sales will surely level off, simply as the market is saturated. But that is a good problem to have, instead of the challenges the company faced in the now-distant 1990s.
It’s sad how fickle Wall Street can be. It rode Apple stock up, then recently savaged it in a concerted attack to take profits and drive its stock price down. But with the coming 3G iPhone, that might change. It’s amazing what greed will do.
In all, kudos to Apple. The company continues to perform and exceed expectations in a weakening economy. Steve Jobs, his management team and its employees worldwide should be proud.
“Apple have a low guiding because they will not recognize ANY iPhone revenue next quarter until after the 2.0 software is released!!!
This is because of accounting rules.”
Wrong, they will only not recognise the value of the upgrade, which they can pretty much arbitrarily set anywhere from a dollar on up.
Wow, from reading the comments I had no idea so many economists read MDN. Remember to get your news from the source, not the aggregate, and not the aggregate’s comment section …. sigh
Analysts again asking about the tax rate. Another concern is that the lower tax rate (29% vs 31% last quarter) means that the EPS beat really wasn’t as good as the headline $0.09.
Apple says the reason for the tax rate decline was lower interest earnings, and foreign tax rates.
AAPL says previous tax rate forecast for fiscal year was 32%, and is now down to 31% for the year. To get to that level, there was an adjustment down to 29% for Q2. For Q3 it is expected to be 31%.
Yet another question about revenue recognition delay. “If you are providing the software for free, why are you deferring the revenue recognition?” Answer: Customers who bought on or after the annoucnement date (March 6) are presumed to be aware of the 2.0 software announcement, and will expect to have those features in their phone. So until the software is actually delivered, hardware iPhone revenue will be deferred.
Lots of analysts are focusing on revenue recognition, gross margin, and tax rates.
AAPL is currently trading at $161.43.