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Apple Q3: Solid result, iPhone heading to Asia in 2008

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Apple Q3: Solid result, iPhone heading to Asia in 2008

Cupertino (CA) – There is hardly anything Apple can complain about these days: Record revenues, record profits, record Mac sales, record iPod sales and a decent introduction of the iPhone. The company, valued now at nearly $130 billion, showed confidence in the fiscal Q3 conference call and revealed future plans for its iPhone.

During the call held this afternoon, we learned that Mac sales were recorded at their highest level ever, with 1.7 million units being shipped, a 33% increase. iPhone shipments (in only the last 30 hours of June) stood at 270,000. It was clarified later that some of those 270K units were products either in transit or already shipped to AT&T stores as inventory at that time. Not all were actual sales. Only 146,000 iPhone subscriptions were activated during the last two days of the quarter (fiscal Q3, calendar Q2).

Apple took some time out to make a formal apology to everyone who had anything less than “a perfectly experience in activation.”  Apple indicated AT&T had corrected the problem and now there was a “very high” success rate of activation.

The company expects to sell the millionth iPhone by the end of the current quarter (end of September) and pointed out that it plans to aggressively sell the device in Europe in the next quarter. In 2008, the iPhone will be heading to Asia, executives confirmed. Combined Apple TV and iPhone hardware revenue accounted for about $180 million in revenue in FQ3.
 
Company representatives once again emphasized the firm’s plans to take 1% of the worldwide cell phone market and sell 10 million “across 2008”.  Apple apparently is working on revisions and what was indirectly referred to as “new family products”, which is expected to help the company attain that goal.

When pressed on the issue by several analysts on sales forecasts, new products and expanded markets, Apple consistently gave out a standard reply about how Apple believes the iPhone is a “breakthrough product” suitable for everyone in every market, without providing further insight on the sales and marketing startegy.  However, Apple representatives did indicate their goal for the iPhone success is measured by company executives in years, not months.

Overall, Apple experienced 24% revenue growth over last year. The company saw $5.14 billion in revenue and their its capitalization now approaches Intel (nearly $130 billion at the current, Wednesday after market stock price). After-hours market activity had Apple shares moving up and down before and after the call. Hitting as low as $135 in after-market trading before the conference call, it later rebounded nicely.  It even exceeded $150 for the first time ever with a high of around $152. That’s up $50 from Apple’s previous quarter’s all-time high of $100. Apple has also had an overall positive stock price increase since April, 2003 when it was valued below $6.

This quarter, 42% of revenue came from the iPod alone.  The iPod also saw a 21% growth in unit shipments to more than 9.8 million.  iTunes saw revenues jump 33%. Apple said it now has a 71.5% of the worldwide market share in MP3 sales.

Apple would not give out any real guidance on revenue from AT&T, nor from prominent front-page vendors with software visible on the main iPhone screen. When asked specifically about this by analysts, Apple executives simply stated they could not comment on agreements or contracts.