AAPL tanks after best quarter in history
Apple announced earnings today. Among the disappointing news for the quarter:
- $9.6B revenue, $1.6B profit, $1.76 EPS ($1.62 expected)
- Mac revenue up 44%
- iPod revenue up 17%, a mere 22M sold in the quarter
- 2.3M iPhones sold (4M to date)
- Apple Retail Stores: 53% sales increase, 35% increase in traffic (almost 40M visitors)
- iTunes Store is reported in the segment “Other Music Related Products and Services”, and revenue is up 27%.
- Leopard made $170M in it’s first quarter (Tiger made $100M)
- Socked away $3B in cash, for a total of $18B in reserves.
In short, it was the best quarter in Apple’s history. But the stock has tanked after hours, down to $138 (from a high of $203 recently). Why? In part because the overall market is tanking because we’re in a recession and it’s all George Bush’s fault.
But there was some Apple-specific news that scared investors: the guidance given for next quarter is only 29% growth. Only 29% growth for a company the size of Intel & IBM.
But the biggie was that iPod growth (in the US only) had slowed to 5%, suggesting that the market might finally be saturated. More specifically, it’s the market for music players in the US that is slowing:
- While unit sales were only up 5% in the US, overall iPod revenue was up 17%. That’s the same revenue growth as last year, when unit sales were up 50%. How’s that possible? 1) international has lots of room for growth, 2) the average sale price is much higher, due to premium iPods like the Touch.
- The iPod is transitioning away from being just a music player. The Touch is the future of the iPod, and it’s a wifi-enabled mobile computer. The SDK is coming next month, and tons of apps are coming (esp. given that there are already 4M users).
It might be a good buying opportunity: Apple stock drop seen as latest buying opportunity