Apple is too cool for the recession, posts record earnings

You’d think the recession would be hurting Apple’s bottom line lately, especially since the firm focuses on boutique products priced at a premium. Well, you’d be wrong. Apple has posted its best second fiscal quarter ever, with net income of $1.21 billion on revenue of $8.16 billion.

In case you’re wondering, yes, those numbers do represent important growth. Apple posted "only" $1.05 billion profits and $7.51 billion revenue for the same quarter last year.

The economic climate still hurt Apple’s Mac business, causing shipments to shrink by 3%. However, the company counteracted that with 3% growth in iPod shipments and 123%—yes, a hundred-and-twenty-three percent—growth in iPhone shipments. Admittedly, the second quarter of Apple’s 2008 fiscal year ended on March 28, long before the release of the iPhone 3G. But that’s still pretty impressive.

Some believe Apple will help sagging Mac shipments by introducing a netbook in the near future. Engadget listened to the earnings conference call and got the latest word from Apple COO (and temporary Steve Jobs stand-in) Tim Cook on that topic:

When I’m looking at what’s sold in the Netbook market, I see cramped keyboards, junky hardware, very small screens, bad software. Not a consumer experience that we would put the Mac brand on. As it exists today, we’re not interested in it nor would it be something customers would be interested in the long term. We are looking at the space. For those who want a small computer that does browsing/email, they might want an iPhone or iPod Touch. If we find a way to deliver an innovative product that really makes a contribution, we’ll do that.

A big "maybe," in other words. If there’s any truth to the reports we’ve seen recently, however, Apple’s rumored netbook will cost more and include better hardware than your typical Eee PC or Aspire One.

Comments closed
    • pogsnet
    • 10 years ago
    • Convert
    • 10 years ago

    Frankly I hope Apple stays out of the netbook segment and instead focuses on cheaper Mac’s and Macbooks, oh, and maybe a worthwhile shuffle.

    Netbooks seem so pointless to me, once you get a large enough keyboard that you can actually type on you might as well just get a 13inch laptop and be done with it.

    • Palek
    • 10 years ago

    Argh, supposed to be a reply to #20.

    If Apple owners are all brainless snobs like you are suggesting then how come they are swimming in money? Maybe they just have their priorities straight and don’t want to waste their creative energies working in a less than ideal computing environment when Apple can give them a highly integrated and streamlined experience where everything “just works,” so that they can make more money. Isn’t it some perverted, reverse snobbery to suggest that people who choose the Apple way are somehow less smart than those who pick the less polished but more versatile and tweakable Windows?

    Just for the record, I’m a Windows user.

    • snakeoil
    • 10 years ago

    people that buy apple products must be understood, they pretend that when they buy an ipod or iphone they gain status and they become part of a group, the only thing they want is to be accepted in the group, they don’t care about performance or individuality. its in fact a religion and if the great leader would ask them to sell the house and give it to apple they would (seriously) they must not be ridiculed just understood.

      • adisor19
      • 10 years ago

      That’s your own personal opinion. Unfortunately, it is very wrong. Take me for example. I didn’t buy my first gen iPod cause it gave a certain status(what kind of BS is that ?!), i bought because it was the only MP3 player on the market that had the features i wanted and that was not a pain to use.

      When i bought my Power PC mac mini, i didn’t buy it to be accepted in this l33t group as you claim, i bought it because i had tried Panther emulated on my T-bird through PearPC and i liked and wanted something i could actually run it on full speed.

      Adi

        • no51
        • 10 years ago

        Do you have an Apple sticker on your vehicle?

          • derFunkenstein
          • 10 years ago

          I do. I took one of the ones that came with my Mac and put it on the door of my topper. My wife has one in her back window, too.

            • Convert
            • 10 years ago

            You need to buy a prius and put the sticker on that, it gives 2x bonus points to status.

        • prashu
        • 10 years ago

        that’s not true either.. there were many other mp3 players in the market (not popular though) when 1st gen. ipod was released with more features. ipod doesn’t even have FM radio and the itunes sucks. But for some reason, every one made it popular..
        and iphone.. yes it’s got an amazing screen (innovation indeed!) but again.. no replacable battery and strict policy control on app development.. it’s good but it’s monopolistic nature of apple and mcft that makes people hate them.. not because their products are worthless (some of them are..)

        and I have to agree that it’s a ‘status symbol’ for most people.. when it was released people did whatever they could to get one.. not because everyone is amazed by it’s technology or it’s innovative screen.. but only because to own it and say ‘in your face adam!’

          • henfactor
          • 10 years ago

          Then is that not Apple’s genius? Creating a product that someone who kill their own grandmother to own?

    • adisor19
    • 10 years ago

    Aaaah the Apple haters frothing at the mouth 😀

    Kinda hurts, eh ? hehe

    I am surprised Apple managed to do this good in such bad economical context but i think the situation is temporary and it won’t last in the future. This could be good for us, the consumer as it may finally force Apple’s hand to start offering that mythical expandable mini tower that everyone’s been wishing about.

    Adi

    • provoko
    • 10 years ago

    1.21 giga watts!?!?!

    • derFunkenstein
    • 10 years ago

    This is what makes the anti-Apple fanboys so frothy at the mouth – Apple proves time and time again they make products that people will buy. It makes alot of the readers of this site completely lose their minds because it’s Not A Good Value ™ or Just A Fancy PC ™.

    • Machupo
    • 10 years ago

    In a recession, people seem to buy quality rather than quantity… If I get a new suit any time soon it’s going to be bespoke.

    • NeXus 6
    • 10 years ago

    I smell another Enron.

      • indeego
      • 10 years ago

      Huge difference. Apple produces measurable prouct. Enron did no such thingg{.}g

        • ssidbroadcast
        • 10 years ago

        Enron also relied heavily on mark-to-market… which our banks are currently doing now. :/

        • JustAnEngineer
        • 10 years ago

        Enron was actually a large power producer.

          • MadManOriginal
          • 10 years ago

          I don’t want to pull this too far OT but he’s right, Enron didn’t produce jack. They were energy and related commodities i[

    • derFunkenstein
    • 10 years ago

    Conspiracy theorist off starboard, Captain!

      • NeXus 6
      • 10 years ago

      Do you believe everything you read?

        • derFunkenstein
        • 10 years ago

        There’s no evidence to even support your “smell”. Are you sure you didn’t just shit your pants a little the last time you think you farted?

          • NeXus 6
          • 10 years ago

          No evidence? That’s what they kept saying about Enron.

    • ludi
    • 10 years ago

    Someone was asking a while back why Microsoft is bothering with those Imapc commercials. This is why.

      • PRIME1
      • 10 years ago

      Not really. Most of the money came from iPod/iPhones. Their computer business actually shrank.

        • Meadows
        • 10 years ago

        It didn’t shrink considerably, which is unsurprising, as the brainless snob who swim in money are very likely not affected by recession as much as average people.
        Rich people are always rich, and that’s where Apple’s business is.

          • axeman
          • 10 years ago

          Ouch, but you do have a bit of a point there. People who buy apple products tend to be those with a lot of disposable income.

        • ludi
        • 10 years ago

        Shrank by 3% <=> Outperformed the market by 4%.

    • Rakhmaninov3
    • 10 years ago

    Wait until they find out that Steve Jobs really is still on the job, only this time he’s working backstage to apply the RDF to cook the books.

    • Kraft75
    • 10 years ago

    Well, they’d have posted a bigger earning if they wanted my money and came out with a 64GB iPod Touch already… Been waiting over a year…

      • Meadows
      • 10 years ago

      You’re right, your handful of dollars matter more than anything.

    • Thresher
    • 10 years ago

    Watch the Mac sales decline though. While iPods and iPhones rake in big numbers, the bread and butter is in Macs (also where they get their highest mark-up). Apple has not changed their product mix (except for the addition of the Mac Mini) since Jobs came back. Quite honestly, I don’t know if they have the right mix for this economy. Furthermore, I am not convinced that their segmentation is correct for the market as a whole.

      • TheShadowself
      • 10 years ago

      Actually the product mix has changed many times since Jobs came back.
      Change 1) elimination of all the redundancy in the product lines (who the hell knewl the difference between the Performas and the Centrinos [though I may have gotten the names wrong]?)
      Change 2) kill everything but computers and computer related software (no more Apple cameras, no more Newtons, no more Pippins, etc. — though you could argued that this really isn’t Mac related even though these side products were just draining Apple of cash and thus jeopardizing the Mac lines)
      Change 3) bring out the iMac
      Change 4) introduce the MacBook and rename the pro line the MacBook Pro
      Change 5) introduce the Cube (probably one of the worst product lines Jobs ever authorized)
      Change 6) introduce the Mac mini

      I’m sure there have been several things I’ve missed (I don’t track Apple all that closely) and some true blue Apple watcher could probably double or triple this list.

      • derFunkenstein
      • 10 years ago

      you missed the consumer portable in that “shake up” stuff. And the downsizing of the product line. Everything has been about streamlining under Jobs II.

        • JustAnEngineer
        • 10 years ago

        Apple’s latest hot-selling i-phone app shakeup is in extremely poor taste:
        §[< https://techreport.com/forums/viewtopic.php?f=15&t=65854<]§

        • Thresher
        • 10 years ago

        That was my point though.

        He came back, they went to one consumer line (later 2) for desktops and 1 pro line. Same thing for laptops.

        They still don’t have anything for the high performance consumer. They still don’t have anything that could be considered entry level (as far as the whole market is considered).

          • derFunkenstein
          • 10 years ago

          and their lower-than-average drop in computer sales proves that they don’t need them. They’re not interested. I’m not making an excuse; they just don’t want that money.

          You know who wants that money? ExpressHD and EFI-X. I’ve got most of the requisite hardware and a strong desire to have a hackintosh that works correctly. I’m *this close* to buying one.

    • gamerguy76
    • 10 years ago

    Frak! I hate apple. I really thought they were going to suck it, so I can make fun of them for being snobby asshats. But gotta give them props for this. Those are some ridiculous numbers during a recession.

    • paulWTAMU
    • 10 years ago

    I may not like all of their business choices as a consumer, but damn, they seem to be working.

      • Thresher
      • 10 years ago

      You mean narrower ecosystem. The Mac environment is narrowly focused and hits its intended audiences like a laserbeam. The question is whether or not those targeted audiences will grow or shrink in the coming years.

        • ltcommander.data
        • 10 years ago

        Well I guess it’s how you look at it. Yes, Apple does focus on certain types of users. But for those users, Apple is trying to add value by creating a cohesive ecosystem of products that work together say computer, software, music player, cell phone, music/app store, monitors, routers, backup devices, living room connections, workgroup servers, etc.

        For people looking for this then it’d certainly be a hit and they’d be willing to pay more to have it. For others, they may not be interested or want the freedom to figure it out themselves and maybe save some money. The question is of course how many are the former and how many are the latter and has Apple fully tapped their market yet? Probably not, so they still have room to grow even if they don’t change their strategy.

        At least it seems more sensible/sustainable than pursuing lower-profit margins for raw unit sales. This may work if you hope to retain users and up-sell later. The risk is though that they just switch to a competitor or they remain focused on lower-priced lower-margin products, which don’t provide the incentive or monetary means to continue innovating or develop value in higher-end models that would encourage people to move up.

        • StashTheVampede
        • 10 years ago

        Apple’s lasebeam is on consumers (they do have plenty of enterprise things) and they do things well.

        The iPhone is great phone for the consumer (not so good for all corporate environments) — one button, shiny, syncs with everything, etc.

        Magsafe (used on all laptops) is a wonderful item for the consumer — they know people will move around often and this helps prevents breakages.

    • AMDisDEC
    • 10 years ago

    Apple is a shining beacon in a crowd of dull 1930s wooden wick lamps.
    Harvard Business School should fire all it’s lame professors, restructure and rename itself, The Apple School Of Business.

    • Decelerate
    • 10 years ago

    Like it or not, many companies out there would kill for a 3% drop while retaining superior margins for an upscaled (price-wise) product in this environment.

    • flip-mode
    • 10 years ago

    The lovers and haters can go back and forth all they like, but from a business standpoint, Apple just did something amazing, given the current economic climate. This is the only company I have heard of that has been unaffected. Other high end fashion segments have been hit pretty hard.

      • Hattig
      • 10 years ago

      Porsche also had increased sales and profits. Looks like a lot of rescue money filtered through to executives …

      • rhema83
      • 10 years ago

      Indeed. I don’t see the reason for the fanboism or hate. Apple (APPL) is a business, and it made money in a tough environment. Kudos to Jobs and the team! Other businesses should learn something.

      And why would the haters wish Apple didn’t make the dough? If Apple disappeared today, there will be less pressure on Microsoft to make something polished like Windows 7. I am a PC / Windows user and I love Apple for driving Microsoft to make better products (sans the silly ad war – the money should’ve gone to R&D or customer service).

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