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Apple (AAPL): FQ4 EPS of $1.82 beats by $0.40. Sales of $9.87B vs. $9.2B. Sees FQ1 EPS of...

Apple (AAPL): FQ4 EPS of $1.82 beats by $0.40. Sales of $9.87B vs. $9.2B. Sees FQ1 EPS of $1.70-1.87 vs. consensus of $1.91 on sales of $11.3-11.6B, in line. Sold 3.05M Macs, 10.2M iPods, and 7.4M iPhones during quarter. Gross margin 36.6%. Shares +5.1% AH. (PR)
Comments (29)
  • Here's AAPL's FQ4 press release:

     

    www.apple.com/pr/libra...

     

    Apple Reports Fourth Quarter Results
    Most Profitable Quarter Ever; Record Mac and iPhone Sales

     

    CUPERTINO, California—October 19, 2009—Apple® today announced financial results for its fiscal 2009 fourth quarter ended September 26, 2009. The Company posted revenue of $9.87 billion and a net quarterly profit of $1.67 billion, or $1.82 per diluted share. These results compare to revenue of $7.9 billion and net quarterly profit of $1.14 billion, or $1.26 per diluted share, in the year-ago quarter. Gross margin was 36.6 percent, up from 34.7 percent in the year-ago quarter. International sales accounted for 46 percent of the quarter’s revenue.

     

    In accordance with the subscription accounting treatment required by GAAP, the Company recognizes revenue and cost of goods sold for iPhone™ and Apple TV® over their estimated economic lives. Adjusting GAAP sales and product costs to eliminate the impact of subscription accounting, the corresponding non-GAAP measures* for the quarter are $12.25 billion of “Adjusted Sales” and $2.85 billion of “Adjusted Net Income.”

     

    Apple sold 3.05 million Macintosh® computers during the quarter, representing a 17 percent unit increase over the year-ago quarter. The Company sold 10.2 million iPods during the quarter, representing an eight percent unit decline from the year-ago quarter. Apple sold 7.4 million iPhones in the quarter, representing seven percent unit growth over the year-ago quarter.

     

    “We are thrilled to have sold more Macs and iPhones than in any previous quarter,” said Steve Jobs, Apple’s CEO. “We’ve got a very strong lineup for the holiday season and some really great new products in the pipeline for 2010.”

     

    “We are delighted with our September quarter and fiscal 2009 results,” said Peter Oppenheimer, Apple’s CFO. “For the full year, we grew revenue by 12 percent and net income by 18 percent in extraordinarily challenging times. Looking ahead to the first fiscal quarter of 2010, we expect revenue in the range of about $11.3 billion to $11.6 billion and we expect diluted earnings per share in the range of about $1.70 to $1.78.”

     

    Apple will provide live streaming of its Q4 2009 financial results conference call utilizing QuickTime®, Apple’s standards-based technology for live and on-demand audio and video streaming. The live webcast will begin at 2:00 p.m. PDT on October 19, 2009 at apple.com/quicktime/qt.../ and will also be available for replay for approximately two weeks thereafter.

     

    *Non-GAAP Financial Measures

     

    During fiscal 2007, the Company began selling iPhone and Apple TV. Because the Company may provide unspecified features and additional software products to iPhone and Apple TV customers in the future free of charge, in accordance with GAAP, specifically FASB ASC 985-605, formerly known as AICPA SOP 97-2, the Company recognizes revenue and cost of goods sold for these products on a straight-line basis over their economic lives, with any loss recognized at the time of sale. Currently, the economic lives of these products are estimated to be 24 months. This accounting treatment, referred to as subscription accounting, results in the deferral of almost all of the revenue and cost of goods sold during the quarter in which the products are sold to the customer. Other costs related to these products, including costs for engineering, sales, marketing and warranty, are expensed as incurred. Further, the costs to develop any future unspecified features and additional software products that may eventually be provided to customers also are expensed as incurred. In contrast, the Company generally recognizes revenue and cost of goods sold for its other products, such as Macs and iPods, at the time of sale, as the Company does not provide future unspecified features or additional software products to those customers free of charge.

     

    In July 2008, the Company began selling iPhone 3G, the second-generation iPhone, and at that time significantly expanded distribution by establishing carrier relationships in over 70 countries. Unit sales of iPhone 3G have been significantly greater than sales of the first-generation iPhone. During the first quarter of iPhone 3G availability ended September 27, 2008, 6.9 million units were sold, exceeding the 6.1 million first-generation iPhone units sold in the prior five quarters combined.

     

    In June 2009, the Company began selling iPhone 3GS, the third-generation iPhone. Unit sales of iPhones continued to be significant in the quarter ended September 26, 2009, with 7.4 million iPhones sold. As a result, the amount of revenue and product cost related to those iPhone sales that the Company deferred for recognition in future periods under subscription accounting was substantial. While the GAAP results provide significant insight into the Company’s operations and financial position, management continues to supplement its analysis of the business using financial measures that look at the total sales, related product costs and resulting income for iPhones and Apple TVs sold to customers during the period. The presentation at the end of this press release includes the following non-GAAP measures: “Adjusted Sales,” “Adjusted Cost of Sales,” “Adjusted Gross Margin,” “Adjusted Operating Margin,” “Adjusted Net Income” and “Adjusted Diluted Earnings per Share.” These financial measures are not consistent with GAAP because they do not reflect the deferral of revenue and product costs for recognition in later periods. The above-mentioned non-GAAP measures are generated by adjusting the related GAAP measures solely to reverse the effect of subscription accounting. The Company uses these financial measures, along with other measures discussed below, to provide additional insight into current operating and business trends not readily apparent from the GAAP results.

     

    Management uses Adjusted Sales to evaluate the Company’s growth rate, revenue mix and performance relative to competitors. Given the impact of iPhone unit sales during the quarter ended September 26, 2009, Adjusted Sales provides a meaningful measurement of the Company’s growth by reflecting amounts generally due to Apple at the time of sale related to products sold within the period. Further, eliminating the effects of deferred revenue (current sales deferred to future periods and prior sales being recognized currently) provides more transparency into the Company’s underlying sales trends. Management uses the non-GAAP measures of “Adjusted Cost of Sales,” “Adjusted Gross Margin” and “Adjusted Operating Margin” to measure the Company’s operating performance based on current period iPhone and Apple TV sales and to facilitate ongoing operating decisions. Additionally, because the Company recognizes engineering, sales, and marketing expenses as incurred, including expenses related to iPhone and Apple TV, management uses Adjusted Sales to evaluate returns on those costs, to manage year-over-year operating expense growth, and to budget future expenses. Furthermore, because they are considered meaningful indicators of current business performance, the non-GAAP measures “Adjusted Sales” and “Adjusted Operating Margin” are metrics that factor into the determination of management compensation beginning in fiscal year 2009. Finally, management uses the non-GAAP measures of “Adjusted Net Income” and “Adjusted Diluted Earnings per Share” to measure the Company’s operating performance based on current period iPhone and Apple TV sales, to facilitate ongoing operating decisions, and compare performance relative to competitors.

     

    Management believes that these non-GAAP financial measures, when taken together with the corresponding consolidated GAAP measures and related segment information, provide incremental insight into the underlying factors and trends affecting both the Company’s performance and its cash generating potential. Management believes these non-GAAP measures increase the transparency of the Company’s current results and enable investors to more fully understand trends in its current and future performance.

     

    Cautions on Use of Non-GAAP Measures

     

    As noted previously, these non-GAAP financial measures are not consistent with GAAP because they do not reflect the deferral of revenue and product costs for recognition in later periods. These non-GAAP financial measures do not adjust for the costs associated with the Company’s intention to provide unspecified new features and software to purchasers of iPhone and Apple TV products. These costs are expensed as incurred under GAAP’s subscription accounting model, and are not adjusted in these non-GAAP financial measures. As such, these non-GAAP financial measures are not intended to reflect in a given period all of the costs of sales made in that period. Rather, the non-GAAP financial measures presented below are intended for the limited purpose of presenting performance measures that include the total sales, related product costs, and resulting income for iPhones and Apple TVs in the period those products are sold to customers.

     

    Management believes investors will benefit from greater transparency in referring to these non-GAAP financial measures when assessing the Company’s operating results, as well as when forecasting and analyzing future periods. However, management recognizes that:

     

    * these non-GAAP financial measures are limited in their usefulness and should be considered only as a supplement to the Company’s GAAP financial measures;
    * these non-GAAP financial measures should not be considered in isolation from, or as a substitute for, the Company’s GAAP financial measures;
    * these non-GAAP financial measures should not be considered to be superior to the Company’s GAAP financial measures; and
    * these non-GAAP financial measures were not prepared in accordance with GAAP and investors should not assume that the non-GAAP financial measures presented in this earnings release were prepared under a comprehensive set of rules or principles.

     

    Further, these non-GAAP financial measures may be unique to the Company, as they may be different from non-GAAP financial measures used by other companies. As such, this presentation of non-GAAP financial measures may not enhance the comparability of the Company’s results to the results of other companies.

     

    A reconciliation of each non-GAAP financial measure to the most directly comparable GAAP financial measure or measures appears at the end of this press release.

     

    This press release contains forward-looking statements including without limitation those about the Company’s estimated revenue and earnings per share. These statements involve risks and uncertainties, and actual results may differ. Risks and uncertainties include without limitation the effect of competitive and economic factors, and the Company’s reaction to those factors, on consumer and business buying decisions with respect to the Company’s products; continued competitive pressures in the marketplace; the ability of the Company to deliver to the marketplace and stimulate customer demand for new programs, products, and technological innovations on a timely basis; the effect that product transitions, changes in product pricing or mix, and/or increases in component costs could have on the Company’s gross margin; the inventory risk associated with the Company’s need to order or commit to order product components in advance of customer orders; the continued availability on acceptable terms, or at all, of certain components and services essential to the Company’s business currently obtained by the Company from sole or limited sources; the effect that the Company’s dependency on manufacturing and logistics services provided by third parties may have on the quality, quantity or cost of products manufactured or services rendered; the Company’s reliance on the availability of third-party digital content and applications; the potential impact of a finding that the Company has infringed on the intellectual property rights of others; the Company’s dependency on the performance of distributors and other resellers of the Company’s products; the effect that product and service quality problems could have on the Company’s sales and operating profits; the Company’s reliance on sole service providers for iPhone in certain countries; the continued service and availability of key executives and employees; war, terrorism, public health issues, and other circumstances that could disrupt supply, delivery, or demand of products; potential litigation from the matters investigated by the special committee of the board of directors and the restatement of the Company’s consolidated financial statements; and unfavorable results of other legal proceedings.

     

    More information on potential factors that could affect the Company’s financial results is included from time to time in the Company’s public reports filed with the SEC, including the Company’s Form 10-K for the fiscal year ended September 27, 2008, its Forms 10-Q for the quarters ended December 27, 2008, March 28, 2009 and June 27, 2009, and its Form 10-K for the fiscal year ended September 26, 2009 to be filed with the SEC. The Company assumes no obligation to update any forward-looking statements or information, which speak as of their respective dates.

     

    Apple ignited the personal computer revolution in the 1970s with the Apple II and reinvented the personal computer in the 1980s with the Macintosh. Today, Apple continues to lead the industry in innovation with its award-winning computers, OS X operating system and iLife and professional applications. Apple is also spearheading the digital media revolution with its iPod portable music and video players and iTunes online store, and has entered the mobile phone market with its revolutionary iPhone.

     

    Press Contacts:
    Steve Dowling
    Apple
    dowling@apple.com
    (408) 974-1896

     

    Investor Relations Contacts:
    Nancy Paxton
    Apple
    paxton1@apple.com
    (408) 974-5420

     

    Joan Hoover
    Apple
    hoover1@apple.com
    (408) 974-4570

     

    NOTE TO EDITORS: For additional information visit Apple’s PR website, or call Apple's Media Helpline at (408) 974-2042.

     

    Apple, the Apple logo, Mac, Mac OS, Macintosh, iPhone, Apple TV and QuickTime are trademarks of Apple. Other company and product names may be trademarks of their respective owners.
    19 Oct 2009, 04:36 PM Reply Like
  • What recession?
    19 Oct 2009, 04:39 PM Reply Like
  • International sales accounted for 46 percent of the quarter’s revenue.

     

    Wow
    19 Oct 2009, 04:41 PM Reply Like
  • This is sparking after-hours buying in INTC, SNDK, and should rally worldwide tonight, leading to more rally tomorrow.
    19 Oct 2009, 04:52 PM Reply Like
  • "International sales accounted for 46 percent of the quarter’s revenue." - it's been the case for a while now

     

    Great quarter!
    19 Oct 2009, 04:53 PM Reply Like
  • wOw!
    19 Oct 2009, 04:56 PM Reply Like
  • Now that Apple has shown its revenues/ profits muscle it should take note of the emerging competition. Upgrade iPhone to 5 MP (no excuse for not doing that). Why there is no camera in the Touch? Cutting edge does not mean cutting corners.
    19 Oct 2009, 05:07 PM Reply Like
  • I guess we must have a deep set physiological need to purchase shiny things.
    19 Oct 2009, 05:07 PM Reply Like
  • So much for Cramer's call to purchase Apple after it pulls back on the earnings report.
    19 Oct 2009, 05:08 PM Reply Like
  • $AAPL could act as a catalyst for $SPY to break the $110 area. $110 is major resistance on the weekly from Oct '08.
    19 Oct 2009, 05:12 PM Reply Like
  • lol, Cramer is a joke

     

    On Oct 19 05:08 PM bricki wrote:

     

    > So much for Cramer's call to purchase Apple after it pulls back on
    > the earnings report.
    19 Oct 2009, 05:13 PM Reply Like
  • I love Apple, I think it's an innovative company with great products. I've been a die-hard fan that's stuck with them even during the times when it looked like they weren't going to make it.

     

    That being said, I think the stock price of AAPL is grossly overinflated. I own the stock, and I've been riding it up with trailing stop losses.

     

    I see rough waters ahead, products like the iPhone and iPod are becoming generic commodities that Apple will have to compete with. I still believe in the company, but if they don't come up with some new home runs, I can easily there price coming down substantially.
    19 Oct 2009, 05:28 PM Reply Like
  • My new LG phone has 16 gigs worth of memory & 1/8th jack that now eliminated the need for another ipod i was thinking of getting. I'm surprised by the new touch messaging phones ability to do what I need at the fraction of an iphones price. Iphone is way better truth be told but the competition seems to be catching up a bit...

     

    On Oct 19 05:28 PM Brad Johnson wrote:

     

    > I love Apple, I think it's an innovative company with great products.
    > I've been a die-hard fan that's stuck with them even during the times
    > when it looked like they weren't going to make it.
    >
    > That being said, I think the stock price of AAPL is grossly overinflated.
    > I own the stock, and I've been riding it up with trailing stop losses.
    >
    >
    > I see rough waters ahead, products like the iPhone and iPod are becoming
    > generic commodities that Apple will have to compete with. I still
    > believe in the company, but if they don't come up with some new home
    > runs, I can easily there price coming down substantially.
    19 Oct 2009, 05:43 PM Reply Like
  • Earnings for the year NonGAAP are $9.66 which makes the NonGAAP PE about 21 at 201 a share
    19 Oct 2009, 06:44 PM Reply Like
  • Apple has what other lacks.

     

    1.Jobs is an Idol the modern Ford, by himself has a value to US economy over 15K billion USD.
    2. Apple has "angel," there are web about gossips related to them nobody else has it.
    3. The young generation has Apple as Icon is the only logo i know is trans generational (from 50´s to 10´s)
    4. It has Java...
    5. Is the most desired item in China
    7. Nobody spend a night in front of a store but Apple
    8. It has imagination which is all in IT
    9. They will reinvent again in 2010

     

    If JObs is there there is value.
    Regards.

     

    On Oct 19 05:28 PM Brad Johnson wrote:

     

    > I love Apple, I think it's an innovative company with great products.
    > I've been a die-hard fan that's stuck with them even during the times
    > when it looked like they weren't going to make it.
    >
    > That being said, I think the stock price of AAPL is grossly overinflated.
    > I own the stock, and I've been riding it up with trailing stop losses.
    >
    >
    > I see rough waters ahead, products like the iPhone and iPod are becoming
    > generic commodities that Apple will have to compete with. I still
    > believe in the company, but if they don't come up with some new home
    > runs, I can easily there price coming down substantially.
    19 Oct 2009, 06:49 PM Reply Like
  • Given the hugh run in the Apple stock price in the past 12 months, reasonable investors would worry about whether the good time will continue. That said, the smart phone era has just started and we may get a good decade out of the trend. (Think PC in the 1990's. The run of Dell and Microsoft is legendary.) If Apple keeps developing the iphone line, the stock will remain a good investment for a while.

     

    The iphone is quite sticky once users begin to buy apps. The app switching cost will increase the cost of switching to a different platform.
    19 Oct 2009, 08:20 PM Reply Like
  • The key (now that the hardware and the interface are in place) is the content - the apps. It would appear that as RK says, they are quite "sticky". I personally see the iphone and ipod franchises leading legions of new young customers back to Apple's laptops and desktops as well, a second wave of success that will reinforce itself.

     

    I have made money on Apple stock several times over the years, and will once again. As a paleo-Apple supporter for decades, this success is something that was always possible, but rarely clear.
    19 Oct 2009, 08:33 PM Reply Like
  • Wow, the equity collapse can wait, those were good numbers.
    19 Oct 2009, 10:02 PM Reply Like
  • I think these results further demonstrate that the consumer is valuing quality over price, even during the recession; this is good for AAPL... obviously
    19 Oct 2009, 10:50 PM Reply Like
  • Then there is the CFO response to questions about the unusually high freight cost estimates for Q1.....

     

    "The air freight is not related to the iPhone so these are unrelated topics. But, generally speaking the air freight is planned to get enough units in to the channel in time for the holidays and is necessary for that reason."

     

    "It’s more than normal so you’re correct that in general we spend more in freight in Q1. However, this increase is larger than usual. I’m sorry I can’t be specific on the product but it’s an abnormal sequential increase."

     

    What product not related to the iPhone will they be shipping out in droves for the holidays?
    19 Oct 2009, 11:03 PM Reply Like
  • I love Apple, but I don't see the attraction people have to Apple stock. Yeah, they have a lot of money in reserve, but they should they are getting close to twenty years without paying any dividends.

     

    A stock that never pays a dividend has no value, regardless of how it looks on paper.
    19 Oct 2009, 11:29 PM Reply Like
  • LOL, I'm surprised to say the least that Apple continues to make money, not only is it a well managed company with great accountant (wink wink) but people also are not willing to give up their flashy iphone's even if they're worried about their jobs.

     

    On Oct 19 04:39 PM tunaman4u2 wrote:

     

    > What recession?
    20 Oct 2009, 01:00 AM Reply Like
  • Look, they have made the best computers forever. Why are people STILL so surprised?

     

    iPod and iPhone have shown that there is a company that still makes things for your computer that actually work like they should, so much so that they can inspire you. So, it's only natural that people begin to think, hey, maybe the computers are this nice as well. And they are, but it's harder to see that, you have to work with them, learn about them before it's blatantly obvious how many advantages (and there are many) there are over copy-cat, wanna be Windoze systems.

     

    Apple is a winner, Microsoft is a loser. Apple has a LOT of marketshare left to take. Sure, not everyone needs a great computer, but for the very small cost differential, I would not be surprised to see the market roughly equal that of Windoze in a few short years.

     

    The difference is, Apple profits from the entire thing, not just a few bucks for the software license.
    20 Oct 2009, 01:37 AM Reply Like
  • Look, they have made the best computers forever. Why are people STILL so surprised?

     

    iPod and iPhone have shown that there is a company that still makes things for your computer that actually work like they should, so much so that they can inspire you. So, it's only natural that people begin to think, hey, maybe the computers are this nice as well. And they are, but it's harder to see that, you have to work with them, learn about them before it's blatantly obvious how many advantages (and there are many) there are over copy-cat, wanna be Windoze systems.

     

    Apple is a winner, Microsoft is a loser. Apple has a LOT of marketshare left to take. Sure, not everyone needs a great computer, but for the very small cost differential, I would not be surprised to see the market roughly equal that of Windoze in a few short years.

     

    The difference is, Apple profits from the entire thing, not just a few bucks for the software license.

     

    And the 'smart' phone market? There wasn't one before the iPhone.
    20 Oct 2009, 01:38 AM Reply Like
  • Berthshire Hathaway pays no dividend. Are you suggesting that it has no value?

     

    parv

     

    On Oct 19 11:29 PM talld wrote:

     

    > I love Apple, but I don't see the attraction people have to Apple
    > stock. Yeah, they have a lot of money in reserve, but they should
    > they are getting close to twenty years without paying any dividends.
    >
    >
    > A stock that never pays a dividend has no value, regardless of how
    > it looks on paper.
    20 Oct 2009, 06:55 AM Reply Like
  • The Apple brand is remarkably strong when they can go non-exclusive and still maintain pricing from the carriers. This suggests iPhone should be able to match Nokia's 100MM+ smartphone units per year and still maintain profit margins.

     

    There are significant network effects at play with the iPhone, apps, and developer ecosystem. App development increase with iPhone sales, which benefit the whole ecosystem - your iPhone is never old. iPhone competitors (Nokia, Palm, RIMM, Microsoft) simply don't have the applications to match iPhone. This is the point Cook makes - competitors are still trying to match iPhone 1.0, where the apps / SDK didn't exist.

     

    Google's Android is the wild card here. They have many new phones due 2009 Holiday season and in 2010. While they have a rich application store, it is unclear if apps run on all Android devices. Hence unclear it will be as rich and vibrant as iPhone.

     

    In the mobile phone space, Apple is one of the lowest cost phones available to the end user. Their Macintosh reputation as a high price, niche provider really doesn't hold for iphones. Even the app ecosystem has high volumes at low costs - benefiting both consumers & app developers.

     

    Apple is positioned to define and dominate the mobile computer as Microsoft dominated the last generation of computing.
    20 Oct 2009, 08:43 AM Reply Like
  • Apple is now looking at about half their sales and profits from outside the American market. This is a trend that may well accelerate, given that it looks like the hangover from the recession is lingering longer in America than elsewhere.
    20 Oct 2009, 02:07 PM Reply Like
  • The growth rate is plunging hard. iPhone grew only 7 per cent q3. Q2 the growth rate was mote than 600 per cent. Almost 90 per cent crash in the growth rate. And still the market share is only 2.6 per cent.
    20 Oct 2009, 03:35 PM Reply Like
  • Someone correct me if I'm wrong here, but I seem to remember that Q2 they introduced a new iphone and cut the price for the contracted bundles to $100. Not a change they can do every quarter.
    20 Oct 2009, 06:42 PM Reply Like
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