Apple is NOT Recession-Proof, but it Wallops the Street!

Apple reported their 1st Quarter financial results on Wednesday after the market closed. Reporting for the Oct-Dec 2008 period, Apple posted the highest revenue and profit in the company’s history! I have run out of verbs to describe Apple’s performance, as quarter after quarter, year after year, they post record sales and profits. In the midst of the worst economic crisis in generations and a horrible retail environment, Apple continues to innovate and sell while the management team leads Apple to financial success.

Apple posted revenue of $10.7 billion and a net profit of $1.61 billion for the 3 months. If you count iPhone and Apple TV revenue that Apple spreads over 24 months, Apple had $11.8 billion in sales and a $2.3 billion profit. These are simply amazing numbers in good economic times; in the current climate, they are unprecedented. It was the first time ever that Apple posted quarterly revenue in excess of $10 billion. Apple now has $28.1 billion in cash and short-term securities and is not seeking a government bailout.

Earnings per share were $1.78, which was well above Apple’s guidance of $1 and well above the “whisper” number of $1.36. Apple provided optimistic guidance for the next quarter while cautioning that their crystal ball is a bit foggy given the economic climate. They are projecting revenue of $7.6 billion to $8 billion with earnings in the neighborhood of $1/share.

Here’s some other highlights:

The Mac Business

  • Apple sold an astounding 2.5 million Macs, 728,000 desktops and the balance MacBooks and MacBook Pros. This is a continuation of a trend from desktop to laptops that we have seen over the past few years.
  • Apple saw declines in the educational market due primarily to the poor economy.

During the analyst call Tim Cook was skeptical about netbooks because of the slow processors, cramped keyboards and displays, but continue to watch the space and has ideas.

Apple TV

There was a lot of speculation about the Apple TV over the past few months, but Tim Cook reported that Apple TV sales were up 300% and that Apple will continue to invest in the product but still considers it a “hobby.”

iPhone

  • Apple sold 4.3 million iPhones, easily surpassing their goal of 10 million for calendar year 2008. This represents 88% growth in units and 417% (!!) growth in revenue year over year.

In response to questions about competition, Tim Cook said that Apple is suited up and ready to face competition, and that they welcome it. He went on to say that Apple will fiercely protect its intellectual property in a not so veiled threat to Palm and the Palm Pre.

Apple Retail

  • Apple’s retail stores continue to mirror our experience in that about 1/2 of the sales of Macs are sold to new to Mac customers (“Switchers”).
  • 515,000 Macs were sold at Apple retail, and while year-over-year, revenue per store was down for the quarter, Apple retail stores are averaging $7 million in quarterly revenue.
  • Apple plans to open 25 stores worldwide in 2009 and half of those will be outside the USA.

iPods and iTunes

  • 22,727,000 iPods were sold, an all-time record for Apple.
  • Apple retains 73% of the MP3 player market and remarked upon the huge success of the App store on iTunes.

In other news, Microsoft posted quarterly results that missed expectations and will lay off 5,000 employees. They said they could no longer offer profit forecasts for the rest of the fiscal year.

For Apple, the news is quite different. Exceptional products, exceptional management, exceptional performance and a laser-like focus on innovation and quality have put Apple in this enviable position. This greatest story in American business continues!

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    *START SOAPBOX*

    These words are sometimes referred to as a curse; however, we certainly are living in extraordinary times. The change that occurred this week was a complete shift in the political paradigm. As I was watching Barack Obama give his inaugural speech and saw the millions of smiling, hopeful faces waving flags, I called my mom who has witnessed many more historical moments than I have. She was overcome with emotion and crying in joy about these interesting times. She said that she has not ever seen anything like this.

    The change transcends simply a new President and a different party in control. This is a change that is all about hope and a celebration of our country’s political system. It is a tribute to some revolutionary folks who got together a few hundred years ago and formulated a government with the people as holders of the true power. President Obama tapped into this source of power, utilized his gift of eloquence and combined it with a modern network of email, text messages and internet presence to launch a new era of hope.

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    For too long, there have been two Americas. One was comprised of the privileged, wealthy and powerful, and the other was made up of the powerless and disenfranchised. The mosaic of faces that I saw at the inauguration–black, brown, white, young and old–waving flags and smiling and crying in joy gives me hope that President Obama can truly lead us to recover that greatness that makes the USA so unique.

    The most poignant part of this change was captured by President Obama in his speech when he said:

    “This is the meaning of our liberty and our creed–why men and women and children of every race and every faith can join in celebration across this magnificent Mall, and why a man whose father less than sixty years ago might not have been served at a local restaurant can now stand before you to take a most sacred oath.”

    It is fitting that a black man was able to stand proudly and take the oath of office of the most powerful position on earth at the same Mall where Dr. Martin Luther King, Jr. moved a nation with his “I have a dream…” speech.

    In MLK’s timeless words:

    __I have a dream that my four little children will one day live in a nation where they will not be judged by the color of their skin but by the content of their character.__

    This was a day of change not only for our nation but an inauguration for the world.

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  • Our Expansion Plans

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    We are hoping to expand soon with new retail locations, and Don was recently interviewed by the Burlington Free Press about our plans for the future.

    “Read the whole article here!”:http://burlingtonfreepress.com/article/20090119/BUSINESS/90118012&referrer=FRONTPAGECAROUSEL

    *At right: Don photographed in our South Burlington store last week.*
    __Photo credit: Glenn Russell, Burlington Free Press__

  • _Dear Friends,_

    It is snowing out and the temperatures have warmed up from well below zero for a couple days. We have a Siberian air mass headed our way with the severe cold coming back this weekend. Things just seem to break when it gets this cold for an extended period of time.

    On Monday when it was -25 here at the office, we had a series of weather-related failures. The hot water stopped working until I found a portable heater to put in the closet where the instantaneous hot water heater was located to thaw out the pipes. Grace’s car just stopped working and was left stranded in a cell-phone dead zone. Worst of all, the furnace failed in the warehouse and the crew down there tried to put up a brave face and continue working as the temperatures dipped but ultimately we had to give up our conference room for Mac repairs.

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  • SPECIALS | 01/23/09 – 01/30/09

    View specials while on-hand supplies last. Please note that some specials may not be available in our retail stores; check for availability.

    See all specials on our “Specials Page.”:http://www.smalldog.com/specials

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    The downside about the new machine is that it now ships with a 2.0GHz processor (instead of the previous 2.1). However, the frontside bus on the new MacBooks has been boosted from 866 MHz to 1066 MHz. That should more than make up for the processor “downgrade.”

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  • I am getting way too excited about my upcoming trip to Tanzania. Normally, I am a last minute packer which infuriates Grace. She likes to pack weeks in advance, while I will just throw some stuff in a suitcase at the last minute. This time, I have been gathering cameras, spare batteries and figuring out how to “pack light” for the trip of a lifetime.

    Thanks for reading this issue of Kibbles & Bytes!

    Your Kibbles & Bytes team,
    _Don, Kali & Ed_