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Summary of Apple's first quarter financials

updated 01:10 am EST, Wed January 23, 2008

Summary of Q1 financials

Apple recently made available its first quarter financial data for 2008, which displayed record earnings for the company. Senior VP and CFO Peter Oppenheimer guided analysts and industry insiders through the quarterly figures, citing record Mac sales, with strong software and iPod sales backing the numbers. A strong install-base of Mac OS X 10.5 Leopard has also helped the company's quarter, with estimates being placed at a 19-percent install base on Macs. Apple's cash generation has doubled that of its net income, and has over $18 billion of financial reserves.

MacNN has assembled a list of all topics that were covered during the report.

  • This has been Apple's best quarter ever, with the highest revenue and earnings in company history.

  • Revenues are up 36-percent year-over-year at $9.6 billion, an increase of $2.5 billion over the previous December quarter.

  • High revenues are driven by record Mac, iPhone, and iPod sales, with strong demand on recent software titles, such as Leopard, iWork and iLife.

  • Domestic revenue is up 27-percent year-over-year, while International revenue up 46-percent year-over-year.

  • Operating margin is better-than-expected at 22.1-percent, resulting from higher than anticipated gross margin and revenue.

  • Net income is at $1.58 biillion, which is up 57-percent over the prior December quarter, translating to $1.76 in earnings-per-share

  • Cash generation is over $3 billion, approximately twice that of net income.

  • Mac products and services account for 47-percent of quarterly revenue

  • Apple shipped 2.32 million Macs, exceeding the previous December quarter by over 700,000 units, representing 44-percent year-over-year growth. This is more than two and a half times the overall market rate of growth for the December quarter.

  • iMac sales are very robust, driving 53-percent year-over-year growth in desktop systems.

  • Portable sales are strong, and have increased 38-percent year-over-year.

  • Apple began and finished the quarter with less than three weeks of Mac channel inventory. The company tries to keep a target of four to six weeks.

  • Leopard's launch was deemed successful, with revenue for the quarter at $170 million. Tiger's release generated approximately $100 million in revenue.

  • Apple believes that 19-percent of the Mac OS installed base is using Leopard.

  • Music products and services account for 50-percent of total revenue for the qtr

  • 22.1 million iPods sold, surpassing last year's record

  • Apple began and finished the quarter with 4 - 6 weeks of iPod inventory in channel, which is on target.

  • Apple's primary goal for the holiday season was to establish an entirely new type of iPod in the marketplace with the iPod touch. The Touch has the potential to grow the iPod from just being a music and video player into being the first WiFi mobile platform running "all kinds" of mobile applications.

  • Due to higher price of the multi-touch display, and more potent processor needed to run rich apps like Safari, this has been the most expensive iPod brought to market in some time.

  • The Touch is selling very successfully, responsible for increasing overall average sale price of iPods to $181, driving revenue up 17-percent year-over-year.

  • iPod share in the US for December quarter is consistent with year ago quarter (approximately 73-percent), while international marketshare is gaining in almost all European and Asian countries.

  • 2.3 million iPhones were sold through the December quarter.

  • Total revenue for iPhones, iPhone accessories, and payments from iPhone carriers sit at $241 million.

  • The total deferred revenue from iPhones and AppleTV sales is $1.44 billion at the end of the quarter, versus $636 million at the end of the September quarter.

  • Apple stores posted record financial results, with revenue at $1.7 billion, representing 53-percent year-over-year growth.

  • The stores generated $405 million in segment margin, versus $259 million in the year-ago quarter.

  • Apple opened its third Manhattan store (on West 14th Street), which devotes an entire floor to the Genius Bar, training, and Pro Labs.

  • Six other new stores were opened, bringing the total count to 204 store locations.

  • Average revenue per store (using an average of 201 stores open at any given time) is $8.5 million, up from $6.6 million in the year-ago quarter.

  • The Apple stores sold a record 504,000 Macs during the quarter, representing 66-percent year-over-year growth.

  • Over 50-percent of customers buying Macs were buying a Mac for the first time.

  • Store traffic came out to 38.4 million customers during the quarter, representing 14,700 customers per store per week, an increase of over 10 million visitors over the year-ago quarter.

  • The Concierge service has been well received, and stores presented over 300,000 personal training sessions during the quarter, a new all-time high.

  • Overall company gross margin sits at 34.7-percent, which is stronger than expected due to a favorable commodity environment, stronger software sales, higher overall revenue, and a weaker US dollar.

  • Operating expenses were $1.2 billion, including $92 million in stock-based compensation expenses.

  • Apple capitalized only $1 million of software development expense related to Leopard during the quarter, compared to $22 million during September quarter.

  • Operating expenses sit at $200 million, with a quarterly tax rate of 32-percent.

  • Apple had strong cash generation during the quarter, increasing its cash balance by over $3 billion to end with over $18.4 billion in the bank.

  • Cashflow from operations sat at $2.76 billion.

  • Looking ahead to the March quarter, Apple is targeting revenues of $6.8 billion, which is approximately 29-percent growth over the prior March quarter.

  • Apple expects stock-based compensation expenses to be at $135 million.

  • Gross margin is expected to be about 32-percent, reflecting approximately $20 million related to stock-based compensation expenses.

  • Apple is guiding gross margin down sequentially due to two factors: sequential decline of software sales due to Leopard entering its second quarter, with iLife and iWork both entering their third; sequentially lower revenues due to seasonality as seen in past years.

  • Operating expenses are expected to be $1.12 billion, including $152 million related to stock-based compensation

  • Apple expects operating expenses to be $190 million, with an effective tax rate approximately 32-percent.

  • Earnings-per-share are expected to be 94-cents.




by MacNN Staff

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Comments

  1. climacs

    Joined: Dec 1969

    0

    all this success

    and still the stock dives massively. I guess that shows how overly-optimistic some people were.

    Good time to buy, folks. Later this year when AAPL is over $200, you'll kick yourself for not having bought.

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