We published too late last week to bring you news of Apple’s results, but it you haven’t scrutinized them yet, the company defied the gravity of recession, and produced record revenue for this particular quarter of $8.1 billion and net income of $1.2 billion.
Apple had $1 billion in music and related sales, and during the quarter shipped around 2.2 Mac computers (both desktop and portable) down 3% in units, and around 16% in value; 11 million iPods, up 3% in units and down 8% in revenues; and some 3.8 million iPhones, up 123% in units but 302% in value terms as it switched between GSM and 3G phones.
Without going into too much detail Apple products are just as likely to stumble in the recession and this is not about Apple doing something miraculous, but instead about the iPhone 3G being at a particular part of its product ramp and being entirely new revenue to the company. Last year there was some iPhone revenue to compare it with, but the wider international distribution of the 3G phone means that iPhone revenues were up over 300%. Everything else in Apple behaved according to the normal laws of economics and were down varying amounts or up a little, in line with the respective markets, but the overall outcome was a very strong quarter, although not up sequentially, substantially up on this time last year.
One controversy is over stories which have run which suggest that Apple has laid off 1,600 store workers in the past quarter and a number of other writers which suggest this can’t be true because no statement came out of Apple to that effect.
It reported retail workers at 14,000 full time or equivalent for the quarter just gone and in January had reported the number as 15,600. But that was the average number in the previous quarter which included the Christmas period and it seems likely to us that both sides of the argument are right. Apple did have 1,600 more workers or their equivalent in the run up to Christmas, but many of them were seasonal and temporary jobs and they have now gone and not been replaced.
If you go back to last June the company had just 13,600 retail workers and a statement in September said that the company, at that time had 3,100 temporary equivalent employees and contractors on its books, so this could swell or fall throughout the year without it being remarkable or Apple having to announce that some major cost cutting is going on. That would be about 10% of Apple’s global work force being temporary and much of that could be made up simply as overtime payments. Also we would bet that retail would take more than its fair share of them and that this would vary wildly with seasonality.
The problem here is that so many people are looking for deeper meaning in everyone’s financials and so books are scrutinized and sometimes the headlines force us to reach the ‘doom and gloom’ conclusion. If tech analysts were used to covering retail they’d have known this.
Retail sales were actually up over last year by $39 million around 2% in first quarter compared to the first quarter of 2008. Also Apple actually opened a few stores during the first quarter (not a lot, around 4) but it had opened more earlier in the year and finished with 251 stores this year compared to 204 a year ago. The fact that staffing has not gone up that much over that time (maybe 400 to 500) means that staffing levels at retail have definitely thinned out a little, but again, we suspect some seasonality and some cutting of temporary positions.
What does seem remarkable is that Apple now has some $25 billion in cash and marketable securities, which is a real anchor on its value as a company. Much of that has built up over the past two years. Apple share price has been going steadily up since the beginning of March, and its market cap its currently $110 billion, on a share price around $124.