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Tuesday, 20 October 2009 06:29

Another 'best ever' quarter for Apple

Not only has Apple set a new record for shipping Macs and iPhones, it also achieved record profitability in its September 2009 quarter.

Market watchers were predicting a good quarter for Mac sales, but the actual numbers were even better than they suggested.

Apple has reported sales of 3.05 million Macs during the September 2009 quarter, up 17 percent year-on-year. Given the economic conditions and the absence of low-cost models in Apple's lineup, that's quite an achievement at a time when the overall market is thought to have grown by between 2 and 4%.

iPhone sales also grew, this time by 7% to 7.4 million units.

"We are thrilled to have sold more Macs and iPhones than in any previous quarter," said Apple CEO Steve Jobs.

"We've got a very strong lineup for the holiday season and some really great new products in the pipeline for 2010," he added, a statement that will doubtless spark a fresh round of speculation about tablets, e-book readers, and other devices.

While iPod sales fell 8% year-on-year to 10.2 million units, that's not really the bad news that it may initially seem.

In 4Q08, iPod and iPhone unit sales totalled 17.9 million units. In 4Q09, the total was 17.6 million, showing that almost all of the decline in iPod sales has been offset by increased iPhone sales. Once carrier subsidies are taken into account, revenue - and presumably profit - is higher on each iPhone than an iPod.

Please read on for details of Apple's profitability.

Talking of profit, the September 2009 quarter was the most profitable Apple has ever recorded. Total revenue of $US9.87 billion gave a net profit of $US1.67 billion.

"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 $US11.3 billion to $US11.6 billion and we expect diluted earnings per share in the range of about $US1.70 to $US1.78," he added.

Much has been made in some quarters about the possible impact of a proposed change to US accounting rules on Apple's results.

Currently, iPhone and Apple TV costs and revenue are recognised over 24 months, rather than at the time of sale. This is because Apple's interpretation of the regulations is that the possibility of delivering additional features and software free of charge at a later date means so-called 'subscription accounting' must be employed.

Some experts have disputed this interpretation, but the company has settled on this conservative approach.

If the rules had already changed, Apple would have reported substantially higher sales and profit.

However, Apple - like several other vendors - has been routinely incorporating 'non-GAAP' (generally accepted accounting principles) figures in its reports. So it isn't as if investors will suddenly be faced with a new set of numbers if the change goes through.

After all, the only thing that would change is the accounting treatment - the underlying reality would remain the same.

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Stephen Withers

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Stephen Withers is one of Australia¹s most experienced IT journalists, having begun his career in the days of 8-bit 'microcomputers'. He covers the gamut from gadgets to enterprise systems. In previous lives he has been an academic, a systems programmer, an IT support manager, and an online services manager. Stephen holds an honours degree in Management Sciences and a PhD in Industrial and Business Studies.

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