Apple shatters sales records, calls Android tablets bizarre

Sells 16M iPhones, 7M iPads as revenues break $20B mark second quarter running

For the second quarter running, Apple said on Tuesday that it had set Mac, iPhone and iPad sales records.

CEO Steve Jobs, who joined the earnings announcements last October, did not participate today. Jobs, 55, announced yesterday that he was taking an immediate medical leave "so I can focus on my health."

As he usually does, chief operating officer Tim Cook, who will run Apple in Jobs' absence and is the front runner for the CEO spot if Jobs does not return, was on the call with Wall Street analysts.

Apple posted record revenues of $26.7 billion for the quarter -- the second quarter in a row that the Apple broke the $20 billion mark -- which represents an increase of 71 per cent over the same period last year and a 31 per cent higher result than 2010's third quarter. Profits were $6 billion, another quarterly record.

"We're running out of superlatives," Ezra Gottheil, an analyst at Technology Business Research, said of Apple's numbers.

"Pretty solid, very solid, and across the board," added Brian Marshall, an analyst with Gleacher & Co. "The entire [business] model continues to work."

In the quarter that closed Dec. 31, Apple sold 4.1 million Macs, breaking last quarter's then-record of 3.9 million machines. Mac unit sales were up six per cent over 2010's third quarter, and 23 per cent over the same quarter in 2009.

Apple has set Mac sales records in five of the last six quarters, and beaten the computer industry average growth rate in 19 consecutive quarters.

Apple also sold 16.2 million iPhones, up 86 per cent over the same period last year. Alone, the iPhone arm of Apple brought in more than $10 billion in revenues.

As they did in October, Apple executives today said that there was still iPhone sales it had left on the table.

"We could have sold even more iPhones if we could have supplied them," said Peter Oppenheimer, Apple's chief financial officer.

With the short supplies in mind, one analyst asked how Apple would handle the introduction of the iPhone 4 on Verizon next month.

Rather than answering the question, Cook talked about iPhone sales growth -- sales were more than two billion higher than the third quarter -- then said, "We're going to do everything possible to get [the iPhone 4] into the hands of as many Verizon customers as possible."

Cook declined to project when Apple's iPhone supply would finally match the demand for the smartphone.

"Clearly, demand continues to outstrip supply, and I don't expect that to change anytime soon," said Marshall. "They just don't have enough manufacturing facility."

Marshall wouldn't speculate on how the limited supply of iPhones will affect the launch on Verizon in the U.S., but Apple's implication was that there may not be enough to satisfy the initial demand by people wanting to ditch AT&T, or by current Verizon customers who have lusted for the iPhone but refused to switch carriers.

Gottheil said he thought Apple would meet demand for its CDMA iPhone on Verizon as long as the company's projections were accurate, not something Apple has always managed.

The iPad's fourth quarter sales totaled 7.3 million, a jump of 75 per cent from the prior period, and the second quarter running that the tablet has outsold Apple's Mac line.

However, the unit sale gap between the two widened in the last three months of 2010, with the Mac group selling just 56 per cent as many systems as the iPad division did tablets. By comparison, in the third quarter -- the first when iPads outsold Mac -- Apple sold 97 per cent as many Macs as iPads.

iPad sales were higher than the average projection of 6.2 million, and higher than all but three estimates by either Wall Street or amateur investment analysts, according to a table collated by Fortune earlier on Tuesday.

Apple racked up 2.9 million notebook sales, an increase of 10 per cent over the previous quarter and 23 per cent more than the same quarter of 2009.

Gottheil attributed the surge in laptop sales to the October introduction of new MacBook Air systems, and the higher average sale price of Apple's notebook line to buyers opting for the more expensive 13-in. models rather than the entry-level $999 11.6-in. MacBook Air.

Desktop Mac sales, however, were down oen per cent year-over-year, to 1.2, a slight decline from the third quarter, as well as off from the same quarter in 2009.

Gottheil said he found even that small slip surprising, since both comparisons were to quarters when Apple revamped its iMac systems. "Desktop sales a year ago were very strong, and leapt to record numbers," he said, impressed that Apple was still able to nearly match those numbers.

Exec slams Android tablets

Although Jobs wasn't available, Cook stepped in to bash Android, as Jobs did during the last earnings call when he vowed Apple's iPhone "will triumph" over smartphones running Google's mobile operating system.

When asked to comment on potential iPad rivals, Cook laid into the competition, calling current tablets running Android "bizarre products in our view" because their version of the operating system wasn't designed for tablets.

Of the Android tablets that many manufacturers strutted at the Consumer Electronics Show earlier this month, Cook was slightly kinder. "There's nothing shipping yet, so I don't know [how they'll do against the iPad]," he said. "But it's hard for me to understand that in a side-by-side comparison, that an enormous amount of people won't select an iPad."

Cook also described tablets running Windows as "big and heavy and expensive" that "customers are not interesting in."

Even when credible tablets make it to market, Cook continued, he argued that Apple has a "huge" advantage because of its early entry into the space.

"I think they got Windows tablets correct," Marshall said. "But they were a little dismissive of Android as vapor because we'll see them shortly."

No analyst asked about Jobs' medical leave, when -- of even if -- he might return to the company as CEO, or how his absence will impact the firm, its revenues or its product offerings.

"That was the elephant in the room," said Marshall, who said he had queued up to ask about Jobs, but wasn't called on during the 40 minutes of Q&A.

Join the newsletter!

Error: Please check your email address.
Rocket to Success - Your 10 Tips for Smarter ERP System Selection

Tags business issuesApplehardware systemstablet PCslaptopsfinancial results

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Gregg Keizer

Computerworld (US)
Show Comments

Most Popular Reviews

Latest Articles

Resources

PCW Evaluation Team

Ben Ramsden

Sharp PN-40TC1 Huddle Board

Brainstorming, innovation, problem solving, and negotiation have all become much more productive and valuable if people can easily collaborate in real time with minimal friction.

Sarah Ieroianni

Brother QL-820NWB Professional Label Printer

The print quality also does not disappoint, it’s clear, bold, doesn’t smudge and the text is perfectly sized.

Ratchada Dunn

Sharp PN-40TC1 Huddle Board

The Huddle Board’s built in program; Sharp Touch Viewing software allows us to easily manipulate and edit our documents (jpegs and PDFs) all at the same time on the dashboard.

George Khoury

Sharp PN-40TC1 Huddle Board

The biggest perks for me would be that it comes with easy to use and comprehensive programs that make the collaboration process a whole lot more intuitive and organic

David Coyle

Brother PocketJet PJ-773 A4 Portable Thermal Printer

I rate the printer as a 5 out of 5 stars as it has been able to fit seamlessly into my busy and mobile lifestyle.

Kurt Hegetschweiler

Brother PocketJet PJ-773 A4 Portable Thermal Printer

It’s perfect for mobile workers. Just take it out — it’s small enough to sit anywhere — turn it on, load a sheet of paper, and start printing.

Featured Content

Product Launch Showcase

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?