World of Apple

One week ago, I reviewed Photomatix Pro. I found it to be a great piece of software for easily creating HDR effects on your photos. If you missed the review, be sure to check it out (especially if you’re into photography). As part of the review, everyone who commented was entered to win a free copy of Photomatix Pro! I’ll go ahead and skip the suspense and announce our Photomatix Pro winner. Congratulations to Pam! Check your e-mail for details on how to get your license!

Thanks to everyone else who commented. If you didn’t win this time, be sure to check back often. We’ve got more great reviews with giveaways coming your way soon!

When Apple released its quarterly results for the 2008 fiscal it was overlooked by many that Apple has now adopted to supply two sets of quarterly results.

Apple will continue giving out GAAP (Generally Accepted Accounting Principles) results, these will include subscription based accounting for iPhones and the Apple TV. In addition Apple will offer a new set of numbers in the form of non-GAAP results which show Apple’s fiscal figures if they weren’t using subscription based accounting.

In the press release on Tuesday Apple wrote the following:

During fiscal 2007, the Company began selling the iPhone and Apple TV. Because the Company may provide unspecified features and additional software products to iPhone and Apple TV customers in the future free of charge, in accordance with GAAP the Company recognizes revenue and cost of goods sold for these products on a straight-line basis over their economic lives, with any loss recognized at the time of sale. Currently, the economic lives of these products are estimated to be 24 months. This accounting treatment, referred to as subscription accounting, results in the deferral of almost all of the revenue and cost of goods during the quarter in which the products are sold to the customer. Other costs related to these products, including costs for engineering, sales, marketing and warranty, are expensed as incurred. Further, the costs to develop any future unspecified features and additional software products that may eventually be provided to customers also are expensed as incurred. In contrast, the Company generally recognizes revenue and cost of goods sold for its other products, such as Macs and iPods, at the time of sale, as the Company does not provide future unspecified features or additional software products to those customers free of charge.

The biggest issue with subscription accounting is that investors, analysts and shareholders struggle to determine just how much revenue and profit is being generated by the sale of a particular unit until long after that unit has been sold.

Apple is now effectively looking at the iPhone in the same way it looks at the Mac, in that respect the iPhone would have recorded an additional $3.8 billion in revenue and an additional $1.3 billion in net income during the company’s fourth fiscal quarter.

Total iPhone revenue of $4.6 billion would have represented 39 percent of Apple’s adjusted overall revenue of $11.7 billion.

Apple has released a build of QuickTime 7.6 to some of its developer community this week. Downloads of QuickTime 7.6 are available for Windows, Mac OS X Tiger and Leopard.

The builds reportedly deliver improvements in multi-channel encoded audio tracks, in addition developers have been asked to focus on MPEG-1 playback and conversions, as well as encoding and playback of audio tracks in the AAC and Apple Lossless formats.

AT&T reported on Wednesday that its third quarter profits were boosted by a larger number of iPhone activations that was initially predicted.

The US iPhone carrier reported a 5.5 percent rise in profits to $3.23 billion and EPS of $0.55. AT&T also noted that it gained an added 2 million subscribers to its network to end the quarter with 74.9 million.

Growth was driven by the activation of 2.4 million iPhone 3Gs, 40 percent of which were new to the network.

“I am particularly pleased with the customer response to the iPhone 3G,” said AT&T CEO Randall Stephenson. “The new customers we’re winning are high-value, with attractive revenue and churn profiles.”

Apple announced on Tuesday that it had sold 6.9 million iPhones worldwide in its previous fiscal quarter.

On Tuesday Apple held its fiscal fourth quarter conference call to discuss its financial results for the past quarter. The call which featured a rare and surprise appearance from company CEO Steve Jobs.

Macs

• Sold 2.61 million Macs, best quarter ever.
• Of those sales 936,000 were desktops and 1,675,000 were notebooks.
• Macs accounted for less than half of Apple’s total revenue at 45.9 percent.
• 90-percent of Apple notebooks feature LED-backlit displays, they’re also the companies greenest products. “You’ll hear more about this in the future,” Jobs said.
• Unibody enclosures are responsible for the low-margin guidance but this will improve.
• Netbooks remain a “nascent category.”
• Apple considers the iPhone a form of netbook. The company has “interesting ideas” if the netbook field evolves.
• 3-4 weeks of channel inventory for Macs.

Apple TV and iPhone

• Sold 6,892,000 iPhones during the quarter and earned about $806M; this is more than all previous quarters combined.
• The iPhone would have represented 39 percent of all of Apple’s revenue, if revenue wasn’t deferred over 24 months.
• A “significant” proportion of iPhone sales were international. Many of these were to first-time iPhone owners.
• iPhone business is too large to ignore, thus the company will reveal its pre-GAAP revenue.
• Apple beat RIM’s BlackBerry shipments last quarter; they shipped 6.1 million handsets.
• Apple is now the third-largest mobile phone supplier in terms of revenue. Nokia and Samsung are first and second respectively while LG and Motorola are fourth and fifth.
• iPhone inventory was less than 6 weeks for the 44 countries launched before August. There are 2 million iPhones listed in inventory around the world.
• Apple TV is still just a “hobby” and will remain that way in 2009.

iPod and iTunes

• Customers will download the 200 millionth app from the App Store tomorrow, with the figure being reached in just 102 days. There are over 5,500 apps in 62 countries. “Competitors are scrambling to copy the App Store, but it’s not easy,” Jobs said.
• Appel sold the most iPods it has ever managed in a non-holiday quarter.
• NPD reports that Apple has 70-percent of MP3 player market in the US.
• 4-6 weeks of iPod channel inventory.

Retail Stores

• Apple retail stores managed to sell 596,000 Mac units and generate $1.718B in revenue.
• Over half of all retail Macs are sold to new customers.
• 31 new stores in the quarter for a total of 247.
• Working on an average of 226 stores open during the quarter, about $7.6M was earned per store.
• 42.7 million visitors to retail stores.

Gizmodo is reporting that Apple may announce during today’s fiscal conference that the Mac mini is being discontinued.

According to Gizmodo’s European retail sources Apple has told them not to expect any further shipments of the Mac mini.

It was first rumoured a year ago that the Mac mini could be close to discontinuation.

Apple today announced financial results for its fiscal 2008 fourth quarter ended September 27, 2008. The Company posted revenue of $7.9 billion and net quarterly profit of $1.14 billion, or $1.26 per diluted share. These results compare to revenue of $6.22 billion and net quarterly profit of $904 million, or $1.01 per diluted share, in the year-ago quarter. Gross margin was 34.7 percent, up from 33.6 percent in the year-ago quarter. International sales accounted for 41 percent of the quarter’s revenue.

In accordance with the subscription accounting treatment required by GAAP, the Company recognizes revenue and cost of goods sold for iPhone and Apple TV over their economic lives. Adjusting GAAP sales and product costs to eliminate the impact of subscription accounting, the corresponding non-GAAP measures for the quarter are $11.68 billion of “Adjusted Sales” and $2.44 billion of “Adjusted Net Income.”

Apple shipped 2,611,000 Macintosh computers during the quarter, representing 21 percent unit growth and 17 percent revenue growth over the year-ago quarter. The Company sold 11,052,000 iPods during the quarter, representing eight percent unit growth and three percent revenue growth over the year-ago quarter. Quarterly iPhone units sold were 6,892,000 compared to 1,119,000 in the year-ago-quarter.

“Apple just reported one of the best quarters in its history, with a spectacular performance by the iPhone — we sold more phones than RIM,” said Steve Jobs, Apple’s CEO. “We don’t yet know how this economic downturn will affect Apple. But we’re armed with the strongest product line in our history, the most talented employees and the best customers in our industry. And $25 billion of cash safely in the bank with zero debt.”

“We’re very pleased to have grown revenue 35 percent and to have generated $9.1 billion in cash in fiscal 2008,” said Peter Oppenheimer, Apple’s CFO. “Looking ahead, visibility is low and forecasting is challenging, and as a result we are going to be prudent in predicting the December quarter. We are providing a wide range for our guidance, targeting revenue of $9.0 to $10.0 billion and earnings per diluted share between $1.06 and $1.35.”

Filed on behalf of the Judge on October 10, 2008 and served electronically upon the parties:

YOU ARE NOTIFIED THAT because the Court will be unavailable, the case
management conference previously set for October 23, 2008 at 11:00 a.m. has been rescheduled
for November 6, 2008 at 8:00 a.m., before the Honorable William Alsup. Please report to
Courtroom 9, on the 19th Floor, United States Courthouse, 450 Golden Gate Avenue,
San Francisco, CA 94102.

You may should be thinking: “So what? Why do I care that some boring meeting has been rescheduled?” Well after this meeting, the Court will issue its Scheduling Order which will contain multiple items of items such as the anticipated trial date and various discovery deadlines and limitations. E-discovery has recently become a hot button topic in legal services, and I am really curious if this Scheduling Order will reflect any agreements reached or limitations imposed on this kind of discovery in this matter.

Later on today Apple will be holding its fourth fiscal quarter conference call to discuss the companies performance during the September quarter. The conference will begin at 2pm PT/5pm ET/10pm BST.

Courtesy of Andy Zaky, Bullish Cross.

Analysts across Wall Street have been throwing in there predictions ranging from the company selling somewhere between 3.8 and 6 million iPhones on revenue of anywhere between $7.865b to $8.37b.

Andy Zaky from Bullish Cross is notoriously accurate in his numbers and has published his results earlier today. Last quarter Zaky was incredibly accurate with his predictions, out trumping all of the paid analysts.

Zaky has his money on Apple reporting $8.343 billion in revenue on EPS of $1.25. Gross margin is predicted to be 33.5%. When it comes to sales figures Zaky has Apple down for 7.25 million iPhones, 11 million iPods and 2.9 million Macs.

Zaky has also kindly put together a table (pictured left) of his predictions compared to Apple’s guidance and other analysts predictions.

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