IFPI said that global sales of music dropped 7.2% to $17 billion for all of 2009. Late last week, Apple reported $13.5 billion in revenue for the first quarter of the year.
Why does anybody still care about music as a business?
Buried in the news that HP is buying Palm is an updated lower guidance for the fourth quarter, otherwise known as a warning.
The Company expects revenues for its fourth fiscal quarter to be in the range of approximately $90 million to $100 million on a GAAP (1) and a non-GAAP basis. Revenues for the fourth fiscal quarter are being impacted by slow sales of the Company’s products, which has resulted in low order volumes from carriers. Palm also expects to close its fourth fiscal quarter with a cash, cash equivalents and short-term investments balance between $350 million and $400 million.
$90 million in revenues for an average ASP of $300 would put unit sales at 300,000 for the quarter. RIM just sold 10.4 million devices, Apple sold 8.75 million. 300k is just an astonishingly small number.
China has been interesting. If you look at greater China which we define as mainland China, Hong Kong and Taiwan, the iPhone units were up year-over-year over 9 times. We added another 800 points of distribution in China. The revenue, we have never released this number before but I will do this in this particular case, through the first half of the fiscal year that we just completed for the six month period our revenue from greater China was almost $1.3 billion and this is up over 200% year-over-year. So we are well pleased with how the company is positioned to take advantage of the growth in greater China.
via Apple Inc. F2Q10 (Qtr end 03/27/10) Earnings Call Transcript -- Seeking Alpha.
Peter Oppenheimer, CFO added:
We are very excited about China not only for retail but for Apple. Tim talked about the success we have had in greater China to date with revenue being up about two time’s year-over-year. With regard to retail stores we will open two stores in Shanghai this summer and with targets of having about 25 stores open in China by the end of calendar 2011.
As a point of reference, the Mac business growth in Asia is also pretty impressive: Mac units in APAC grew 67% vs. 20% in the Americas, 18% in Japan and 37% in Europe.
Apple's overall gross margin reached 41.67%, the second highest ever. The highest was 41.82% last Fall. This should not come as a surprise as the iPhone continues to make up an increasingly larger percent of Apple's total sales. The gross margin on the iPhone continues to be well above all its other product lines (except for software).
Although Apple does not provide product line GM break-out, some intelligent guessing can be made. Here are my estimates:
A historic perspective for gross growth (iTunes, Peripheral and Software sales growth) is shown in the graph below.
Each of Apple's individual business lines is profitable. Last quarter only the iPod experienced negative year-on-year unit growth but still generated a positive sales growth due to higher ASP.
Here is the list of each product line and its y/y sales growth:
Unit Growth, Sales Growth
Overall sales grew 49%.
A historic perspective for unit growth (iTunes, Peripheral and Software sales growth) is shown in the graph below.
Nokia reported 21.5 million converged devices sold in Q1. The units, share, ASP, Revenues and Operating Profits are compared in the following table.
It's once again evident that Apple captured more profits from the iPhone than Nokia did from all its devices and services operations.
With respect to converged devices, Apple also generated more sales and had nearly triple the ASP. Unit shares remained almost the same sequentially. Nokia did suffer more from ASP erosion sequentially as the converged ASP dropped by 24% vs. a 2.5% drop for Apple.
What is interesting from a growth perspective is that Apple's #1 position in the share of profits from mobile phones was acquired with such a low market share. Analyst Brian Marshall said the most interesting part of Apple's story is the international growth of the iPhone. He believes that Apple has only acquired about 1.5 percent of its international carrier partners' total postpaid subscription base of 525 million. For comparison, its penetration in the U.S. peaked in Sept. 2009 on AT&T with 5 percent.
Sources:
Research #Nostalgia #netbooks · 6 comments
The results all but confirmed a sudden slowdown in netbook sales in the early part of the year and suggested the business may actually be on the decline. Intel didn't directly explain the shift, but an ongoing recovery from the recession and a more mature market are likely to give more buying power and greater interest in faster notebooks, especially following the addition of mobile Core i3, i5 and i7 chips.
The trend away from netbooks is likely to continue as Intel raised its profit margin estimates for the whole year from a range of 58 to 64 percent earlier to between 62 and 66 cents.
Source: Electronista
A tip of the hat to John Gruber for compiling this list:
Daring Fireball: Apple Netbook Claim Chowder.
14 October 2008, Doug Aamoth at CrunchGear: “Five Reasons Why an Apple Netbook Is a No-Brainer”:
When asked today about the possibility of an Apple netbook, Steve Jobs said something to the effect of, “The market is just getting started — we’ll see how it goes.”
Huh? Here’s how the netbook market’s going, Steve: pretty much every major computer company has a netbook but you. Apple’s a prime candidate for a netbook, too.
20 January 2009, Brian Caulfield at Forbes: “Apple’s Real Problem: Netbooks:"
The real problem is how Apple’s portfolio of expensive gear — particularly notebooks — will fare as the recession starts to bite.
21 January 2009, Brian X. Chen at Wired Gadget Lab: “Apple Still Oblivious to Netbook Opportunity”.
18 March 2009, Shane O’Neill at PC World: “Recession Breathes Life Into Windows PCs as Apple Gasps for Air”:
At this point, I’m going to stop asking when Apple will acknowledge these dark days we live in because I think the answer is never. Maybe Apple should just be a bull market company. When times are lean, it should pack up like a traveling carnival or disappear like a baseball team in winter and not come back until everybody’s rich and happy again.
24 March 2009, Scott Moritz at TheStreet.com: “Apple’s Netbook Foray Will Flop”
Nonetheless, design hubris and slumping sales will cause Apple to tap a hot segment of computer market.
19 August 2009, Charles Moore at The Apple Blog: “Lack of Netbook, Price Hurting Apple in This Year’s Back-to-School Market”.
Deagol estimates 12,594 2.77
via Deagol's AAPL Model: Fiscal 2Q 2010 Final Estimates.
In the spirit of Deagol and Turley Muller here are my estimates for the quarter:
3mo ending Mar-2010 Rev($M) EPS($)
------------------- ------- ------
Apple guidance 11,200 2.12
Analysts consensus 11,960 2.44
asymco estimates 12,357 2.60
asymco Revenue breakdown:
Mac 3,918 ( 3.01M @ $1,300)
iPhone 4,500 ( 7.50M @ $ 600)
iPod 1,652 (11.00M @ $ 150)
Music 1,206
Software 689
Periph 393
-------- ------
Total 12,357
Income statement:
Revenue 12,357
COGS 7,458
GM 4,899
OpEx 1,533
OpInc 3,366
OI&E 50
Pre-tax 3,416
Tax 1,025
NetInc 2,391
Shrs. 920
EPS 2.60
At the event, CEO Steve Jobs noted that iPhone sales to date now tops 50 million units. Morgan Keegan analyst Tavis McCourt points out in a research note that as of the end of December, sales to date were 41.8 million. Ergo, the company sold at least 8.2 million in the March quarter, he concludes.
Source: Barrons
How can you count on these guys for forecasts about the future when they can't get the past right? Total iPhones sold as announced by Apple: 42.484 million. A more reasonable estimate is here.
Apple said Thursday that it has shipped over 450,000 iPads since the device went on sale this past Saturday, spurring 3.5 million app downloads for the new tablet device by its earliest adopters.
via AppleInsider | Apple sells 450,000 iPads in 5 days, users download 3.5 million apps.
Jobs also updated with 600,000 downloads of iBooks. The first day sales of books was 250k, so it's keeping a bit above 1 book per device. First day apps was 1 million, so the app attach rate is now 7.8, well above the 3 from day one. Keep in mind that the iPhone attach rate grew to over 50 so it's early days to see how iPhone compares to iPad as an app magnet.
What RIMM doesn't say (and, as far as I can tell, no one else has noted) is that Apple has surpassed them in total smartphone revenues. This quarter RIMM reported sales of $4.1 billion in revenue for their whole company. Apple surpassed them, selling $4.6 billion worth of iPhones in Q4 2009 and, more recently, $5.6 billion in Q1 2010. Remember, the iPhone didn't exist until mid 2007.i Phone sales have gone from zero to $5.6 billion in about 900 days. It's very hard to compete against that explosive growth.