Apple Q2 Results Blow Past Forecast Thanks to iPhone, iPod Shipments

NEWS ANALYSIS: If there's a recession, Apple isn't feeling it. Apple on April 22 announced its best results ever for a non-holiday fiscal quarter. Apple shipped 2.2 million Macs and 11.01 million iPods in the quarter and iPhone shipments reached 3.7 million.

For months, analysts and pundits have speculated about how the economy would affect Apple sales. Today the company answered with fiscal second-quarter results. After the market closed on April 22, Apple announced earnings of $8.16 billion, up from $7.51 billion a year earlier. Net profit grew from $1.05 billion a year earlier to $1.21 billion, or from $1.16 to $1.33 earnings per share. Gross margins were 36.4 percent.

The Wall Street consensus had been $7.96 billion revenue and earnings of $1.09 a share. In January, Apple forecast revenue between $7.6 billion and $8 billion for its fiscal second quarter, with earnings per share ranging between 90 cents and $1 per share. Estimated gross margins: 32.5 percent. So Apple forecast a revenue gain but an earnings decline.

"We are extremely pleased to report the best non-holiday quarter revenue and earnings in our history," Apple Chief Financial Officer Peter Oppenheimer said in a statement. "Apple's financial condition remains very robust, with almost $29 billion in cash and marketable securities on our balance sheet."

Looking ahead, Apple forecasts between $7.7 billion and $7.9 billion in revenue for the fiscal third quarter, with earnings per share ranging between 95 cents and $1 a share. In the comparable 2008 quarter, Apple reported revenue of $7.46 billion and $1.07 billion net quarterly profit, or $1.19 per share.

During the fiscal second quarter, Apple shipped 2.2 million Macs, with units down 3 percent year over year. The company shipped 11.01 million iPods, up 3 percent year over year. Shipments of iPhones reached 3.7 million. Earlier April 22, AT&T revealed that 1.6 million iPhone 3Gs had been activated during the first calendar quarter, suggesting that about 2 million units are still unsold in the channel.

Mac Analysis

The question hanging over Apple during the recession: Could the company maintain Mac shipments at its current prices, which are substantially higher than those of PCs? For example, according to NPD Group, the U.S. retail average selling price for a Mac in February was $1,500 compared with $555 for a Windows PC. For notebooks, the Mac laptop ASP was $1,512 compared with $560 for a Windows laptop. The cheapest MacBook sells for $999, while an iMac starts at $1,199.

Before the recession, Apple easily maintained higher pricing while clocking huge sales growth and market share gains. Twelve months ago, Apple's U.S. retail share reached 14 percent, with notebook sales up close to 60 percent year over year, according to NPD. By September, Apple's retail share had topped 20 percent in units and approached 40 percent in revenue.

But the recession has acted as gravity pulling against Apple's earlier gains. Apple's U.S. share of the PC market reached 9 percent in the third quarter of 2008, according to Gartner. But Mac market share declined to 8 percent in the fourth quarter and to 7.4 percent in the first quarter of 2009.

Meanwhile, at U.S. retail, Windows PC sales are way up, while being way down for Macs, according to NPD Group. In February, U.S. retail Windows PC unit sales rose 22 percent year over year compared with a 16.7 percent Mac sales decline. Windows PCs posted modest 1.4 percent revenue growth, compared with a stunning 23.3 percent Mac revenue decline.