Mac sales up, iPod sales up, iPhone sales way, way up, and an uncharacteristic appearance by CEO Steve Jobs at the analyst conference call. It's hard to know where to begin.
Jobs showed up in part to discuss Apple's decision to disclose some alternative financial data from now on. Because Apple periodically issues free software updates for the iPhone and Apple TV, revenue from those sales is recognized over the two-year life of the product rather than entirely in the quarter the product is sold, as with Macs and iPods.
To help analysts and investors better "evaluate the company's overall performance," Jobs said the company plans to release "non-GAAP" financial results along with the usual earnings figures. (GAAP stands for Generally Accepted Accounting Principles.)
Tremendous sales of the iPhone 3G – 6.9 million units – prompted the change, Jobs said. The iPhone accounted for a whopping 39 percent of Apple's 4Q revenue.
"The non-GAAP results are truly stunning," Jobs crowed, and it's hard to argue with the numbers. Including the iPhone and Apple TV sales in their entirety adds nearly $3.8 billion in revenue, a 48 percent increase over the $7.9 billion the company reported.
Non-GAAP adjusted income doubles from $1.14 billion to $2.44 billion, a 115 percent increase. For those keeping score at home, the $1.26 per share Apple reported balloons to $2.69 per share in the adjusted figures. Yowza!
Jobs probably has grown tired of AAPL's slumping stock price – which had slid $6.95 to $91.49 yesterday before Apple announced its results. He wants the world to know how much dough Apple is really making.
Apparently investors got the message: AAPL rose $12.12 in after-hours trading and is up today in a down market.
More details from Apple's earnings call, by topic:
The blockbuster iPhone 3G/App Store: The star of the quarter, the iPhone 3G blew away all expectations. Customers bought more iPhones in the September quarter than during the entire previous lifespan of the product (6.9 million vs. 6.1 million).
Oppenheimer said Apple has "already surpassed our goal of 10 million iPhone sales in calendar 2008," but that claim must include some October sales. Adding the reported sales of the first three quarters of 2008, I get 9.3 million iPhones. At the rate iPhones are selling, Apple probably hit 10 million about a week or so ago.
Prospects for future iPhone sales also look good. Oppenheimer said Apple is now selling the iPhone 3G in 51 countries, with the number expected to increase to 70 by the end of the year. Apple has 3,100 iPhone distribution points in the United States and over 30,000 worldwide, he said.
Jobs pointed out that Apple beat Research in Motion's BlackBerry in unit sales 6.9 million to 6.1 million this quarter. Furthermore, Jobs said, Apple is now the No. 3 mobile phone maker as measured by revenue, with $4.6 billion in sales (behind Nokia with $12.7 billion and Samsung with $5.9 billion).
The App Store, despite some grumblings from developers whose apps Apple rejected, has amply demonstrated the iPhone's potential as a software platform. "Customers will download the 200 millionth application from the App Store tomorrow [Wednesday], only 102 days since its launch," Jobs said, noting the availability of over 5,500 apps.
Jobs also said Apple's strategy is not to build "a hundred variations" of the iPhone like other handset makers, but to use software as the differentiating factor.
The Mac hangs tough: Mac sales fell slightly short of last month's optimistic analyst projections, but at 2.61 million units still set a record for most Macs sold in a quarter. The growth rate of 21 percent year over year wasn't as impressive as March's 51 percent or June's 41 percent, but remains respectable.
Apple CFO Peter Oppenheimer said cutbacks in education budgets as well as rumors of imminent new MacBook models (which Apple did indeed unveil last week) probably hampered Mac notebook sales at the end of the quarter. Two-thirds of all Macs sold are notebooks.
Apple has its corporate fingers crossed the new models will boost notebook sales going forward. "We've had a very, very strong launch and we are anxiously awaiting to see the demand trajectory that will unfold during the quarter," Jobs said.
When asked if Apple would consider "more affordable" Macs, Jobs repeated a long-standing Apple philosophy: "There are some customers we choose not to serve," he said. "We don't know how to make a $500 computer that's not a piece of junk."
If fresh iMacs appear in November as rumored, unit Mac sales could set another record come January.
iPod not dying: Apple sold 11 million iPods in the quarter, a record for a non-holiday quarter and an 8 percent increase year over year. Market share for the iPod remains at a healthy 70 percent. The iPod stubbornly continues to defy predictions of its decline.
During what could be a bleak retail holiday season, the line of iPods refreshed in September should keep it high on many shopping lists.
Apple TV on pause: Jobs reiterated his take that Apple TV is "still a hobby." He said it would stay that way at least through 2009, dashing the hopes of those dreaming of a major Apple TV announcement at the annual Macworld Expo in January.
More stores: The growth of the retail chain continued unabated, with the addition of 31 new stores, bringing the total to 247. As always, Oppenheimer said half of all Macs sold in the stores were to people who had never owned a Mac before.
The stores saw 42.7 million visitors in the quarter, another record and further evidence that the ailing economy has so far failed to impair the lure of the Apple brand.
Rainy Day Fund pays off: Having generated another $3.7 billion in cash, Apple's stockpile of money stands at $24.5 billion. Jobs brushed off a question about returning some cash to shareholders in the form of dividends. "It's not burning a hole in our pocket," he said.
But Jobs also said Apple's unusual cash position "provides us tremendous stability and the ability to invest our way through this downturn," which he said means more money going into research and development of future products. He wouldn't comment, however, on the possibility of acquiring other companies.