Saturday, October 23, 2010

They Just Don't Get Apple! (Video) *Is Apple a mobile device or a computer company?* AAPL


Apple reported record revenues and net income for Q3 September 2010

They Just Don't Get Apple!

Apple reported calendar Q3 financial results on Monday, October 18. Quarterly sales surpassed $20 billion ($20.3B) for the first time and quarterly net income was an all-time high of $4.3B. These are near-legendary quarterly results that few, if any, tech companies, have ever achieved. Yet the expectations were so high that Apple was knocked for a 36.9% gross operating margin, down from 39.1% the prior calendar Q2 June 2010 and down from 41.8% the prior year calendar Q3 September 2009.

So what's the story here and is the disappointment justifiable? First, Apple is selling lower margin devices now, and lots of them, such as the iPad and iPhone. Second, Apple stated earlier this year their gross margin would be lower. Is Apple a different company now? Still arguably the tech king of companies, but changed? Has Apple "transitioned from a computer company that made mobile devices to a mobile-device company that makes computers?" That is, has Apple transformed from a higher margin computer company to a lower margin mobile device company?

In calendar Q3 2010, Apple sold 3.89 million Macs, a 27% unit increase over the year-ago quarter, sold 14.1 million iPhones, representing 91% unit growth over the year-ago quarter, sold 9.05 million iPods, representing an 11% unit decline from the year-ago quarter, and sold 4.19 million iPads.

WESTCHESTER COUNTY, N.Y. -- Marek Fuchs, TheStreet's media critic, talks muddled Apple margin coverage.

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