In the event of a recession, what would it be like? Apple rate?

In the event of a recession, what would it be like? Apple rate?

The number of Macs sold in the quarter was down 3% from the previous quarter. “Mac sales have not suffered as much as one might have feared,” said Ezra Gottheil, an analyst at Technology Business Research Inc. “Apple’s rate of growth was much slower, but it’s clear that the new MacBook was a major winner.” Apple unveiled new all-aluminum “unibody” MacBook and MacBook Pro notebooks in late October, and counter to what many thought at the time, reduced the price only for the remaining low-end MacBook with the plastic case.

Despite the fact that the recession is worsening and rivals’ sales are faltering, Apple Inc. stated today that it sold more than 2.5 million Macs and 4.3 million iPhones in the last three months of 2008, setting a new single-quarter revenue record.
In its first fiscal quarter, which ended Dec. 31, 2008, Apple sold 1.8 million laptops and 728,000 desktops, a 34 percent increase for the former and a 25 percent dip for the latter over the same time previous year. Although Mac sales income was basically unchanged year over year, Apple sold 9% more Macs during the time than it did in the last three months of 2007.


  • During the call, Oppenheimer used the phrase “extremely proud” several times to describe the bottom line for the period, while Chief Operating Officer Tim Cook bragged that Apple had been able to maintain strong notebook sales even in the face of a generally lousy economy.

  • During the quarter, total revenue was $10.2 billion, a new single-quarter record, said Apple Chief Financial Officer Peter Oppenheimer in a Wednesday afternoon conference call with Wall Street analysts.

According to analysts, however, Apple actually lost market share, at least in the U.S., when desktops were added to the mix. Last week, Gartner Inc.’s Mikako Kitagawa estimated Apple’s domestic share of sales had slipped to 8%, down from 9.5% the quarter before.

“We were very pleased with the overall Mac portable share gain,” said Oppenheimer, who called out the unibody notebooks as driving sales since their October launch.

Oppenheimer acknowledged the slide of desktop sales, which were off 25% year to year and down 22% from the previous quarter, but he cited two reasons for the plummet. One, he said, was the very strong sales of the just-released iMac in late 2007, and the tough time matching that volume in 2008. The other reason was simply a reflection of the market as a whole, which increasingly is tilting toward laptops, he said.

Gottheil pointed to a third reason: slowing sales in the K-12 education market, which typically buys desktops.

For all the strength of Mac sales, however, Apple’s computers accounted for a smaller slice of the company’s total revenue than in the previous quarter and in the same quarter the year prior. Last quarter, Mac sales were just 34.9% of all Apple revenues, down from 36.9% in the same period in 2007 and off even more from the 45.8% in the quarter that ended in September 2008. “The Mac piece of the pie is getting smaller, and the overall iPod market is saturated,” said Gottheil. “That’s why the iPhone is the big propeller behind the overall growth of the company.”

Apple sold 4.3 million iPhones in the last three months of 2008, down substantially from the 6.9 million it sold the quarter before. But that still represented an increase of 88% year to year over the 2.3 million sold in late 2007. Gottheil was bullish on the iPhone, in particular the amount of money each one sold brings to Apple’s bottom line. “They were even more transparent than they have been in the past,” he said, referring to Apple’s new practice of noting what revenue the iPhone would have contributed if the company didn’t spread it out over a 24-month span.

Each iPhone, said Gottheil, is a “$600 cash infusion” — the amount Apple makes from the retail sales and mobile carriers’ subsidies. “Right now, the iPhone is driving Apple’s growth, absolutely,” Gottheil said. During the question-and-answer segment of the call, the Apple executives talked about netbooks, the small, low-priced notebooks that grabbed as much as 10% of the laptop market in late 2008, and declined to comment about the health of CEO Steve Jobs.

“They don’t seem so much concerned about leaving that money on the table as more concerned about the erosion in the Mac market,” Gottheil said.

“I think that at this point, they don’t feel a need to enter the [netbook] marketplace,” said Gottheil, who last month had speculated that Apple would, in fact, unveil one or more netbooks at Macworld, which Apple did not do. On netbooks, Cook, who is in charge of day-to-day operations at Apple while Jobs is on a six-month medical leave, essentially reiterated the wait-and-see attitude that Jobs himself expressed three months ago. “Right now, the products in there are much less powerful than customers want — they have cramped keyboards and small displays,” said Cook. “We think that the products there are inferior. But we’ll see. We have some ideas here, and we’re watching the space.”