Mac Corner: More good news from Apple  

  
By Larry Grinnell, Palm Beach Phoenix Apple Users Group

Last week, Apple Inc. made this announcement regarding their third quarter earnings:

Apple today announced financial results for its fiscal 2010 third quarter ended June 26, 2010. The Company posted record revenue of $15.7 billion and net quarterly profit of $3.25 billion, or $3.51 per diluted share. These results compare to revenue of $9.73 billion and net quarterly profit of $1.83 billion, or $2.01 per diluted share, in the year-ago quarter. Gross margin was 39.1 percent compared to 40.9 percent in the year-ago quarter. International sales accounted for 52 percent of the quarter’s revenue.

“It was a phenomenal quarter that exceeded our expectations all around, including the most successful product launch in Apple’s history with iPhone 4,” said Steve Jobs, Apple’s CEO. “iPad is off to a terrific start, more people are buying Macs than ever before, and we have amazing new products still to come this year.”

Wow. They did it again. The iPad has contributed to the bottom line in a big way, apparently. It also shows how important the international market is to Apple, with 52 percent of its quarterly revenue coming from overseas. Gross margin was off by almost two percentage points, though at a still incredible 39.1 percent.

A little about that last number. Gross profit margins like this are virtually unheard of anymore. It means for one that Apple has their manufacturing costs under control, and for another, it shows that Apple is able to continue to charge premium prices for their products and that there is little motivation to reduce prices — even in tough economic times.

Profit pressures for the upcoming quarter include the bumper fix for the iPhone 4, which should cost upwards of $175 million, but experts say this fix is a lot cheaper than a full recall, which could have cost Apple in the vicinity of $1.5 billion.

Apple is also in the enviable position of sitting on almost $30 billion in cash. In the current economic environment, Apple is probably struggling to find a place to invest this money. You can’t make money putting it in banks, and the stock market is waaay too volatile. What they need to do is continue acquiring companies, from small to large, that can compliment Apple’s bottom line.

Apple continues to be a cash-generating monster. They hold the enviable position of having profit margins that have not been seen in the consumer electronics business in decades. There’s no reason this should not continue for the immediate future. Oh, and they make great products, too!

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About Larry Grinnell: Larry has been working with Macintosh and Windows PCs for over 25 years and worked as a senior technical writer and IT support professional for a major midwest-based consumer electronics and telecommunications equipment manufacturer here in South Florida. His musings on a wide variety of topics from computers to jazz guitar to strange foreign cars from the 1950s can be viewed at the MyMac.com website. Click here to reach him by email.

Writers of this column are members of the Palm Beach Phoenix Apple User Group, a nonprofit organization for Apple Computing Device Users, recognized by Apple Inc., with the purpose of providing educational training and coaching to its members (students, professionals and seniors alike) in a cordial social environment. The club meets the second Saturday (1-4 p.m.) and fourth Wednesday (6-8 p.m.) of each month at the Fire Station #2, 4301 Dixie Highway in West Palm Beach (just two block south of Southern Boulevard). Click here to visit their website. Click here to reach them by email.