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Despite an ongoing recession, the fourth quarter of Apple's (Nasdaq: AAPL) fiscal year 2009, which ended in September, was the company's second-best quarter ever, Chief Financial Officer Peter Oppenheimer said at the company's earnings call on Monday.
Net revenues totaled US$9.87 billion, and net quarterly profits $1.67 billion, or $1.82 per diluted share.
Gross margin was 36.6 percent, up from 34.7 percent year over year, and international sales accounted for 46 percent of revenue.
The day after it disclosed its results, Apple also showed off a set of new products, including revamped iMacs and MacBooks, as well as a multi-touch "Magic Mouse."
A Fistful of Dollars
Cupertino is ecstatic over its financial results. "This is Apple's most profitable non-holiday quarter ever," Oppenheimer said. "It's second only to the record results for last December." Apple's annual sales typically peak in December because of the holiday season.
At $9.87 billion, revenues for Q4 were $1.97 billion -- nearly 25 percent -- higher than the $7.9 billion it chalked up in the same quarter last year.
At $1.67 billion, Cupertino's net quarterly profits were $530 million higher than in the same quarter a year ago.
Apple's healthy 36.6 percent gross margins were better than Apple's guidance last quarter for four reasons, Oppenheimer said. Cupertino sold more copies of Snow Leopard, the latest version of its OS X operating system; it had a better product mix; it spent less on the iPod transition than planned; and the cost of components increased less than expected.
Overall, Apple generated $36.5 billion in revenue for fiscal year 2009. That's a growth of 12 percent, Oppenheimer said. Net income was up 18 percent for the year.
These are GAAP (Generally Accepted Accounting Principles) figures; Apple is still deciding how to implement the non-GAAP approach, which it is now allowed to do under a recent change in reporting rules.
Apple's results surprised Broadpoint AmTech analyst Brian Marshall, who had pegged its earnings above the street consensus prior to the earnings call. "My numbers were $500 million above the Street's, and Apple beat them by $150 million," he told MacNewsWorld.
"Those are truly stellar results, which stemmed from higher average sale prices on the iPhone as more people bought the 3GS instead of the 3G," he said.
"Wall Street keeps missing on Apple earnings because it thinks Apple sells computers and phones, which are commodities, and the lowest price always wins in the mass market," Carl Howe, director of anywhere consumer research at the Yankee Group, told MacNewsWorld.
"But Wall Street executives buy BMWs and Mercedes instead of Kias and Chevys because BMWs and Mercs are highly differentiated products, and people are willing to pay a premium for that. They may be paying the premium for value or brand or style, but that doesn't matter," he explained.
Looking Ahead
In providing guidance for the first quarter of Apple's fiscal year 2010, ending December, Oppenheimer said revenues would be between $11.3 billion to $11.6 billion.
Diluted earnings per share should be between $1.70 and $1.78, he said.
Those figures are considerably lower than Marshall thinks they should be. He pegs Apple's revenue for the forthcoming quarter at $11.565 billion, with earnings per share of $1.98.
"Historically, Apple has always been very conservative in terms of guidance," Marshall explained.
Behind the Money
Mac and iPhone sales led Apple's charge. "We sold more Macs and iPhones than ever before," Oppenheimer said.
Cupertino sold more than 3 million Macs this past quarter. This was an increase of 17 percent year over year. "We've had a growth in sales over 19 out of the past 20 quarters," Oppenheimer pointed out.
A large part of this came from sales to the educational sector, Oppenheimer said.
Still, that doesn't account for strong demand from other markets, especially considering the recession and that many other PCs cost less than the cheapest Mac. Quality is the key here, BroadPoint AmTech's Marshall contends. "Apple continues to gain market share for both Mac notebooks and desktops despite the premium prices because they have a superior product both from the hardware and software perspective," he explained.
Apple sold 7.4 million iPhones during the quarter, a 7 percent increase year over year. Demand for iPhones was so strong that there was a shortfall in several countries. "We were very surprised by the demand," Oppenheimer said.
However, iPod sales were down 8 percent year over year. Apple sold 10.2 million iPods during the quarter, Oppenheimer said.
No Innocents Abroad
Apple is looking to international markets to sustain its rate of growth. International sales accounted for 46 percent of its revenue in Q4, Oppenheimer said. Apple's fiscal 2009 was the first year it opened more stores internationally than in the United States, he pointed out.
Cupertino will begin selling iPhones in China later this month, and it plans to open the iPhone to more carriers in the UK and Canada.
"The international market will be a huge component of Apple's growth in the future. When the U.S. economy declined and Apple's sales suffered here in early 2009, it was the international side that kept Apple's growth engine running," Marshall said.
"Apple knows that there are well-to-do consumers in other countries than the U.S., and we have only to look at their initiatives in China to see that," the Yankee Group's Howe said.
