Apple Q4 2008 Earnings: iPhones Off The Hook, Prepared For Recession

October 21st, 2008

Apple announced Q4 earnings today. I listened in on the earnings call.

Notes:

Apple iPhone sales were off the hook. Based on revenue, Apple was the third largest cell phone manufacturer and sold more hardware than RIMM (Blackberry).
Apple TV and movie rentals will continue to be a “hobby” in 2009.
They’re prepared for the recession: Apple has lots of cash – $25 billion. They rode out the last downturn and plan to survive this one just fine.
Apple feels their current product line is the strongest in the company’s history.
When asked about netbooks, Steve Jobs said the iPhone is a pretty good solution for the “netbook” category (mobile web browsing and email) and they’re watching this “nascent” segment for the future.
Apple wants to deliver quality. They don’t want to ship a $500 computer that’s a piece of junk.

Thoughts

iPhone sales have been stellar. I totally agree with Jobs’ comment that the other cell phone manufacturers will have a hard time competing with Apple’s software. They may get the hardware up to speed, but Apple’s years of experience with software should be that extra gravy consumers will be willing to pay extra for. Case in point is the App Store.

It also seems my desire for a low cost Mac has been dashed in the near term. I guess the “sub 1,000″ range is going to be filled with iPods and iPhones. I guess I’ll have to start viewing my iPhone as a cheap Mac. I think the jury’s out on whether this strategy is a good one in a slow economy.

Anyhow, Apple is up 13% after hours. The earnings are really something when compared with oh, say, Yahoo! which saw a 64% drop in profit and announced layoffs.

I think it’s safe to say Apple will emerge from this recession just fine. The jury’s out on Yahoo!.

In my mind, six tech companies emerged from the web 1.0 crash stronger than before: Microsoft, Google, Apple, Yahoo!, Amazon, eBay. It will be interesting to see how each performs during this downturn. So far, Google, Apple, and Amazon are doing pretty good. Microsoft, Yahoo!, and eBay are showing some weakness.

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