Apple Q1 2013 Financial Results Mixed: iPhones and iPads up, iMacs and iPods down

Ahead of the earnings call scheduled for 2 PM today, Apple has released its Q1 2013 earnings. The earnings are decidedly mixed with narrowly missing estimates with $54.5 billion in revenue, but beating estimates with $13.1 billion in profit. In the crucial device department metric, iPhone sales were up 29%, iPads up 48%, but iMacs down 22% and iPods also down 18%.

This story and analysis is developing, so stay tuned as we update the post.

First thing that needs to be kept in mind as we analyze all these numbers is that Q1 2013 was a 13 week quarter while Q1 2012 was a 14 week quarter. Would this have made a tremendous difference in iMac or iPod sales (both down), maybe not. However, since Apple narrowly missed estimates for revenue for the quarter, maybe they could have narrowed the gap a bit.

That said, let’s put this into perspective (something after-hours trading seems not to be with the stock dropping and recovering) is that these results still broke all time Apple quarterly records:

“We’re thrilled with record revenue of over $54 billion and sales of over 75 million iOS devices in a single quarter,” said Tim Cook, Apple’s CEO. “We’re very confident in our product pipeline as we continue to focus on innovation and making the best products in the world.”

“We’re pleased to have generated over $23 billion in cash flow from operations during the quarter,” said Peter Oppenheimer, Apple’s CFO. “We established new all-time quarterly records for iPhone and iPad sales, significantly broadened our ecosystem, and generated Apple’s highest quarterly revenue ever.”

Apple PR

Now what would that extra week in Q1 2013 have done? Well, the average weekly revenue was $4.2 billion versus $3.3 billion in 2012. So if Apple had just one more week, they might have had revenue of $58.7 billion…not too shabby. Plus as, TNW points out, Apple beat its own (conservative) guidance of $52B in revenue and earnings of $11.75.

For Q2 2013 (this quarter), Apple is giving the following guidance:

• revenue between $41 billion and $43 billion
• gross margin between 37.5 percent and 38.5 percent
• operating expenses between $3.8 billion and $3.9 billion
• other income/(expense) of $350 million
• tax rate of 26%

We’ll update this post after the earnings call finishes (it just started).

Updates from the earnings call:

Lots of data and figures, but here are some key facts and quotes that are pretty interesting:

  • Apple sold 312,000 Macs per week. Related to this, Cook and Oppenheimer believe that supply constraints on the iMac are a big factor in the poor Mac sales figures
  • Over 2 billion iMessages are sent per day
  • iCloud grew 31.5% with 250 million users
  • On phone screen size: “We put a lot of thinking into screen size and believe we have picked the right one,” Cook said.
  • On the supply chain reports as analogous of iPhone sales: “We obviously have multiple sources for things,” he said. Yields can also vary, as does inventory
  • On Apple TV (in response to a question by Gene Munster): Cook: “in terms of the product we sell today. We sold more last quarter than we have ever before. It was up almost 60% YOY. There is very good growth with that product. What was a small niche at one time… this is an area of intense interest for us and I tend to believe there is a lot we can contribute in this space.”
  • On device cannibalization:

    “We know iPhone has cannibalized the iPod business. We know that iPad has cannibalized the Mac.”

    “Our strategy is to never fear cannibalization. If we do somebody else (will cannibalize).”

    But computer cannibalization is “the mother of all opportunities” for Apple, because Windows share of computers is so much greater than the Mac.

    Also, there is the potential “halo effect” as those that get an iPad as their first Apple product given that history shows those that buy one device often buy more.

    “I see cannibalization as a huge opportunity.”

There is a lot to take in with these results. The Street is disappointed, especially in the profits, but I think we all have to step back and consider how successful Apple is. Truly. Very profitable, lots of cash, products they can’t make enough of. Personally I like this take from John Gruber:

Bruno J. Navarro, CNBC:

Apple stock is headed to a level of $425 per share this quarter, DoubleLine CEO Jeff Gundlach said after the company reported disappointing earnings Wednesday.

“I think this is really a broken company that is over-owned,” he said on “Fast Money.”

Record-breaking revenue. Record-breaking profit. Over 75 million iOS devices sold in the quarter. Totally broken.

Yeah I wish I had Apple’s problems.

Via: AllThingsD and 9to5Mac

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Categories: Apple News

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  • ObamaIsGod

    Only 26% rate???!!! Phones are basic necessities, they should not be allowed to have any profit on phones! They should be taxed just like a 1%-er … or MORE!

    • Jacobo

      This makes no sense. Go back to sleep.

    • http://www.facebook.com/THExREALxTACO Jeremy Taco Patterson

      Go home, ObamaIsGod.

      You’re drunk.

  • Pacomacman

    Analysts are stupid people, whoever wrote this headline doesn’t have a clue. Of course iPod sales are down, this has been happening for the last few years. MP3 players have become redundant.

    Mac sales were down because we were promised a product refresh that never happened. I held off getting an iMac because the rumours were that new retina models were in the pipeline. Damn the speculation.

    The important thing is that iPhone sales were up, trashing the speculation that there was no demand for them. IPad sales up considerably despite lots of competitors flooding the market. The iPad Mini obviously proving a success.

    • http://www.facebook.com/THExREALxTACO Jeremy Taco Patterson

      Pretty much dead on.

      Of course the week AFTER Christmas they scale back production. Demand falls for EVERYTHING after the holidays (well, except maybe therapy… But that’s for another story) so “analysts” making anything of a production reduction (LOL, clever, right?) is absurd.

    • http://trishussey.com Tris Hussey

      Yes analysts are out to lunch on this. As for the title, that was one of the key parts being reported. Yes iPods have been declining for years. This is the first time in year, however, that Macs have declined.

  • sidenine

    Mark my words, you are witnessing the fall of a giant. The iPhone 5 was the chance they had to show they could still innovate, but they dropped the ball by releasing a phone that was only marginally larger than the 4S. Meanwhile Android continues to increase share of the market.

    Not saying Android is better than iOS, because I actually prefer iOS for many reasons. But, the Android phones of late are getting better and larger, which is what many people (including myself) want. I have an iPhone 5 because as I said, I prefer that ecosystem. I truly believe if Apple had just released a larger phone with the iPhone 5, they would not be in this mess. As of this writing, their stock was down over 10% in after-hours trading to a 52 week low of $461.

    I’ve said it before and I’ll say it again…innovation left that company the day Steve died.