Apple sets revenue record during recession

In the face of a deepening recession and softening sales for its rivals, Apple Inc. today announced that it set a single-quarter revenue record in the last three months of 2008, selling more than 2.5 million Macs and 4.3 million iPhones in the process.

Apple sold 1.8 million notebooks and 728,000 desktops in its first fiscal quarter, which ended Dec. 31, 2008, an increase of 34% for the former, but a drop of 25% for the latter over the same quarter last year. Overall, Apple sold 9% more Macs during the period than it did in the last three months of 2007, although Mac sales revenue was effectively flat year-to-year.

The number of Macs sold in the quarter was down 3% from the previous quarter.

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In the face of a deepening recession and softening sales for its rivals, Apple Inc. today announced that it set a single-quarter revenue record in the last three months of 2008, selling more than 2.5 million Macs and 4.3 million iPhones in the process.

Apple sold 1.8 million notebooks and 728,000 desktops in its first fiscal quarter, which ended Dec. 31, 2008, an increase of 34% for the former, but a drop of 25% for the latter over the same quarter last year. Overall, Apple sold 9% more Macs during the period than it did in the last three months of 2007, although Mac sales revenue was effectively flat year-to-year.

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 with 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.

During the quarter, total revenues were $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.

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.

"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.

According to outside 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.

Oppenheimer acknowledged the slide of desktop sales, which were off 25% year-to-year and down 22% from the previous quarter, but as he did, he put forward a pair of 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 tilts toward laptops, he said.

Gottheil added a third: 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 revenues than either the quarter before or the same quarter the year prior. Last quarter, Mac sales contributed 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."

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