Smoke and mirrors?
Apple raked in revenue of $15.68 billion and profits of $3.38 billion in the last quarter of 2009, a year-on-year increase of 32 percent and almost 50 percent, respectively.
A 50 percent increase in profits is pretty amazing, but it's not all that it seems. While gross margin did improve from 37.9 to 40.9 percent, an estimated half of the improvements are due to a change in the way Apple accounts for revenue from the iPhone and Apple TV. Where revenue from these products was previously accounted for over the course of their entire economic life, it's now all up-front.
Nonetheless, Apple is clearly still doing just fine thank you very much. It currently has nearly $40 billion in the bank. To put that into context, that's more than the entire market capitalisation of Dell or Sony and not far short of Nokia.
"If you annualize our quarterly revenue, it's surprising that Apple is now a $50+ billion company," said Apple CEO Steve Jobs. "The new products we are planning to release this year are very strong, starting this week with a major new product that we're really excited about." Wink, wink, nudge, nudge.
Of the key product segments, Apple sold 3.36 million Macs, 33 percent up on a year ago. The 8.7 million iPhones sold in the quarter were twice as many as a year ago, but still a bit less than was expected. Apple sold 21 million iPods during the quarter, which was eight percent less than Q4 08.
Apple shares were up 1.5 percent in pre-market trading.