Listen to this article
It seems nothing can stop the comet from Cupertino. Apple’s latest set of recession-busting results almost defy belief. Net income of $1.23bn in the third quarter, up from $1.1bn the year before, beat all but the most bullish estimates.
Sales of $8.3bn, up 12 per cent year-on-year, meanwhile came as many other computer manufacturers have struggled to hawk less expensive machines to antsy consumers.
While rivals are being hit by feeble demand, Apple’s biggest problem is that it hasn’t been able to make computers fast enough.
A closer look at the numbers shows that Apple is not entirely immune to the recession. A 4 per cent rise in Macintosh computer shipments was only possible after Apple chopped prices across most of its product line (although at $1,000 for a low-end MacBook, its machines remained pricier than those of rival PC makers). Although units rose, Mac revenues fell 8 per cent.
Yet to say that those declines were made up for by soaring iPhone sales is an understatement. Two years after the iPhone’s launch, sales of the fancy handset have overtaken those of its iPod music player. At $1.6bn, up sevenfold year-on-year, iPhone sales last quarter accounted for one-fifth of Apple’s revenues.
There are two lessons here for investors. First, in spite of a confidence-sapping lack of communication about the health of chief executive Steve Jobs during his recent medical leave, Apple’s management backbench has proved its mettle.
Second, recession or no, consumers continue to reward innovation. Another company might have been caught out by a maturing market for a hit product such as the iPod; Apple came up with the next big thing that is supplanting it.
On 26 times forward earnings, though, it is trading at a demanding premium to other hardware makers. Investors are betting it can continue on its meteoric trajectory.
Lex is the FT’s agenda-setting column, giving an authoritative view on corporate and financial matters. It is also one of the few parts of FT.com available only to Premium subscribers. This article is provided for free as an example. A Premium subscription gives you unlimited access to all FT content, including all Lex articles and the FT mobile Newsreader.
If you have questions or comments, please e-mail email@example.com or call:
US and Canada: +1 800 628 8088
Asia: +852 2905 5555
UK, Europe and rest of the world: +44 (0)20 7775 6248
Get alerts on Semiconductors when a new story is published