Apple's Fourth Quarter Report

After the economic chaos all over the world, Apple's fourth quarter has survived. Despite some product problems than usual, it's been business as usual at Apple during the past three months. The Strong Mac growth and steady iPod sales, with the added bonus of soaring iPhone sales help the company to find itself in a much better economic environment than last time Apple held an earning conference call in July.

Will consumers who just watched the value of their retirement savings plunge by 30 percent or more still want to load up on high-end consumer electronics equipment this holiday season? Analysts seem to believe the company's hot streak is likely to continue so long as Apple products remain in the good graces of the public, but no company is immune from the effects of a prolonged recession.

Apples for Students

The fourth quarter of Apple's fiscal calendar is almost always one of its strongest for Mac sales, as it takes advantage of the back-to-school shopping season. The Mac brand is extremely strong among the collegiate set, as Apple COO Tim Cook outlined last week at the company's notebook event.

Even without the new MacBook and MacBook Pros, Apple enjoyed an excellent quarter for Mac sales, according to recent market share results. Piper Jaffray's Gene Munster thinks a repeat of the free-iPod-for-students promotion of past years probably helped, and he expects Apple to have sold 2.8 million Macs during the quarter, as compared with Wall Street expectations of 2.5 million units. Last year during this period, Apple sold 2.1 million Macs.

None of the new notebooks will contribute to Apple's fourth quarter, which ended a few weeks earlier. But the decision to adopt the unibody chassis on all new MacBooks and MacBook Pros could prove to be a more expensive proposition at first, until the process becomes old hat.

The research and development costs to get that production process up and running took place in the past quarter, which might have dinged Apple's margins by the point or two that CFO Peter Oppenheimer warned was coming last July.

No Static at All 

Given the reception problems experienced by many iPhone 3G owners, perhaps that's not the best title for this section. But despite the bugs that required an all-hands-on-deck approach to the 2.1 software update, iPhone sales took off during the past quarter, with analysts expecting Apple to have sold as many as 5 million units.

The lower acquisition price of the new iPhone as well as the global reach appear to have Apple well on its way to hitting its 10 million shipment goal for 2008. In fact, some bloggers believe the company has already reached that milestone.

Whatever the number, it's clear the iPhone is becoming a huge part of Apple's fortunes more than a year after it was introduced, and while rivals like Research In Motion are preparing an offensive for later this year, the iPhone is now well-established in the market.

In a future age

In July, Apple itself said it expected revenue of $7.8 billion and earnings per share of $1, but like death and taxes, an underpromise-overdeliver approach to guidance from Apple is a given.

The worst effects of the stock market crash came in the last few weeks of Apple's quarter, so the economic environment is unlikely to have too big an impact on the current quarter, especially given the health of the Mac and the iPhone during the period.

Analysts are likely to pepper Oppenheimer--with little success--regarding his expectations for the current quarter.

Apple's guidance will be a key driver behind those questions; everyone knows the company's guidance will likely come in below the $10.6 billion in revenue and $1.66 in earnings per share that analysts are expecting for the company's first fiscal quarter, because Apple has done that almost every quarter for the past several years.