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Apple's Profits Soar

David Gilbert


Apple's Profits Soar

Apple observers have had a very interesting couple of days. On Monday Steve Jobs announced his third leave of absence from the company and last night the company announced massive record profit levels. One drove the share price down and the other is likely to make it soar once again.

Apple COO, Tim Cook – taking over from Jobs – announced results for the final three months of 2010 to Wall Street analysts last night. Compared to the same period of 2009, net income almost doubled from $3.3 billion to $6 billion, overall sales rose from $15.68 billion to $26.7 billion. Apple sold 16.24 million iPhones, which is a whopping 86 percent increase over the same period in 2009 – and this in a year when Android overtook iOS in the market share of smartphone OSes. Apple’s market leading iPad sales totaled 7.33 million in its first year on the market but will surely face stiffer competition in 2011 as the Android and Windows devices slowly catch up.

However it seems as if Cook doen;t see much real competition for the iPad at the moment. On Windows' tablets: "They're big, heavy and expensive. Weak battery life. Need keyboard or stylus. From our point of view, customers aren't interested in that." On Android: "It's a "scaled-up smartphone" – that's a bizarre product in our view."

The only downside for Apple was a decline in sales of iPod devices compared to a year ago. In the three months to December 25, Apple sold 19.45 million iPods which as a seven percent decline. The Cupertino company’s results were well ahead of market estimates with sales up 71 percent. Cook told analysts: “We’re all very happy about our product pipeline,” adding that “the team here has a breadth and depth of innovation that Steve has built.”

While Cook may be positive in his outlook, the market’s view of Apple’s current position has been in flux over the past 24 hours. Following news of Jobs' leave of absence, the share price fell by as much as six percent, closing on Tuesday evening down 2.25 percent at $340.65. After-hours trading, on the strength of the Apple results, saw the share price rise to $344.90 which is a rise of 1.25 percent over its opening price on Tuesday morning. It is likely to go even higher today on the back of these results - though don't take our word for it.

What affect Steve Jobs absence will have, and the how long that absence will be, are questions the market are obviously mulling over but these results will no doubt bolster the company’s credentials for the coming year. 2011 is like any other set to be an important one for Apple with the iPad 2 and iPhone 5 on the horizon. To get some more insight, read our take on what Jobs’ absence from Apple will mean and let us know what affect you think it will have.


January 19, 2011, 3:01 pm

and whos says Apple kit isn't overpriced ;-)


January 19, 2011, 3:07 pm

> "scaled-up smartphone"

So hubris runs in the corporate family? Shouldn't be a surprise really. Whilst I readily admit that the ipad is a trendsetting device and seems to be better than all the alternatives on the market so far, isn't "scaled up smartphone" EXACTLY what the ipad is (apart from that you can't make calls from it...)

I give Apple kudos. They do know how to make beautiful products which are extremely popular even in the face of their detractors. It's just the hypocrisy and downright big-headedness that gets me! Why can't they just be a teensy bit modest and let the figures speak for themselves?

Ok. Rant over.


January 19, 2011, 3:08 pm

Quote from article:

On Android: "It's a "scaled-up smartphone" &#8211 that's a bizarre product in our view."

Urm, where as the iPad isn't just a scaled up iPhone?

Do Apple people live in the real world?


January 19, 2011, 4:14 pm

Something a bit screwy with the sales figures quoted... "sales rose from $26.7 billion to $15.68 billion." ?

Also - the optimistic amongst us hope to see iPad challenged by WebOS devices and the PlayBook too.

David Gilbert

January 19, 2011, 4:56 pm

@KultiVator Good spot, the figures were the wrong way round. It's not that Apple's sales dropped through the floor since Jobs leave of absence....

I agree that the webOS tablets and the PlayBook are likely to be the best alternatives to the iPad but on a technical perspective. The iPad will continue to win the hearts and minds of the populous due to Apple's innate ability to fuse beauty with marketing nous. Not sure where the Android tablets will fit in.


January 19, 2011, 5:39 pm

@David Gilbert

Im hoping Android Tablets will fit into the market by using Androids main strengths over the other OS's (i.e more open than iOS and many more app developers than WebOS and Blackberry) to take tablets into an area the iPad and other tablets haven't exploited fully yet.

For example, media creation (as opposed to media consumption), using a tablet to edit video's and photos taken on DSLR cameras/video cameras on the go (not currently possible with an iPad, and would be great with the upcoming dual core processors), more elaborate gaming experiences (for example using two or more android phones as a controllers and the tablet as the "screen" when gaming) ect. Unlike the iPad the only thing holding back the device would be the developers imagination as opposed to Apples lockdown of iOS or the numbers of developers working on the platform!


January 19, 2011, 6:07 pm

In defence of Apple, I think they must be referring to tablets (like the Galaxy Tab) using Android OSes designed for smartphone resolutions, with apps on the marketplace not being made for the increased screen estate. The iPad OS, on the other hand, is designed to use the extra space afforded by it's 1024 x768 resolution. Of course that's all going to change when HP, Blackberry and Android 3.0 tablets get released later this year. And perhaps Tim Cook's choice of words could have been better.

Having just acquired an iPad, I'm not surprised at the sales figures - it really is an excellent device. It's one weakness being text input. Though I'll be interested how it's first true rivals will do in the coming year, and how Apple react to a bit of competition in this area.

David Gilbert

January 19, 2011, 6:43 pm

@Stelph The thing is that the iPad 2 will no doubt build on the already successful iPad. Taking the video editing example you mention, Apple Macs are the best devices for these types of A/V functions and I wouldn't be surprised to see the iPad 2 improve significantly in this area. The idea of having an Android phone as a controller with an Android tablet as the screen is indeed an exciting prospect, but again nothing that Apple can't do with the next iteration of its devices.


January 19, 2011, 9:47 pm

@David Gilbert - A agree that the iPad 2 will continue to develop on the success of the iPad, and I think there is a very good chance that the media creation on the iPad 2 will improve significantly (the rumour of an added SD card for one suggests that), however I still think the iPad 2 will suffer because of Apples tight control of what can and can't be done withing iOS. iOS still can't play back files except ones that are coded very specifically to work with itunes, so in the media creation example again and the rumoured SD card slot I think we will find that the SD cards will be for uploading pictures only, since iOS doesnt support all of the video formats that cameras can record to.

That is where I see Androids chance at beating the iPad, bizarrely enough by being MORE user friendly than iOS where every format you put into the tablet is supported rather than the current situation where the iPad rejects anything except very specifically coded files (at least that is what I hope)


January 19, 2011, 10:18 pm

@Stelph - I dream of a tablet I can take on holiday to view all the pics and video I've shot - and maybe even some of the TV recordings from my Media Centre that I need to catch up on.

I don't need the full functionality of a laptop - or the weight in my luggage.

If Apple relax some of the iPad's siller restrictions - and there's a few key ones, such as solid SD/SDHC card integration, codec support, etc - it could be close to perfect.

Meantime - I'll keep my fingers crossed regarding the other big tablet platforms from HP/Palm and RIM.

By the way - did anyone else notice that the Palm logo is back again in those renders? It had disappeared on the latest Pre rehash.

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