Apple profits up but outlook cautious
Apple’s profits are up by 25% compared with last year despite slightly missing analyst expectations on revenues. The firm says economic problems shouldn’t cost it customers, but is being cautious about its forecasts for 2009.
For the three months ending in September, profits rose to $1.14 billion compared with the same period in 2007. Sales were up from $6.2 billion to $7.9 billion (with impressive iPhone sales a factor). Surveys had shown Wall Street analysts expected sales of $8.1 billion so, despite the disappointment of missing this figure, it’s hardly a major setback.
Apple is now predicting sales of $9 to $10 billion for October through December. While that sounds like a rise, it takes into account the natural higher sales at Christmas, and is slightly below independent forecasts. The firm is also predicting significantly lower profits than the market expects, which may signify Apple doesn’t think there’s much room for cost-cutting on its part.
It’s worth noting Apple is traditionally quite cautious about its financial forecasts, which can make even modest successes look more impressive. Apple can pull this tactic off as it’s well-established enough that there’s no need to talk things up to try to attract new investors.
Speaking about the new figures, Apple head Steve Jobs (pictured) said of the threat of recession “We may get buffeted around by the waves a bit, but we’ll be fine and stronger than ever.” His theory is that would-be Apple buyers may delay purchases, but will still be loyal to the brand when they do splash the cash.
Economic problems could affect Apple in different ways. If consumers simply cut out all unnecessary spending, iPods and Mac sales could suffer. However, if buyers merely cut back the number of electrical items they purchase, they could decide the quality of Apple goods (real or perceived) makes them a priority.
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