Apple in Q2: Mac Sales Soar, iPod Sales Slow

Apple just reported its fiscal second-quarter 2008 earnings, and well, the declines from the fiscal first quarter (ended Dec. 29, 2007) are remarkably obvious. From a revenue perspective, the year-over-year comparisons are pretty solid, but in other categories the slowdown is rather stark.

These results compare to quarterly net earnings of $770 million, or 87 cents a diluted share, on revenue of $5.26 billion in the year-ago quarter. Gross margin was 32.9 percent, down from 35.1 percent in the year-ago quarter.

Apple shipped 2,289,000 Macs during the quarter, representing unit growth of 51 percent and 54 percent revenue growth over the year-ago quarter. But it sold 10,644,000 iPods during the quarter — in other words, unit growth of a scant 1 percent and revenue growth of just 8 percent over the comparable three-month period last year. Our friend, Cynthia Brumfield breaks down the iPhone magic, only as she can.

Some interesting observations from Ezra Gottheil, analyst with Technology Business Research (TBR):
* Apple appears unphased by the U.S. economy.
* TBR believes Apple has established itself as a real and often better choice for consumer purchasers of higher-end PCs.
* In the first four quarters of its availability, Apple sold 5.4 million iPhones, versus 1.2 million iPods in that product’s first four quarters.
* The iPod market has matured, and unit sales have flattened. iPod unit sales were up only 1% year-to-year, but iPod revenue increased 8%, thanks to higher priced iTouch.
* TBR believes Apple is looking to develop a variety of “appliances,” self-contained devices with simple interfaces that, in Apple’s favorite phrase, “delight” users. The company’s drive to develop more products is shown in the 49.2% growth of its R&D expense, and in its acquisition of microprocessor design company PA Semi.