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Mac, iPad sales push Apple to record revenue

iPhone 4 case giveaway expected to cost Apple $175M

July 20, 2010 10:09 PM ET

Computerworld - For the third time in the last four quarters, Apple today reported it sold a record number of Macs, although sales of the iPhone slipped slightly.

The iPad, meanwhile, debuted on Apple's balance sheet with 3.27 million units sold, generating $2.17 billion in revenues that represented nearly 14% of the Cupertino, Calif. company's total income for the period.

"That was out of nowhere," said Brian Marshall, an analyst with Gleacher & Company, about the iPad's numbers. "Phenomenal."

Overall, the company posted record revenues of $15.7 billion for the quarter, with a net profit of $3.25 billion. Revenues were up 61% year-over-year.

"Revenues were driven primarily by the iPad, with strong sales of iPhone and Mac," said Peter Oppenheimer, Apple's chief financial officer, during the earnings call with Wall Street analysts Tuesday afternoon.

Marshall agreed, saying that strong Mac and iPhone sales, when combined with a stellar debut by the iPad, produced the record quarter.

The iPad's number should put to rest thoughts that the tablet would cannibalize sales of Apple's other products. "The Mac upside and the iPhone upside, along with the iPad numbers, makes the idea that the iPad would take away from Apple's internal dollars null and void," said Marshall.

The iPad sales weren't a surprise: In late June, Apple announced that it had sold 3 million tablets in the first 80 days of availability. Apple is selling approximately 1.1 million iPads per month, according to Apple's figures, putting it on a pace to sell almost 10 million tablets by year's end.

In the quarter that closed June 26, Apple sold 8.4 million iPhones, down 4% from the 8.75 million it sold the first quarter, but up 61% from the same period last year. Mac sales, however, set a record of 3.47 million, up 33% over the same quarter in 2009 and trumping the 3.36-million mark of the previous bestselling quarter, the final three months of last year.

Apple set Mac sales records in the third and fourth quarters of 2009, as well as in this quarter, turning a hat trick out of the last four periods.

"The Mac is very healthy," said Ezra Gottheil, an analyst with Technology Business Research. "That was the one business they might have been concerned about, but it's looking very good. It's still far and away from where they once were on an APS [average selling price], but they don't have to generate a lot of their profit on the Macs anymore."

Desktop Mac sales were up 18% year-over-year to 1 million, a growth rate significantly less than the 40% increase the prior quarter and the 70% climb of 2009's final quarter. Apple explained the slippage as part and parcel of its refresh cycle; the company's primary desktop, the iMac, hasn't been revamped since October 2009.

Notebook sales were up 41% for the quarter to 2.46 million, a growth spurt dramatically higher than the 28% increase of the prior quarter. "There's clearly a move to mobility," said Tim Cook, Apple's chief operating officer, during the question-and-answer portion of the call.



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