The Inevitable Comparison: Apple’s Financials and the Health of Steve Jobs
July 21st, 2008Just ahead of the news of Apple’s stellar quarterly financials, their stock price increased a trickle, which seems at wide variance with the results.
In brief, Apple beat the street, as is typical, with record sales of $7.46 billion for the quarter ending June 28, 2008. Profits came in at $1.07 billion, or $1.19 per diluted share, an increase of more than 30 percent compared to last year. As usual, I’ll be brief about the numbers. You can check Apple’s site directly for the specifics.
What’s most significant is the record sales of the Mac, with 2.496,000 units sold, a unit increase of 41 percent compared to last year, and the best in the history of the platform. They also confounded the tech and financial pundits all over again, by moving 11,011,000 iPods, an increase of 12 percent in units, and seven percent in revenue compared to last year. So iPod growth may be leveling off somewhat, but it’s clear there’s lots of room to grow.
As far as the iPhone is concerned, 717,000 were sold before stocks were depleted several weeks ago. Apple claims they sold a million iPhone 3Gs the first weekend the new model went on sale. Although this figure has been disputed by some analysts, who claim the figure represents the number of units shipped, not the number sold. Apple, however, maintains they sold that number, and I’ll grant them a little slack here, since the critics have few facts — make that no facts — to demonstrate that the information may be misleading.
Besides, it’s also true that iPhone shortages are now widespread. Even Apple’s own retail outlets have difficulty getting enough stock to fill the pent-up demand. It does seem to me that Apple either severely miscalculated demand for the product, or is having difficulty ramping up production. The latter would seem questionable, though, since Apple executives claim they are pleased with the production situation, and they are “confident with the ability to supply,” yet they can’t say when supplies will catch up with demand.
In case you’re wondering, some 25 million applications have been downloaded so far from the App Store.
During its conference call with financial analysts after the financials were announced, Apple also said they were “very excited” about the forthcoming product pipeline but, as usual, gave no specifics about what you might expect even in the near future. Later in the conference they spoke of “start-of-the-art new products that deliver incredible value to our customers,” and several times mentioned that one of those products may indicate a major transition of some sort, but your guess about it is as good as mine.
As far as those guesses are concerned, I’d be willing to suggest that Apple’s display line is going to be reworked soon, if only because it’s been so long since the last revisions. On the other hand, are displays all that important, since they are so plentiful? Or is Apple prepping something revolutionary, such as their first entry into the flat-panel TV market?
It’s also possible that major revisions in the MacBook and MacBook Pro line, including spectacular new case designs, are in the offing. That’s what the rumor sites say, but with Apple how can you tell?
But perhaps the most significant issue that’s clouding Apple’s great financials is no doubt represented in a somewhat lurid story in Monday’s issue of the New York Post suggesting that the state of Steve Jobs’ health is a main factor contributing to ongoing concerns about Apple and the generally lower stock price.
Some of that speculation can be attributed to the gaunt appearance of Apple’s mercurial CEO during his WWDC keynote, particularly when you examine some of the photos that supposedly demonstrate that he has lost weight. At the time, Apple said Jobs was suffering from a “bug,” which required treatment with antibiotics. They did not, however, explain the nature of the illness, how long it might persist, or even if he has since been cured of the ailment.
Certainly ever since his apparently successful bout with pancreatic cancer, chatter about how long he might remain as head of Apple has taken on a macabre aspect. Has his cancer returned? Is he suffering other illnesses that might impact his ability to continue to his devote full energy to running the affairs of the company he co-founded?
According to Apple executives during the analyst meeting, “Steve loves Apple. He serves as CEO at the pleasure of Apple’s board. He has no plans to leave Apple.” They added that any questions about his health constitute a “private matter.”
While the departure of Bill Gates as a full-time employee of Microsoft was met with collective yawns, Jobs and Apple are tightly connected. Many feel the company could not possibly have escaped the jaws of death and emerged as a builder of iconic products without the leadership of Steve Jobs and the supremely talented people with whom he has surrounded himself.
Sure, Apple’s board claims it has a succession plan in the event of Jobs’ departure, and that they have a roster of talented executives from which to choose. That may be true from a business standpoint, but few believe another “rock star” can be located to take Apple on the next stage of its journey.
For now, though, Apple isn’t saying anything about any immediate changes. One hopes they’re not withholding anything.
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“While the departure of Bill Gates as a full-time employee of Microsoft was met with collective yawns”
Ouch, Gene. Actually there were a lot of tears shed during Gates ceremony, unfortunately they were all from Steve Ballmer. As he has to see the Microsoft ship all the way down to the bottom of the sea. 🙂
Apple sell TVs, God forbid! Extremely doubtful due to very low margins on consumer electronics, no product exploration, i.e., monitors haven’t been updated for ages, and, most importantly, Apple hinted they were going somewhere their competition couldn’t go.
More likely, as they have pretty much locked up a large portion of the static RAM market and locked out just about everyone on price, we’re looking at a static RAM based product. Given the recent release of the MacBook Air,I’d suggest looking in that direction. Maybe a tablet with MBA father and iPhone mother, or a further iteration of the Air leading toward a tablet.
Prior to the release of iPhone 2.0, based on the increase in expenses related to Steve Jobs’ Jet, Steve Jobs must have travelled a lot to negotiate and sign iPhone contracts all over the world. It is quite possible that he could have a bug that resulted in his gaunt appearance at WWDC 2008!!!
From the ‘wishful thinking’ department, maybe that elusive minitower – the one that’ll be so aggressively priced with revamped displays – is finally on its way. Of course, it’ll be introduced alongside a refreshed laptop line featuring Toshibas latest SSD’s with product price drops across the board – all amidst a marketing campaign that’ll leave PC vendors out for the count. And to top it off, we’ll get a matte screen option for the new iMacs ;D
Then again, perhaps a touchscreen tablet is a little more on the cards – MBA style.
Anyone who believes the “private matter” line is a fool…including the board which issued the statement, thereby opening themselves up to suits for director liability in the event that Jobs actually is ill.
On the other hand, what would Apple be like without Jobs? While it is undeniable that Jobs performed a valuable function revitalizing Apple, is he actually the right person to lead Apple into the future? Is his management style is actually stifling creativity by the people who actually create products? The tradition of releasing hardware that is not right simply to coincide with a presentation may actually be damaging to the company’s reputation (and sales). Look at the iPhone. It lacks voice dialing, one of the most basic features of a decent voice device. (Even clunky old Motorolas have it.) What does this say about the “vision” of the product line…or the world of real users for that matter?
Although it would be unusual to publicly announce a succession plan, the board claims to have one. What is it? For Jobs to work forever? “The next era” is soon to be upon us one way or another. One that is unlikely to be a personality cult. The board had better be doing a better job than they publicly appear to be doing with regard to Jobs’ health.
P.S. Jobs and Apple got a big sloppy kiss from the Department of Justice when it closed the stock backdating investigation. There are any number of former CEOs who did what Jobs did.