Apple's Q1 sets records, but stock drops

Record revenue over $54 billion, over 75 million iOS devices sold

Apple once again had a record-setting quarter that ended December 31, posting revenue of $54.5 billion and net profits of $13.1 billion, which represents $13.81 per share. The company's performance set new records; last year's Q1 (which was 14 weeks instead of 13 weeks) had revenue of $46.3 billion and net profit of $13.1 billion, or $13.87 per share. Sales of iPhones and iPads set new records, while Mac sales dropped.

Apple's growth was led by greater sales in China (up 67 percent) and new products introduced late last year. While Apple didn't break down sales of specific models, the company did provide overall numbers: 47.8 million iPhones sold, compared to 37 million in the same quarter last year; some 22.9 million iPads were sold, compared to 15.4 million. Mac sales dropped, though, to 4.1 million from 5.2 million. The iPhone's market share in the US is now over 50%, CFO Peter Oppenheimer noted in his remarks.

The iPad sales growth represented a 60 percent improvement over weekly sales; Apple is selling over 1.5 million iPads per week. Apple could not build enough iPad minis to meet demand, according to CEO Tim Cook. "We were constrained every week, and ended the quarter with significant backlog," Cook said.

Apple's stock dropped over 10 percent in after-hours trading, reflecting investor nervousness over future Mac sales, and the fact that Apple failed to beat estimates for sales. The reduced Mac sales also caused concern. Apple blamed reduced Mac sales on production constraints on new Mac models, since many people would hold off buying older models while waiting for the latest version.

Apple noted they have paid out over $7 billion to app developers so far. Given the popularity of games as the #1 category on the iPhone and the iPad, it's likely that the majority of that revenue has gone to games. Over 40 billion apps have been downloaded, and over 300,000 native iPad apps are in the store.

Cook was asked about innovation in the upcoming year, and he professed to be "incredibly excited" about the "very full" product pipeline for the upcoming year. Cook also noted that more Apple TV units were sold last quarter than ever before, over 2 million, which is up over 60 percent year over year. "Apple TV "remains an area of intense interest for Apple," said Cook. He wouldn't comment further, other than to say Apple would "continue to pull the string and see where it leads."

Cook sees cannibalization as a huge opportunity. "We never fear it," Cook said. "We know iPhone has cannibalized the iPod, iPad has cannibalized the Mac, and that doesn't worry us." Cook believes the tablet market will be larger than the PC market at some point, and that day is growing closer, Cook said.

Apple's iPad is now selling at a rate that would mean close to 90 million units sold in 2013, even without any growth. In other words, the total number of iPads sold in one year would be more than all of the Xbox 360's sold, or PS3's, and about the number of Wii's sold... ever. The iPhone sales are even more stunning, with close to 4 million sold per week. At the current rate, 200 million new iPhones sold in 2013 would not be a surprise. These numbers explain why game publishers remain intensely interested in creating games for Apple products.

One final statistic of note: Apple now has $137.1 billion in cash. If there's a strategic acquisition to make, Apple can certainly make it.

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Latest comments (12)

Bruce Everiss Marketing Consultant 5 years ago
Over $7 billion to app developers.
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Keldon Alleyne Developer, leader, writer, Avasopht Ltd5 years ago
Over $7 billion to app developers
And how much exactly is that on average per developer? or better yet how many developer hours is that comprised of?
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Bruce Everiss Marketing Consultant 5 years ago
@Keldon Alleyne

I take your point.
But the vast majority of mobile games are made by chancers, indies, console devs with an itch to scratch etc.
As a percentage there aren't all that many professional developer/publisher operations amongst the 100,000+ App Store publishers.
In the UK there are several of them who are doing very well indeed. Neon Play, Full Fat, Future Games of London, Natural Motion, Chillingo, Playfish etc etc

Edited 1 times. Last edit by Bruce Everiss on 24th January 2013 11:17am

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Carl Silvers Researcher, Electronic Arts5 years ago
Playfish don't develop for iOS, Bruce.
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Bruce Everiss Marketing Consultant 5 years ago
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Fran Mulhern , Recruit3D5 years ago
Saw these figures last night. Really interested to see how Apple do over the coming years, I really think it could go either way. Their biggest asset now is lack of fragmentation, which seems to be really hampering Android when it comes to good quality apps - not saying Android doesn't have them (I have an s3), just that iOS seems a lot more unified.

I'd also love to know how much sales of the iPad mini have impacted on sales of the full sized ipad. There was talk of a retina Mini 2 in March - I really hope that happens, it's a gorgeous little device.

@ Keldon - I'd love to know that, too. Sure, some people are raking it in, but my understanding is that the vast majority of developers, well, don't do so well.

Edited 1 times. Last edit by Fran Mulhern on 24th January 2013 1:09pm

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Fran Mulhern , Recruit3D5 years ago
Oh, and as for their $137bn in cash, they could take a leaf out of this man's book.

Edited 1 times. Last edit by Fran Mulhern on 24th January 2013 1:14pm

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Carl Silvers Researcher, Electronic Arts5 years ago
@ Bruce

Your reference to Restaurant City was dated 2011. The game wasn't launched.

Please, you'll have to believe me, but Playfish don't develop for Facebook. I'm 100% certain about this, as their Director of Shared Technology also happens to be my wife, and I think she might have mentioned something about it to me by now ;)

Edited 1 times. Last edit by Carl Silvers on 24th January 2013 2:39pm

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Bruce Everiss Marketing Consultant 5 years ago
@Carl Silvers

I stand corrected. Thank you.
That will teach me to believe the interwebs! :-)

But my point remains that there are several successful developer/publisher companies on iOS in the UK.
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Benjamin Kratsch Deputy Editor-in-Chief, Games Network5 years ago
Call of Duty alone is doing more than one billion a year. I don`t know, but I would say 7 billion is not that much for thousands of developers. And I honestly think this business modell is a really tough one. The cheaper games get, the more you devalue them. 4,99 dollar is not a lot of money to charge for something like Infinity Blade or what ever, something with production value behind it. Now you lower the price, there is more and more freemium apps in the marcet and people are not willing to pay anymore than that price.

Devaluation is not a good thing and I guess now it`s affecting triple a business, because people think they should get a 50 million dollar game for the same buck like a game, that probably cost less than one mio to make. I would say that`s the biggest problem the vita is facing.

Or am I wrong?
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Bruce Everiss Marketing Consultant 5 years ago
@Benjamin Kratsch

CoD one billion is at retail. And the publisher has to pay for all that plastic and cardboard and for it to be shipped everywhere. And the fee to the platform holder.
App Store 7 billion is what publishers have received. With no plastic and cardboard to be paid for. And the license fee already accounted for.
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Bruce Everiss Marketing Consultant 5 years ago
As ever The Economist is excellent on this subject, with the best analysis I have seen.
Here is their article:
And here is a riposte:
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