Sales of Apple computers, iPods and the uber-popular iPhone helped push Apple Inc.’s third-quarter profits up a whopping 31%. The news isn’t all good for the Cupertino California-based company, however. Even though Apple’s third-quarter earnings significantly topped Wall Street analyst’s predictions, investors were skeptical, and the companies stock continues to underperform.
According to Yahoo news, Apple Inc. earned just over $1 billion in the third quarter of 2008, well above Wall Street expectations. According to Apple representatives, the sharp spike in profits resulted largely from increased sales of Apple Mac computers. In fact, sales of Apple computers were up 41% from 2007, and desktop computers outsold laptops nearly 2 to 1.
Apple computers have been gaining market share against Microsoft for some time now on the strength of a vigorous advertising campaign which negatively compares PCs to Macs. Industry experts also speculate that the lackluster performance of Microsoft’s Vista operating system is contributing to the increased sales of Macs. Many longtime Windows users have been disappointed by Vista, which they claim is slower and less efficient than Windows XP. With Microsoft now discontinuing sales of Windows XP, many users feel they have no choice but to switch over to Apple.
But it’s not just computers that are increasing profits for Apple in 2008. Sales of the iPod are also up this year, showing an increase of 12% over last year. The iPod Touch is predominantly driving sales in this area, with its iPhone-like touchscreen and easy user interface.
The new Apple 3G iPhone was not released in time to figure into the sales statistics for the third quarter, but with the new phone breaking sales records globally, you can be sure it will contribute greatly to Apple’s bottom line in the fourth quarter of 2008.
Wall Street praised Apple’s performance for the quarter, but some apple investors seem to be less optimistic about the company’s future prospects. Shares in Apple Inc. were down 6.3%, even after news broke of the company’s increased third-quarter earnings.
One reason why investors may be hesitant is Apple’s overly conservative predictions for fourth-quarter earnings. Even though Apple is known for low-balling their quarterly earnings estimations, the company has lowered expectations by predicting less than one dollar per share in earnings, far short of most Wall Street pundits expectations.
There is also concern about the health of Apple CEO Steve Jobs, who has recently battled with pancreatic cancer. Although Jobs and his associates continue to assure stockholders that he is in good health, and has no intentions of stepping down as head of Apple, some investors still seem wary.
Despite the sluggish stock price, it is clear that Apple remains strong, and the company will likely make it through the current economic downturn with nothing more than a few scratches, something which cannot be said for many of their competitors.
