iPhone Sales Give Apple, AT&T Lift; Microsoft Qtr. Off
By Steve Smith and Joseph Palenchar -- TWICE, 8/3/2009
NEW YORK — Apple and AT&T both show strength in the second quarter, based on the popularity of iPhone, while Microsoft experienced sales and profit softness.
Apple reported what it called its “best non-holiday revenue and earnings” in its history for its fiscal third quarter, ended June 27.
Apple posted revenue of $8.34 billion, compared with the prior year's $7.46 billion, and net income of $1.23 billion, compared with the prior year's $1.07 billion.
Apple sold 2.6 million Macintosh computers during the quarter, representing a 4 percent unit increase over the year-ago quarter. Apple sold 10.2 million iPods during the quarter, representing a 7 percent unit decline from the year-ago quarter. Quarterly iPhones sold were 5.2 million, representing 626 percent unit growth over the year-ago quarter, the company said.
Steve Jobs, Apple's CEO, said in a statement, “We're thrilled to have sold over 5.2 million iPhones during the quarter and users have downloaded more than 1.5 billion applications from our App Store in its first year.”
In June 2009, Apple began selling iPhone 3G S, the third-generation iPhone. Unit sales of iPhones continued to be significant in the quarter, ended June 27, with 5.2 million iPhones sold, the company said. As a result, the amount of revenue and product cost related to those iPhone sales that the company deferred for recognition in future periods under subscription accounting was substantial.
AT&T's second-quarter iPhone activations surged to more than 2.4 million to exceed the device's previous peak activation rate, which occurred in the third quarter of 2008 when AT&T first began subsidizing iPhone prices, company statistics show.
In the third quarter of 2008, AT&T put iPhone activations at 2.4 million, and for the most recent quarter, the company described activations as “more than 2.4 million.”
iPhone activations in the May to June 2009 quarter surged 50 percent from the first quarter's 1.6 million. Activations surged largely due to the June 19 launch of the 16GB and 32GB iPhone 3G S at $199 and $299, respectively, and a reduction in the price of the 8GB iPhone 3G to $99 from $199. The 3G S models double cellular-download speeds and double memory capacity over their predecessors.
“The day of the launch was the best sales day ever for AT&T's retail stores, and att.com experienced its largest order day ever on that day,” AT&T said. More than a third of the iPhones activated in the second quarter were activated by consumers new to the AT&T network, the company said.
AT&T's iPhone activations numbered 2.4 million in the third quarter of 2008, 1.9 million in the fourth quarter of 2008, 1.6 million in the first quarter of 2009, and more than 2.4 million in the second quarter of 2009, written statements by the company show. AT&T hasn't disclosed the number of iPhone activations during 2008's first and second quarters.
AT&T said the number of integrated 3G devices, or 3G phones with hard or virtual QWERTY keyboards, operating on the network grew by more than 3.5 million devices in the second quarter to account for 36 percent of the carrier's 62.1 million postpaid subscribers. The numbers include the iPhone.
And wireless revenues grew 10.1 percent from the year-ago quarter to $13.3 billion but net income grew only 2.7 percent to $3.2 billion as operating-income margins declined to 23.8 percent from 25.5 percent.
Microsoft saw revenue fall for its fourth quarter and 2009 fiscal period, due to global weakness in the PC and server markets.
For the fiscal year, ended June 30, Microsoft posted revenue of $58.4 billion, which generated a net income of $14.6 billion. Revenue was down about $2 billion from 2008, while net income dropped $3.1 billion for the year.
For the fourth quarter, also ended June 30, revenue was $13 billion, down from the $15.8 made during the same period in 2008. Net income for the quarter was down about $1.2 billion, to $3 billion. —Additional reporting by Doug Olenick
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