Since 2003 Apple has beat on every single earnings report and today the streak continues. We reported on the earnings this afternoon but I wanted to write a more in depth analysis. When looking through the numbers there were a couple of things that stood out that are worth a few thoughts. So let’s dive in.
Strangely Low iPad Sales
First off let’s talk about the iPad sales figures. Remember this is not sell rather this is units sold. Apple reported selling 4.69 million iPads this last quarter. Now when compared to the first quarter sales of iPads of 7.33 million units, one might speculate that the iPad is not in as high of demand as originally thought. Many of the financial analysts I track had estimates of between 7-10 million iPads for this quarter.
So why the lower number? The answer is simple, this quarter was a product transition quarter where the iPad 2 was announced. Many consumers held off their purchase of an iPad early in this quarter due to the imminent release of the second generation product.
Historically in this industry sales volumes prior to a new generation release are low. This has proven true again with the transition from the first iPad to the second generation. Apple will most likely stay on target 7-8 million iPads for the third quarter as many predict.
Apple reported that U.S iPhone sales were up 155% which was helped in part by Verizon. However the more shocking number is their report of the greater China sales being up 250%. Strong International sales are one of the key things to look at for a global brand. Apple has repeatedly climbed in International sales and is becoming a very strong global brand.
Many other companies who compete with Apple are weak globally and the fact that Apple is showing tremendous growth in this area should give investors confidence for the long term.
Apple Store Foot Traffic
I’ve spoken publicly to the media quite a bit about Apple’s retail strategy being one of their biggest assets for competitive advantage. The statistic they shared that in the last quarter alone their stores saw 71.1 million visitors up 50% is staggering.
This is the number we need to look at in order to anticipate consumer demand. From that number we know consumer demand for Apple products is at an all time high.
Criticize them as you may but more rational beings will give them credit where credit is due.