MacRumors

AT&T today posted their 3Q earnings with strong wireless division gains lead by 2.4 million iPhone 3G activations in the quarter, 40% of which were new AT&T subscribers. Adjusted earnings dipped slightly due to the subsidies placed on the iPhone 3G and hurricane related expenses.

AT&T highly values iPhone and other smartphone subscribers due to their lucrative data plans that have "significantly higher [average revenue per user] and lower churn than postpaid subscriber average."

Yesterday Apple reported that they had sold the 10 millionth iPhone last quarter. This beat Apple's self-imposed goal of reaching this milestone by the end of calendar year 2008.

Steve Jobs was present at today's financial results conference call and answered questions during the Q&A session.

One interesting topic that came up was questions about Apple's interest in the low-cost netbook category of platform. Jobs made it clear that Apple chooses not to target the low-cost notebook market and believes it is a nascent category that will evolve.

Most interesting, however, was that Jobs hinted that if the category does evolve, Apple has "some pretty interesting ideas" about it. Jobs makes it clear that Apple is not going to be competing in this market at this time.

Apple has revealed that the company has met its self-imposed goal of selling 10 million iPhones in calendar 2008.

Steve Jobs first described the goal in January 2007 when he introduced the iPhone. The 10 million iPhone sales represented 1% of mobile phones sold at that time.

With today's financial results, Apple revealed that the iPhone 3G had sold 6,892,000 units this quarter alone, and when combined with previous and current iPhone sales apparently add up to over 10 million with two more months to go.

Apple announced their financial results today for the 4th quarter of fiscal 2008 . Apple posted revenue of $7.9 billion and net quarterly profit of $1.14 billion, or $1.26 per diluted share. These results compare to revenue of $6.22 billion and net quarterly profit of $904 million, or $1.01 per diluted share, in the year-ago quarter. Gross margin was 34.7 percent, up from 33.6 percent in the year-ago quarter. International sales accounted for 41 percent of the quarter's revenue.

Apple shipped 2,611,000 Macintosh computers during the quarter, representing 21 percent unit growth and 17 percent revenue growth over the year-ago quarter. The Company sold 11,052,000 iPods during the quarter, representing eight percent unit growth and three percent revenue growth over the year-ago quarter. Quarterly iPhone units sold were 6,892,000 compared to 1,119,000 in the year-ago-quarter.

"Apple just reported one of the best quarters in its history, with a spectacular performance by the iPhone -- we sold more phones than RIM," said Steve Jobs, Apple's CEO. "We don't yet know how this economic downturn will affect Apple. But we're armed with the strongest product line in our history, the most talented employees and the best customers in our industry. And $25 billion of cash safely in the bank with zero debt."

Apple will provide live streaming of its Q4 2008 financial results conference call at a 2:00 p.m. PDT.

Conference Call Highlights- Record breaking: more Macs than in any other quarter in Apple's history. More iPhones than in all previous quarters combined. More revenue and earnings than any previous September quarter.
- iPhone unit sales grew significantly. If iPhone results were not deferred (subscription accounting), it would have represented 39% of Apple's revenue for the quarter.
- Sold nearly 6.9 million iPhones during September quarter. With more than 2 months to go, have already surpassed 10 million iPhone sales in calendar 2008.
- In more than 70 countries by the end of the December quarter. 3100 points of iPhone distribution in the U.S. Over 30,000 points of distribution around the world.
- 21% year-over-year growth for Mac sales, beating industry growth
- Despite growth, believe purchase delays due to speculation and budget constraints
- Sold over 11 million iPods, new record for a non-holiday quarter.
- iTunes Store had a good quarter. Over 65 million iTunes customer accounts. Over 8.5 million music titles. Pleased with fall lineup including HD shows from major networks.
- Apple retail had strong results. Over half of Macs sold were to customers who had never owned a Mac before. 247 stores by end of quarter.
- Better than expected gross margins due to better component prices and software sales.
- Outlook for next quarter: "best products we've ever shipped". Very confident in business. Prudent predictions for December quarter. Revenue target between $9-10 billion.
- Steve Jobs speaking at conference call. Talks about impact of subscription reporting on financial results. Non GAAP financial results will be reported alongside GAAP reporting to show the average investor the impact of the iPhone.
- Jobs: Apple beat RIM. RIM 6.7 million Blackberries, Apple sold 6.9 million iPhones.
- Jobs: Measured by revenue, Apple has the world's 3rd largest mobile phone supplier. Nokia and Samsung are #1 and #2. Apple at #3. Sony Ericsson at #4.
- Jobs: Who knows what the future results will be due to economic slow down, but not bad for being in market for so short a period of time.
- Jobs: App Store. 200 millionth application will be downloaded tomorrow. Rate of new applications being submitted is increasing every week. Competitors are scrambling to copy the App Store, but it's not that easy to do. All of this in 102 days.
- Jobs: New MacBook and MacBook Pro. Notebooks comprise 2/3 of the Macs they sell. Best products they've ever created. Customers already love them. Anxious to see the demand trajectory. Unibody precision would normally cost hundreds of dollars by themselves. LED Backlights, GPU. New notebooks are the greenest products Apple has ever offered.
- Jobs: The economy. We are not economists. But: we have the best customers in the world. Smartest, product aware customers in the market. They have chosen Apple's quality products. While they may postpone purchases, they are unlikely to abandon Apple's products. More likely to delay than switch. We still have a minority marketshare of the PC market. While we may not appeal to every prospective customer, the percentage of new customers we have to attract is relatively small to significantly impact our revenues. Feel very good about Apple's product lineup. We have the most talented designers in the world. None of our competitors can deliver productt in this class. $25 billion dollars and zero debt. We can continue to invest in R&D.
- Summary: strongest Apple products, most talented employees, best customers and $25 billion in the bank.

Q/A

- Q: Why is there just a disparity between results and next quarter guidance? A: Slow period in October, but a lot of prudence is built in.
- Q: Thoughts on share repurchasing? A: I think this economic downturn will represent some extraordinary opportunities for companies that have cash. We are very comfortable with our cash position in the bank.
- Q: How much more expensive of the unibody aluminum shell? A: Many new technologies and features besides just the unibody. As said in the last call, these new products will have high cost at first and will come down over time.
- Q: Can you comment about the pricing of the Mac line? And thoughts about netbooks? A: This particular downturn is not creating a market of cheaper computers. That market has existed. There are parts of that market we choose not to play in. We choose to be in certain segments of the market, and choose not to be in certain segments. Will the downturn drive customers to different cheaper products? I'd be surprised if that happened in large numbers. I think there are a tremendous number of customers that we don't have that would like to and can afford to buy Apple products. We'll see what the ratio of those two are, but we're not tremendously worried. The netbook: not a lot of them getting sold, one of our entrants into that category is the iPhone. Browsing, connectivity, etc... the iPhone is a pretty good solution to that. We'll see how the netbook evolves, and we have some pretty interesting ideas if it does evolve.
- Q: Factors impacting on Mac sales? A: K-12 budget constraints resulted in 7% contraction, customers were delaying purchases due to rumors about the new portables, but saw a considerable rebound in sales.
- Q: In 2009, with more competition, how do you think of your roadmap? A: We have to be the best, and I think we have to not leave a price umbrella underneath us, and we are working hard to fulfill both of those goals. Great partner in AT&T, together, I think we're both very committed at making the iPhone a great value for customers next year and beyond.
- Q: Cheaper Macs? A: We chose not to server a certain customer base. We don't know how to make a $500 computer that's not a piece of junk. Our DNA will not allow us to ship that. We can continue to deliver value to customers we do choose to serve.
- Q: How are you thinking about Apple TV and digital living room opportunity? A: I think the whole category is still a hobby right now. And I don't think anyone's succeeded yet. Given the economic conditions, I continue to believe it will be a hobby in 2009.
- Q: Tablet and touchscreens? When you look at tablet computing, does that get to be a more attractive opportunity? A: I think we have such creative people that are looking at a lot of things, but can't talk about products we're working on.

Gizmodo believes that the Mac mini may have already been discontinued by Apple. According to the site's European retailer sources, Apple has stopped orders for the low end Mac and has reportedly told the retailers not to expect any more.

The Mac mini may be pronounced dead as soon as today's Apple earnings conference call, as two major retailers in Europe have confirmed to me that they can't order any more of the little computers. While this could signal an updated model coming in, they have been told by Apple to expect no more of it. Their impression is thatonce againthe Mac Mini may be dead dead DEAD for real, even while you can still order it at the Apple Store.

Rumors of the demise of the Mac mini started circulating back in May, 2007, though the most recent reports have claimed that Apple was still working on revising it.

Apple will be reporting their Q4 2008 financial results today, and could reveal more during their conference call.

NVIDIA announced yesterday the GeForce 9400 and 9300 motherboard GPUs which offer desktop equivalents to the NVIDIA mobile chips adopted by Apple in their new notebooks:

These new mGPUs give NVIDIA a big advantage over other integrated graphics chips, said Dr. Jon Peddie of Jon Peddie Research. By doing so much parallel processing on a single chip, they can accelerate the new visual computing applications people are getting, and at a reasonable price. The GeForce 9400 and 9300 mGPUs set a new standard for what users should expect from todays more mainstream desktop systems.

It's not clear if this technology would find any use in future Apple Macs. Apple has traditionally based their iMac around the same chips and technology that power their notebook computers, while using server-class technology in their Mac Pros. In the past, Apple has not used Intel's "desktop" offerings.

Boxee is a free personal media application that is installable on your Apple TV. Boxee provides your Apple TV with playback support for a wide variety of media types across local networks and the internet. While the process has been simplified, installing Boxee on your Apple TV still requires a multi-step process involving a bootable USB flash drive. Their latest announcement, however, may push some into giving it a try.

Hulu and CBS both offer full streaming episodes of popular television shows. Many of the same episodes are available for purchase on iTunes. Hulu is backed by NBC Universal and is the industry's response to both YouTube and iTunes content. Boxee also coexists with the default Apple TV software which can still be used.

The software is still considered to be in "alpha" so readers should proceed with caution, however, Apple TVs can be easily reset to factory default settings. Our existing invitation thread can be used to ask for invites to the service -- any Boxee user can invite an unlimited number of individuals.

In Bean Counter, John Hodgman (PC) is shown separating money into a large pile dedicated for advertising and a small pile for fixing Vista. The ad seems to be a clear response to the much publicized $300m advertising campaign that Microsoft has embarked on to help improve their image. In another ad called V Word, Hodgman describes how they will no longer refer to Vista by name due to the "baggage" that accompanies it and simply refer to Windows. Indeed, Microsoft's new ads have had no references to Vista.

Both ads are available on Apple's site as well as YouTube (Bean Counter, V Word)

Tonight, forum user MGLXP noticed that playback of 1080p high definition trailers from Apple took far less CPU time on his new aluminum MacBook (28% CPU) as compared to his old MacBook Pro (100% CPU). Both computers shared the same CPU speed, but the new MacBook includes the NVIDIA 9400M integrated graphics chipset, while the old MacBook Pro uses the NVIDIA 8600M GT.

This suggests that the version of Mac OS X on newly released MacBooks, MacBook Pros and MacBook Airs based on the new NVIDIA chipsets now offers GPU-accelerated H.264 video decoding for the first time. While Apple has previously included graphics cards (such as the NVIDIA 8600M GT) that have contained hardware support for H.264 decoding, the company has apparently not previously taken advantage of it.

Multiple readers have confirmed similar findings on their new MacBooks and MacBook Pros, though it appears it can be movie-specific, as one video showed little difference between the machines. We assume the new MacBook Air would share the same advantage as it is based on the same graphics chipset as the new MacBook, though we haven't heard from an Air owner yet.

These changes could be based on improvements planned for Snow Leopard. Apple had previously announced that "QuickTime X" would be a feature in Snow Leopard to offer optimized media playback:

Using media technology pioneered in OS X iPhone, Snow Leopard introduces QuickTime X, which optimizes support for modern audio and video formats resulting in extremely efficient media playback.

Readers should be reminded that without official confirmation from Apple, we are only speculating as to the reason behind the CPU usage difference. If true, however, we would hope that Apple would incorporate support for older Macs that have the necessary hardware in a future software update.

New MacBook

Old MacBook Pro