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iPhone 3G sales way down during holidays: Mobile device sales slump sequentially from 6.9 million to 4.4 million units

Apple Inc. is not immune to the economic downturn, as it reported a massive slowdown in iPhone 3G sales in its earnings call this afternoon, after markets had closed.
The first fiscal quarter of 2009, which ended Dec. 27, 2008, saw Apple selling 4.4 million iPhone 3G units, while in the prior quarter – the final quarter of fiscal 2008, which ended Sept. 27 – saw Apple selling 6.9 million iPhone 3G units. That’s more than a 36% sequential drop.
But Apple also established that it has a healthy, multi-product portfolio and can profit, if not grow its profits, even with a quarter of mixed results.
The numbers
Apple posted its first $10 billion quarter in revenue, slightly more than a 5% increase, year-on-year. Net income reached $1.61 billion, relatively flat, year-on-year. Gross margin reached nearly 35%, equal to the year-ago quarter.
Also of interest, for a company that has most of its stores located in the United States, international sales accounted for 46% of quarterly revenue. The company said that in fiscal 2009, it would open another 25 stores, half of them overseas. Apple currently has 251 stores in 10 countries.
Apple also sold 2.5 million Macintosh computers, up 9% year-on-year. The company sold 22.7 million iPods during the quarter, up 3% year-on-year.
In a statement, CEO Steve Jobs said the results were the “best quarterly revenue and earnings in Apple history.”
Jobs’ health, and the SEC
As expected, COO Tim Cook and CFO Peter Oppenheimer provided no new information on Jobs’ healthapparently the subject of a new investigation by the Securities and Exchange Commission – in response to the first question from analysts during the company’s conference call.
But Cook gave eloquent testimony to Apple’s 35,000 “wickedly smart” employees and said the company’s culture of excellence was well-entrenched – in essence, saying that Apple will continue to deliver desirable products without Jobs’ presence, a period set to last until the end of June, according to Jobs.
And questions on the company’s guidance going forward were telling.
“Our visibility is not as good as in quarters past,” Cook said. “Our fear is that the economy may slow the uptake of smartphones. We’ll see. But we feel extremely good about our product pipeline.”
On distribution and competition
Cook said it was too soon to tell how Apple’s deal with Wal-Mart has fared since it began in late December. But because Wal-Mart has 4,000 stores – many in locations not covered by Apple and AT&T Mobility stores – and Wal-Mart has succeeded in retailing iPods, the deal was deemed valuable, he said.
As for competition posed by Palm Inc.’s Pre and other innovative touchscreen smartphones, Cook pointed to Apple’s App Store.
“Software is the key ingredient and we believe we’re still years ahead of our competitors,” Cook said. “We’ve seen a half billion downloads from the App Store. That’s still our advantage.”
Developing applications for a single platform – such as the iPhone – is best for developers, Cook added.
“We approach this as a software platform, which is different from a hardware approach (taken by competitors),” the COO said.
But Cook had a stern warning for competitors, while declining to name names.
“We like competition, it makes us all better,” Cook said. “We are ready to suit up and go against anyone. However, we will not stand for having our IP (intellectual property) ripped off and we will use whatever weapons we have at our disposal.”


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