The maker of some of the tech industry's best-loved luxury goods reported a strong quarter, including the sale of 6.9 million of the new 3G iPhones, a figure that crushed estimates, and 2.6 million Mac computers, a quarterly record.
Not celebrating yet
But CEO Steve Jobs warned that the coming quarter could be comparatively weak, and he offered uncharacteristically conservative sales estimates for the holiday season. "We don't yet know how this economic downturn will affect Apple," he said in a statement. "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."
Quarterly profits were up 26% to $1.14 billion from $904 million a year ago; revenue was up 27% to $7.9 million. Apple profits beat estimates, while revenue was slightly under what Wall Street was expecting.
Mr. Jobs, who made a rare appearance on Apple's earnings call, was ebullient on the performance of the new iPhone; Apple sold more phones than BlackBerry maker Research in Motion in the quarter, and became the third-biggest cellphone maker by revenue behind Nokia and Samsung.
But he made it clear that Apple has no better crystal ball when it comes to holiday sales than anyone else. "We're not economists," he said. "We read the papers like everyone else. Our visibility is low."
Apple offered conservative sales guidance: $9 billion to $10 billion, or as much as $1.57 billion below consensus Wall Street estimates.
That said, Mr. Jobs argued that Apple consumers are unlikely to settle for cheaper, lesser products, and 50% of Mac sales are to people converting from PCs. "If the economic downturn does affect them, they are more likely to delay [a purchase] than to switch," he said. And Apple still has plenty of room to grow. "We still have a minute share of the PC and mobile phone markets," he added.
Mr. Jobs said Apple weathered the last downturn by investing in new products, specifically, the iTunes store. "This downturn may present extraordinary opportunities for companies with the cash to take advantage of them, like Apple does," he said. "We may get buffeted around a bit, but we'll be fine."