Reporting its first quarter financial results today, Apple said it sold 21 million iPods during the holiday quarter — an eight percent decrease compared to the same quarter last year. Despite the drop in unit sales, revenue from iPod sales actually increased one percent year-over-year, to $3.391 billion. Apple also sold 8.7 million iPhones in the quarter, a 100 percent increase year-over-year, and up from 7.4 million units in the prior quarter. The company posted revenue of $15.68 billion and net quarterly profit of $3.38 billion, or $3.67 per diluted share, representing all-time revenue and profit highs, compared with revenue of $11.88 billion and net quarterly profit of $2.26 billion, or $2.50 per diluted share in Q1 2009. Sales of Other Music Related Products + Services were up 15% over the year-ago quarter, and up 14% from Q4 2009, to $1.16 billion total. That category includes iTunes Store sales, iPod services, and revenues from Apple and third-party iPod accessories. International sales accounted for 58 percent of the quarter’s revenue.
Notably, Apple has applied new accounting principles to its iPhone and Apple TV numbers, and is accounting for the sale of both products as two deliverables. As explained in the company’s 10-Q filing with the SEC, “The first deliverable is the hardware and software essential to the functionality of the hardware device delivered at the time of sale, and the second deliverable is the right included with the purchase of iPhone and Apple TV to receive on a when-and-if-available basis future unspecified software upgrades and features relating to the product’s essential software.” The rules also result in the recognition of “substantially all of the revenue and product costs from the sales of iPhone and Apple TV at the time of sale.” The change in accounting rules explains the discrepancy between the Q1 2009 financial numbers mentioned above and those originally reported.
“If you annualize our quarterly revenue, it’s surprising that Apple is now a $50+ billion company,” said Steve Jobs, Apple’s CEO. “The new products we are planning to release this year are very strong, starting this week with a major new product that we’re really excited about.”
“We are very pleased to have generated $5.8 billion in cash during the quarter,” said Peter Oppenheimer, Apple’s CFO. “Looking ahead to the second fiscal quarter of 2010, we expect revenue in the range of about $11.0 billion to $11.4 billion and we expect diluted earnings per share in the range of about $2.06 to $2.18.”