Apple astounds
Posted
Jan 22 2009, 06:12 AM
by
Bernhard Warner and Matthew Yeomans
Rating:
This post comes from partner site The Big Money.
What recession? That was the defiant message Apple (AAPL) sent to the markets after trading closed Wednesday, posting better-than-expected profits on record sales last quarter, thanks to unsinkable demand for the iPod and iPhone.
Consumers purchased more than $10 billion worth of Apple products last quarter, a first for the company. To many tech journalists, the results seemed like they were pulled from a different era entirely. "Headlines like that could make it easy to forget temporarily that the U.S. is in the throes of a recession and consumers and companies are reining in spending on consumer electronics," BusinessWeek commented.
And what about Steve Jobs, the company's ailing CEO? The Financial Times reports that Jobs did not show up for the analysts' call, as expected, but he talked in the earnings release about the "best quarterly revenue and earnings in Apple history." The announcement sent Apple shares soaring after hours, and Thursday they were up another 6%.
But it's not all good news for Apple investors. The Securities and Exchange Commission may be looking into the way Apple disclosed Jobs' health condition. It's unclear how far the investigation has proceeded. And looking forward, Apple said "it expects sales and profit to be lower in the current quarter than Wall Street projects," says the Wall Street Journal.
Still, Apple's record-setting numbers are a far cry from other tech giants. EBay (EBAY) posted its first-ever quarterly sales decline yesterday, and CEO John Donahoe admitted he's "frustrated" that the online auctioneer's turnaround plan is not proceeding more quickly, BusinessWeek writes. Adding to the bad news, chips giant Intel (INTC) announced a major restructuring Wednesday that will see it shutter factories in Asia and slash up to 6,000 jobs, Reuters reports.
But Wednesday was a day of hope for investors. The Dow climbed back to near pre-Obama levels, led by Tuesday's biggest losers, the banks. Double-digit-percentage gains for Citigroup (C), Bank of America (BAC) and JPMorgan Chase (JPM) sent the Dow Jones Industrial Average up 3.5% to 8228.10, the WSJ recaps.
It started midday, when Bank of America CEO Kenneth Lewis and five directors revealed they would be buying back more than a half-million shares of the battered stock, the Los Angeles Times reports. But there were fresh headaches for the bank this morning, Bloomberg reports.
Bank of America was hit with an investor lawsuit over its purchase of the debt-laden Merrill Lynch. In a separate article, Bloomberg breaks the news that the bank will cut 1,000 jobs in its investment banking unit, equivalent to one-third its staff in this division, to quickly cut losses.
And, in a long-suspected move, Citigroup has a new chairman, Richard Parsons. The New York Times says the appointment will put to use Mr. Parsons’s ties to the Obama administration (he was a member of President Obama’s transition economic advisory board), as well as his experience in running companies under the federal government’s microscope. But, the Times adds, it will also most likely offend some on Wall Street who are calling for a more radical shake-up at Citigroup.
We now head overseas, where Japan, China, and South Korea all revealed yet more bad news about still-declining growth in the economic heart of East Asia on Thursday morning. According to the BBC, Japan reported an exports plunge of 35% last month, its worst-ever tally, while China says GDP fell to 6.8% in the final three months of 2008, from 9% in the previous quarter.
Not to be outdone, South Korea said its economy shrank by 3.4% last quarter. The outlook is particularly bad in Japan, where the central bank today warned that the country will endure at least another two fiscal years of deflation and further economic decline. The Bank of Japan on Thursday left its benchmark interest rate unchanged at 0.1%, saying economic recovery will likely not materialize until the second half of fiscal year 2010, MarketWatch reports. Bloomberg reports that the gloomy numbers managed to stabilize (for now) the resurgent price of crude.
After 77 years, there's a new top dog in the U.S. automotive industry. Toyota (TM) surpassed General Motors (GM) in U.S. auto sales last year, with the Japanese automaker out-selling its Detroit rival -- 8.9 million cars to GM's 8.35 million. BusinessWeek calculates that "the margin of victory is two auto factories' worth of production."
The Detroit News, though, reckons the accomplishment is akin to hoisting a flag on a sinking ship. With GM fighting for its survival on a week-by-week basis and Toyota stung by its first full-year operating loss in a half-century, the once-coveted title "has lost some of its significance." And, staying in Detroit, UAW chief Ron Gettelfinger gave his blessing on Wednesday to the no-money-down tie-up Chrysler arranged with Italy's Fiat earlier this week. "I personally think that of all of the options out there, this was the best one," Gettelfinger was quoted by Reuters as saying.
And, finally, do you have any idea what the carbon footprint of a half-gallon carton of orange juice is? It's 3.75 pounds of carbon dioxide, the NYT reports. PepsiCo (PEP), owner of the Tropicana orange juice brand, hired experts to calculate the figure as it continues with its plan to promote low-carbon products to eco-conscious consumers. The problem is, it cannot figure out how to use the information. PepsiCo will put the details on its Web site, but it's not sure if consumers want to see that kind of information on the packaging.
This post was written by Bernhard Warner of The Big Money.
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