Intel delivers record results as Apple misses earning estimates and iPhone sales

By Tom Warren, on 18th Oct 11 9:01 pm with 36 Comments

Mac vs PC

Apple reported its third-quarter earnings on Tuesday, below Wall Street analysts expectations.

Apple’s third-quarter earnings of $7.05 a share on revenue of $28.3 billion were below estimates of $7.22 a share on revenue of $29.5 billion. Apple’s earnings miss is a first for the company in nine years, according to The Wall Street Journal. iPhone sales for Q3 2011 racked up 17.07 million units compared to estimates of around 20 million. Despite the sales being below expectations, the figure is a 21% gain over the same quarter last year. Apple’s stock dropped 6% in after hours NASDAQ trading on Tuesday.

Apple’s earnings miss comes just two days before Microsoft is scheduled to report its fiscal first-quarter earnings for 2012. Microsoft’s Windows revenue is likely to wobble thanks to weak growth in the PC market and competition from Apple’s iPad and MacBook Air sales. Apple announced on Tuesday that it has sold 11.12 million iPads during the quarter, a 166% increase from a year ago. The company also shipped 4.89 million Macs during the quarter, another increase from the same period a year ago. Apple’s iPad device is believed to be a factor in the slow down of PC sales.

Worldwide PC shipments totaled 91.8 million units in the third quarter of 2011, a 3.2 percent increase from the third quarter of 2010, according to preliminary results by Gartner last week. IDC backed up Gartner’s findings by reporting a 3.6% growth in the third quarter of 2011 (3Q11) compared to the same quarter in 2010. Despite the slow down of PC sales, Microsoft could make up for this with success in other areas of the company. Microsoft’s Xbox and Kinect sales have been strong this year, dominating U.S. sales charts for the whole of 2011.

Intel announced its third-quarter results on Tuesday. ”Intel delivered record-setting results again in Q3, surpassing $14 billion in revenue for the first time, driven largely by double-digit unit growth in notebook PCs,” said Paul Otellini, Intel president and CEO. “We also saw continued strength in the data center fueled by the ongoing growth of mobile and cloud computing.” Intel’s third-quarter results saw the company set new records for microprocessor units shipped, EPS, earnings and revenue, which was up 28% year-over-year. Key Intel third-quarter facts:

  • PC Client Group revenue of $9.4 billion, up 22 percent year-over-year.
  • Data Center Group revenue of $2.5 billion, up 15 percent year-over-year.
  • Other Intel® architecture group revenue up 68 percent year-over-year.
  • Intel® Atom™ microprocessor and chipset revenue of $269 million, down 32 percent year-over-year.
  • McAfee Inc. and Intel Mobile Communications contributed revenue of $1.1 billion.
  • The platform average selling price (ASP) was up year-over-year and flat sequentially.
  • Gross margin was 63.4 percent, 0.6 percent below the midpoint of the company’s expectation.
  • R&D plus MG&A spending was $4.2 billion, slightly below the company’s expectation.
  • Net gain of $107 million from equity investments and interest and other, consistent with the company’s expectations of approximately $100 million.
  • The effective tax rate was 29 percent, above the company’s expectation of approximately 28 percent.
  • The company used $4.0 billion to repurchase 186 million shares of common stock.
  • Anonymous

    You know that there are INTEL processors in Apple’s computers right? Not to mentioned that they created Thunderbolt together. That pic isn’t really the definition between the 2.

    • http://www.winrumors.com Tom W

      Sure, the pic isn’t really meant to be about a processor war. The majority of Apple’s devices ship with ARM processors. The pic is more of a comic reference to the history between WinTel (Microsoft/Intel) and Apple.

  • Anonymous

    Poor Tim Cook. If Apple goes up, it’s all on Jobs. If Apple goes down (it will), it will be all on him.  He can’t win.

    • Anonymous

      Reminds me of Steve Ballmer.  No matter how well MS does he gets no love from the general public or tech community lol.

    • Guest

      MS was a growth story company and stock that went bust. Takes a long time to recover from that. Apple just had its first hiccup. Might have just been a one quarter timing issue. If so, no problem. Otherwise, it could be the start of their decade of being ignored too.

    • Anonymous

      Remember the Samsung Nexus Prime is being announced tomorrow. Many speculate this is the first true ‘iPhone killer” device that could surpass iPhone in quarterly sales.

    • Anonymous

      MS didn’t go bust. It just went from a growth company to a mature company with steady income. It happens to all companies. Nothing can keep growing fast forever. 

    • Guest

      *ymcpa

      Didn’t say it did. Said the “growth story” went bust.

    • http://twitter.com/LachlanCMcLeod Lachlan C McLeod

      This shows you what happens when a company stops growing.. Microsoft used to have almost 600 billion in market cap (around 750 billion in today dollars) .. apple is still under 400 billion and as soon as they have a big hiccup they will drop the exact same way..  Apple is still nowhere near what microsoft used to be valued at.

      *this is market cap not stock price

  • Guest

    That Apple result is surprising and a big deal. They’ve beaten consensus by an average 30-40% every quarter for at least five years. So the real miss here (consensus + 30-40% – actual) is huge. Glad I sold my Apple calls last week.

    • http://www.winrumors.com Tom W

      I think it’s more the fact that there was a downward trend of iPhone sales due to the gap between their usual delivery in June/July time. Clearly people were holding off buying an iPhone 4 as rumor and speculation started to suggest an October release. I suspect the next quarter will be massive thanks to the crazy demand after people held off. 4 million iPhone 4S sales in one weekend is very strong.

    • Guest

      There’s always a downward trend before a new product release. The analysts were all aware of that and the extra delay this time. Their consensus for this and next quarter already reflected it. I have to take a closer look at the numbers and what they’re saying about them, but on the surface it’s a huge miss that will take them quarters to recover from, at least in Wall St’s eyes.

    • OMG55

      Shouldn’t that have made consumers more eager than ever to get their hands on the newest device????? We seem to always be looking for reason why this occurred. Why can we just admit that the 4s maybe didn’t have the radical tech advancements consumers were looking for. Because as I’ve stated in many posts I own 2 wp7 devices and an iphone 4 as well as the 3 and 3GS.  I for one, am not impress by Siri, iOS5, or the 4S device itself and wont be foolish enough to go out and waste money.

    • Guest

      OMG55

      The results are for last quarter. The 4S wasn’t on sale yet. I think maybe your reply was directed to someone other than me?

    • http://www.winrumors.com Tom W

      I disagree. It’s not a huge miss in reality. Their forward facing statements suggest they could crack a $40 billion quarter next time. “Looking ahead to the first fiscal quarter of 2012, which will span 14 weeks rather than 13, we expect revenue of about $37 billion and we expect diluted earnings per share of about $9.30.” That’s their own estimates, which they always beat. I’d expect Wall St estimates could push that figure above $40 billion and since they’ve never managed to push past $30 billion in one quarter then that’s a huge jump. Definitely not something that will “take them quarters to recover from” in anyone’s eyes.

    • Guest

      Disagree about what? That analysts knew about the 4S and its likelihood of stalling sales? That this was factored into consensus? Those are irrefutable. And so is the miss being huge in reality:

      http://tech.fortune.cnn.com/2011/10/17/our-apple-whisper-numbers/

      When a company that has beaten by an average 30-40% for more than 5 years misses, it takes quarters for the stock to recover. It doesn’t matter that revenue and profit will increase. The multiple the market is willing to pay will contract, thereby keeping a lid on the stock’s gain, until the growth story is reestablished. I have seen this hundreds of times over the years, as have most stock investors.

    • OMG55

      Which will be another case of lots of people trying to “Keep Up with the Jones’s”. Because the iphone 4s isn’t ground breaking. Siri will not function well in an uncontrolled enviroment like in made for TV commercials or room where there is complete silence to ensure Siri function without hickups.

    • Guest

      Let’s face facts. 4S, as its name suggests is a stop gap because Apple wasn’t able to deliver the 5 this year like they had originally planned. The 4S gives them something to keep the buzz alive until then. Though 4S buyers are going to might pissed once the 5 comes along and actually delivers a real upgrade.

  • http://www.mainstreetchatham.com/ JimmyFal

    Tom I think you should put a pic of yourself as the PC guy and MG Siegler as the Mac guy. Nice to see the balloon stop getting filled with all that hot air. But when will be the pop? Hmmm, no competition for Ipod, Iphone, and Ipad until, hmmm lets see…. now? So I would guess, not so much of a pop, as a hiss.

    • Guest

      Except that Tom uses a Mac.

    • Sarah_gilbert

      With Windows running on it

    • Guest

      Loaded != running.

    • http://www.winrumors.com Tom W

      I use Macs, PCs, iPads, Windows Phones…the list goes on. Your point? :)

    • Guest

      Uh huh. But your main PC is a Mac. That’s my only point.

    • Anonymous

      There is still no competition for the iPod, it’s just that people are buying fewer PMPs and more smartphones instead. The Samsung Galaxy player is the only viable alternative to the iPod Touch and the Nano is completely unique.

    • OMG55

      I wish people would just stop being stupid. I will not be buying an ipod, Galaxy player or any other device the plays mp3′s, 4′s, and other music formats. Not when I can use my phone to do the same thing. phones are slim-line now and have all kinds of carriers for them. So again, I think people are just silly or materialistic if they do opt for the item that does the most for them, “Their Cell Phones”

    • Guest

      You don’t have to. But many millions are. The iPod touch is a great device if you don’t need or want something with a carrier plan.

    • Anonymous

      You won’t, but people with kids will. Many people will not get a phone for their kids that requires a data plan. 

  • Anonymous

    Another point I want to make is that up until now Android handset makers had to flood the market with crappy devices to barely compete with the iPhone. Now with the Samsung superphones(Galaxy SII and upcoming Nexus Prime, Galaxy Skin next year), there will be fewer Android devices selling more units then before. By 2012 I think hardware will reach parity between iPhone, Samsung Android and Nokia WP7. After that it’s all about the OS and ecosystems.

  • Soulja3

    nooooooooooo its a post pc era :( LOL

    • Tom

      PC client up 22 percent?!  Yes, clearly the PC is dying.

      I wonder what that Heather chick at Goldman Sachs has to say.

    • Guest

      Yeah, surprisingly strong number. China is now the largest PC market and that’s starting to pay off for Intel. Unfortunately it doesn’t translate as well for MS.

  • OMG55

    Example of Siri not working like in commercials: http://news.yahoo.com/most-common-complaints-iphone-4s-132141318.html

  • Anonymous

    The FY 2011 Q3 will be remembered as the absolute peak of Apple with the $7.3 billion net-income figure. From here on out, the competition just gets stiffer and Apple’s profits will decrease.

    • Guest

      Unlikely. It might be the stock’s peak, though that’s doubtful too. But it’s not the peak in Apple’s revenue or profit.

    • Guest

      Dude, put down the crack pipe right now.