Steve Jobs: Apple Will Be 'Fine'

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Jobs also noted that Apple is now the world's third-largest vendor of wireless phones, measured by revenue. On a non-GAAP basis, Apple recorded iPhone sales of $4.6 billion, or more than 39% of non-GAAP revenue. He compared that to $12.7 billion in revenue for Nokia (NOK) and $5.9 billion for Samsung. RIM, he said, came in seventh with $2.1 billion (BusinessWeek.com, 9/26/08). On a GAAP-adjusted basis, Apple's iPhone revenue was only $806 million, or 10% of sales.

The appearance of Jobs on an earnings call was unusual. While he regularly appeared on earnings calls for Pixar before it was sold to Walt Disney (DIS), Jobs last appeared on an Apple earnings call in October 2000, and then later that year on another conference call with analysts in December, when the company warned about disappointing results. "What he's trying to say, but not in so many words, is that he thinks the stock is undervalued," says Bill Kreher, analyst with Edward D. Jones.

Morale Booster

The remarks may have also been directed at bucking up staff, says Charles Wolf, an analyst at Needham & Co. "Steve wasn't speaking to investors as much as he was speaking to employees," Wolf says. "Every Apple employee was on that call, and if you listened to Oppenheimer's guidance, you'd probably be pretty unhappy. But when you consider the non-GAAP results, the stock is absolutely cheap."

Adding to Jobs' optimism on the future is the company's $24.5 billion in cash and marketable securities. Asked about buying back shares, Jobs said he instead sees " extraordinary opportunities" for companies with a lot of cash, but declined to elaborate.

Asked about Apple's interest in producing a "netbook" a newly fashionable type of small notebook that vendors like Dell (DELL) and Hewlett-Packard (HPQ) have recently embraced, Jobs seemed cool to the idea. "As best as we can tell, there aren't many of them being sold. …We'll be waiting to see how it evolves, but we've got some pretty interesting ideas if it does evolve," he said.

Mac sales were also strong, suggesting resistance to recessionary pressures. Apple sold 2.6 million Macs for $3.6 billion in revenue, or 45% of the total. Apple's retail unit accounted for $1.7 billion in sales, and sold nearly 600,000 Macs.

Despite the best face Jobs could put on the results, there was no escaping Apple's unusually conservative guidance. "October has always been a foggy month for us," Jobs said. "We're always biting our nails over whether we ordered too many iPods. Sales often don't take off until December. There's a lot of prudence built in." If the recession proves as deep and lasting as some believe, that prudence may prove well founded.

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Hesseldahl is a reporter for BusinessWeek.com.