Apple Q1 2011 financial results conference call

Apple Q1 2011 financial results conference call

Apple is holding their Q1 2011 financial results call today at 2pm PST, 5pm EST. Q1 covers the holidays, traditionally Apple's strongest quarter, and this year should see another record being broken for iPhone, iPod touch, and iPad sales.

Juxtaposed against the news of Steve Jobs taking another medical leave of absence, the stock market today and the Q&A following the call itself, could be a mixed bag of hurt for Apple. Numbers vs. emotion, we'll see what wins out.

Quasi-live updates of the call after the break!

  • Peter Oppenheimer (PO) talking about Macs.
  • PO talking about Mac App Store
  • iPod sales down, iPod touch sales 50%, continues to grow. 70% share remains the same. Still top selling in most countries.
  • 16.2 million iPhones. Handset and accessories $10.7 billion. $10.1 billion iPhones alone. 185 carriers in 90 countries. Strong growth, Asia and Japan doubling.
  • 88 Fortune 100, 60% of FT Europe now testing or deploying iPhone.
  • CIOs continue to add iPhone to approved devices. Wells Fargo, ADM, Dupont, Staples, Starbucks, Nissan, Standard Charter, Dannon and others have made it available.
  • 7.3 million iPads. Over 3 million increase. 43 countries. CIO's adding iPad at amazing rate. 80% of Fortune 100 deploying or piloting. JP Morgan, Cardinal Health, Well Fargo, ADC, Dupont.
  • $4.4 billion in iPads
  • 165 million iOS devices sold to date
  • Pleased with iAds, expanded to other countries.
  • Apple Stores still doing great. China highest traffic, highest revenue. 323 stores worldwide. 87 outside US. $12 million avg. per store. 69% increase.
  • 75.7 million visitors. Increase 49%.
  • $59 billion in cash
  • Q&A time! Tim Cook is on (TC)
  • Q: How to ensure sufficient iPhones for Verizon?
  • TC: Made bold move going to 14 million production, now gone to 16 million. Working on increasing further. Takes time. Thrilled to offer it to Verizon, existing and new customers. Going to get into as many hands as possible.
  • Q: How comfortable are you with iPhone, iPad supply. Shortages?
  • TC: iPad increased dramatically last quarter. Expanded to 46 countries. Added 20 during quarter. Adding 15 more in January. Confident. Feel good. Demand is high. Demand from Verizon will be huge. Doesn't want to give prediction.
  • Q: Sequential growth is impressive, what's driving that? How will it be sustained?
  • TC: Identified China as top priority, put enormous energy into China. Results staggering. (Greater China as region, PRC, HK, Taiwan). $2.6 billion last quarter. Up 4x. Korea also very good market. Driven by iPhone, iPad. Other Asian countries doing well. Japan not in segment. By itself 83% year over year. Stunning. Placing more resource there. Looking for expansion.
  • Q: How long is roadmap? 1 year, 2 year? (Trying to find out how far Jobs has been involved).
  • TC: Apple magic. Don't want anyone copying it. Apple is doing best work ever. Steve has made excellence a habit. Feel very confident. Have low market share of handsets, huge market. Believe iPad market is huge as well. In fast moving markets. Have best products they've ever done. Confident.
  • Q: Could have sold more, how many?
  • PO: Can't run experiment both ways. Couldn't make enough. Would have loved more.
  • Q: Commodities?
  • TC: DRAM favorable. Metals increasing. NAND, batteries, ODDs, LCDs, most others in supply/demand balance. Design components they believe they can innovate beyond market. A4 chip is example. Didn't feel like they had to build fab. Good options for doing that. Focused on design.
  • TC: Signed deal with NAND Flash suppliers because anticipated importance, wanted to secure supply. Fantastic use of Apple cash, Look for more of these. Identified another area. Come to agreements PO talked about. Pre-payments, capitol, focused on area they feel is strategic. Not going into details.
  • Q: iPad different on historical margin pattern?
  • TC: Number of factors. Don't guide on product level on margins.
  • PO: Good track record on lowering costs. Strong gross margins. Happy.
  • Q: Other tablets
  • TC: Android tablets shipping today, OS not designed for tablet. Google has said that. Not Apple dig. Makes size less than reasonable, won't provide real tablet experience. Scaled up smartphone. Bizarre product. Enormous percentage will select iPad. Next generation of Android tablets. Nothing shipping yet. Doesn't know. Generally lack performance specs, timing. Today they're vapor. Will assess when they come out. Apple not sitting still. Have huge first mover advantage. Incredible user experience. iTunes, App Store, ecosystem. Very confident entering fight with anyone.
  • Q: Moving to multiple carriers ASP impact, other large carriers without iPhone, CMDA based? More?
  • TC: Not releated to US or specific carrier: Always looking, assessing.
  • TC: Signed multi-year non-exclusive deal with AT&T. Happy to have 2 carriers in US.
  • TC: No contractual exclusivity anywhere in the world anymore.
  • iPad cannibalization of Macs?
  • TC: Yes but also halo effect. Look at the growth.
  • Q: iPad influencing Mac?
  • TC: No "not invented here" in Apple groups. Very low walls. Great ideas are great ideas. Uses MacBook Air as example, instant on like iPad.
  • TC: Steve had phenomenal insight. MacBook Air is how to compete with iPad.
  • Q: iPad new to the brand? Any numbers?
  • TC: We collect it, of course. iPhone numbers been for a while. Doesn't need numbers. Look at Asia numbers. Incredible.
  • Q: Established tablet market vs. emerging, more about consumption vs. creation?
  • TC: Tablet market large everywhere.
  • Q: Supply again
  • PO: Working hard to increase, won't come overnight
  • Q: Any other observations on Android and BlackBerry since Steve spoke last call?
  • TC: Could have sold more iPhones. Suggests they grew faster than market. Working around the clock to meet supply. Increasing countries and carriers. Enormous enterprise traction. Mind-blowing. Highest customer ratings in industry. Largest App Store. Now sold over 160 million iOS devices.
  • TC: Integrated approach provides better experience than fragmented approach. Fragmented app stores will make users pull their hair out. Updates will be hard to track. iOS is off charts on percentage of people who have latest OS version compared to other guys. Verizon will help Apple in the US. Just repeated Steve. Nut nut is their integrated approach is better for the end user, takes out the complexity. Doesn't make user a system integrated. Doesn't know many users who want to be SI. More iPhones they can get out, the more people love them. Think they have bright future. Same thing about iPad. Same set of issues. Difference is they've been running 3 quarters without any significant competition. iPad also off the charts. None of that new. Apple is in a very good position.
  • TC: Thanks to iOS SDK can make an app and run your whole business off an iPad. Numbers incredible. iPad started shipping in April, already up to 80% of largest companies deploying or piloting. Unheard of at least in his dealings. Usually much slower, more cautious. Seen productivity, creativity advantage.

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Rene Ritchie

EiC of iMore, EP of Mobile Nations, Apple analyst, co-host of Debug, Iterate, Vector, Review, and MacBreak Weekly podcasts. Cook, grappler, photon wrangler. Follow him on Twitter and Google+.

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Reader comments

Apple Q1 2011 financial results conference call


If the stock opens down (like it already is in Europe by about 8%), I'd suggest buying as it will probably recoup a lot of its value by day end. No insider trading here folks- just my best guess.