Apple Q2 2011: 18.65 million iPhones, 9.02 iPods, 4.69 million iPads
Apple today reported their Q2 2011 results, which included 18.65 million iPhones, 9.02 iPods, 4.69 million iPads sold during the quarter. Revenue was $24.67 and profits $5.99 billion.
“With quarterly revenue growth of 83 percent and profit growth of 95 percent, we’re firing on all cylinders,” said Steve Jobs, Apple’s CEO. “We will continue to innovate on all fronts throughout the remainder of the year.”
“We are extremely pleased with our record March quarter revenue and earnings and cash flow from operations of over $6.2 billion,” said Peter Oppenheimer, Apple’s CFO. “Looking ahead to the third fiscal quarter of 2011, we expect revenue of about $23 billion and we expect diluted earnings per share of about $5.03.”
Apple's conference call will shed some color on those numbers and we'll update with the highlight after the break.
Conference call highlights:
- Peter Oppenheimer (PO): Record iPhone sales, record March quarter Mac sales. Robust demand for iPad.
- 95% growth over a year ago.
- Talking Macs. Air and Pro laptops drove demand.
- Lion preview brings ideas from iPad back to the Mac. Scheduled to ship this summer, will show more at WWDC in June.
- 9 million iPods. Lower year over years, ahead of expectations. iPod touch over 50%. Apple share of MP3 still over 70%.
- 4-6 weeks iPod channel inventory.
- iTunes $1.4 billion in revenue thanks to media and apps. Full catalog of Random House books. Now includes 2500 publishers in 20 categories. 100 million books downloads.
- 18.6 million iPhones. 113% year over year growth, ahead of IDC estimates. Revenue from handset and accessories $12.3 billion. America, AsiaPac doubling. Significant increase in capacity, expanded distribution.
- Please to be on Verizon, SK telecom in Korea, Saudi telecom. 186 carriers in 90 countries.
- 5.2 million iPhones in channel. 4-6 weeks of inventory.
- Enterprise growth, 80% of fortune deploying or testing. 100s of private, public companies supporting 1000s of iPhones, including Cisco, GM, Xerox.
- iPad has momentum. Sold 4.7 iPads. Launched iPad 2 in US and 25 additional countries by end of March. Working to get it into hands. 59 countries for iPad. Channel inventory down, below 850 thousand. Sold every iPad 2 they could make. Would like more inventory. Revenue was $2.8 billion.
- CIOs embrace iPad. Just over a year, 75% of Fortune 500 are testing or deploying. Xerox, ADP, Disney, USAA.
- iOS reached 189 million cumulative sales by end of March.
- App Store 350,000 apps, well over 3 billion downloads. New subscription service debuted. Made more than $2 billion in payments to developers.
- Apple Retail Store time. About to hit 1 billionth visitor.
- About half the Macs still sold to new customers.
- 323 stores.
- 40 new stores in fiscal 2011. 5th store in China.
- Still have those mysterious supplier agreements...
- Expect $23 billion in June quarter. Gross margins to be 38%. (They're typically conservative.)
- Thrilled with results.
- Q: Is Japan causing disruption.
- Tim Cook (TC): Incredible tragedy, hearts go out. Apple has long history, strong ties, very sad. Helping with relief. Economics pales compared to human impact. Had some revenue impact in Q2 but not material. Q3 could be less but already factored. Did not have any supply or cost impact in Q2. Do not anticipate in Q3. Source hundreds of items in Japan, from components like LCD, NAND, optical drives, resins, coatings, etc. Earthquake and subsequent Tsunami and nuclear incidents have caused disruption but Apple has worked around the clock and have been able to implement contingency plans. Remain with long term partners, displayed incredible resilience. Do not anticipate any Q3 problems but have to be wary due to after shocks, etc. Don't know of unsolvable issues but situation uncertain, no guarantee. Difficult to predict beyond Q3. Will address Q4 in July.
- Q: iPad 2 constraints. Where do they lie?
- TC: Demand staggering. Still amazed. Heavily backlogged. Extremely pleased. 25 additional countries. 13 more countries next week. Will add more in Q3. Confident they can produce a lot of iPads in Q3.
- Q: What drove iPhone strength? Carrier, region? How do we think about seasonality in June quarter?
- TC: iPhone did very well everywhere. Off the charts in US -- 155%, adding Verizon was key. AT&T did extremely well as well. 3x IDC forecast for market. Continue to be on tear in China. Greater China was up over 3x, 250%. Catapulted revenue in Greater China to just under $5 billion. Up 4x. Extremely happy.
- PO: Increased inventory by over 1 million units. 4-6 weeks. June Q should be year over year increase. Significant.
- Q: What did you learn about elasticity with $49 iPhone 3GS.
- TC: Did very well. Very popular.
- Q: LTE, how mature? Urgency?
- TC: Asked this with Verizon launch, still see it in products being shipped. 1st gen chipsets force lots of design concessions. Apple not willing to make them. Very happy with iPhone 4, iPhone 3GS. 3 more large carriers.
- Q: Sequential decline? Forces you'd highlight?
- PO: Priced aggressively. iPhone channel increased. iPad channel inventory fell.
- Q: iPad constraints?
- TC: Demand has been staggering.
- Q: CDMA? Magnitude of spending?
- TC: Don't want to get into specifics on CDMA or GSM, constantly looking at where to bring on incremental partners. Brought on 3 this quarter.
- Q: How do you maintain competitive growth?
- TC: ComScore data released yesterday showed iOS outreached Android by 59% in US. Worldwide iPhone up, materially faster than market rate. Sold every iPad. Gaining traction in Enterprise, 88%, 75% of Fortune 500. Largest App Store, 350,000 iPhone, 65,000. Fewer than 100 tablet apps for Android. Feel very good. Feel great about future plans. Paid $2 billion to devs. 10 billion downloads. Business prop is very strong. Integrated approach materially better than Android fragmented approach, multiple stores, versions, screen sizes. User appreciates full experience responsibility. Fragmented approach turns customer into system integrator. Customer doesn't want that.
- Q: Post vs. pre-paid iPhone. UA?
- Wanted to understand levers in China market. iPhone sale up 3x in Q2.
- Q: How is Steve doing?
- TC: Still on medical leave. Speak on regular basis, involved in strategic decisions. Wants to be back full time as soon as he can.
- Q: Supply question (again!) Was iPad 2 a forecasting error? Why couldn't you have kept production higher, filled more.
- TC: Product transitions never simple. Have to call them many weeks in advance. How many current, dates of new product announcement. Added 170,000 new iPad 2s, most in transit. Net reduction was 400K. Sell through was close to 5 million. Sent out invite to event at end of Feb, announcement early March, on sale March 11, Q ended soon thereafter. Factored in to product transition. Key point, extremely pleased on manufacturing. Materially better start, a lot more units produced than first iPad. Confident enough already put on 25 more countries, 13 more next week. Even more in Q3.
- Q: New iPhones typically in June, new iPods in September. What could change that?
- TC: Nothing to share on that.
- Q: Supply/demand balance for iPhone, still haven't met it?
- TC: In balance in almost all major markets.
- Q: iPad model, make sense to offer subsidies at some point?
- TC: Today is subsidized in Korea, Japan on 24 month contract. Some European countries. Most are on no-commitment pay-as-you-go. Yes, carriers can offer subsidies but many customers prefer PAYG.
- Q: Last year had new product transition, this year again? Can comment on Samsung?
- PO: Hard to comment on gross margin year over year, different cycles, mixes, other factors.
- TC: We are Samsung's largest customer, valued supplier. Expect that to continue. Mobile Communication division had cross the line. After trying to deal with issue for a long time, they decided to go to court.
- Q: iTunes?
- PO: Biggest, largest, most content. Nothing beyond that.
That's it! What do you think?