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Apple’s monster Q1 blows away Wall Street estimates [Stock Talk]

Chris Umiastowski — Wed, 25 Jan 2012 15:41:49 +0000

“Apple is firing on all cylinders and still looks like it has plenty of room for growth.”

Tonight, Apple reported its 1st quarter 2012 results for the holiday period ending December. To say it was a good quarter would be like saying the iPhone was sort of different among smartphones when it launched. It would be more accurate to say Q1 was a tsunami of excitement for shareholders. In fact, according to Wikipedia, Apple now owns the #4 spot for top corporate quarterly earnings. Of all time.

Steve Jobs must have a huge grin on his face, wherever he is out there. And deservedly so. The company he founded and shaped continues to grow beyond his wildest imagination.

Highlights

Revenue was 46.33 billion, a whopping 20% above Wall Street expectations.
EPS, or earnings per share, was $13.87 while Wall Street expected $10.07, so this is an enormous beat on overall profitability
Apple shipped 37 million iPhones. The Street was expecting just over 30 million as the new iPhone 4S hit the market and demand clearly exceeded even the most wildly optimistic expectations.
iPad 2 shipments of 15.4 million were also well ahead of the Street’s 13.2 million estimate. The Kindle Fire didn’t put too much of a dent in Apple’s ownership of the tablet market after all.
Mac hit another record with 5.2 million unit sales. This is still a 26% year over year growth rate whereas the overall PC market had zero growth according to IDC numbers. So Apple’s Mac business is growing strong while he rest of the market shrinks. Nice position to be in.
The iPod business didn’t set any records, but Apple still sold 15.4 million units, over half of which were the iPod touch. They still dominate the MP3 player market with 70% share.

Guidance for Q2 was also ahead of Street expectations. Apple says it expects about $8.50 in EPS next quarter compared to the consensus estimate of $8.02. But as any Apple follower knows, this company is the king of sandbagging quarters. They are uber-conservative and typically beat their own estimates handily.

After hours, Apple is trading up over $30 per share to about $450. The company’s market capitalization is now well in excess of $400 billion. The crazy part is that Apple is on the verge of having $100 billion in cash. Under Jobs’ leadership, Apple didn’t ever seem open to a special dividend to distribute its mounting cash hoard, or even a regular quarterly dividend . But since Cook took the helm, investors have been told that Apple is analyzing the situation and doesn’t plan to let the cash burn a hole in its pockets.

I, for one, would love to see Apple return some of the cash to shareholders. When one quarter of your valuation is tied up in cash it doesn’t maximize value. Apple earns some interest income on the cash, but interest rates are excessively low these days and if they paid out the cash it wouldn’t put much of a dent in their earnings. So paying out the cash unlocks value, which is why shareholders are so interested in seeing something materialize. 2012 looks like the year when something will finally happen.

Off the charts demand in China & pushing deeper in to Brazil

The iPhone 4S is now shipping in China, and CEO Tim Cook told investors on the conference call that demand is “off the charts”.

China may be an emerging market where most people can’t get anywhere near affording a $600+ phone, but it has a population of 1.4 billion. Even a thin slice of upper class citizens translates into a massive number of buyers. On top of this, China has an exploding middle class population. This country could very well fuel another significant leg of growth for Apple.

Brazil is another market where Apple sees huge opportunity. Cook speaks of Brazil as the #2 emerging market that Apple is focused on behind China. They don’t expect to be opening any Apple retail stores there in the near term, but through other distribution channels they’re going deeper into the world’s 5th largest country.

India is still a tiny revenue generator for Apple, but Cook did disclose that revenue tripled in that market this quarter. India is no small fry either, being the world’s second largest country by population with 1. 2 billion people.

iCloud is a strategy for the next decade

Apple’s executive team didn’t spend much time discussing iCloud, but Cook did drop a juicy line on us. He said, “ICloud isn’t a product, it’s our strategy for the next decade”. When you really think about it, Apple built up its entire ecosystem around iTunes and a dependency on having a Mac or PC to synchronize your device to. That’s fine in developed countries, but if Apple hopes to penetrate the prepaid market, or go deep into the enterprise, or other vertical markets, the cloud is where it’s gotta be.

With iCloud, the way we use Apple products should make life even easier. Consumers can have automatic cloud based synchronization. Enterprises could potentially use iCloud to manage groups of devices and push apps out to them. Educational institutions could push textbooks and other material to them. If Apple is to succeed in these markets, they certainly can’t do it with a need to plug each device into a Mac with iTunes running on it.

Apple TV still a hobby

Cook still describes the company’s Apple TV business as a hobby. That may be the case, but it’s a growing hobby with 1.4 million units sold in the quarter. Not too shabby as far has hobbies go. Almost everyone on the planet is expecting Apple to enter the home display market sometime in 2012, so I guess we’ll see how this shakes out. I’d love to see Apple push deeper into this market. I’ve already ditched cable TV in my house in favor of Apple TV. Cable set top boxes just don’t seem to be even trying to compete with their pathetic on-demand capabilities and horribly slow user interfaces.

Stock Still Has Upside

Apple is firing on all cylinders and still looks like it has plenty of room for growth. They own the tablet market, and just injected a long term dose of growth into their business through their recent expansion into the textbook market. They’re neck and neck with Android, both dominating in the smartphone market. And they stand alone in terms of controlling not only their entire smartphone ecosystem, but also their computing and content platforms. Apple remains an integrated powerhouse.

Yet its stock remains cheap by any traditional measure. At $450 per share (after hours quote), it’s trading at about 12x annual earnings. But once you factor in that earnings estimates are bound to rise tomorrow morning, and if you back the company’s enormous cash pile from it’s valuation, the stock trades about about 10x earnings.

I’ll take that bet. I’m hanging onto every single one of my Apple shares.

Notes of interest from Apple Q1 2012 conference call

Rene Ritchie — Tue, 24 Jan 2012 21:57:10 +0000

Below are notes of interest from Apple’s just-completed 2012 conference call. Some interesting comments — or non-comments — from Tim Cook on Apple Television, bigger 4G Android phones, and Microsoft. Dig in!

Jan 24 2012, 4:59 PM: reneritchie: Apple Q1 2012 results: $46.33 billion in revenue, 37.04 million iPhones, 15.43 million iPads, 15.4 million iPods
Jan 24 2012, 5:02 PM: reneritchie: Call starting now.
Jan 24 2012, 5:02 PM: reneritchie: Oppenheimer likely up first. Read out the results.
Jan 24 2012, 5:03 PM: reneritchie: And here’s Op.
Jan 24 2012, 5:03 PM: reneritchie: Biggest Q in history, new records. Highs for iPhones, iPads, Macs. (Poor iPod).
Jan 24 2012, 5:03 PM: reneritchie: 46.3 billion in rev. 73% growth. Feuled by iPhone, iPad, Mac. Aided by 14th week in quarter. 17 billion margin. 13.1 billion income.
Jan 24 2012, 5:04 PM: reneritchie: Equalling half the income of half of 2011.
Jan 24 2012, 5:04 PM: reneritchie: Going over stocks now.
Jan 24 2012, 5:04 PM: reneritchie: Macs.
Jan 24 2012, 5:04 PM: reneritchie: New record with 5.2 million Macs. New records for desktop and portables.
Jan 24 2012, 5:05 PM: reneritchie: Average weekly sales up strongly. Outgrew market in all geographies, especially Asia/Pac. Fueled by MacBook Pro, Air, iMac strong.
Jan 24 2012, 5:05 PM: reneritchie: 3-4 weeks of inventory.
Jan 24 2012, 5:05 PM: reneritchie: Mac App Store a success. Over 100 mil apps in less than a year. Thousands of apps.
Jan 24 2012, 5:05 PM: reneritchie: (Not as big as iOS app store by far)
Jan 24 2012, 5:05 PM: reneritchie: 15.4 million iPods. Down from 19 last year.
Jan 24 2012, 5:06 PM: reneritchie: Ahead of expectations. IPod touch more than 50%. Over 70% of MP3 market. Top selling MP3 player in most countries.
Jan 24 2012, 5:06 PM: reneritchie: 4-6 weeks of inventory.
Jan 24 2012, 5:06 PM: reneritchie: iTunes store generated 1.7 billion
Jan 24 2012, 5:06 PM: reneritchie: Launched iTunes Music in Brazil and 27 other countries.
Jan 24 2012, 5:06 PM: reneritchie: iTunes customer busy on Xmas, 140 million downloads
Jan 24 2012, 5:07 PM: reneritchie: iPhone sold 37 million. 128% growth. Way ahead of market.
Jan 24 2012, 5:07 PM: reneritchie: Very strong growth in all segments thank to iPhone 4S. Customer captivated by Siri.
Jan 24 2012, 5:07 PM: reneritchie: (Talking up Siri)
Jan 24 2012, 5:07 PM: reneritchie: iPhone inventory up 200k, 6 mil in channel, below 4-6 weeks.
Jan 24 2012, 5:07 PM: reneritchie: iPhone revenue was 24.4 billion inlcuding accessories. 133% up
Jan 24 2012, 5:08 PM: reneritchie: Nearly all Fortune 500 companies use/test iPhone. Changing way companies use mobile devices.
Jan 24 2012, 5:08 PM: reneritchie: Developing, deploying mission critical apps.
Jan 24 2012, 5:08 PM: reneritchie: (Listing tons of companies using iPhone, including Facebook)
Jan 24 2012, 5:09 PM: Bla1ze: That’s a lot of companies.
Jan 24 2012, 5:09 PM: reneritchie: Pleased to be shipping in China, 90 countries, fastest rollout ever
Jan 24 2012, 5:09 PM: reneritchie: 15 million iPads. 111% increase.
Jan 24 2012, 5:09 PM: reneritchie: iPad popular with holiday buyers.
Jan 24 2012, 5:09 PM: reneritchie: iPad + accessories up 99%, 9.1 billion
Jan 24 2012, 5:09 PM: reneritchie: iPad sales exceeded expectations. 4-6 weeks inventory.
Jan 24 2012, 5:10 PM: Felichiomo: hello
Jan 24 2012, 5:10 PM: reneritchie: Unprecendented adoption in business. Nearly all fortune 500 companies.
Jan 24 2012, 5:10 PM: reneritchie: iPad enables business to change the way to work. (Giving examples.)
Jan 24 2012, 5:10 PM: Bla1ze: Heck, even my bank uses iPads
Jan 24 2012, 5:11 PM: reneritchie: 1.5 million iPads in use in education
Jan 24 2012, 5:11 PM: reneritchie: 1000 one-to-one deployments.
Jan 24 2012, 5:11 PM: reneritchie: Announced iBooks 2 last week. (Giving marketing pitch)
Jan 24 2012, 5:11 PM: reneritchie: (Listing publishers)
Jan 24 2012, 5:11 PM: Bla1ze: And with iBooks 2, that number will grow.
Jan 24 2012, 5:11 PM: reneritchie: iBooks Author means anyone with a Mac can create books, publish them.
Jan 24 2012, 5:11 PM: reneritchie: (How many copies? Missed that!)
Jan 24 2012, 5:12 PM: Bla1ze: 600,000
Jan 24 2012, 5:12 PM: reneritchie: Thanks!
Jan 24 2012, 5:12 PM: reneritchie: 3 million copies of iTunes U downloaded
Jan 24 2012, 5:12 PM: reneritchie: 315 cumulative iOS device sales. 62 million last quarter.
Jan 24 2012, 5:12 PM: reneritchie: iOS and iCloud launched last quarter. Customer loves it!
Jan 24 2012, 5:12 PM: reneritchie: 85 million iCloud customers.
Jan 24 2012, 5:12 PM: reneritchie: (Giving iCloud pitch)
Jan 24 2012, 5:13 PM: Bla1ze: 85 million customers signed up for iCloud?
Jan 24 2012, 5:13 PM: reneritchie: App Store includibly succesful. 170,000 iPad apps, half a million total
Jan 24 2012, 5:13 PM: reneritchie: Chris — is that what he said?
Jan 24 2012, 5:13 PM: Bla1ze: I believe so, yes.
Jan 24 2012, 5:13 PM: reneritchie: Apple retail had record sales.
Jan 24 2012, 5:13 PM: reneritchie: iPhone sales robust, doubling. IpHone 4S launch.
Jan 24 2012, 5:13 PM: reneritchie: iPad 2 was strong over the holidays.
Jan 24 2012, 5:14 PM: reneritchie: 1.1 million Macs. Half the Macs sold are still to new Mac customers.
Jan 24 2012, 5:14 PM: reneritchie: 4 new stores including Grand Central.
Jan 24 2012, 5:14 PM: reneritchie: 358 stores open. 17.1 million average per store. 43% up.
Jan 24 2012, 5:14 PM: reneritchie: 45% increase in visitors.
Jan 24 2012, 5:14 PM: Bla1ze: (Still waiting for my Halifax store, cause you know — obviously Apple needs my money lol)
Jan 24 2012, 5:15 PM: reneritchie: 22,000 visitors per store, per week on average.
Jan 24 2012, 5:15 PM: reneritchie: Easy pay checkout has helped handle the traffic.
Jan 24 2012, 5:15 PM: reneritchie: Personal pickup let’s them pick up in-store products in an hour, makes shopping easier/faster.
Jan 24 2012, 5:15 PM: reneritchie: Lower commodities, leverage on higher revernue, one-time (something?), higher iPhone sales.
Jan 24 2012, 5:16 PM: reneritchie: (Getting into the financial stuff.)
Jan 24 2012, 5:16 PM: reneritchie: Cash on hand is now 97.6 BILLION
Jan 24 2012, 5:16 PM: reneritchie: 64 billion is off shore.
Jan 24 2012, 5:16 PM: reneritchie: 17.5 in cashflow. Actively discussing use. Nothing to announce. Very disciplined. Not letting it burn a hole in their pocket.
Jan 24 2012, 5:17 PM: reneritchie: Next quarter is 13 weeks. Expect 32.5 billion. Gross margins to be 42%, OPEX 3.05 billion.
Jan 24 2012, 5:17 PM: reneritchie: 25.25% tax rate, eps of 8.25
Jan 24 2012, 5:17 PM: reneritchie: Closing. Very please. (Yeah, I’d be please too!)
Jan 24 2012, 5:17 PM: Bla1ze: 8.50
Jan 24 2012, 5:18 PM: reneritchie: TThanks!
Jan 24 2012, 5:18 PM: reneritchie: Strongest product lineup in Apple history.
Jan 24 2012, 5:18 PM: reneritchie: Q&A time!
Jan 24 2012, 5:18 PM: Bla1ze: Excited for the new product pipeline..
Jan 24 2012, 5:18 PM: reneritchie: Can you describe iPhone momentum? Enthusiasm for H1 2012?
Jan 24 2012, 5:19 PM: Bla1ze: Looking for details on metrics
Jan 24 2012, 5:19 PM: reneritchie: Cook: Thrilled with sales. Substantially above previous. Breathtaking customer receptuon of iPhone 4S/iOS 5/camera/Siri
Jan 24 2012, 5:19 PM: reneritchie: Customers loving it
Jan 24 2012, 5:20 PM: reneritchie: Made a bold bet as to what demand would be, despite bold bet, Apple was short of supply. Ended with significant backlog. Improved some since end of Q. Still short in key geographies.
Jan 24 2012, 5:20 PM: reneritchie: Also attibuted to delayed purchases from prior quarter, people anticipating new iPhone. Made a correct decsion to go with broad range, turned out to be good. 14th week was part of this, factored that in.
Jan 24 2012, 5:20 PM: reneritchie: Strength in every key region, US and Japan particularly.
Jan 24 2012, 5:21 PM: reneritchie: Many more sales days than most countries.
Jan 24 2012, 5:21 PM: reneritchie: iPhone sale sin greater China especially since iPhone 4S didn’t start in PRC until Jan.
Jan 24 2012, 5:21 PM: reneritchie: Could not be happier
Jan 24 2012, 5:21 PM: reneritchie: Bet bold but not high enough, customers loving it, Apple happy.
Jan 24 2012, 5:21 PM: reneritchie: Q: ASP is up for iPhone, good mix of higher capacity 4S?
Jan 24 2012, 5:22 PM: reneritchie: TC: iPhone 4S was most popular iPhone. Consistent with most launches. See higher mix of front end.
Jan 24 2012, 5:22 PM: reneritchie: Q: Pent up demand at end of December is US, Japan, or new countries?
Jan 24 2012, 5:23 PM: reneritchie: Q: Component environment, production capacity, can you address catch up demand, China? Help you rebuild inventory in March?
Jan 24 2012, 5:23 PM: reneritchie: TC: Demand in China has been staggering. Selling through reseller and online. Not currently in retail. Demand off the charts.
Jan 24 2012, 5:23 PM: reneritchie: Very happy.
Jan 24 2012, 5:24 PM: reneritchie: Other countries were smaller countries in terms of demand. Will see how it goes. Did make progress.
Jan 24 2012, 5:24 PM: reneritchie: Caught up in some countries, still some to catch up on.
Jan 24 2012, 5:24 PM: reneritchie: Component environment is favorable, one of the things that let them overachieve on gross margin. Predicts it will stay favorable except for hard drives affected by tragedy in Thailand.
Jan 24 2012, 5:25 PM: reneritchie: Doesn’t predict issue but will pay more, reflected in guidance.
Jan 24 2012, 5:25 PM: reneritchie: Q: More detail on hard drive? Impact on sales? Impact on revenue?
Jan 24 2012, 5:25 PM: reneritchie: TC: Was not material supply or cost for December quarter.
Jan 24 2012, 5:25 PM: reneritchie: March quarter not expecting any material supply impact but prices have increased, included in guidance.
Jan 24 2012, 5:26 PM: reneritchie: Q: December quarter NAND down 10%, DRAMM down 40%(?) How favorable will pricing be in March quarter?
Jan 24 2012, 5:26 PM: reneritchie: TC: Not confirming percentages but did receive better cost, particularly on displays, NAND flash, DRAMM. Continue to have supply exceed demand.
Jan 24 2012, 5:27 PM: reneritchie: HD big exception, constrained industry wide basis. Can navigate supply issue, paying more for them.
Jan 24 2012, 5:27 PM: reneritchie: PO: Loss of leverage on lower revenue, non recurrence of 1 time items, stronger US dollar.
Jan 24 2012, 5:28 PM: reneritchie: PO: How big were 1 time items?
Jan 24 2012, 5:28 PM: reneritchie: (Not PO, Q
Jan 24 2012, 5:28 PM: reneritchie: PO: Better mix, largely iPhone sales
Jan 24 2012, 5:28 PM: reneritchie: Q: iPad — very strong numbers december quarter, any impact from lower price tablets? How do you think of competition from Amazon?
Jan 24 2012, 5:29 PM: reneritchie: TC: Really happy with 15 million iPad sales, took down inventory slightly. Consistent with long term belief that this is huge opportunity for Apple over time.
Jan 24 2012, 5:29 PM: reneritchie: Truly believe that tablet market in units is bigger than PC market. Interesting to note it’s clear on IDC data on desktops, tablets exceeded desktop sales in US.
Jan 24 2012, 5:30 PM: reneritchie: Significant momentum. Competitiveness — ecosystem is in a class by itself. Larger canvas. 170,000 apps for iPad. A few hundred for the competition.
Jan 24 2012, 5:31 PM: reneritchie: People really wnat to do multiple things with tablets. Don’t see limited function tablets/e-readers in teh same categories. Will sell a far enumber of units but iPad wanters won’t settle.
Jan 24 2012, 5:31 PM: reneritchie: Last year year of tablet. Was year of iPad for second year in a row.
Jan 24 2012, 5:31 PM: Bla1ze: No iPad killers? I’m shocked.
Jan 24 2012, 5:31 PM: reneritchie: Q: Digging into iPad, what are you learning in terms of elasticity?
Jan 24 2012, 5:31 PM: Bla1ze: Looking at iPhone numbers now.
Jan 24 2012, 5:31 PM: reneritchie: Pre-paid market.
Jan 24 2012, 5:32 PM: reneritchie: TC: Each model, 3GS, iPhone 4, was important in achieving total units.
Jan 24 2012, 5:32 PM: reneritchie: Glad to cover broad range of products. IPhone 4S most popular.
Jan 24 2012, 5:32 PM: reneritchie: Post paid market much smaller difference between models. Larger in pre-paid market.
Jan 24 2012, 5:32 PM: reneritchie: Too early to tell. Just started in Oct.
Jan 24 2012, 5:32 PM: reneritchie: Thrilled with total result.
Jan 24 2012, 5:33 PM: reneritchie: Q: Discussing uses of cash? Any difference than historical behavior? Thinking more constructively?
Jan 24 2012, 5:34 PM: reneritchie: PO: Always discussed internally in management and board. Recognize it’s growing for all the right reasons. Today, discussions are active.
Jan 24 2012, 5:34 PM: reneritchie: Nothing to announce.
Jan 24 2012, 5:34 PM: reneritchie: Q: Time frame? Will you tell us when you finish? Process? Ending?
Jan 24 2012, 5:34 PM: reneritchie: PO: When they have something to announce, they’ll announce it.
Jan 24 2012, 5:35 PM: reneritchie: Q: Gross margins. Saying it’s going 270 basis points, bucking trends. Loss of 1-time item that significant.
Jan 24 2012, 5:35 PM: reneritchie: PO: (Giving same answer to same question. Sigh. Analysts, up yo game!)
Jan 24 2012, 5:35 PM: llofte: such lame questions
Jan 24 2012, 5:36 PM: reneritchie: (How about asking what they think of the television market?)
Jan 24 2012, 5:36 PM: reneritchie: (They won’t answer, but the non-answer will be interesting)
Jan 24 2012, 5:36 PM: Bla1ze: Here we go Rene
Jan 24 2012, 5:37 PM: reneritchie: Q: Congrats! At CES, everyone has connected TV, trying to solve problems only Apple can solve. Apple TV looks outdated. What’s your strategy?
Jan 24 2012, 5:37 PM: Bla1ze: Sold 2.8 million Apple TV’s
Jan 24 2012, 5:37 PM: reneritchie: TC: Apple TV doing well. Sold 2.8 million last year. December quarter new record, 1.4 million. (Including Leanna!). Still classified as hobby.
Jan 24 2012, 5:37 PM: Bla1ze: (and me)
Jan 24 2012, 5:37 PM: reneritchie: Continue to add things to it. Couldn’t live without it. Fantastic product. Pull strings, see where it takes us. No comment.
Jan 24 2012, 5:37 PM: reneritchie: TC: New job as CEO, any surprises?
Jan 24 2012, 5:38 PM: reneritchie: (Q, not TC)
Jan 24 2012, 5:38 PM: reneritchie: TC: I love Apple, priviliege to work with incredible team. Lucky.
Jan 24 2012, 5:38 PM: reneritchie: Q: Strategic, first 4 months?
Jan 24 2012, 5:38 PM: reneritchie: TC: Look at our results, team doing terrific job.
Jan 24 2012, 5:38 PM: reneritchie: Q: (Montreal!) Cash balance, perspective on framing different opportunities?
Jan 24 2012, 5:39 PM: Bla1ze: Again with the cash balance questions.
Jan 24 2012, 5:39 PM: reneritchie: PO: Examining all possibilities — acquisitions, supply chain, otherwise, nothing to share on dividends or buy backs. Actively discussion. Not burning a hole in their pockets.
Jan 24 2012, 5:40 PM: reneritchie: Q: iCloud? What’s your perception on value add? What are the metrics used to determine if its driving success?
Jan 24 2012, 5:40 PM: reneritchie: TC: Shared number of customers – 85 million in just a few months.
Jan 24 2012, 5:40 PM: reneritchie: Solved a lot of problems
Jan 24 2012, 5:40 PM: reneritchie: (Doing marketing pitch on iCloud)
Jan 24 2012, 5:41 PM: reneritchie: Not a product, it’s a strategy for the next decade.
Jan 24 2012, 5:41 PM: reneritchie: Q: iPhone distro in the Q, moving forward
Jan 24 2012, 5:41 PM: reneritchie: Where are you? Prospects for expansion in China, carriers?
Jan 24 2012, 5:41 PM: reneritchie: TC: 130,000 points of sale, up 35%
Jan 24 2012, 5:42 PM: reneritchie: Captured carriers, key retailers
Jan 24 2012, 5:42 PM: reneritchie: Extremely pleased.
Jan 24 2012, 5:42 PM: reneritchie: Incumbant carriers did incredbly well, proud of new carriers. Nothing to announce on China expansion. Extremely important market for Apple.
Jan 24 2012, 5:43 PM: reneritchie: Q: Revenue guidance for March quarter?
Jan 24 2012, 5:43 PM: reneritchie: (Interesting no one is asking about Google competition this time?)
Jan 24 2012, 5:44 PM: reneritchie: PO: Would expect to have yearly increase on iPhone, down sequentially. iPad same thing.
Jan 24 2012, 5:44 PM: reneritchie: Mac, iPod, same thing, seasonality.
Jan 24 2012, 5:45 PM: reneritchie: PO: Five reaosns why he expects greater down: 1) 14th week, 1/14th of revenue, 2) 14th week fell in March Q last week, not included this week, typically higher than average. 3) iPhone inventory increased 1.7 mil unites. 4) benefited from launch of iPhone 4S, pent up demand. Fastest roll out ever.
Jan 24 2012, 5:46 PM: reneritchie: 5) US dollar up against Euro. Last year was flat.
Jan 24 2012, 5:46 PM: reneritchie: Q: Acquisitions? Strategy? Annobit?
Jan 24 2012, 5:47 PM: reneritchie: PO: Done acquisitions that were small, medium with great talent, great start on product/technology/IP.
Jan 24 2012, 5:47 PM: reneritchie: Tend to do several a year. Very diciplined. track record very strong.
Jan 24 2012, 5:47 PM: reneritchie: Q: How are they integrated in? Run as stand alone?
Jan 24 2012, 5:48 PM: reneritchie: TC: We don’t believe in lots of divisions. One company, not a lot of mini-companies. Semi conductors work for Mansfield like rest of hardware. Bob integrating Annobit. Fantastic technical talent. Lucky they joined.
Jan 24 2012, 5:49 PM: reneritchie: Q: Focus on China, 500 carriers in the world? Adding them? Country rollout, China on rollout side, Brazil next, what about Russia, India retail?
Jan 24 2012, 5:49 PM: reneritchie: TC: Key online, carrier, retailer partners. Russia, india through partners. In all thoe countries.
Jan 24 2012, 5:50 PM: reneritchie: Clear in the past, ton more energy in the China market today doesn’t mean lack of focus or effort in other countries, just less.
Jan 24 2012, 5:50 PM: reneritchie: Brazil is huge opportunity.
Jan 24 2012, 5:50 PM: reneritchie: Doesn’t invision retail in near term.
Jan 24 2012, 5:50 PM: reneritchie: Beginning to see traction, recognize they have to focus to deeply understand, get to large revenue figure like greater China.
Jan 24 2012, 5:51 PM: reneritchie: More carriers, anticipate adding them. Nothing specific but looking at the same list you are. Major carriers, number much smaller.
Jan 24 2012, 5:51 PM: reneritchie: Same thing with countries. All are important. Wants to get into all of them.
Jan 24 2012, 5:52 PM: reneritchie: Q: tablet market? iPad growth outpaced expectations. Think Apple benefitted from lower cost, reduced feature tablets? Checked them out, traded up to iPad? Same thing with MacBook Air? Ultrabook clones?
Jan 24 2012, 5:52 PM: reneritchie: TC: Data in US looked at on weekly basis after Amazon launched Kindle Fire. Wasn’t obvious effect plus or minus. Heard your theory from some customers who did just taht.
Jan 24 2012, 5:52 PM: reneritchie: Whether that’s happening on large basis, he doesn’t know. No obvious change.
Jan 24 2012, 5:53 PM: reneritchie: Is cannibalization of Mac by iPad but continue to believe much more cannibilzation of Windows. Love that trend.
Jan 24 2012, 5:53 PM: reneritchie: TC: iPad is very diffrent: Can see it nbegiining to appear everywhere. Business has adopted it. Fortune and global 500. K12 sold 2x iPads to Macs.
Jan 24 2012, 5:54 PM: reneritchie: Education adopts tech slowly so surprising.
Jan 24 2012, 5:54 PM: reneritchie: Consumer has moved in huge way to iPad.
Jan 24 2012, 5:54 PM: reneritchie: Winning market by market by market.
Jan 24 2012, 5:54 PM: reneritchie: Consumers who think about ecosystem, customer experience, Apple will win a fair number. See that in the results.
Jan 24 2012, 5:54 PM: reneritchie: 55 milllion iPads, only in business since April 2010.
Jan 24 2012, 5:55 PM: reneritchie: Q: Customer data, because of refresh cycle, Apple vs. competition? iPhone buying quicker or halo effect?
Jan 24 2012, 5:55 PM: reneritchie: TC: In enterpise, iPhone is catalyst, iPad moves after. Mac follows in several accounts. Clear examples.
Jan 24 2012, 5:56 PM: reneritchie: Macro level, how much it’s happening is difficult to put their fingers on, but all segments pointing that out. Seen that before with iPod halo for Mac in early 2002-2004. Not new to Apple.
Jan 24 2012, 5:56 PM: Patrick Finger: http://9to5mac.com/2012/01/24/aapl-blows-by-450-in-after-hours-trading/

AAPL blows by 450 in after hours trading. Market cap at $420B, passing Exxon | 9to5Mac | Apple Intelligence

Jan 24 2012, 5:56 PM: reneritchie: Q: Android vs. iPhone — this the year of a 2 horse race? Can your integrated model survive?
Jan 24 2012, 5:57 PM: reneritchie: TC: Not like Mac and Windows. Mac has outgrown market for over 20 Q in a row. Still has single digit percentage. iOS look at phone, tablet, touch, over 315 million sold.
Jan 24 2012, 5:57 PM: reneritchie: 62 million in last quarter.
Jan 24 2012, 5:57 PM: reneritchie: Don’t have numbers on Android, hasn’t found a way to get transparent numbers on Android.
Jan 24 2012, 5:58 PM: reneritchie: Momentum, NPD data in the US, Oct-Nov, part of launch, just phones not total iOS, iPhone at 42, Android at 47
Jan 24 2012, 5:58 PM: reneritchie: Nielsen Oct-Dec, iPhone 45, Android 47
Jan 24 2012, 5:58 PM: reneritchie: Comscore, Oct-Nov. iPhone 42, Android 41
Jan 24 2012, 5:59 PM: reneritchie: All of the data he’s seen in US say it’s a close race. On iPad side, no specifci numbers, all of them believe iPad is way ahead. No comparable product to iPod touch. iOS doing exrememly well.
Jan 24 2012, 5:59 PM: reneritchie: Horse in Redmond always suits up, always run. Other players can’t be counted out.
Jan 24 2012, 5:59 PM: reneritchie: Apple focuses on innovating, making world’s best product. Somewhat ignore how many horses. Just want to be the lead one.
Jan 24 2012, 5:59 PM: reneritchie: Q: 4G and larger screens?
Jan 24 2012, 6:00 PM: reneritchie: Has popularity of Android changed you point of view?
Jan 24 2012, 6:00 PM: reneritchie: TC: Won’t comment on future roadmap, not a shock. 37 million iPhones sold, incredible number could have sold more if more supply. Really love what Apple is doing.
Jan 24 2012, 6:00 PM: reneritchie: AND THAT’S IT!
Jan 24 2012, 6:01 PM: reneritchie: Thanks everyone for joining us!
Jan 24 2012, 6:01 PM: reneritchie: Cook didn’t really hint at much this time. Even the snark level was down.
Jan 24 2012, 6:01 PM: Brad Morris: Noooo, I missed it!
Jan 24 2012, 6:01 PM: reneritchie: You can get the replay off iTunes. Or just scroll up.

Apple Q1 2012 results: $46.33 billion in revenue, 37.04 million iPhones, 15.43 million iPads, 15.4 million iPods

Rene Ritchie — Tue, 24 Jan 2012 21:54:17 +0000

Apple has just announced another record breaking quarter, coming off the holidays with $46.33 billion in revenue, $13.06 billion in net profit, and a whopping 37.04 million iPhones, 15.43 million iPads, and 15.4 million iPods sold.

“We’re thrilled with our outstanding results and record-breaking sales of iPhones, iPads and Macs,” said Tim Cook, Apple’s CEO. “Apple’s momentum is incredibly strong, and we have some amazing new products in the pipeline.”

“We are very happy to have generated over $17.5 billion in cash flow from operations during the December quarter,” said Peter Oppenheimer, Apple’s CFO. “Looking ahead to the second fiscal quarter of 2012, which will span 13 weeks, we expect revenue of about $32.5 billion and we expect diluted earnings per share of about $8.50.”

Apple’s live conference call starts in about 10 minutes and we’ll be doing play by play right here on iMore. Full PR after the break.

Conference call: apple.com

Apple Reports First Quarter Results

Highest Quarterly Revenue and Earnings Ever

All-Time Record iPhone, iPad and Mac Sales

CUPERTINO, California—January 24, 2012—Apple® today announced financial results for its fiscal 2012 first quarter which spanned 14 weeks and ended December 31, 2011. The Company posted record quarterly revenue of $46.33 billion and record quarterly net profit of $13.06 billion, or $13.87 per diluted share. These results compare to revenue of $26.74 billion and net quarterly profit of $6 billion, or $6.43 per diluted share, in the year-ago quarter. Gross margin was 44.7 percent compared to 38.5 percent in the year-ago quarter. International sales accounted for 58 percent of the quarter’s revenue.

The Company sold 37.04 million iPhones in the quarter, representing 128 percent unit growth over the year-ago quarter. Apple sold 15.43 million iPads during the quarter, a 111 percent unit increase over the year-ago quarter. The Company sold 5.2 million Macs during the quarter, a 26 percent unit increase over the year-ago quarter. Apple sold 15.4 million iPods, a 21 percent unit decline from the year-ago quarter.

“We’re thrilled with our outstanding results and record-breaking sales of iPhones, iPads and Macs,” said Tim Cook, Apple’s CEO. “Apple’s momentum is incredibly strong, and we have some amazing new products in the pipeline.”

“We are very happy to have generated over $17.5 billion in cash flow from operations during the December quarter,” said Peter Oppenheimer, Apple’s CFO. “Looking ahead to the second fiscal quarter of 2012, which will span 13 weeks, we expect revenue of about $32.5 billion and we expect diluted earnings per share of about $8.50.”

Apple will provide live streaming of its Q1 2012 financial results conference call beginning at 2:00 p.m. PST on January 24, 2012 at www.apple.com/quicktime/qtv/earningsq112. This webcast will also be available for replay for approximately two weeks thereafter.

This press release contains forward-looking statements including without limitation those about the Companyâs estimated revenue and earnings per share. These statements involve risks and uncertainties, and actual results may differ. Risks and uncertainties include without limitation the effect of competitive and economic factors, and the Companyâs reaction to those factors, on consumer and business buying decisions with respect to the Companyâs products; continued competitive pressures in the marketplace; the ability of the Company to deliver to the marketplace and stimulate customer demand for new programs, products, and technological innovations on a timely basis; the effect that product introductions and transitions, changes in product pricing or mix, and/or increases in component costs could have on the Companyâs gross margin; the inventory risk associated with the Companyâs need to order or commit to order product components in advance of customer orders; the continued availability on acceptable terms, or at all, of certain components and services essential to the Companyâs business currently obtained by the Company from sole or limited sources; the effect that the Companyâs dependency on manufacturing and logistics services provided by third parties may have on the quality, quantity or cost of products manufactured or services rendered; risks associated with the Companyâs international operations; the Companyâs reliance on third-party intellectual property and digital content; the potential impact of a finding that the Company has infringed on the intellectual property rights of others; the Companyâs dependency on the performance of distributors, carriers and other resellers of the Companyâs products; the effect that product and service quality problems could have on the Companyâs sales and operating profits; the continued service and availability of key executives and employees; war, terrorism, public health issues, natural disasters, and other circumstances that could disrupt supply, delivery, or demand of products; and unfavorable results of other legal proceedings. More information on potential factors that could affect the Companyâs financial results is included from time to time in the âRisk Factorsâ and âManagementâs Discussion and Analysis of Financial Condition and Results of Operationsâ sections of the Companyâs public reports filed with the SEC, including the Companyâs Form 10-K for the fiscal year ended September 24, 2011 and its Form 10-Q for the fiscal quarter ended December 31, 2011 to be filed with the SEC. The Company assumes no obligation to update any forward-looking statements or information, which speak as of their respective dates.

Apple designs Macs, the best personal computers in the world, along with OS X, iLife, iWork and professional software. Apple leads the digital music revolution with its iPods and iTunes online store. Apple has reinvented the mobile phone with its revolutionary iPhone and App Store, and is defining the future of mobile media and computing devices with iPad.

Apple reports Q4 2011 financial results, 17.7 million iPhones, 11.2 million iPads, 6.62 million iPods, $6.62 billion in profits

Rene Ritchie — Tue, 18 Oct 2011 20:42:51 +0000

Apple today announced their Q4 2011 financial results, including 17.7 million iPhones, 11.2 million iPads, 6.62 million iPods, $6.62 billion in profits. Unfortunately for Apple’s stock in after-hours trading, that’s below expectations — the first time Apple hasn’t exceeded expectations since Q2 2002.

“We are thrilled with the very strong finish of an outstanding fiscal 2011, growing annual revenue to $108 billion and growing earnings to $26 billion,” said Tim Cook, Apple’s CEO. “Customer response to iPhone 4S has been fantastic, we have strong momentum going into the holiday season, and we remain really enthusiastic about our product pipeline.”

“We are extremely pleased with our record September quarter revenue and earnings and with cash generation of $5.4 billion during the quarter,” said Peter Oppenheimer, Apple’s CFO. “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.”

Of course these results don’t include 4 million iPhone 4S sold last weekend. In other words, North Carolina might not be enough. They’re going to need a bigger money bin.

We’ll be covering Apple’s financial results call at 5pm EDT, so keep your browsers’ locked here.

Tim Cook (TC): First call since the loss of Steve Jobs. Cook is repeating the email he sent out previously.
Peter Oppenheimer (PO): New record for Mac and iPad, new quarterly record for iPhone.
PO: [Going over results]
PO: Going over new MacBook Airs, Lion, Mac business.
6.6 million iPods, down from 9.3 million. iPod touch still 50%. iPod share remains 70% according to NPD. Continues to be best selling in most country. 4-6 weeks inventory.
iBookstore has 180 million downloads.
17.1 million iPhones, compared to 14 million in previous quarter. New September record. Asia almost doubled. Please with growth as they transition to iPhone 4S. Expected design following new product rumors at WWDC. Declined in second half of quarter due to increased speculation. 4-6 weeks channel inventory.
Deferred new carrier additions until after launch. Sprint and KDDI now added.
iPhone ranked highest in customer satisfaction, performance, ease of opperation, features, design. 93% of Fortune 500 testing or deploying, 60% of Global 500 testing or deploying. Lowes is in process of rolling out custom app. L’Orelieel, RBS, SAP, TI, Land Rover, CXS.
Thrilled to be shipping iPhone 4S, Siri. Customers will love performance of A5, camera, 1080p. Now in 7 countries, working hard to roll out in 22 countries by end of next month.
New record 11.1M iPads sold. iPad 2 launched in 28 countries, 90 countries total. $6.9 billion in revenue. 4-6 weeks channel inventory.
Only 18 months sicne introduction. 92% of Fortune 500 is testing or deploying. 52% of Global 500 testing or deploying.
United Continental is putting iPad in airplanes. Sonic Automotive is using for checkin, analytics. General Mills, Siemens, others using them.
250 cumulative iOS device sales to date. Customers are loving iOS 5.
iCloud launched last week. It’s the easiest way for customers to manage content. Early reviews excellent.
App Store 500,000 apps, 18 billion download. 123 countries total.
Apple Stores growing, Mac and iPad sales. iPhone sales slowed.
Will be restoring or replacing older Apple Stores in US that can’t meet demand.
$81 billion in cash.
Next quarter to span 14 instead of 13 weeks. Talking expectations. Apple is usually very conservative.
4 72 million iPhones, 32 million iPads, 17 million Macs. 40 new stores
Q&A!
Q: iPhone 4S close to holidays, how do you mitigate shortage?
TS: 4 million sold, great start, thrilled. Confident in supply, won’t speculate when demand will balance. Confident will set all time record for iPhone this quarter.
Primary negative impact was sell-through pause? No inventory issues?
TS: Much less of a reduction they were expecting. Revenue exceeded guidance. Knew there was great anticipation of June/July iPhone. That was pace for last several years. Decline did occur but not to extent they though, beat guidance. Reduction happened in back half of the quarter as speculation hit highs. Thrilled to be shipping iPhone 4S, iCloud, iOS 5.
In wildest dreams couldn’t have gotten off to better start.
Q: Why can’t you do better than 40% in September given how well iPhone 4S is already doing, favorable components.
PO: Expect gross margins to be flat. Favorable environment will continue, healthy mix of iPhone. Fully offset of higher cost structures, lower price points for iPhone, iPod, US dollar.
Q: Traction in China, any update? Insight? How substantial?
TC: Progress has been amazing. Greater China was 2% in ’09. 12% in 2011. 16% last Q. Fastest growing major region by far. Up 4x, 270% year over year. Total revenue over 13 billion. A year ago, they were right above 3 billion. Growing at feverish pace. New retail stores. Online store opened at the end of last year. 200 mono-branded stores (resellers). Premium experience. 7000 point-of-sales on iPhone in Greater China. How far can it go? Never seen a country with as many people rising into the middle class, aspiring to buy products Apple makes. Enormous opportunity. Place more stores. Middle East has significant opportunities.
TC: iPhone introduced whole new customers to Apple. iPad will do the same. The sky is the limit.
Q: Update on margin flexibility as you start to use more than one source?
TC: Outstanding team in this area, unparalleled track record. Keep trying to improve it. Use balance sheet in favorable way to do strategic deals. Very important to Apple across series of products. As they get larger, they have elected to diversify some, however their approach has been and will always be to do business with as few as possible to be very deep, do as great an innovation as possible. Give Apple great quality, reasonable prices. Helps margin.
Q: Amazon with Kindle Fire, lower price points, limited features. Hybrid market?
TC: Outstanding iPad quarter. 11 million. Same time setting Mac record. Phenominal. Seen several competitors try to compete with iPad. Different form factors, price points. Reasonable to say none have thus far gained traction. In fact, iPad share went up. June quarter, IDC said 3/4 tablets were Apple. Assess this thing, look at iOS 5, iCloud, iTunes and App Store ecosystem, books, movies, 140k native apps for iPad vs. 100s for other guys. He feels very comforatble in ability to compete. Pipeline.
Q: Why defer carriers?
PO: Knew they would launch iPhone 4S, wanted to launch new carriers with new device. Biggest impact was rumors. Pervasive. Behind them. iPhone 4S is off to fantastic start. Thrilled to be including Sprint, KDDI, best product line EVER!
Q: Size of tablet market? Not netbook? How big could it be?
TC: Thought from beginning it would be huge, has been even greater than they thought. 40 million iPads sold cumulative basis. Still believes tablet market will be larger than PC. Not guidance, what he believes. More people can access it, ease of use is off the charts.
Q: How many iPhone units were deferred? How should they think of iPhone 4S launch? Velocity?
TC: Can’t run experiment twice. Can’t tell with precision if no rumors, no expectation. He believes they were substantial. Get same answer from customers. 4S is off the charts. Do comparison of 3 days of launch. 4 was 1.7 million. 4S was over 4 million. Mother of all uplifts. Feedback is fantastic.
Q: iPad category, now that it’s more experienced, Macs are up sequentially, how would iPad seasonality work? Gut feel?
PO: Expect to establish new records for both iPhone and iPad, fantastic products, great market.
Q: Siri?
TC: Number of people using it is amazing. Questions, personality, is incredible. See Siri as profound innovation. Over time, many many people will use it in a substantial way. What percentage of input, search will be Siri, he doesn’t know but his gut it substantial, incredible innovation. Feedback they’re getting from customers.
Q: Thailand?
TC: Hearts go out to everyone who has lost life and family from monsoons, flooding. Apple has factories not-operable. Timeline is unknown. Whether hasn’t allowed assessment. Primary exposure is on Mac. Number of drive components sourced, Thailand is significant. Can’t give precise accounting, he’s concerned about it. Overall industry shortage of disk drives. Not sure. Placed assessment to degree they’ve already provided.
Q: Patent disputes with Samsung, Android. What are your objectives? Injunctions, royalty fees?
TC: Don’t want to comment on litigation. As you know, spend a lot of time and money and resource on coming up with innovation. Don’t like it when someone else takes those. Unfortunately pushed into court system. Don’t want to comment on remedies.
Q: Price reduction on iPhone 3GS? Free on contract, cheap off. Elasticity? New segment of consumers? Prepaid vs. postpaid?
TC: Wanted to make iPhone more accessible to broader market. Also lowered price of iPhone 4 to $99. These are still fantastic products. Can do reasonably well. Also has advantage in pre-paid markets. Lower than where entry points were previously. Did it for both markets. Both are very important. Thinking for a while to do that.
Q: More on components!
TC: Take is seriously!
Q: Pressure on gross margins? Can expand or maintain if pressure from product mix?
PO: Repeating December quarter predictions.
Q: iPad, where is distribution rollout? Any pause? Growth in emerging markets?
TC: In 90 countries on iPad. About 40,000 POS. 50,000 on iPod. 120,000 on iPhone. Still countries left to do. Are in main countries. Was there a slow down? With iPhone numbers, crystal clear there was a showdown. Not the case with iPad. Supply/demand, entered balance, stayed there for quarter. Outside of China, has already started looking at other countries. Already done. Over $900 million in Brazil. Some have protectionist strategies, very high if no local content.
Q: First call as CEO, anything thoughts on different strategy, dividend, buy back? Cannibalization levels of iPad vs. Mac?
TC: Second first. Seeing cannibalization. Showing up in 2 ways. Some buying iPad over Mac. Larger number are electing to buy iPad over Windows PC. Coming out very well. Mac had best quarter by far last quarter.
TC: Wanted to maintain flexibility. Cash not burning a hole in their pocket. Conservative investments. Done a good job. Done things like acquire companies, acquired IP. Invested in supply chain. Build out stores. New product tooling. What they’re doing with cash, doing extremely good job. Very frugal.
TC: Not religious about holding/not holding cash. Will ask what’s in Apple’s best interest and will always do that.
PO: $81 in cash. $51 billion was offshore.
TC: Series of unbelievable products. Pipeline is unbelievable. Totally separate and distinct things. Cash is always a topic. Always do what’s in Apple’s best interest.
Q: iPhone goal was audacious at 1% at launch, now at 5%. 95% of market to go. Similarly audacious goal for next few years?
TC: Want iPhone in as many hands as possible. Thinks it’s the greatest phone by far. Aspire to greater volumes. Smartphone market will absorb handset market. 1.5 billion handsets. Smartphone is 400 million. Huge growth. Also grow in sector. Big win is eat into 1.5. For anyone. Apple is very focused on doing that.
Q: Extra week linear on revenue and expenses?
PO: 14 week will conclude on New Year Eve day. Strong but not as strong as Thanksgiving to Christmas. For expenses, variable, payroll for 14 week. Fixed costs are fixed, benefit there as well.
Q: Japan, bigger disparity on units vs. revenue?
TC: Huge percentage of Japan total revenue in year ago quarter was iPhone 4 launch. Adversely effects revenue compare. Mac grew 48 percent. iPhone was negative year-over-year. One of first 7 countries, very good start.
Q: tablet market higher or lower end?
TC: Fantastic things in pipeline, sold 40 million in first 18 months. Have good handle on what to do next.
Q: iPhone business into emerging market? Carriers thoughts on pricing change?
TC: Look at channel inventory on iPhone at end of Q4, September 24 cut off. Half of that has already sold through. One portion driving that is elasticity. Also did, in a very few countries, dropped 3GS price a bit early. Particularly in pre-pay markets. Pleased with results.
That’s it folks.!

Apple Q2 2011: 18.65 million iPhones, 9.02 iPods, 4.69 million iPads

Rene Ritchie — Wed, 20 Apr 2011 20:57:16 +0000

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.

[Apple PR]

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.
Introduced iOS 4.3 including Nitro JavaScript engine, Hotspot, Home Sharing, better Airplay.
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&A time

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?

Apple Q2 2010 conference call – live notes

Rene Ritchie — Tue, 20 Apr 2010 21:01:17 +0000

Apple has announced their Q2 2010 financial results, including sales of 8.75 million iPhones, 10.89 million iPods, and $13.50 billion in revenue. We’re now listening in to their conference call and updating any particularly relevant iPhone, iPod touch, and iPad news below:

Call beginning. Tim Cook and Peter Oppenheimer (Apple COO and CFO are there). No Steve Jobs (CEO)
Best non-holiday quarter ever (again)
Highest iPhone sales quarter ever. (wow).
Almost 3 million Macs. Starting with those. We’ll take a nap until iPhone comes up…
iPod touch sales 63% year to year. Strong performance. Strongest growth rate in a while. Still over 70% share.
iTunes sales 1.1 billion, strong on music, video, apps.
185,000 apps, over 4 billion downloads
iPhone grows more than 3x more than smartphone estimates over all.
Best quarter ever for iPhone (wow repeat).
151 carriers in 88 countries.
IPhone again ranked first in JD Powers.
iPhone OS 4 this summer, developers thrilled.
iPad 3G on track to ship April 30 US, end of May international
Apple Retail up again as well.
(Retail results remind us why Apple doesn’t need tradeshows anymore).
Strong iPhone and accessory mix contributed to results.
Over $40 billion in the bank now, up over $1 billion. Still keeping it in the bank.
(Going over numbers, we’re waiting for the Q&A…)
Next quarter will include iPad revenue.
Q&A time!
What impact has the iPad had on the Mac? Any cannibalization? Cook: No obvious impact last quarter on Mac or iPod. iPad sales have exceeded expectations.
March step down due to iPad anticipation? Cook: [Not really.]
Any word on mix of iPad Wifi vs. 3G sales? Cook: Too early.
Low guidance for next quarter result of product change for iPhone (sneaky!): Oppenheimer: [long list of factors] Not much experience on seasonality of iPhone yet. Will report in July. iPad, thrilled… [yada yada boilerplate....]
Why was iPhone so strong? International? Cook: Inventory was flat. Staggering growth rates Asia Pac (474%), Japan (183%), Europe (133%). Added 8 carriers in key countries, Vodafone in UK, Ireland. Existing carriers strong. Greater China (PRC, HK, Taiwan) up year over year, 800 more points of distribution. 1st half 2010 revenue was $1.3 billion up 200%.
App Store and higher priced iPad apps? Oppenheimer: thrilled, [yada yada boilerplate]. 3500 iPad apps.
Production demand? Can produce, can ramp up? Cook: no production problem per se. Demand stronger than predicted. Had to push out international launch to get iPad 3G out in US. We’ll see. Level of demand has shocked Apple.
iAd is profit or break even like App Store? Oppenheimer: putting toes in water, learning, building foundation.
AT&T network improvement plan? Cook: looking forward to continued improvement.
How much of growth came from new carriers? Cook: don’t break that out but important.
Exclusive carrier thinking? How important is availability to any carrier in any country? Cook: 3 main countries with contractual exclusive US, Germany, Spain. Others have smaller, co-exclusive. Over last year, moved some from exclusive to non, in each case sales of increased and so has market share, but doesn’t mean that’ll be the same everywhere. Think carefully everywhere, what’s in Apple’s best interest.
iPad has dramatically lower margins than company average? Cook: don’t give out specific product margins, but priced iPad aggressively to deliver value. Thinks market size for iPad is very large, want to capitalize on first mover advantage. Good track record of riding out cost curves. That’s been their experience.
iPad subscription accounting like iPhone or regular like iPod? Oppenheimer: Will discuss that in July quarter when they discuss iPad revenue.
New hardware, new products, iPhone OS 4, new distribution, great marketing
Apple is more aggressive in protecting patents, legal expenses? Oppenheimer: factored into guidance.
International carriers 75% for last quarter? Learned anything about international market ramp-up? Cook: Smartphone market is great market to be in, high growth rate, iPhone outgrew market by 3x, even better outside US. Won’t say anymore, doesn’t want anyone to copy (zing!)
Apple TV, any update? Cook: up 34% year-over-year, still small, still a hobby. Market is much smaller than PC, smartphone, MP3 player. Those are enormous. Apple TV is not in a market that large yet. However, they love product, use it, think something’s there.
iAd could be source of significant incremental earnings? Oppenheimer: toes in the water, don’t expect much this calendar year, learning for future.
Will iPad cannibalize iPod touch or competing netbooks? Cook: nothing obvious in iPod or Mac numbers to suggest cannibalization but hadn’t started selling yet so don’t know yet. Can’t answer netbook, to Cook its not brainer, 100 to 0, can’t think of a single thing netbook does well. Cook addicted, couldn’t live without it.
Why is iPad independent market? Why will Apple outpace other tablets, ebook readers? Cook: Steve positioned it extremely well, between notebook and smartphone. His personal use, variety of things he’d put on that list. Email, browsing, music, videos, tv shows, reading books, list goes on. App Store, ecosystem, games, large canvas, serious apps, less serious apps. More room to do cool things. Is new category. Early but really like what they see. Had high hopes, exceeded those.
With low end $99 iPhone, can Apple influence carriers on plan costs, TCO? Cook: do everything that they can to try and get best deal possible for consumer. iPhone 3GS mix was high, and that starts at $199. Price is important but people also want innovative product, apps, os, ecosystem, incredible hardware.
iPad attach rates for accessories relative to iPhone, iPod? Oppenheimer: accessory portfolio is good for us, 5000 accessories for iPhone, iPod largely work for iPad. Apple has some great ones. Developers rallying as well. Give it a little time.
[discussing Apple Store growth]
iPad will be reported similar to iPhone, line item on data summary. Revenue will be reported for unit and for accessories, also similar to iPhone.
iPad apps being bought differently than iPhone? Oppenheimer: very early days. Getting apps, getting books, great thing. Will talk more in future. Not focused on making a lot of money on App Store, run a bit over break even.
iPhone halo in Europe? Oppenheimer: Don’t break it down.
iPhone is sales value in quarter of sale, no carrier payments, accessories, etc.
iPad bringing any new kinds of customers to Apple? Cook: too small a time, not something that could be read into.
Other extraordinary products in pipeline, new or updates? Oppenheimer: won’t help competitors by answering.
That’s it folks, thanks!

Apple sells 8.75 million iPhones, 10.89 million iPods, $13.50 billion in revenue

Rene Ritchie — Tue, 20 Apr 2010 20:49:17 +0000

Apple has posted their Q2 2010 financial results and once again its the best non-holiday quarter even, including $13.50 billion and net quarterly profit of $3.07 billion, or $3.33 per diluted share. iPhone sales were 8.75 million (up 131%) and iPod sales of 10.89 million (down 1%). Says CEO Steve Jobs:

“We’re thrilled to report our best non-holiday quarter ever, with revenues up 49 percent and profits up 90 percent. We’ve launched our revolutionary new iPad and users are loving it, and we have several more extraordinary products in the pipeline for this year.”

We’ll be listening in to their conference call and providing our usual special brand of TiPb commentary, so join us over in that post for more.

Apple Q4 Conference Call Live Blog — 7.4 Million iPhones Sold!

Rene Ritchie — Mon, 19 Oct 2009 19:00:01 +0000

Apple Q4 2009 Conference Call

We’ll be beginning TiPb’s live coverage just before 2pm PT/5pm ET, but Apple has already released their results, and they include 7.4 million iPhones and 10.2 million iPods (they don’t break out numbers for the iPod touch) sold in Q4 2009.

“We are thrilled to have sold more Macs and iPhones than in any previous quarter,” said Steve Jobs, Apple’s CEO. “We’ve got a very strong lineup for the holiday season and some really great new products in the pipeline for 2010.”

TiPb will be providing live coverage of the call, so join us back here at start time.

Apple Q3 2009 Conference Call – 5.2 Million iPhones Sold

Rene Ritchie — Tue, 21 Jul 2009 20:20:12 +0000

Apple announced their Q3, 2009 financial results today. - Press release is live: The Company posted revenue of $8.34 billion, with 5.2 Million iPhone sales in the quarter. (That makes an install base of 45 million plus iPhone OS devices, including iPod touch). Boom.

“We’re making our most innovative products ever and our customers are responding,” said Steve Jobs, Apple’s CEO. “We’re thrilled to have sold over 5.2 million iPhones during the quarter and users have downloaded more than 1.5 billion applications from our App Store in its first year.”

Apple also hosted an accompanying conference call, highlights after the break!

(Updates posted in reverse chronological order from latest or oldest)

And we’re done!
App Store pricing. Race to the bottom with $0.99 apps? Can Apple help sort out quality vs. quantity? Tim Cook: has ideas on categorizing Apps differently. Today does it based on type. As App Store grows, makes sense to have lower prices but that’s up to developers.
iPhone sales, anything on new activations vs. upgrades? Tim Cook: Can’t share, confidential to carriers.
iPhone in China? Tim Cook: Nothing to add today but continues to be priority project. Hopes to be there within a year.
Supply constraints to effect international rollout? When will it balance? Tim Cook: Won’t balance in short term but won’t give prediction. Too hard to judge demand without supply. Vast majority will be selling 3GS by end of quarter, may move date by a week or more.
iPod touch user base, how many upgraded? Tim Cook: a good number, won’t be specific. Priced aggressively. Want to get platform out there, good for ecosystem, developers. Try to get people to upgrade.
Competitors tinkering with pre-paid model. Apple interested? Tim Cook: Apple doing that as well in markets that are predominantly pre-pay. Apple has lots to learn. Still a beginner. Can make improvements. Model works well in post-paid, but pre-paid could be interesting. Have multiple things going on. Hope to improve going forward.
Asking about iPhone activations. US represents 40% of activations. Shouldn’t international side pick up, grow faster? Tim Cook: don’t release sales by geography. Smartphones in general sell better in post-pay environment. Not unique to Apple, reality of market.
Follow up on netbook. Think an emerging market for a truly mobile device, larger screen, do more than with iPhone? Tim Cook: Never discount anything, won’t answer about new products. Customers want full featured notebooks. Apple delivers those, delivers value. Customers very happy. Current netbooks are very slow, software is old, don’t have robust computing experience, lack horsepower, small screens, cramped keyboards. People not happy. Apple will only play where they can deliver products that are innovative, proud of.
Will Apple invest in NOC to take pressure off carrier? Cook: No plans to do so. When they entered business, they came to conclusion they could deliver world class handset, deliver something revolutionary. Other people have better skills at networks. Apple working with them as partners.
AP asks if growth of Apps constrained by network capacity of carrier partners? Tim Cook: better question for them. Without singling out [AT&T] Cook sees them investing in making better networks, happy with rising ARPU, lower churn. Changes customer acquisition. Thinks they will continue to make investments to deliver faster networks.
Has outgrown market 18/19 quarters. Cook thinks that means they have right approach.
Asking about netbooks. Tim Cook: Apple’s goal is not to build most computers but to build the best. Will play at whatever price point they can build the best. Don’t see a way to build a great product at $399/$499. Thinks customers, many customers, become disenchanted after they buy them. Continue to focus on building best and giving tremendous value.
Additional distribution and pricing model needed to sustain growth? Tim Cook: Just took major change with intro of $99 product. Reason to do that was view of elasticity. Working hard to continue expanding distribution in countries they’re in, (where it makes sense) and adding new countries. Still large markets left uncovered. [China?]
RBC Capital asking about competitive App Stores and software. How to out innovate in user experience and leadership? Tim Cook: Won’t talk about future plans. Summarize last 30 days: shipped iPhone 3.0, App Store now available in 77 countries. Install base more than 45 million (iPhone + iPod touch). Quotes App Store stats. 65,000 apps compares RIM/Nokia, Android. Substantial lead in Apps and innovation. Years ahead of other people.
Asking why iPod channel was reduced. Tim Cook: to support new Shuffle and easter holiday, they increased. When that was done, they decreased, and also demand was lower and iPhone cannibalized. Shuffle, nano, and classic demand also lowering (“classic MP3 player market”). Still in target range, however.
Apple benefitting from higher iPhone revenue. [No doubt!]
Asking if $99 iPhone 3G actually served as traffic driver for iPhone 3GS. Was that it’s role, or is it really part of iPhone story. Tim Cook: Focused on total iPhone story. Too early to tell ultimate mix due to only shipping in 18/80 countries and supply constraints. Also upgrades happen early, upgraders likely to pick newer version.
Talking about $999 MacBook vs. cheaper MacBook Pro pricing mix. Tim Cook: competitive info.
Asking why Snow Leopard was priced so low. Tim Cook: Even better Leopard, redefines 90% of projects. Something about not even Windows building in (Exchange support?). Priced aggressively so all users can upgrade. Hoping they do. Expect to ship later this quarter.
Talking about MacBook pricing elasticity. When they can do it at lower prices, they will but won’t put Apple brand on products that don’t innovate.
Asking about 5.2 million iPhone sales in Q3 and supplies still constrained. How’s inventory. Tim Cook: Flat sequentially. What that means is selling more units at the end, don’t have a channel loaded. Haven’t seen anything like it. About 1.83 million inventory, including in transit, invoice, demo — counted conservatively.
Talking about reduced margins due to back to school promotions, lower MacBook prices, etc.
Questions on guidance and margins…
Follow up question on progress in enterprise accounts? Tim Cook: Growing interest with release of iPhone 3GS and iPhone 3.0 due in part to new hardware encryption and security policies. Doing best in corporate and government who allow individual purchases. 20% of Fortune 100 customers bought 10,000 iPhone, some have bought 25,000. In over 300 higher education institutions.
David Baily asks how $99 iPhone is doing. Change in mix since launch? Tim Cook: Acceleration of total unit sales, can’t tell exact mix since it’s competitive data. iPhone 3GS supply is still constrained, so demand very robust.
Nothing to announce about U-Verse, 3G in laptops. Happy with AT&T relationship.
Tim Cook answering Gene Munster on how carrier relationships will evolve: most of the carriers they’re doing business with are thrilled with lower churn and higher ARPU. Customers demanding iPhone. Looking to expand.
Closing canned remarks. Can has Q&A soon?
$500M prepayment to Toshiba for NAND flash memory
31.1 BILLION in cash on hand(!)
More financial stuff…
1.5 billion in revenue for Apple Stores.
iTunes experience getting better. 8 billion songs purchased.
Didn’t recognize iPhone revenue until iPhone 3.0 became available on June 17.
1.69 billion from iPhone, accessories, carriers, etc.
App Store stats: 65,000 apps. 3.0 will create even more innovative apps.
Continuing to roll out 3GS to 80 countries this summer.
iPhone 5.2 million sold in June quarter! 1 Million iPhone 3GS in 3 day launch. Cannot make enough to meet demand. Working to address this.
70% of US market. iPod top selling MP3 player. Gaining share in almost every country tracked.
iPod touch grew 30% year over year.
50% of iPod buyers are still new buyers, even in established markets
Traditional MP3 players declined, as internally forecast. Reason why they developed iPod touch and iPhone. They’re cannibalizing themselves. Business will still last for years.
10.2 million iPods. Down from last quarter. Reduced channel inventory and sell-through declines.
13% increase in laptop sales. Customers favorable on new portables.
2.6 million Macs. Sales increased 100K units over prior year.
Lots of financial info we shan’t bore you with. Read press link below…
Record June revenue. Highest non-Holiday revenue in history.
Call’s about to start. Will update as news is announced.

Updated: 10 Million iPhones in 2008! 7 Million in last 3 Months! Apple Q4 Results!

Rene Ritchie — Tue, 21 Oct 2008 21:39:50 +0000

Apple is reporting their Q4, 2008 financial results, and while things look good for the Mac, they look great for the iPhone, with 6,892,000 units sold during the 3 month period, up from 1,119,000 in the same quarter last year. And YES! Apple has already made their 10 million iPhone in 2008 goal, with the holiday season still to come. This makes Apple, dollar-for-dollar, the third largest mobile phone manufacturer in the world (after Nokia and Samsung), and Apple has only been in the space since June 2007!

Says Apple CEO, Steve Jobs:

“Apple just reported one of the best quarters in its history, with a spectacular performance by the iPhone—we sold more phones than RIM.”

Boom!

Mac’s hit 2.6 million, iPod’s at 11 million (not breakout for iPod Touch, as usual).

Conference call is currently underway (and Steve’s on the call!).

Here are some highlights:

When asked why Apple only had 1 iPhone SKU, Steve replied (paraphrased), Babe Ruth only had 1 home run… he just kept hitting it.

On the same topic, Steve said that while other companies made dozens of different voice units, he believes software was becoming the differentiating factor, and that presenting developers with multiple device versions wasn’t compelling. He also said Apple’s competition didn’t come from software backgrounds like Apple did.

When asked if RIM having around 50% upgrades vs. new users, if the iPhone had a greater number of new users, did that make Apple’s true success against RIM higher, Steve maintained he was happy just to beat RIM on the direct numbers.

No direct US vs. International split for iPhone sales were given.