Apple has just announced their Q3 2011 results and the iOS platform continues to impress with 20.34 million iPhones sold (up 142% from last year), 9.25 million iPads (up 183%), 3.95 million Macs (up 14%) and 7.54 million iPods (down 20%). All that added up to $28.57 billion in revenue and record quarterly net profit of $7.31 billion.
“We’re thrilled to deliver our best quarter ever, with revenue up 82 percent and profits up 125 percent,” said Steve Jobs, Apple’s CEO. “Right now, we’re very focused and excited about bringing iOS 5 and iCloud to our users this fall.”
“We are extremely pleased with our performance which drove quarterly cash flow from operations of $11.1 billion, an increase of 131 percent year-over-year,” said Peter Oppenheimer, Apple’s CFO. “Looking ahead to the fourth fiscal quarter of 2011, we expect revenue of about $25 billion and we expect diluted earnings per share of about $5.50.”
Their quarterly conference call is coming up soon and we'll add highlights as we hear them, after the break.
- Starting off with Macs. Up 14%. 4x IDC forecast for PC industry... but nothing compared to iOS. Particularly strong in AsiaPac.
- New iMacs with Thunderbolt, FaceTime HD cameras
- iPod touch is half of iPods sold.
- iTunes $1.4 billion, music, video, apps strong. 225 million accounts. 15 billion songs.
- 20.3 million iPhones. 142% growth, double IDC estimates for global market.
- iPhone revenue $13.3 billion, increase of 150%
- Very strong growth, all segments. AsiaPac robust, 400% up.
- Increasing iPhone manufacturing capacity. 228 carriers in 105 carriers.
- 5.9 million iPhones in channel. Support strong demand, carrier additions, distribution.
- 91% of fortune 500 testing or deploying iPhone, 57% of global 500 companies testing or deploying iPhone. Acta, Netsle, Dow, SuperValue, Comcast.
- 9.2 million iPads. 183% increase. Increased production by over 4.5 million. Sold every one they could make.
- 64 countries for iPad, iPad 2.
- $6 billion in revenue from iPad.
- 1.05 million iPads in inventory.
- 86% of fortune 500 are testing or deploying. 47% of global 500 companies.
- Boston Scientific, Xeorox, Salesforce deploying iPad. Top hospitals, retail. General Electric, SAP internal apps. Airlines using in cockpit.
- iPhone, iPad, iPod touch, 222 million cumulative device sales.
- iOS 5 includes 200 new features, notification center, iMessage, Newstand. PC-free, activate and set up out of the box. Launching this fall.
- June provided preview for iCloud. Free new services. Work seamlessly. Store content on cloud, push to devices. Release in fall.
- App Store 425,000 apps, 15 billion downloads. $2.5 in cumulative payments to devs. Far ahead of competitors.
- Apple Stores now. (They're doing just fine thanks.)
- Cash is at 76.2 billion in the bank. Wow.
- Will continue to charge for OS upgrades like Lion and iWork.
- (Call keeps cutting ou for me, sorry if I miss stuff)
- Deferring revenue, recognizing over 2 years to account for upgrades.
- Now giving out typically conservative guidance for next quarter.
- Q&A time.
- 12% revenue downtick is more conservative than normal, why? PO: September more weighted to higher education. Best Macs ever. Expect increase. Expects iPhone increase as well, expanding iPad, expecting as well. iPod decline. A lot going on with iCloud, iOS 5. Product transition they won't talk about will effect quarter.
- How do you approach working transitions into guidance. OP: Not talking about it. Factored it in. Incredibly confident about pipeline.
- iPad 2 sales, trends? Tim Cook: Do believe some customers chose iPad over Mac. Believe even more chose to purchase iPad over Windows. Lots more Windows to cannibalize over Mac. Mac has attributes that will continue to do well in the market. Grew 5x market. iPad 2 has been a frenzy. Feel good about progress, reception.
- China, growth in AsiaPac? TC: China was key for results. Greater China up 6x. $3.8 billion is quarter, $8.8 billion year to date. Substantial opportunity for Apple. Just scratching surface.
- Outlook for gross margin? PO: 38%, down 370 basis points. 2/3 decline driven by different product mix. Loss of leverage on lower revenue. Full quarter of back to school. Future product transition. TC: NAND and DRAM, LCD, batteries, optical, in positive supply situation. Pricing to fall at or above historical trend. HD supply constrained, less than trend. Components favorable on sequential comparison. Offset by 1 time benefits discussed for June quarter.
- 1 time benefit on gross margins. PO: Saw benefit on warranty on phone support, benefits.
- Patents? IP strategy? TC: Simple view, we love competition, great for Apple, everyone. Want people to invent their own stuff. Going to defend portfolio.
- What drove iPhone strength? TC: Added 42 new carriers, 15 new countries. Throughout quarter. Real sequential improvement due to emerging and developed markets. China, Latin America - Brazil, Mexico, Middle East. Great for Apple. Not historically as strong in. Beginning to see fruits of their labor.
- Milestones for next quarter? TC: No, but can see it's something of great focus. Want to do business with great partners. Still out there. Working new relationships.
- Android activations higher than iPhone, China is on fire, what about Google numbers? TC: Android activation number is difficult to get hands around. Apple numbers from data sheet, add iPhone, iPad, approximate 50% iPods is iPod touch. Sold over 33 million iOS devices. Now over 222 million cumulative devices. Numbers very straight forward, transparent, quarterly. iPhone is up 142%, more than 2x rate of market growth. Incredible. Sold every iPad 2 they could make. Also gaining traction in enterprise. Converting to penetration focus. App Store largest by far, iPad specific over 100,000. Be hard pressed to find more than a few hundred on other platforms. Other tablets not getting any traction to speak of. $2.5 billion to developers, great model. Customers love it. Confident with model, app store. Ranked iPhone #1 in customer surveys. Confident in road map. Feel very good. Changewave data reaffirmed iPhone is clear leader in satisfaction, number one preference for new smartphone buyers.
- Apple TV? Not a leg of the stool yet. Not in size market iPhone, Mac, etc. Love the product, customers love it. Got it right with new model. Still a hobby.
- Non-Apple retail channel? TC: About 115,000 points of sale. Diversified. Part of the magic. Prefer not to share it. Make right decisions for Apple.
- iPhone, iPad manufacturing yield? TC: No specific numbers, supply of iPad improved dramatically in the quarter. Further improved in July. In balance in some SKUs in some countries. Feels good about progress.
- How to sustain growth? TC: On tariff side, carrier sets that. Better question for them. At very macro level, virtually every carrier is desirous of more customers having smartphones, using data, expanding ARPU. No better device to move to from any phone up to smartphone than iPhone. Ease of use, ecosystem. Good alignment. Key driver emerging and developing markets. Putting more and more energy in these markets. Bit more difficult to do well in.
- How to address markets? TC: Some percentage of post-paid but looked in aggregate, predominantly pre-paid. Convinced in some cases to start pre-paid, better for customer, carrier, Apple. Obviously developing and expanding channels on list. 115,000 down, some experience to play with.
- What lack of Mac growth was cannibalization, what was hold off for Lion? TC: Look more year-over-year on Mac than sequential. Proud of numbers. Doing 5x rate of growth is something to be proud of. Why isn't it higher? Some cannibalization by iPad. 2x iPad shipped over Mac. But more customers chose to buy iPad over Windows PC. Some customers have delayed purchase for Lion. Launching tomorrow. Fantastic product. Worked really hard on it. Revolutionary. 3rd thing, year ago quarter launched new MacBook Pros. This time launched new iMac. Both well received but MBP makes up majority so makes more difficult comparison.
- Growth trajectory for iPad? TC: Don't predict units. Don't want to make a comment. Think iPad will grow significantly year over year.
- Why does iPad have supply problems? TC: (Repeats previous statements).
- Any differences in enterprise strategy? TC: Dual prong on both iPad and iPhone. Work with carriers who have sales forces. Train and provide help with carriers. Do some direct sales or act as overlay to channel. Very happy with numbers, interest, pilot, deployment. Now moving to penetration. To be this far into Enterprise for a product only shipping 15 months is incredible. Enterprise typically much more conservative, takes more time to evaluate. Moving at speed he's never seen. K12 takes very long time as well but last quarter sold more iPads than Macs. Would never have predicted this. Clear it has universal appeal from consumer to business to government and on and on.
- Expectations for iCloud? PO: Cannot wait to get iCloud and iOS 5 into hands of customers. Have done it right. Seamless, integrated experience they're going to love. Didn't go unnoticed in Changewave results that iOS devices are #1 in intent to buy.
- Lead over competitors in ability to mirror content? PO: Good with internet, delivering content. Proved with iTunes, App Store. Have some things to learn but have a lot of skills. Excited.
- China Mobile? Pre-paid? TC: Pre-paid or unlocked phones (off contract) are key in China and a number of emerging market where credit systems are not as well established as US, Japan, Western Europe, Australia, etc. iPhone volume for 1st 3 quarters was up 5x year over year. iPhone is key contributor to greater China revenue. Not saying figured out precisely how to play perfectly in environment. Have more to do, more to learn. Feel good about progress. If told a year ago would do $3.8 billion, very many in Apple wouldn't have believed it. Feel very, very good. Applying those learnings to other markets.
- Recent market data in some countries shows lost share? Is iPhone share strategically important to Apple? TC: Share gain is important. Do offer 3GS as example in lower price point. US is $49 with contract. Varies off-contract. Clearly in distinctly different price than iPhone 4. Philosophy same as always. Will only make products Apple is proud of, best in the world. iPod shuffle was created, now $49. Lot of people love it. Always question, litmus test. Up to Apple to convince Apple to spend more for a material better experience and product. Seen people will do that if product is great, message is appropriate. A lot of experience in both those areas.
- iPad media consumption? TC: Talk to 10 people, 10 different reasons they love it. Reason it's doing so well across demos, geographies.
- Why not more movie titles? PO: Have a very broad library, particularly in US. Adding more internationally each
More smartphone makers to follow Apple in ditching headphones from boxes
A recent DigiTimes report includes an indication that more smartphone makers will follow Apple's lead in ditching headphones from their smartphone boxes, a move that will benefit sales of true wireless products.
The MagSafe Charger may leave a circular imprint on leather iPhone cases
According to a new Apple Support document, the company is warning those who use a leather case with their iPhone of potential imprints.
Apple Stores get huge neon window dressing to celebrate iPhone 12 launch
Some Apple Stores now have some huge, neon window dressings as the company releases iPhone 12 and iPhone 12 Pro to the world.
Keep your iPod touch 7 safe and convenient with these top workout armbands
An iPod touch is a great device for playing your favorite tunes or podcast while you work out. But holding it in your hand is no fun; check out these fabulous armbands to keep your iPod touch close at hand.