Live notes from Apple’s conference call discussing Q3 – 2008 financial results in reverse-chronological order:
• End of conference call. Thank you for joining us.
• Back to School promo will have its biggest impact over the summer months as the start of the school year approaches
• We are very happy with Japan: grew at 40% YOY vs. company as a whole (38% growth) – 56% market share for iPod in Japan, up 10 points YOY
• We are working to develop new products that contain technologies that our competition will not be able to match. I cannot discuss these new products, but we are very confident in our product pipeline.
• Oppenheimer: Very happy with iPod sales during the quarter. If there is going to be iPod cannibalization, we want it to be from the iPhone.
• Apple “extremely confident” of achieving the goal of selling 10 million iPhone units in calendar year 2008.
• iPhone knockoffs? Apple believes that the software is the key ingredient. We believe that we are many years ahead of the competition and we welcome any and all competition as long as they do not step on our Intellectual Property.
• Oppenhemier: iPhone is currently a small part of Apple’s total revenue due to accounting/ We expect to sell significantly more iPhone in this quarter and in the future
• iPhone 3G demand issues: Staggering demand almost in every country and the manufacturing ramp in right on schedule. We are confident to launch in 20 additional countries in August. Apple not predicting demand, but confident of supply which will allow Apple to expand to more countries.
• App Store will generate some revenue, it’ll be a small profit generator. Just like iTunes Store makes iPod more attractive, Apps Store exists to make iPhone and iPod touch more attractive to customers.
• Apple Retail Stores: Traffic continues to go up, now at 32 milllion in 211 open stores (on average) this quarter, up from 20 million last quarter.
• iPhone 3G: Significant interest from very large enterprises: Kraft, Disney, First American, Southern, more beginning to deploy iPhone 3G’s in their organizations. Many more writing custom apps right now. Carrier partners’ sales forces are calling on corporate customers and very excited.
• Oppenheimer: “As I look at out products today, I think we are incredibly well-priced and are as competitive today on the Mac as we have been in my 12 years with Apple”
• We are excited about our first full quarter of iPhone 3G sales.
• We expect $32.4 billion for fiscal 2008 up 35% YOY from fiscal 2007 which grew to 24 billion.
• We plan to deliver state-of-the-art products that I cannot discuss today and are very excited about the products in our pipeline.
• We believe that we will sell more Macs in the September qtr. vs. this just-completed June qtr., but margin is expected to decrease, hence the guidance provided.
• Oppenheimer: We give you guidance that we have reasonable confidence in achieving. I have guided revenue up 5% from where we ended the June quarter.
• We will be delivering state-of-the-art new products “that I cannot discuss today” that our competitors will not be able to match going forward
• Oppenheimer: Apple delivering state-of-the-art products at price points that our competitors cannot match and we plan to continue that strategy
• iPhone supply? Tim Cook: iPhone 3G response has been stunning. Sold 1 million in 3 days. Contrast that it took 74 days to sell 1 million of first-gen iPhone. Apple is thrilled. Overwhelming demand is taking place; Apple is “pleased with production ramp” and shipping as fast as they can, will launch iPhone 3G in 20 additional countries on August 22nd. To sell iPhone is 70 countries by end of 2008.
• iPod sales in U.S. grew 10%, outside grew 15%
• Apple TV: Pleased with sales, however, Apple TV remains a “hobby,” however APple is very exited in the potential of the business and continues to invest in it
• Steve Jobs health: Oppenheimer says, “Steve loves Apple. He serves as CEO at the pleasure of Apple’s Board. Steve has no plans to leave Apple. Steve’s health is a private matter.”
• We are very confident in our future product pipeline
• Gross margins about 30% in fiscal 2009
• Oppenheimer: we do not discuss future products, so I cannot discuss the future product transition today.
• Oppenheimer sees “about 31.5%” gross margin from September quarter due to first full qtr impact of BTS, one-time contract manufacturer will not occur this quarter, and “Future product transition that I cannot discuss today”
• Back to School promo will have effect on next quarters gross margins, factored into guidance
• Globally, there are now 10,300 retail locations for Mac, up 1,600 locations YOY
• Tim Cook: Added about 170 Best Buy stores this quarter (570 total), plan to have “600 by end of the summer.”
• Retail store sales up 44% in Mac sales YOY.
• Tim Cook: Mac doing very well outside U.S. – CPU units YOY: Americas up 38%, Europe up 47%, Japan up 26%
• Oppenheimer repeats that “Future product transition that I can’t discuss today” is one factor influencing next quarter’s guidance and gross margins
• More than half of Mac sold to customers who were new to Mac
• Oppenheimer “Future product transition which I cannot discuss today” is one factor for next quarter’s guidance and gross margins
• Expect to sell more iPhones this quarter than any other previous quarter (unsurprising)
• Desktop Mac sales up 49%, sales of Mac portables up 37% year over year
• International sales accounted for 42 percent of the quarter’s revenue
• Gross margin was 34.8%, down from 36.9 percent in the year-ago quarter
• Plan to end fiscal 2008 with 248 stores total
• Apple opened 8 stores in the quarter with 216 stores total
• Over 25 million apps have been downloaded from App Store to date
• Apps Store launched on July 11: Offers over 900 apps currently
• Oppenheimer’s guidance for Q408: revenue of about $7.8 billion and earnings per diluted share of about $1.00.”
• iPod has 12 percent unit growth and seven percent revenue growth over the year-ago quarter
• Apple sold 11,011,000 iPods during the quarter
• Macs represented 41 percent unit growth and 43 percent revenue growth over the year-ago quarter
• Apple shipped 2,496,000 Macs during the quarter
• Mac products and services represented 61% of total revenue
• Revenue of $7.46 billion and net quarterly profit of $1.07 billion, or $1.19 per diluted share
• Best June quarter for both revenue and earnings in Apple’s history
• 5pm EDT: Conference Call has begun
Conference call of the wild slide.
Oh no. ANOTHER product transition?! Oh please, we just made it successfully through the Intel transition. Now there’s going to be another one so soon?
I wonder if the “product transition is the Snow Leopard.
@Scott: No, if it was Snow Leopard, they could discuss it today since it’s publicly available information on their website.
What could the product transition possibly be???
Future product transition is the iPod………duh
Hmmm, no specifics on Mac sales….again. I reckon that’s news not worth reporting. Can’t add any worse news like MBA slumping sales, better to just report gross sales instead.
To the former fanboi who stated Apple had no clue who where new Mac owners and who were repeat customers, it is obvious that you were wrong. No cookie for you.
Perhaps the product transition is Intel’s Nehalem processor. Seem obvious – this product is due for release later 2008. Wake up!
Well, they do own a chip designer now. one possibility.
Maybe it’s time for a little product differentiation that can’t be copied.
@interested
All Mac laptops to be sold through AT&T;or the App Store
@ Interested: it’s pretty obvious. new Macs in August/September and new iPods in October, as usual.
“Steve’s health is a private matter”..? Sure, but denying the bad health rumors shouldn’t be too difficult if everything’s fine. Makes you go hmmm…
maybee they’ll kill off the Mini’s
“We will be delivering state-of-the-art new products “that I cannot discuss today” that our competitors will not be able to match going forward”
Not the Apple Game Box
and the apple game store!
What’s really disturbing is the statement “Steve’s health is a private matter”
“What’s really disturbing is the statement “Steve’s health is a private matter”
That is the statement that doubt drove the price down further…
As cruel as it sounds, Steve is the head of a public corporation and stock holders do deserve to know..
For additional reporting and commentary on the conference call, please see the comments section of this post:
http://macdailynews.com/index.php/weblog/comments/17934/
As of 18:05 ET, AAPL is trading at $148.75.
Sadly, the questions on SPJ’s health are the equivalent of “Have you stopped beating your wife??” in as much as there is no good answer. If they dignify the questions with a response, it legitimises further scrutiny and makes it seem like Apple’s board are concerned and they say nothing it makes it seem like they’ve got something to hide.
The good news is that Apple are on track to sell 10 million Mac units for this financial year at an average of over $1450; makes you feel sorry for all those box assembler WinDell OEMs who have to sell four times as many units to make half as much profit.
Of course, not one of the top five WinDell OEMs actually have the courage to publish their sales data, so we have to rely on averaging the IDC and Gartner data: poor little chicken-shit OEMs – so frightened of the market that they can’t bring themselves to make an official public statement.
“Another product transition”
Finally the G5 Powerbook we all have been waiting for!
Analysts are puckering up over declining margins at Apple, but I’m okay with it (to a limit). The fact is that Apple is not simply losing margins, it is converting them to share of market. I think Apple is a stronger company, and better investment, when it rests on larger customer customer base. It provides a stabilizing factor.
“Future product transition that I cannot discuss today”?
That’s easy. Apple is finally dumping their toy OS and licensing Windows. Congratulations, Apple on coming to your senses! It’s about time. WindowsBook Pro, WindowsBook, WindowsMini, iWindows, etc. Finally Apple products you can be proud of.
Your potential. Our passion.™
Zune Tang,
As consistently repetitive and boring as ever.
Ah…Zuney. Close, but you left out that Apple is dumping those stupid money-losing iPods and will be licensing the Zune. It will be the same Zune that Microsoft sells, except it will have an Apple logo.
Hey, it worked for HP…
Also, Apple will be dumping iPod OS X and going with Windows Mobile 6 for the iPhone.
Actually, I’m betting that Apple will dump Intel and go back to PowerPC. Any takers?
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And along with all those goodies above I predict a rootin’ tootin’ NewtonTwo… what’s Inkwell for after all?
Apple is forced to state that Steve Jobs’ health is a private matter to protect themselves. If something happens to Steve and Apple’s official position is wrong, they open themselves up to being sued by the “shareholders” (i.e. lawyers). If they don’t comment, they can’t be held liable for the accuracy on their statements.
I agree with their stance. It’s a private matter. You have to be a moron if you think they don’t have a succession plan.
@ John
I totally agree with you on that score. Hell,If Jobs got hit by a bus tomorrow why would it make a damn bit of difference to the freight train that is currently Apple’s economic performance. Any short term speculation would quickly be diluted by Apples performance. These people are looking for someting to knock the stock down.
Any photos of Jobs post WWDC. He’s out in public how can he go undocumented?
If Jobs changed name to Britney Spears professional photog pics would appear in seconds.
Who’s up for a drive thru in Palo Alto?