MacDailyNews presents live notes from Apple’s Q116 Conference Call with analysts starting at 5pm EDT/2pm PDT today.

Apple will provide live audio streaming of its Q116 Results Conference Call using Apple’s industry-leading QuickTime multimedia software.

The live webcast will begin at 2pm PDT/ 5pm EDT today here.

Apple today announced financial results for its fiscal 2016 first quarter ended December 26, 2015. The Company posted record quarterly revenue of $75.9 billion and record quarterly net income of $18.4 billion, or $3.28 per diluted share. These results compare to revenue of $74.6 billion and net income of $18 billion, or $3.06 per diluted share, in the year-ago quarter. Gross margin was 40.1 percent compared to 39.9 percent in the year-ago quarter. International sales accounted for 66 percent of the quarter’s revenue.

Apple Inc. Q1 2016 Unaudited Summary Data
(Units in thousands, Revenue in millions)
Apple Inc. Q1 2016 Unaudited Summary Data

Live notes from Apple’s Q415 Conference Call in reverse chronological order:

• After Hours : 97.65 Down 2.34 (2.34%) 6:00PM EST
• End of conference call.

• Cook: Our strategy is always to make the best products. We are able to provide several different price points for iPhones. We continue to offer the iPhone 5s at the low end and it continues to do quite well.

• Apple Upgrade Program geared to helping customers simply and easily upgrade to the new iPhone models each year
• After Hours : 97.82 Down 2.17 (2.17%) 5:56PM EST
• Cook: Apple’s services assets are huge and the investment communtity should focus upon more

• Cook: Number of people who were iPhone users prior to iPhone 6/Plus (before September 2014) stands at 60%. Much headroom remains.

• Cook: Demographics in India are incredibly great for Apple products, so Apple continues to invest in India – a really good business environment for the future
• Cook: Number of people moving into middle class in China is massive and Apple remains “very bullish on China and don’t subscribe to the doom and gloom outlook on China, frankly.”
• Cook: China LTE penetration at end of Dec. was in the mid 20% area; tremendous headroom remains
• Cook: Apple will invest confidently through any downturns
• Cook: BRIC economies admittedly currently look pretty bleak, but “this too shall pass.”
• Cook: We will continue to invest in India
• Cook: Our Apple Retail Store expansion plans in China have not changed

• Maestri: We grew iPhone channel inventory by 3.3 million units as we were below channel inventory target range at the start of the quarter

• Cook: iPhone has a lot of headroom. There is still a tremendous number of people in the world who buy smartphones and Apple should be able to win their fair share of those
• Cook: If we make a great product and have a great experience, we expect people to move to iPhone
• Cook sees overall economic “malaise” in virtually every country around the world
• Cook: We do think that iPhone units will decline in Q2. We do not project beyond Q2. Q2 will be the toughest compare vs. the rest of the fiscal year

• Data center capacity expenditures tied to rapid installed base growth

• After Hours : 98.65 Down 1.28 (1.34%) 5:35PM EST

• Maestri: We entered the Dec. quarter below 5-7 week target inventory for iPhone, but we have existed on the low end of the 5i7 week target range
• Maestri: $691 ASP for iPhone counting a $49 impact on ASP due to currency; iPhone mix was very, very strong

• Cook on Virtual Reality. It don’t think it’s a niche market. I think it’s really cool and presents some opportunities.
• Cook: iPhone Upgrade Program will be meaningful over time
• Cook: We were blown away by the level of Android to iPhone switchers last quarter. The highest numbers “by far.”

• Maestri: We have increased prices in certain countries based on currency rates, which protects margins, but affects demand
• Maestri: Macroeconomy is weakening worldwide YOY
• Maestri: In constant currency, revenue would actually be down between 5-15%, we are looking at a 400 basis point impact for the March quarter

• Maestri: We believe the March quarter faces the most difficult YOY compare vs. the other quarters this year

• Apple is providing the following guidance for its fiscal 2016 second quarter:
– revenue between $50 billion and $53 billion (larger range than usual, due to currency fluctuations)
– gross margin between 39 percent and 39.5 percent
– operating expenses between $6 billion and $6.1 billion
– other income/(expense) of $325 million
– tax rate of 25.5 percent

• The dividend is payable on February 11, 2016, to shareholders of record as of the close of business on February 8, 2016
• Apple’s board of directors has declared a cash dividend of $.52 per share of the company’s common stock
• Apple will update on capital return program when they report Q216 earnings in April

• $215.7 billion in cash on-hand, up 10.1 billion sequentially, $201 of which is located outside the U.S.A.

• Apple Watch and Apple TV established new all-time quarterly record sales
• App Store growth set all-time records
• $5.5 billion in services revenue, up 15%, a new all-time quarterly record

• After Hours : 99.27 Down 0.72 (0.72%) 5:23PM EST

• Cisco partnership continues to grow
• IBM released 48 IBM MobileFirst for iOS apps during the quarter

• In November, 451 Research measured 97% customer satisfaction rate for iPad Air 2
• iPad channel inventory is within 2-4 week target range
• Mac channel inventory is within 2-4 week target range
• Apple exited the quarter at the low end of the target 5-7 weeks of inventory

• iPhone ASP: $691 despite very unfavorable currency headwinds
• iPhone sales grew 76% in India

• All-time record iPhone sales, all-time quarterly Apple TV sales, all-time record net income

• Luca Maestri: Apple is in an unequalled position of strength
• Apple’s installed base drove over $31 billion in related purchases in FY15, up 23% YOY, and almost $9 billion in Q1’16, up 24% YOY
• Apple’s services business is now one of the largest in the world

• Apple customer satisfaction is unmatched

• Cook: We have the “Mother of All Balance Sheets” with $216 billion on hand; that’s $39 per diluted share of Apple stock
• Cook: Apple Music now has over 10 million paying subscribers

• Cook: China, Hong Kong, Spain, and Singapore to get Apple Pay in 2016
• Cook: We set a new quarterly record for Apple Watch sales
• Cook: We had our best quarter by far for Apple TV sales. 3,600 apps now available

• Apple remains committed to innovation and will invest through the current economic uncertainty

Apple Currency Index

• Currency headwinds are extraordinary
• Cook: 74.779 million iPhone units sold is an incredible accomplishment
• Cook: In constant currency, Apple’s growth rate would have been 8%
• Cook: Apple’s strongest financial results ever.

• Apple has now completed $153 billion of their $200 billion capital return program
• Apple returned over $9 billion to investors through share repurchases and dividends
• Apple generated operating cash flow of $27.5 billion during the quarter

• Apple’s installed base recently crossed a major milestone of one billion active devices (iPhone, iPad, Mac, iPod touch, Apple TV, and Apple Watch devices that have been engaged with our services within the past 90 days)
• International sales accounted for 66 percent of the quarter’s revenue
• Gross margin was 40.1 percent (vs. 39.9 percent YOY)
• Record quarterly net income of $18.4 billion, or $3.28 per diluted share (vs. $18 billion, or $3.06 per diluted share YOY)
• Record quarterly revenue of $75.9 billion (vs. $74.6 billion YOY)

• After Hours : 99.46 Down 0.53 (0.53%) 5:00PM EST
• After Hours : 99.50 Down 0.49 (0.49%) 4:55PM EST
• After Hours : 98.79 Down 1.20 (1.20%) 4:50PM EST
• AAPL: After Hours : 100.24 Up 0.25 (0.25%) 4:45PM EST