Welcome to live coverage of Apple’s Q1 – 2006 financial results conference call.
Notes will appear in reverse chronological order:
– Audio replay will be available at 5pm PST: http://www.apple.com/quicktime/qtv/earningsq106/
– End of conference call.
– iPod FM Remote – Apple currently not meeting demand, working very hard to do so.
– iTunes music and video sales exceeded expectations.
– Apple sees iPod as “the absolute best player in the market” and sees significant opportunities for iPod going forward.
– R&D – Apple is investing in long-term growth. Expect Apple to invest in advertising, marketing, engineering, and retail stores.
– Europe was very strong in Q1. Europe iPod demand outstripped supply in Q1 which held down earnings.
– Apple does not project channel inventory.
– Rosetta runs very well with products like Microsoft Office. iLife, iWork, Mac OS X, other apps are all Universal Binaries that don’t require Rosetta. Pro apps coming as Universal Binaries in March. Over 200 Universal Binaries already available. Apple believes users will be “very satisfied” with Rosetta when used.
– 4G iPod and iPod mini saw declines last quarter as they were phased out; more than made up by iPod nano and iPod 5G sales.
– Apple Retail Stores will open in U.S., Canada, UK, and Japan in 2006.
– 49% of Apple revenue was from Web and Apple Retail Store sales.
– Web sales were “significant” in Q1.
– Last quarter was favorable on components (LCDs and RAM).
– iTunes Music Store operated “above break-even.”
– Now over 2,000 iPod accessories. Apple did “very well” with Apple-branded and third-party iPod accessories during Q1.
– Apple will sell iMac G5 and PowerBook G4 15-inch while supplies last. This is factored into guidance.
– Seasonality in iPod, more than seasonality in Mac will affect Q2 2006.
– Apple to aggressively pursue Mac market share going forward? Apple is happy to be transitioning to Intel already, Apple will continue to open retail stores and make the best personal computers on the planet.
– iPod demand coming into balance (Apple working to get ore 4GB iPod nanos into customer’s hands).
– Apple will not discuss future Mac model price changes. Any price changes are factored into guidance for Q2 2006.
– Intel-based Mac gross margins? Apple will not comment for competitive reasons.
– iPods are in over 35,000 outlets, however all iPod models are not in all 35,000+ outlets.
– Air freight in current quarter – Apple will be doing so with iMac Intel to meet demand.
– MacBook Pro will ship “in February” – Apple may not be able to meet demand.
– iMac Intel Core Duo now shipping – Apple hopes to meet demand.
– iTunes gift certificates/cards and direct purchases are resulting in current level of 3 million per day.
– iPod demand outstripped demand in certain channels at certain times in Q1 2006.
– Apple will not discuss iPod sales by model or geography.
– iPod gross margins were above 20%.
– Will Apple discount non Intel-based Macs? Oppenheimer: we will continue to ship iMac G5, Power Mac G5 at this time.
– Reaction to new Intel iMac and MacBook Pro is very positive. Demand looks strong.
– Mac sales grew 20% YOY.
– MacBook Pro – strong demand – Apple may not be able to meet demand. Sales will not contribute much to Q2 as units don’t ship until well into quarter.
– Tim Cook: we saw a pause in sales as we approached Intel transition. Mac sales exceeded expectations in Q1.
– Oppenheimer: new iMac and MacBook Pro (slips and says “PowerBook,” corrects himself) orders look good. We have and are factoring in Intel transition into Mac projections.
– $4.3 billion projection too conservative? Oppenheimer: Normal 13 weeks vs. last quarter’s 14 weeks. Mac switch to Intel-based processor could affect revenue in Q2. iPod will drop due to seasonality.
– Did extra week in Q1 contribute to extra earnings? Oppenheimer: Yes – a very strong earnings week (week between Christmas and New Year’s) contributed to Q1 earnings.
– Apple targeting second-best quarter ever of $4.3 billion in Q2 2006, 33% YOY growth. Factoring in seasonal decline in iPod and transition to Intel.
– Cap Ex $82 million including $40 million for retail stores.
– See related earnings results article (link below) for more info.
– $90 million in retail profits on over $1 billion in revenue.
– 135 Apple Retail Stores now in operation.
– iTunes Music Store in 21 countries. Covers over 90% of worldwide music market. Holds 83% share.
– Over 14 million iPods sold in quarter. Accomplished while replacing two of three iPod lines.
– Mac up 12% YOY, 667,000 desktop systems – Apple saw lower than expected Intel shift effect on Mac sales.
– Apple quarterly revenue surpassed all of fiscal 2002.
– Apple’s second quarter spans 13 weeks vs. 14 week of Q1 2006.
– Conference call begins
– Awaiting start of conference call at 2pm PT/5pm ET
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Related articles:
Apple shares take beating on lackluster second quarter forecast – January 18, 2006
Apple shares fall 7% to $76.70 after reporting Q1 results – January 18, 2006
Apple reports Q1 2006 earnings results: record revenue & earnings – January 18, 2006
only 40 dollars on retail stores? wow!
Re: “40 dollars on retail stores”
It makes more sense when you do the math. It comes to 29 cents per store.
That 29 cents is for a small sticker to be placed in each employee restroom. It reads, “Leaks are only tolerated in here. – Apple Management”
“Expect Apple to invest in advertising…”
Could that actually happen with Macs? Or are they referring to iPod advertising?
Could that actually happen with Macs? Or are they referring to iPod advertising?
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.. look at the top of the MDN page..that Intel ad is EVERYWHERE..
this is it.. this is the Mac advertising we’ve been waiting for.. Intel chips means PC users won’t be freaked out by low Ghz ratings on IBM chips..
Instead they’ll be puzzled by low Ghz ratings on Intel chips, and think, “Wait a minute.. what’s a Ghz anyway?”
mike – the ads on MDN are from either apple resellers or MDNs own affiliate to the apple store where they get a few pennies off each sale if you click on the link and buy something.
Put you cursor over the ads on MDN and you can see for the most part they are click.linksynergy.com links – pay for each click or a tiny commission if u buy.