Apple Financial Results Conference Call Q4-2006 Live Notes

20 years ago

Apple Financial Results Conference Call Q4-2006 Live Notes (in reverse-chronological order):

End of conference call.
• Apple has about 5,800 retail store employees.
• Apple has a “reasonable handle” on commodity costs.
• Apple will continue to air freight portables this quarter as wella s a portion of iMacs due to strong demand.
• Generally speaking, the economy is slowing due to multiple Fed hikes. Economy appears to be heading for soft landing. Apple agrees with that outlook.
• iTV announced early to give customers an idea of how movies and content will get to large screens in home.
• Apple looks forward to bringing “movies” to international iTunes Store locations in 2007.
• iTunes Store in 21 countries: cover close to 90% of whewre music is legally purchased.
• Apple working with Coke in Europe (UK, Germany) with Coke website linked directly to iTunes: Coke will give away 70 million songs in next few months.
• Are there new Leopard features that haven’t been shown, specifically Windows virtualization built-in? Apple: No comment. Shipping in spring 2007.
• Apple taking orders for iPod shuffle. “Really excited” to begin shipping the model.
• Back-to-school promotion (Buy a Mac, get iPod nano) was a key factor in excellent back-too-school results. Apple won’t quantify iPod and/or Mac results due to promo.
• Apple believes “video will be big” in portable space.
• Mac gross margins in Sept. QTR: Apple “quite happy” with those margins. Will not comment further.
• Game and movie sales via iTunes Store to be released at later date. Apple “pleased” with sales.
• Apple has “plan to integrate Boot Camp into Mac OS X Leopard next spring.”
• Boot Camp downloads: over 1,000,000 downloads.
• Mac results due to completion of Intel transition, strong back-to-school sales, retail stores.
• Traffic in Apple Retails Store just above 20 million. Mac sales up 60% in retail stores.
• iPod gross margin above 20% in September quarter.
• iPo has just under 40,000, Mac a little over 7,000 points direct and indirect channels worlwide.
• 54% direct sales up from 50% in June and 52% Y-O-Y. Apple happy with direct and indirect channels.
• Desktop growth up 4% Y-O-Y; result of widespread move by customer to portables.
• iPod nano customer reception “excellent.”
• Oppenheimer: Mac OS X Leopard will be shipping in the spring of 2007.
• Macs below 4-5 week mark for inventory levels.
• Apple believes iTunes+iTunes Store helps drive iPod sales.
• Apple running iTunes Store “at above break even” levels.
• Special committee found no misconduct of any Apple Board member including Steve Jobs.
• Japan Mac sales: PC market in Japan one of the weakest in the world, still Apple is not happy and working to bolster Mac sales to Japan.
• Inventory up about 100 million Y-O-Y: Due mainly to increased numbers of new stores’ inventory.
• Summer usually not the best quarter for music sales / new album releases.
• Apple “very confident with what is in product pipeline.”
• Apple pilot programs continue at select Best Buy and Circuit City locations.
• Apple skillfully executed the Intel transition within the last year.
• 70-73 cents per share forecast for Q1 07.
• Apple targets $6-6.2 billion revenue for Q1 2007 (2006 Q 4 holiday quarter).
• Apple now has over $10.1 billion in cash on hand.
• Education store: most successful ever, shipments increased 49% year-over-year.
• Over 50% of customers buying Macs are new to Mac at Apple retail stores.
• Apple retail stores: 165 with 10 new stores opened during quarter.
• Nielsen SoundScan: iTunes accounts for 88% of music downloads in U.S.
• Apple very confident in current iPod lineup for holidays.
• 42% of total company revenue from “music” products.
• 61% of all Macs sold during quarter were portables. nearly 1 million portables sold during quarter.
• Oppenheimer: Best Mac shipments “BY FAR” in the company’s history. 1.38 million Macs was previous best record in Q1 2000.
• These results compare to revenue of $3.68 billion and net profit of $430 million, or $.50 per diluted share, in the year-ago quarter.
• Gross margin was 29.2 percent, up from 28.1 percent in the year-ago quarter.
• International sales accounted for 40 percent of the quarter’s revenue.
• Apple shipped 1,610,000 Macintosh computers and 8,729,000 iPods during the quarter, representing 30 percent growth in Macs and 35 percent growth in iPods over the year-ago quarter.
• Apple posted revenue of $4.84 billion and net quarterly profit of $546 million, or $.62 per diluted share.