MacDailyNews presents live notes from Apple’s conference call discussing Q209 financial results.
Live notes will begin today at 2pm PDT/5pm EDT in reverse-chronological order:
• Apple (AAPL) shares are currently up $3.40, or 2.80%, to $124.91 in after-hours trading
• End of conference call.
• Cook: “We think that Apple’s innovation in iPhone is leading industry by years. We think competition is great – as long as companies invent their own stuff.”
• iLife and iWork exceeded Apple’s expectations in the March quarter
• Cook: “We’re very busy on constructing new products.”
• Oppenheimer: No update on the new campus construction besides “we’re very busy.”
• 21 million iPhones and 16 million iPod touch units sold to date.
• Cook asked about Palm Pre: “It’s difficult to comment of products that aren’t shipping.”
• Apple believes that App Store customers are having a lot of fun
• Apple is expanding iTunes App Store categories to aid in app discovery
• iPhone 1.83 million units in inventory at end of quarter. Apple is very comfortable with the channel inventory for iPhone
• iPhone channel inventory (last quarter 1.75 million units, counting 100,000 demos that aren’t sellable and about 100,000 units in transit)
• iPhone sold in over 50,000 storefronts in 81 countries
• Cook: Apple considers Wal-Mart a key iPod partner. For iPhone, Apple is pleased with early results thus far.
• About half of Apple Retail Store Mac customers are “new to Mac.”
• Cook: We have a plan for iPhone. We are years ahead of competitors.
• Apple is very focused on the iPhone product plans (incl. “things I can’t talk about”), the iTunes App Store and geographic rollouts
• Cook: “Cycles come and cycles go. What we’re about is making the best computers in the world, not the most. We want to make products we’re proud of.”
• In the U.S. Macs are more education dependent than rest of the world (poor economy affects Mac sales in the U.S. due to education budget).
• Cook: On a worldwide basis, IDC projected the PC market contracted 7%. On a sell-thru basis, Macs were essentially flat YOY.
• Peter Oppenheimer: “We look forward to Steve Jobs returning at the end of June.”
• Cook: Apple would like to have iPhone in China within the next year and “we’re working on it.”
• Verizon is CDMA. GSM works for the world. That’s why AT&T works better for Apple right now.
• Apple is very happy with AT&T relationship and do not have plans to change it
• Cook: Apple views AT&T as a very good partner; the best wireless provider in the U.S.
• Cook: iPod touch is a runaway hit; it’s clearly being driven by the App Store
• Recent stellar gross margins have been due to favorable component pricing
• For September quarter, Apple gross margin should be “about 30%.”
• In June, education sales really begin
• Direct sales were 48% in the quarter
• 37 million iPhones and iPod touch units sold
• iPod touch unit sales more than doubled over the year ago quarter
• Apple does not disclose the free vs. paid mix of iTunes App Store due to competitive reasons
• Cook: And if we can find a way to deliver an innovative product that really makes a contribution, then we’ll do that. We have some interesting ideas in this space. The product pipeline is fantastic for the Mac. If you look at the past, in 17 of the last 18 quarters we’ve exceeded the market rate of growth, and to exceed it in this horrendous economy is quite an accomplishment, especially if you look at these very low-cost netbooks that I think is a stretch to call it a personal computer, that are really propping up unit numbers as a whole.
• Cook: And so it’s not a space, as it exists today, that we’re interested in, nor do we believe that customers in the long term would be interested in. That said, we do look at the space and are interested to see how customers respond to it.People that want a small computer (so to speak) that does browsing and e-mail might want to buy an iPod touch or an iPhone. So we have other products to accomplish some of what people buy netbooks for. So in that way we play in an indirect basis.
• Tim Cook: When I look at what is being sold in the netbook space today, I see cramped keyboards, terrible software, junky hardware, very small screens, and just not a good consumer experience… Not something we would put the Mac brand on, quite frankly.
• Mac education sales in the U.S. contracted about 11% YOY
• Average selling prices in Mac desktops declined due to Mac Pro declines (businesses delaying purchases due to macro economic conditions)
• Apple paid about $1.3 billion in taxes in the March quarter
• Apple sees NAND Flash increasing sequentially; component pricing overall to remain favorable
• Apple is very excited about their product pipeline
• Apple expects gross margins of about 33% in Q309
• Apple currently has $28.9 billion in cash and short-term investments on-hand
• International sales accounted for 46 percent of the quarter’s revenue
• Gross margin was 36.4%, up from 32.9% in the year-ago quarter
• 16% increase in visits YOY over 39 million visitors
• Apple Retail Store realized $1.47 billion in revenue in quarter vs. $1.45 billion in year ago quarter
• iPhone now available in 81 countries
• Apple is within hours of hitting 1 billion apps downloaded milestone
• 35,000 apps now available via iTunes App Store for iPhone and iPod touch
• iTunes Store went DRM-free during the quarter
• Over 70% share in U.S. MP3 player market according to NPD
• Apple is very confident in their Mac business
• Entire Mac desktop line transitioned during quarter in a single day
• Apple COO Tim Cook and Apple CFO Peter Oppenheimer present for call
• For fiscal third quarter (Q309), Apple guides “about $7.7 billion to $7.9 billion” and expects diluted earnings per share “in the range of about $.95 to $1.00.”
• Apple’s fiscal second quarter 2009 results are the best non-holiday quarter revenue and earnings in company history
• Quarterly iPhone units sold were 3.79 million representing 123% unit growth over the year-ago quarter
• Apple sold a Q2 record 11.01 million iPods representing 3% unit growth over the year-ago quarter
• Apple sold 2.22 million Macs representing a 3% unit decline from the year-ago quarter
• The corresponding non-GAAP measures for the quarter are $9.06 billion of “Adjusted Sales” and $1.66 billion of “Adjusted Net Income.”
• These results compare to revenue of $7.51 billion and net quarterly profit of $1.05 billion, or $1.16 per diluted share, in the year-ago quarter
• Apple posted revenue of $8.16 billion (9% increase YOY) and a net quarterly profit of $1.21 billion, or $1.33, per diluted share for its fiscal 2009 second quarter ended March 28, 2009
