MacDailyNews presents live notes from Apple’s Q210 Conference Call

invisibleSHIELD case for iPadLive notes from Apple’s Q2 -2010 Financial Results Conference Call is reverse chronological order:

• End of conference call.

• Apple looks forward to competing in the education markets.
• School districts are under pressure in the U.S. Apple sees no evidence of market share loss in education.

• Oppy: We are very confident in our new product pipeline
• Cook: iPad numbers, as far as “new to Apple” customers are too preliminary to disclose or read to much into so far
• Oppy: Apple is thrilled with the number “new to Mac” customers in Appel Retail Stores all over the world.

• Oppy: Customers are loving their iPads and going to the App Store to download apps, books, etc.
• iPad numbers will be reported via a line item on Apple’s data summary similar to how they report iPhone
• Oppy: Apple Stores are performing very, very well.
• Apple Retail: Average increase of revenue per store up 8% YOY. Same store Mac sales up over 20%. A great place for people to come in a see and try iPads.
• Cook on iPhone and the carrier rate plans: Apple does everything that they can to try to get the best deal possible for the consumer and, Apple believes, so do the carriers

• Cook: From my personal use, I choose my iPad over a netbook for email, browsing, listening to music, watching videos and TV shows, reading books, App Store access, games, and the list goes on
• Cook: I’m already addicted to my iPad and can’t imagine living without it
• Cook: To me iPad vs. netbook is a no brainer; I can’t think of a single thing a netbook does well, but iPad does a number of things extremely well
• Cook: Since the iPad announcement, we see no obvious cannibalization of Mac sales. We’ll see how this shapes up going forward

• Cook: Apple TV’s market is a small market (vs. personal computer, smartphone, portable media player markets), however we love the product, we use the product and we continue to think there’s something there for the future.
• Cook: Apple TV still classified as a “hobby” by the company.

• iPhone in U.S. vs. international: Tim Cook: Smartphone market has a very great growth rate and Apple outgrew the market by 3 times.

• Apple is very excited about iPhone OS 4
• Apple being very aggressive with iPad to maximize their first mover advantage
• Apple has in the past seen margin improve as unit sales scale
• Tim Cook: iPad has been priced very aggressively. Apple won’t give out specific margins.

• Apple has seen iPhone market share and unit sales increases in countries with multiple carriers.
• Apple has contractual iPhone exclusivity in 3 countries: U.S., Germany, and Spain.

• AAPL after-hours trading: $258.93, up $14.34 (+5.86%).
• iAd: This year is about learning a lot, not so much about generating significant profits

• DRAM market is constrained and Apple expects higher costs in the quarter
• Tim Cook: iPad demand “shocked us.”
• Tim Cook: iPad demand in U.S. “much, much strronger than we predicted,” that’s why international release was pushed ahead a bit
• App Store: Well over 4 billion downloads to date
• Thru first half of fiscal year, Apple revenue from greater China almost $1.3 billion
• Apple saw strong performance from iPhone carriers around the world
• Phone units in Asia/Pacific, for example, grew 476% YOY, Japan up 183% YOY. Europe up 133% YOY. Incredible demand
• Why were iPhone sales so strong? TIm Cook: Channel inventory was essentially flat from start to end of quarter
• Q310 guidance based on sequentially lower ASPs, iTunes Sales, dollar strength, seasonality
• Last year in March, Apple announced a new iMac and new Mac mini, so you can’t compare March 2010 to March 2009 directly
• Tim Cook: In our view, there was no obvious impact from iPad on Mac or iPad in quarter. Going forward, we’ll see how it goes.

• “Future product transition” to impact margins
• Apple on track to open 40-50 new Retail Stores globally in 2010
• 284 Apple Retail Stores average revenue of $5.9 million vs. 5.8 million in year-ago quarter
• About half the Macs sold in Apple Retail Stores were to customers new to Mac
• Apple Retail Store revenues were $1.68 billion vs. $1.38 billion in the year-ago quarter
• Apple pleased with iPad launch and reviews; 3G to ship on April 30; both iPads
• JD Power 2010 U.S. Wireless Smartphone Customer Satisfaction Survey: iPhone #1 – again
• iPhone ASP about $600
• 3,500 new apps designed for iPad
• More than 185,000 apps in App Store currently
• Cash on-hand: $41.7 billion. Oppy: “Our investment priorities for cash continues to be preservation of capital which has served us well in the current environment. We are continuing to focus on short-dated, high quality investments and remain comfortable with our investment portfolio.”
• Best non-holiday quarter ever, with revenues up 49% and profits up 90%
• Q3 – 2010 EPS guidance: “about $2.28 to $2.39”
• Q3 – 2010 revenue guidance: “about $13 billion to $13.4 billion”
• iPhone units: 8.75 million vs. 6.8 million Street consensus; 131% YOY growth
• iPod units: 10.89 million vs. 9 million Street consensus; 1% YOY decline
• Mac units: 2.94 million vs. 2.7 million Street consensus; 33% YOY growth
• EPS: $3.33 vs. $2.44 consensus
• Revenue: $13.5 billion vs. $12.06 billion consensus
• Present on call: CFO Peter Oppenheimer, COO Tim Cook, Treasurer Gary Wipfler
• Fiscal 2010 second quarter ended March 27, 2010

22 Comments

  1. Curious about the future product transition?
    We have an indication: The server farm!
    Apple is getting in the service business for sustainable revenues.
    They won’t solely rely on hit products from now on.

  2. I’m going to hazzard a guess on the “Future Product Transition”..

    Probably has to do with new iPhone, and the expansion of that product line. My guess is that the 3G and 3GS will both still be available after the new iPhone ships, and that the two older models will drop in price. Thus, the “impact on margins”.

  3. “RAM market is constrained and Apple expects higher costs in the quarter”

    Funny. I wonder who constrained it.
    There must be some large high-tech company pumping out millions and millions of cool consumer products : )

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