Live notes from Apple Inc.’s Fiscal First Quarter 2011 Conference Call appear in reverse chronological order:
• End of conference call. Most surprising thing to us? The lack of questions from analysts regarding Steve Jobs.
• Cook sees enormous enterprise potential. iPad started shipping in April and already up to 80% of large companies deploying or piloting. “We’re just scratching the surface.”
• Any enterprise barriers? Cook: Consumerization of enterprise is a mega-trend. The ability to write apps for iPhone and iPad is an incredible thing; you can literally run your whole business of an iPad and iPhone. iPad has a huge advantage as each iOS upgrade delivers huge chunk of enterprise features.
• Cook: MacBook Air was a phenomenal part of our Mac success during the quarter. We’ve only been shipping it for less than 90 days.
• Oppy: Will not talk about future iPads or any other unannounced products
• Cook: “I think we’ve got a very bright future [with iPhone] and I think the same thing about iPad.”
• Cook: We believe integrated beats fragmented. Much better for the end user. Takes out the frustration and complexity
• Cook reiterates: “We’ve now sold over 160 million iOS devices. This is huge.”
• Cook: Enterprise traction for iPhone is gaining
• Cook: We could have sold more iPhones if we had them. We are working very hard to increase production
• Oppy: iPad was a hot holiday gift, so we would expect a sequential decline vs. the holiday quarter
• Oppy: Highest Mac sales, have outgrown the PC market for 19 consecutive quarters
• Oppy: We are thrilled to be guiding 63% revenue growth YOY
• Oppy: We are working hard to increase supply of iPhones. It will come over time, not overnight
• Cook: The tablet market is so large, it’s large everywhere (not just in the U.S. or other specific markets).
• 175% revenue growth in Asia Pacific; $2.6 billion in China in just 3 months is phenomenal – “We are introducing a lot of people to Apple” which bodes well for all of Apple’s product line in the future
• Good ideas will spread throughout product lines; iPad to Mac and vice versa, etc.
• Cook: Part of the magic of Apple is that there are not high walls between product groups. No “not invented here” attitude between groups.
• Cannibalization is not something we are spending one minute on: iPad team working to build the best iPad and Mac team is looking to build the best Mac
• Cook: Yes, I think there is some cannibalization by iPad on Mac, but there is also an iPad Halo Effect on the Mac, “so if this is cannibalization it feels really good.”
• Cook: Mac grew almost 8X the PC market in Q111. “Stunning.” Mac outgrew the PC market in every region of the world
• Apple is not under any exclusive carrier deals in any country in the world – “We have moved away from that.”
• Cook: We’ve signed a multi-year, non-exclusive deal with AT&T Mobility about which we’re also very happy
• Cook: Nothing new to announce regarding CDMA iPhones and carriers other than Verizon (We’re very happy to be working with Verizon)
• Where we’ve moved from exclusive carrier to dual- or multi-carrier, our sales have increased
• Cook: I don’t envision the overall iPhone ASP decreasing from Q111 to Q211. We’re always looking and assessing in every country regarding who Apple should be doing business with.
• Cook: With iPad, we are not standing still. We have a huge first-mover advantage and an incredible user experience, huge ecosystem. We are very confident entering into a fight with anyone.
• Cook: Generally speaking, besides iPad, there are two kinds of groups of tablets on the market today: Windows-based – heavy, big, expensive, poor battery life, no customer interest. Android tablets today are scaled up smartphones, “a bizarre product in our opinion.” If somebody does a side-by-side with these tablets vs. iPads, most people will pick an iPad. Apple not worried about that.
• Cook: Margins consist of a number of different factors. We don’t guide on gross margins for specific products.
• Cook: We used Apple’s cash to secure NAND Flash supply and we have identified other areas similar to the Flash agreements we’re focused on specific areas to invest cash to secure supplies (won’t name what Apple’s securing)
• Cook: With A4 chip, we focused on design, not the actual fabbing; design that exceeded what’s available on the market
• Cook: In most areas we saw favorable pricing which was a key factor in exceeding our gross margin expectations
• Cook: NAND Flash, LCDS, most other commodities are generally in supply/demand balance
• Cook: DRAM pricing is favorable. Key metals pricing is increasing
• Cook: We believe tablets are a huge market, so iPad’s opportunity is huge as well
• Cook: Enormous opportunity in the smartphone market
• Cook: We still have a relatively low share of the PC market; enormous opportunity for Mac
• Cook: Apple is doing it’s best work ever and we are all very happy with the product pipeline. Steve has driven a culture of innovation into the company and excellence has become a habit
• Cook: Japan revenue up 83% YOY in a down Japanese economy.
• Cook: Our focus on China have produced results that have been absolutely staggering. Korea has also been a very,. very good market for Apple (iPhone and iPad).
• Cook: iPhone supply still not in balance with demand. We think Verizon iPhone will be huge.
• Cook: iPad expanded to 46 countries, +20 in quarter. Will add 15 more this quarter to hit 60+ countries.
• Cook: Very happy to have over 1 billion App Store downloads
• Tim Cook: iPhone 4 production still ramping. We are thrilled to offer iPhone 4 to Verizon’s 93 million customers as well as any new customers who’d like an iPhone. We are working to produce as many units as possible.
• Oppenheimer’s guidance: “Looking ahead to the second fiscal quarter of 2011, we expect revenue of about $22 billion and we expect diluted earnings per share of about $4.90.”
• Apple expects tax rate of about 25.5% for Q111
• Half of Apple Retail Store Mac buyers were new to Mac
• 6 new Apple Retail Stores opened during quarter: Now 232 total stores, 87 of which are located outside USA
• 851,000 Macs sold in Apple Retail Stores, 24% increase YOY
• Apple Retail Store revenue 3.85 billion, up 95% YOY
• 165 million cumulative iOS devices sold through December 25, 2010
• 80% of Fortune 500 companies have deployed or are piloting iPad (ASP of about $600)
• iPhone = sizable backlog; could have sold more
• iPod touch now 50% of total iPod sales
• iPhone on 185 carriers in 90 countries with $625 ASP
• iTunes Store exceeded $1.1 billion thanks to strong music, videos, and app sales.
• Guidance: “Revenue of about $22 billion and diluted earnings per share of about $4.90.”
• $9.8 billion in cash flow generated from operations during the quarter
• 7.33 million iPads sold during the quarter – now in 46 countries at end of quarter
• 19.45 million iPods during the quarter, representing a seven percent unit decline YOY (if you don’t count the iPods built into every iPhone and iPad)
• 16.24 million iPhones in the quarter, representing 86 percent unit growth YOY
• 4.13 million Macs sold during quarter, a 23 percent unit increase over the year-ago quarter
• International sales accounted for 62 percent of the quarter’s revenue
• Gross margin was 38.5 percent compared to 40.9 percent in the year-ago quarter
• Versus revenue of $15.68 billion and net quarterly profit of $3.38 billion, or $3.67 per diluted share, in the year-ago quarter
• Record net quarterly profit of $6 billion or $6.43 per diluted share
• Record revenue of $26.74 billion
• Apple today announced financial results for its fiscal 2011 first quarter ended December 25, 2010
• Apple CFO Peter Oppenheimer opens conference call
Next year look for over $8.75 share in XMAS Quarter …
As always, my faith is in apple.
Go Apple! and get better Mr. Steve Jobs!
How come Android companies can’t post record earnings like this?
wow! Best company ever! Thank you and get well soon, Steve!
@ silverwarloc
… because they are selling Android products.
This year’s earnings should be at a minimum $21.50 a share, based upon $5 guidance, and this Xmas’ $6.50. Multiply by 20 and you should see price targets tomorrow being upgraded to $430.
iPad for the three quarters of 2010: 7.33 + 4.19 + 3.57 = 15.09 million
I predicted 15 million for 2010 after the first million was sold. My simplistic reasoning was 1 million average per month during the first three months and 2 million average per month during the last six. Pretty close.
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33 million iOS devises were sold in calendar Q4 — about 358 000 activations per day.
Google reported reaching 300 000 activations per day before the end of the year, so iOS is still sells better.
However, smartphone sales are bigger for Android, since there are countless of cheapo half-baked, no market-store “smart” phones on this OS.
Apple could only do 16.2 million of iPhones.
@ DeRS
It’s important to keep in mind that “Android” is NOT a product. There is no single Android-based product that is close to being as popular and profitable as iPhone, and there is no single company selling Android-based products that is close to being as successful or profitable as Apple. In terms of financial results, THAT should be the comparison, not iOS versus Android.
Two things:
– for fiscal 2011 Apple will have over $100 billion in revenue!
– iOS is blowing Android away in growth rate; Verizon will accelerate the trend and Apple’s lawsuit against HTC and Oracle’s against Google will make things much worse for Android
ken1w: of course, I agree that it would be actually more fair to compare on device basis — but you know that the media always focuses on Android vs iOS in whole.
They like to omit the fact that iOS is bigger thanks to iPod touch and iPad, so triumphlyal report on Andoid success on smartphones.
Even more important that device count could be robustness of the base comparison: how many apps are sold, how often internet is browsed, so on. Andoid is much poorer in that.
Congratulations & well done Steve & Apple Inc. Another stellar year of success to follow. Get well Steve!
Once again!! Another Blow- Out!
The growth machine continues and it seems the leadership of Apple seems quite capable of handling business while Steve recovers.
Steve’s vision has been passed on to the culture and will persist. This is the truth and will be a lasting legacy!
Hemodroid is for users of Preparation H.
<sarcasm>
How the devil did Apple sell 16.24 million iPhones in a single qtr (5.41 mil per month) when it is not a very good email machine and doesn’t appeal to business users?
EGads the Motorola Q is much more capable, as it has a physical keyboard and is ONLY $99. It’ll do music, it’ll do internet, it’ll do email, it’ll do instant messaging. How the H.E. Double Hockey Sticks can Apple compete with Microsofts strategy? CEO Ballmer told us point blank that the iPhone is a under powered over priced device?
</sarcasm>
Microsoft is selling tens of tens of phones a year and Apple is selling millions of millions phones a year. Still like your strategy monkey boy?
F’ing A I love the smell of Microsoft failure in the evenings.
“Apple Retail Store revenue 3.85 billion, up 95% YOY”
That is a staggering figure. Apple nearly DOUBLED its revenue from its retail outlets. Pretty soon, they’ll have to double the size of each store to fit the customers in. Otherwise, we’ll have to apply Yogi Berra’s line: “Nobody goes there anymore. It’s too crowded.”
Since Apple could not supply enough iPhones to the market BEFORE Verizon iPhone,we’ll have to assume those Verizon iPhones are being made at new factories, with NEW production capacity. And it explains why Apple is not immediately pursuing other worldwide CDMA opportunities.
I expect 2011 to be a “stabilization” year for iPhone, like going from iPhone 3G to iPhone 3GS. It will not change as much, compared to other years. The marketing focus on the summer upgrade will be new software-based features. And with Mac OS X Lion, and the Mac business being so strong and obviously so important to Apple, it’s more “Back to the Mac” at WWDC.
Not only “lack of questions from analysts regarding Steve Jobs” but also lack of sensibility for the lack of well wishes from those same analysts to Steve. And don’t tell me they weren’t aware about Steve’s medical leave.
Apple gave a lot of info away today
1. iTunes making over $1BB
2. iPod Touches being over 50% of all iPods
3. Apple using its cash to secure supply of flash memory and other key components
4. Selling over $2.5BB in China
More info than usual. Also $22BB in the slowest quarter in the year is phenomenal. We could easily be looking at $25 EPS and $120BB revenue for the whole fiscal year.
So, do we think Apple passes MS in profit margin this Q or next?
When does MS report, and are they tweaking the books right now to stay ahead of Apple in profit margin.
@ken1w It’s about iOS vs Android insofar as every Android device sold is one less iOS device sold. If it weren’t for Android there’d be no clear alternative to the iPhone/iPad.
Tim Cook confirmed my suspicion that there has been some iPad cannibalization of Mac sales, but it’s been more than offset by the iPad halo effect. Tablets (or as I prefer to call them, web appliances) are set to replace home computers for a lot of people (and even some businesses), and this time Apple wants to be the dominant player.
As my name says Microsoft’s karma has just imploded in on itself.After years of “it’s underpowered” and “it’s never going to take off” the numbers speak for themselves.I just really wish I had worn an extra pair of pants because I had almost pissed myself thinking about how Microsoft share holders are reacting to the news
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The participating analysts were told ahead of time not to waste their questions asking about Steve because they wouldn’t be answered.
@ Connor MacBook
> It’s about iOS vs Android insofar as every Android device sold is one less iOS device sold.
Nope. Up until now (or Feb. 10th), an Android device may have been sold because the customer did not like ATT, ATT had poor coverage where they live, or the long wait to get an iPhone 4 was not acceptable. It’s also “remotely” possible that they actually thought the Android phone was better.
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Also, even after Verizon iPhone goes on sale, Apple does not have the capacity to produce 100% of the world’s smartphones (not even close). So if you asked Apple’s execs, “If a customer decides to buy some other phone (not an iPhone), which would you like it to be?” I think they will say “an Android phone” (not RIM, Nokia, or Windows Phone 7). Why? Because it’s the closest iPhone copycat. Apple is better off competing against a single fragmented platform with many relatively small players making the hardware, each making several devices to further fragment the platform and lower potential profit. And Google does not even profit directly from an Android phone sale. In that scenario, Apple rules the market because Apple makes most of the available profit (it’s doing so already). THAT is what really matters, not iOS versus Android.
Apple WANTS Android to eventually be the ONLY other relevant smartphone platform. Android is predictable. RIM and Nokia are dangerous, because they control hardware and software, and may actually do something intelligent and innovative. Whether iOS has higher share or Android has higher share is less important, as long as Apple keeps meeting or exceeding its internal sales and profit goals.
> Tim Cook confirmed my suspicion that there has been some iPad cannibalization of Mac sales
Common sense says that there must be customers who bought an iPad instead of a MacBook. Obviously, there is “cannibalization.” However, they made a key point earlier in the call regarding Mac sales growth potential. Because Windows has a dominant share of users, MOST iPad customers are current Windows users, not Mac users. You need a Mac or Windows PC to use an iPad (at least for now), and many of those Windows users have aging PCs with Windows XP. Naturally, they will at least consider replacing that PC with a Mac, now that they have experienced iPad. That’s the halo effect. Customers who would “never” consider getting a Mac buy an iPad; because of that iPad decision, they are now willing to consider getting a Mac. Apple gains two sales (iPad and next “PC”), while the competition loses one (that next Windows PC).