MacDailyNews presents live notes from Apple’s Q111 Conference Call

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

27 Comments

  1. 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.

  2. 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. ” width=”19″ height=”19″ alt=”smile” style=”border:0;” />

  3. 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.

  4. @ 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.

  5. 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

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