MacDailyNews presents live notes from Apple’s Q311 Conference Call with analysts starting at 5pm EDT/2pm PDT today.
Live notes from Apple’s Q311 Conference Call in reverse chronological order:
• End of conference call.
• Oppy: We have a broad library of movies and TV shows in the U.S. on iTunes. Look for some more content of a variety of iTunes Stores later this year.
• Cook: We learned that people love using iPad for a whole variety of things. That’s why it’s doing so well among a very diverse set of users and markets.
• Cook: It’s up to us to convince people to maybe spend a little more for a materially better product.
• Is gaining smartphone market share strategically important to Apple? Cook: Yes. We do offer iPhone 3GS for $49 in US with a contract, so we are addressing different market segments. However: “We will only make products that we are very proud of; that are the best in the world.”
• Cook: We have more to do and learn about doing business in China. What we learn is applied to other markets as well
• Cook: $8.8 billion in China revenue through the first 3 quarters of Apple’s fiscal 2011
• Cook: Prepaid or unlocked phones; phone sold without a contract are very key in China and in a number of emerging markets where credit systems are not as well-established as they are in USA, Japan, etc.
• 5:52pm EDT: AAPL currently +$23.40 in after-hours trading
• Oppy: We cannot wait to get iCloud and iOS 5 into customers’ hands in the fall. We believe we’ve done things right with iCloud.
• Last quarter, we sold more iPads in K-12 education than Macs. Cook: “Absolutely shocking. We would have never predicted that.”
• Apple has dual-prong strategy towards iPhone/iPad enterprise sales: Carriers sell to enterprise and Apple also has a direct sales team that acts as an overlay to help get corporations into the pilot and deployment stages.
• Cook on reasons why Mac growth is at 14% and not higher:
1. Cannibalization by iPad 2
2. Some customers have delayed purchases until OS X Lion ships (tomorrow)
3. On year ago quarter, Apple launched new MacBook Pro and this year it was iMac. Portable sales are higher than desktops.
• Cook proud of Apple Mac growth of 14%, 5X that of PC market. 21st consecutive quarter that Mac sales beat PC market in general.
• Cook: We do not want to avoid the prepaid phone market
• Cook on iPhone 4: I firmly believe that there is no better smartphone for someone to move up to from a regular phone.
• Cook: Apple has further improved iPad supply in July.
• Cook prefers not to discuss suppliers because Apple feels it is a part of their “secret sauce” and do not want to give competitors any insight.
• 115,00 points of sale now for iPhone worldwide. The channel is extremely well diversified. There are still countries where Apple is working on channel development.
• Cook: Apple TV continues to do well. We still call it a “hobby” here. We really got it right with Apple TV 2. We’re continuing to invest because we think there’s something there. (Gene Munster’s Apple television obsession continues unabated).
• Cook: It does not appear that any other tablets are getting any traction
• Cook: We sold over 33 million iOS devices in Q3.
• Cook: We added 42 new iPhone carriers and 15 new countries throughout Q3
• Cook on patent legal actions: We love competition, we think it’s great, but we want people to invent their own stuff and we are going to defend our IP.
• Cook: Most components are generally at a favorable supply situation
• China business up over six time YOY. Up $3.8 billion in Q3. Cook: “We’re just scratching the surface there.”
• Some iPad 2 SKUs in some countries are now at a supply/demand balance, but much work left to do ramping up throughout the world
• Tim Cook: In the quarter, some customers chose to purchase a new iPad 2 over a Mac, but even more customers chose to purchase an iPad 2 over a Windows PC. Apple Mac outgrew PC market as a whole by about 5X during June quarter.
• Oppy: Apple has a future product transition in fall that they “are not going to talk about this in any detail today. We’ve factored this into our guidance.”
• 5:19pm EDT: AAPL after-hours trading currently: +$23.18 to $396.98
• 24% tax rate expected in fiscal Q411.
• Cash on-hand now $76.2 billion vs. $65.8 billion at end of March quarter, a $10.4 billion sequential increase.
• 23.5% tax rate for the quarter
• To open 30 new retail stores in September quarter; 40 total for fiscal 2011
• Apple Retail Store traffic up 22% YOY
• Over $2.5 billion in total iOS developer payments; well in excess of any of Apple’s competitors
• Oppy: We are looking forward to launching iOS 5 and iCloud this fall.
• 86% of Fortune 500 companies testing or deploying iPads
• Apple “delighted” by varied and sometimes unexpected use cases for iPad
• Oppy: Apple sold every iPad we could make; now available in 64 countries; 1.05 million units in channel inventory, well below Apple’s target
• At end of June quarter, Apple iPhone now on 228 carriers in 105 countries vs. 186 and 90 at end of March quarter
• iTunes #1 music retailer in world with over 225 million accounts
• Oppy: “OS X Lion to launch tomorrow.”
• Apple CFO Peter Oppenheimer guides: “Looking ahead to the fourth fiscal quarter of 2011, we expect revenue of about $25 billion and we expect diluted earnings per share of about $5.50.”
• Strong MacBook Pro and MacBook Air sales drove Mac unit sales
• 3.95 million Macs, 14% unit increase over the year-ago quarter; new record for fiscal 3Q
• 9.25 million iPads, 183% unit increase over the year-ago quarter; new all-time quarterly record
• 20.34 million iPhones, 142% unit growth over the year-ago quarter; new all-time quarterly record
• 7.54 million iPods, a 20% unit decline from the year-ago quarter
• On April 20, 2011, Apple had guided “revenue of about $23 billion and we expect diluted earnings per share of about $5.03.”
• Analysts’ consensus estimates called for $5.84 EPS on revenue of $25.00 billion (vs. Q310 results of $3.51 EPS on revenue of $15.70 billion
• International sales accounted for 62 percent of the quarter’s revenue
• Gross margin was 41.7 percent compared to 39.1 percent in the year-ago quarter
• Vs. revenue of $15.70 billion and net quarterly profit of $3.25 billion, or $3.51 per diluted share, in the year-ago quarter
• Record quarterly net profit of $7.31 billion or $7.79 per diluted share
• Apple posted record quarterly revenue of $28.57 billion
• Apple’s fiscal 2011 third quarter ended June 25, 2011
• Awaiting start of Apple’s live audio webcast…
• 4:50pm EDT: AAPL shares up $27.18, or 6.95%, as after-hours trading resumes; AAPL breaks $400 barrier.
• Apple’s Q311 conference call coverage begins Tuesday, July 19, 2011 at 5pm EDT/2pm PDT.
Apple destroys Street with all-time record revenue and earnings – July 19, 2011
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