MacDailyNews presents live notes from Apple’s Q411 Conference Call

MacDailyNews presents live notes from Apple’s Q411 Conference Call with analysts starting at 5pm EDT/2pm PDT today.

Live notes from Apple’s Q411 Conference Call in reverse chronological order:

• End of conference call.

• Cook: We dropped 3GS price a bit early in some market to see what would occur and that gave us the conviction to price the iPhones models as we did with the launch of the iPhone 4S.
• Cook: iPhone channel inventory at the end of Q4 (ended 9/24/11) – over half of that has already sold through
• Cook: We are extremely excited in the future pipeline and we have a pretty good handle on what to do next.
• Cook: We see the tablet market as a huge market and we could not be happier with our position in it.

• Cook: A huge percentage of Japan’s total revenue in 2010 Q4 was iPhone 4 launch, so YOY comparison is skewed. Mac grew 40+% YOY in Japan.
• Oppy: The extra 14th week in the quarter will conclude on New Year’s Eve day.

• Cook: Smartphones will eventually eat into the handset market (1.5 billion unit market)
• Cook: We want iPhone to be in as many customers’ hands as possible. We think it is the greatest smartphone by far.
• Oppy: Of the $81.6 billion in cash and short term securities, $54 billion is offshore
• Cook: The cash isn’t burning a hole in our pocket. We invest it conservatively. We’ve acquired several companies, invested in supply chain, to build out our retail stores… “I’m not religious about holding cash.” We’ll continue to ask ourselves what’s in Apple’s best interest.

• Cook: We are seeing cannibalization: People buying iPad rather than Mac. Materially larger amount of people electing to buy iPad instead of a Windows PC. Mac had the best quarter ever last quarter (as did iPad). “With cannibalization like this, I hope it continues.”

• Cook: We have already stared placing additional efforts in promising markets (Brazil, Russia). Same game plan as Apple used in China
• Cook: No slowdown on iPad. iPad now in supply/demand balance. comScore: 97% of tablet usage in U.S. is iPad
• Cook: It’s crystal clear in looking at the number that there was a slowdown on iPhone (due to anticipation of new model)
• Cook: Apple in 90 countries with iPad, 40,000 points of sale. 50,000 on iPod, 120,000 on iPhone.
• Oppy: We expect 40% gross margin, operating margin of just over 31%. Apple is confident and excited about what’s in the product pipeline.
• Cook: NAND flash, LCD, and DRAM: Positive supply situation. Other products (outside of HDDs (Thailand) ) will be at or above historical trends. Apple sees a favorable component pricing environment in quarter.
• Cook: Unibody Mac cases. We are investigating situation and have factored supply outlook as we see it into our guidance.

• Cook: iPhone price points: iPhone 4 and iPhone 3GS are fantastic products at excellent prices – for both post-pay and prepay markets
• Cook: No comment on litigation (Android, HTC, Samsung, etc.). We spend a lot of time and money on innovation and we don’t like it when somebody takes those. Unfortunately, we’ve been pushed into the court system. Won’t comment on whether the end goal is injunctions and/or royalties.

• Cook: Many Thailand factories are inoperable. We would say our primary exposure in on the Mac lines due to hard drives
• Cook: Thailand monsoons and flooding: Our hearts go out to the people.

• Cook: Siri is incredible, a profound innovation. We think many people will use it in a substantial way.
• Oppy: Apple expects to set new all-time records for iPad and iPhone and, for Macs, expects to outgrow PC market for 23rd consecutive quarter
• Cook: iPhone rumors and expectations caused “substantial” deferral of iPhone purchases in Q411
• Cook: Over 40 million iPads sold to date. “I believe that the tablet market will be larger than the PC market.”

• Oppy: We’re heading into holiday season with best product lineup Apple has ever shipped
• Oppy: Apple deferred adding new carriers or countries – waited for iPhone 4S launch to do so
• Cook: Several iPad competitors have come to market. None of them have gained any traction so far.
• Cook: Apple’s approach is to do business with a few companies as possible in order to have deep relationships that foster innovation and also provoke favorable pricing for Apple
• Cook: Apple track record unparalleled in industry in controlling the supply chain, inventory management, etc.
• Cook: The sky’s the limit in China for Apple.
• Cook: Brazil up 118% YOY, Russia and the middle east also very promising
• Up to 7,000 points of sale in greater China. In my lifetime, I’ve never seen a country with so many rising into the middle class that aspire to buy Apple products.
• Cook: China accounted for 16% of Apple’s revenue. $4.5 billion in revenue came from China. Over $13 billion for fiscal 2011 (up from $3 billion in fiscal 2010)
• Oppy: Apple expects favorable component costs in quarter; higher cost structures and lower price points, stronger dollar will offset those costs
• Cook: In our wildest dreams we couldn’t have gotten off to a better start than we have on the iPhone 4S.
• Cook: iPhone sales exceeded internal expectations given anticipation for next-gen iPhone especially near end of quarter
• Cook: Confident Apple will have a large supply of iPhone 4S, “I’m confident we’ll set an all-time record for iPhone sales this quarter.”

• AAPL: $396.30, -$25.94, (-6.14%) @ 5:03PM EDT

• Oppy: Apple is “extremely pleased” with strong end to fiscal year: 72 million iPhones, 32 million iPads, almost 17 million Macs during fiscal year
• December quarter will be 14 weeks vs. 13 weeks
• Apple cash and short term securities: $81.6 billion vs. $76.2 billion at end of previous quarter
• Lower component costs accounted for positive margin vs. guidance

• 40 stores to open
• 77.5 million visitors to retail stores in quarter
• 357 Apple Retail Stores now open at end of quarter
• 1.1 million Macs sold in retail stores; about half sold to customers new to Mac
• $3.6 billion retail revenue
• Over 18 billion downloads from iOS App Store
• Apple iCloud launched last week to “excellent” early reviews

• 92% of Fortune 500 are testing or deploying iPad

• Apple iPad sets new record in quarterly sales
• Apple Mac sets new record in quarterly sales

• Apple “thrilled” to be shipping iPhone 4S and extremely excited about Siri personal assistant.
• Lowes rolling out over 40,000 Apple iPhones in stores
• As Apple expected, iPhone sales were negatively affected as expectations of a new iPhone in autumn spread after WWDC iCloud and iOS 5 announcements.

• Peter Oppenheimer, Apple CFO: “Looking ahead to the first fiscal quarter of 2012, which will span 14 weeks rather than 13, we expect revenue of about $37 billion and we expect diluted earnings per share of about $9.30.”

• Annual revenue of $108 billion and earnings of $26 billion
• 17.07 million iPhones, representing 21 percent unit growth YOY
• 11.12 million iPads, a 166 percent unit increase YOY
• 4.89 million Macs during the quarter, a 26 percent unit increase YOY
• Apple sold 6.62 million iPods, a 27 percent unit decline YOY
• International sales accounted for 63 percent of the quarter’s revenue.
• Gross margin was 40.3 percent compared to 36.9 percent in the year-ago quarter
• Versus revenue of $20.34 billion and net quarterly profit of $4.31 billion, or $4.64 per diluted share, in the year-ago quarter
• Apple posted revenue of $28.27 billion, net profit of $6.62 billion, or $7.05 per diluted share

• Cook: Apple expresses gratitude for all of the condolences received on the passing of Steve Jobs.
• Cook: The world has lost a visionary in Steve Jobs. His spirit will forever be the foundation of Apple.

• Call begins
• Awaiting start of conference call…
• 4:53pm ET: AAPL down $26.44, or -6.26%, to $395.80 per share.


        1. Forget the link. SELL APPLE NOW! One thing for certain. Those amateur Apple bull analysts won’t be quitting their day jobs as janitors and shoe salesmen. They couldn’t figure out Apple’s numbers if they had a damn time machine that takes them into the future. Just burn this day into your memories for the future. If some idiot tells you that Apple is going beat the street, ignore them and walk away. I hope all Apple shareholders were wearing a parachute because Apple shares dropped like it was a 787 Dreamliner that lost both its wings.

          Anyone hoping for Apple at $450 this year? No? Good. No point in hoping for the impossible.

  1. Apple’s CFO must be inhaling illegal substances if he thinks next quarter revenues will hit $37 billion. That’s a growth rate of 33% quarter over quarter. Unprecedented? For sure. Attainable? I don’t think so.

    1. I doubt that Cook will state something that he does not think is a certainty.
      Let’s add up a few numbers:
      Mac: 6M x 1400 ASP = 8.4BB
      iPhones: 30M x 700 ASP = 21BB
      iPads: 20M x 600 ASP = 12BB
      That’s over 40BB there and these number are conceivable given that Apple sold 4M iPhones last weekend alone.

    2. – This quarter will be a week longer (~8%)
      – This quarter is always the strongest for Apple
      – iPhone 4S launch that has already broken early sales records.

      Suddenly 33% more than last quarter doesn’t seem like much

  2. If Apple had been able to start selling iPhone 4S a few weeks earlier, so that the first weekend of sales fell in the previous quarter, Apple would have had AT LEAST another billion dollars in revenue. Instead, that extra revenue now falls into the December quarter, plus this December quarter for Apple has 14 weeks instead of the usual 13.

    I think Apple intended to begin sales of iPhone 4S during the previous quarter when they made their guidance, so it’s a VERY strong showing that Apple still beat its own guidance and had significantly better results compared to the year-ago quarter.

    1. Correct, had Apple released iPhone 4S in September their numbers would of been off the charts ….

      This quarter will be HUGE …. Buy more, like Steve always did when the stock tanked …..

  3. Buy some AAPL now or even better buy AAPL calls tomorrow morning if the price stays depressed. Long in the money calls and you should be rewarded nicely. Steve will be missed but next quarter will be just fine. It wouldn’t be any better if he were still alive and working everyday at Cupertino. His stuff is in the pipeline for quite some time into the future. But after next quarter the street will question the management at AAPL no matter how well they are doing. It’s just the nature of the investing community. No fanboys, it’s nothing personal against Apple. So be very careful if you purchase shares as they are quite expensive and can burn you badly. Be nimble and get in and out when you can make some money. Remember it’s investing not holding. Holding shares of AAPL or any other stock is rewarding only when you profit. You only profit when you sell. You simply wait for a pullback which happens with AAPL like all stocks. My great, great grandmother had CSA currency (that’s Confederate States of America to you yankees) from the war between the states. But it isn’t worth anything. Somebody in my family way back then was a buy and hold person. Go AAPL!

    1. You make a decent point about aapl stock. But what’s the war between the states? Do you mean the American Civil War? And CSA money was worthless because the CSA was worthless.

  4. Wall Street SUCKS – I mean really a company as large as Apple (the largest in market cap) has an increase of 54% in profit on a 39% increase in revinue and that is a bad thing – there is no other company on earth that big that can grow that fast.

    No way the stock should be dropping that fast in After Hours..

    1. At the other end of the spectrum, yahoo’s earnings fall, but “beat expectations” so their price rose in after hours. Dell was also up in after-hours trading (though was fluctuating last I saw it). Wall street is what’s wrong with America.

    2. It’s business. It’s not personal. AAPL simply did not meet the analysts estimates. All companies have estimates. some make or exceed some do not. Geez! It’s a company. Quit acting like AAPL is your best friend. AAPL doesn’t know you or care what you think. Nor do the analysts. It’s a multi billion dollar company that makes great stuff. That’s all it is. Quit acting like a 2 year old. Stop the fanboy
      crap. Enough already with all the fanboys! Wow! This is the third opportunity since August to sell AAPL for a profit. Hopefully tomorrow will be the third time since August to buy back in at bargain prices. Find an adult to invest your allowance for you.

      1. It is actually personal. AAPL does not play well with Wall Street (they dislike paying fees to them) and they do not allow provide clear guidance to the analysts (which I think the word Analyst should be replace with say anal-yst).

        AAPL being in a position where they have a list of companies who are too lazy to innovate are eyeing them with green eyes and will use any opporunity to spread FEAR.

        AAPL does a GREAT job with consumers, and the consumers reward them by paying a great margin to AAPL. AAPL has great board and they need to turn the Wall St to a fan club and guide the guidance.

        People want to follow someone and if there are no leaders then they follow the loud mouth Anal-ysts they read about since they believe anything they read. Sad but it is what it is.

  5. Oooh, I don’t like Cook’s phrase, “We are extremely excited in the future pipeline and we have a pretty good handle on what to do next.”

    Not to read into it too much, “pretty good” is not as good as “very good”. It will be interesting how Apple does in the future without its co-founder.

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