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.