MacDailyNews presents live notes from Apple’s Q113 Conference Call

MacDailyNews presents live notes from Apple’s Q113 Conference Call with analysts starting at 5pm EDT/2pm PDT today.

Live notes from Apple’s Q113 Conference Call in reverse chronological order:

• End of conference call.

• AAPL @ 6:01PM EST: down $54.70 (10.64%) to $459.31

• Cook: Over 300 million addressable customers in this next LTE rollout phase
• Cook: Currently we have 24 LTE carriers around the world; next week we’re adding 36 more LTE carriers to support iPhone 5

• Cook: I see cannibalization as a huge opportunity
• Cook: We somebody buys their first Apple product, a significant number of people (halo effect) buy other Apple products
• Cook: Tablet market will be larger than PC market – said it for three years now and still believe that
• Cook: We never fear cannibalization. It is an opportunity. iPad will cannibalize some Mac. iPhone has cannibalized iPod. This does not bother us.
• Cook: iPad mini, iMac, iPhone 5, iPhone 4/4S were all constrained last quarter; iMac may remain constrained in this quarter due to strong demand

• Cook: Last quarter, we had strong sales for iPad and iPad mini
• Oppy: We would expect a large YOY increase in iPad sales, but a typical, post-holiday sequential decline
• Cook: We believe that we can achieve supply/demand balance on iPad mini this quarter
• Cook: iPhone 5, with thenumbers we’re selling, is selling to a lot of new customers.

• Cook on Apple TV (as prompted by, of course, Gene Munster): We sold over 2 million Apple TV units in the quarter, up almost 60% YOY (13 weeks vs. 14 weeks). This is an area of intense interest for Apple. Cook declines to say any more about television.

• Cook: I am very happy with how things are going in China; China is already the 2nd largest region for Apple and it’s clear there is a lot of potential
• Cook: 6 stores have grown to 11 stores in China and we have much work to do
• Cook: iPad shipped to China very late in the quarter and despite that saw very nice growth
• Cook: Total greater China, including retail stores, revenue was $7.3 billion, up over 60% YOY and this is 13-weeks vs. 14-weeks
• Cook: The number of new product ramps last quarter was unprecedented for Apple. We feel great to have delivered so many new products for the holiday season

• Oppy on CapEx: We expect to spend about $10 billion this fiscal year, $1 billion on retail stores; $9 billion on equipment for partner facilities and adding to data center capabilities and for infrastructure

• ASP for iPhone essentially the same YOY

• AAPL @ 5:40PM EST: down $50.52 (9.83%) to $463.49
• Oppy: iPad mini – we could not make enough, we were constrained every week; we ended the quarter with a significant backlog

• Over 40 billion App Store downloads
• Over 450 billion iMessages sent
• We’ve now sent over 4 trillion iOS Notifications
• Cook: Apple Maps is already much improved and we will continue to work on it until it meets our incredibly high standards
• Cook: We are working on some incredible stuff, the pipeline is chock full, we feel great about the pipeline

• Cook: Our portable Macs alone were in line with IDC’s forecasts
• Cook: To a lesser extent, the market for PCs is weak. Apple sold 23 million iPads and could have sold more, but could not build enough iPad minis to satisfy demand.

• Cook: If you look at Q112, Mac sales were 5.2 million vs. 4.1 million this quarter. iMac down by 700,000 units YOY. This is due to supply constraints of new iMacs. We left the quarter with significant constraints on the new iMacs. We tried to tell people this on the conference call in October. if you look at last year, it was 14 weeks vs. 13 weeks this quarter. Our channel inventory down by over 100,000 units; we didn’t have the iMac in channel inventory.

• Cook on smartphone market share: The most important thing to Apple is to make the best products in the world that enrich customers’ lives. We are not interested in revenue to revenue’s sake. We want to make only the best products. iPod is at different price points and gotten reasonable share.

• Oppy: Guidance in the past we gave you a single point estimate; it was conservative that we had reasonable confidence of achieving; going forward we are now providing a range of guidance that believe that we will report within

• Cook: “I know there has been lots of rumors about order cuts and so forth and so let me just take a moment to make a comment on these. I don’t want to comment on any particular rumor because I would spend my life doing that but I would suggest it’s good to question the accuracy of any kind of rumor about build plans and also stress that even if a particular data point were factual it would be impossible to accurately interpret the data point as to what it meant for our overall business because the supply chain is very complex and we obviously have multiple sources for things, yields might vary, supply performance can vary. The beginning inventory positions can vary, I mean there is just an inordinate long list of things that would make any single data point not a great proxy for what’s going on.”

• Cook on rumors of iPhone component cuts: It’s good to question the accuracy of any rumors about build plans. Even if numbers were accurate, it’s difficult for those outside of Apple to properly interpret the reason(s).
• Cook: iPhone sales very constrained for much of the quarter; iPhone 4/4S constrained for the entire quarter

• Cook on iPhone screen sizes: iPhone 5’s 4-inch Retina display is the most advanced display available int he industry today; we put a lot of thinking into screen size and believe we’ve picked the right one

• Oppy: We continuously assess stock buybacks and dividends; we do consider increasing these programs and we will do what’s in the best interest of our shreholders
• Cook: We increased 70% in iPhone sales; triple digit growth in China; both of which are higher than the overall market

• Oppy: We remain very confident in our product pipeline going forward

• Over 75 million iOS devices were sold during the 13-week quarter

• Guidance: Revenue between $41 billion and $43 billion; Gross margin between 37.5% and 38.5%; Operating expenses between $3.8 billion and $3.9 billion; Other income/(expense) of $350 million; Tax rate of about 26%

• $137.1 billion total cash on-hand; a sequential increase of nearly $16 billion
• Tax rate for quarter was 26%

• Apple store visitors up 7% YOY
• 11 new Apple Retail Stores opened during quarter. 401 stores total, 150 of which are outside the U.S.
• Apple retail stores generated $6.4 billion for the quarter

• Macs declined 16% YOY. New iMacs were significantly constrained. Apple believes Mac sales would have been much higher absent iMac constraints

• 3.4 million iPads in channel inventory – below 4-6 week target
• 1.7 million iPads sold per week vs. 1.1 million YOY – 60% growth per week

• Apple sees continued iPhone deployments in businesses around the world.
• iPhone is in target range of 4-6 weeks channel inventory
• Greater China iPhone sales doubled YOY

• 39% increase per week in iPhone sales YOY; 78% sequential increase over Q412
• Apple has revised revenue by product category in their quarterly reports

• AAPL @ 5:07PM EST: -$33.61, or -6.54%, to $480.39

• Apple now has over 400 Apple Retail Stores around the world

• 10 iOS devices sold per second last quarter alone
• Cook: The most important thing for Apple is that our customers love our products; we are laser-focused on that goal

• Tim Cook: Jan. 24, 1984 marks the introduction of the Mac by Steve Jobs
• Tim Cook: People join Apple to do the very best work of their lives

• Apple posted record quarterly revenue of $54.5 billion in the 13-week Q113 quarter vs. $46.3 billion in the 14-week Q112 quarter

• Apple posted record quarterly net profit of $13.1 billion, or $13.81 per diluted share in the Q113 13-week quarter vs. net profit of $13.1 billion, or $13.87 per diluted share in the Q112 14-week quarter

• Apple’s BoD declared a cash dividend of $2.65 per share payable on February 14, 2013 to shareholders of record as of the close of business on February 11, 2013.

• 12.7 million iPods sold (in 13 weeks) vs. 15.4 million in the year-ago quarter (14 weeks)
• 4.1 million Macs sold (in 13 weeks) vs. 5.2 million in the year-ago quarter (14 weeks) – [New iMac supply was severly constrained throughout quarter – MDN Ed.]
• Record 22.9 million iPads sold (in 13 weeks) vs. 15.4 million in the year-ago quarter (14 weeks)
• Record 47.8 million iPhones sold (in 13 weeks) vs. 37 million in the year-ago quarter (14 weeks)

• Average weekly revenue was $4.2 billion in the 13-week quarter vs. $3.3 billion in the 14-week year-ago quarter
• Apple’s Q113 (Holiday 2012 quarter), ended December 29, 2012 spanned a 13-week period vs. Q112 which covered a 14-week span

Related article:
Apple reports record results: $54.5 billion revenue, $13.1 billion profit, $13.81 EPS – January 23, 2013

34 Comments

  1. Staggered, Apple designs, builds and sells its own products, (albeit the manufacture is subcontracted to China) reports a record quarter and the share price goes down. All Amazon is a glorified distributor who designs and builds and sells nothing of its own. Ditto Google. Why are they considered better? Why?

    1. Because America (like the UK) has reached the point of believing that actually designing and building anything is wrong in comparison to the trend in Germany, pushing paper in the Banking and Financial industries is considered the way to go, Apple, Dyson in their own countries, or the German companies go against the overall trend of what Wall Street wants-likes, therefore Apple pays the price.

      Notice the constant calls for Apple to hand out their very necessary war chest (137 billion dollars) which also goes against Wall Street’s new business math belief’s.

  2. Still waiting on my 27inch iMac. Shame. Convinced a colleague to purchase one for work too..,we’ve been waiting..and waiting..getting delivery dates pushed back every week or so with no end in sight.

    Bet that has something to do with Mac sales being down.

    Putting a bad taste in my buddies mouth as this is his first Mac. This delay is crazy! We ordered the week they were available!

    If the rational is that Apple caught a bug during QC, it would be worth the wait. If its due to manufacturing yield, that’s a big negative for Apple. They should know how to do this by now. Jobs never had issues like this.

  3. The Economist has a nice article about the potential for war between two populous asiatic countries, one of which launched an attack on Pearl back in December ’41, and is now allied to the U.S. What happens if the shooting starts to Apple’s production line and Chinese sales expectations is a serious concern, and conflict certainly would drop Apple’s share price.
    On the financial numbers for the quarter, the gross margin drop has to relate to sales of iPads which right up front were billed as having a higher cost content than the norm, and the minis apparently accentuated the gross margin decline. Whilst the gnomes of Wall Street instead posited higher GM ratios in the expectation of reverse gravity.

  4. Though I’m a big Apple fan (and investor), this financial report is NOT good news for Apple. Even adjusting for the 14/13 week quarter change, profits grew in single digits. That may not be a decline, but it is weak growth by any measure. Not too long ago, when Apple’s stock was soaring, the company was growing profits 60%+ YOY. Apple probably can’t be expected to continue at that rate anymore given the maturity of its markets, but it does need AT LEAST 20-30% earnings growth YOY to be viewed as performing well. And if its current markets are becoming saturated, it needs to enter some new ones! Not good. 🙁

  5. 23billion in cash flow. 4.4 billion in dividends and buybacks. Despite the buybacks and div, cash increased by 16 billion.

    WS wants to put in their Sculley back in apple so they can pillage the company. They want to push investors to replace management with people they can trust to again pillage the company.

    Even the carnival barker from Seattle is salivating on the cash hoard of apple.

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