Apple CEO Tim Cook: ‘No technology company has ever reported these kinds of results’

During yesterday’s Apple Inc. fiscal first quarter 2013 earnings conference call, which MacDailyNews covered with live notes here, Apple CEO Tim Cook made some interesting comments, including:

• We are incredibly pleased to report an extraordinary quarter with $54.5 billion in revenue and new records for iPhone and the iPad sales. No technology company has ever reported these kinds of results.

• You’re going to hear a lot of impressive numbers during this call, but they’re not the only way that we measure success at Apple. The most important thing to us is that our customers love our product, not just buy them, but love them. Everyone here is laser focused on creating an unprecedented customer experience. We have now sold well over half a billion iOS devices, including a staggering 10 per second last quarter alone. We couldn’t have achieved these milestones without the very best products in the world and unmatched execution by our engineering operations and sales teams to deliver so many innovative and beautifully designed products. It’s simply phenomenal.

Apple CEO Tim Cook
Apple CEO Tim Cook
• Everyone at Apple has their eyes on the future, a future driven by the incredible hard work and dedication by the most talented and creative team on earth who all share a common purpose of continuing to create the world’s best product and in doing so enrich the lives of our customers.

• Sequentially we increased [iPhone sales] over 70% from the September quarter, which was 3.5 times market. And so we could not be happier with that. In terms of the geographic distribution, we saw our highest growth in China and it was into the triple digits, which was higher than the market there. And so, I would characterize it as we are extremely pleased.

• The iPhone 5 offers as you know a new 4-inch Retina display, which is the most advanced display in the industry and no one comes close to matching the level of quality as the Retina display. It also provides a larger screen size for iPhone customers without sacrificing the one headed ease-of-use that our customers love. So, we put a lot of thinking into screen size and believe we’ve picked the right one.

• If you look at the iPhone sales across the quarter, we were very constrained for much of the quarter on iPhone 5. As we began to produce more and ship more sales went up with the production. iPhone 4 was actually in constraint for the entire quarter and sales remained strong, and so that’s helped sales progress across the quarter

• 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.

• The most important thing to Apple is to make the best products in the world that enrich customer’s lives. That’s our high order bit; that means that we aren’t interested revenue for revenue sake, we could put the Apple brand in lot of things and sell lot more stuff but that’s not what we’re here for. We want to make only the best products and so what does that mean for market share? We’ve been able to do that and I think we’ve had a great track record here on iPod doing different products at different price points and getting a reasonable share from doing that. And so one doesn’t, I wouldn’t view these things as mutually exclusive as some might, but the high order bit is making a great product, that enriches customer’s lives. And so that’s what we are focused on.

• If you look at the previous year, our Mac sales were about 5.2 million [units]. This year, they were 4.1 million and so the difference is 1.1 million. And so let me try to bridge that. iMacs were down by 700,000 units year-over-year. As you remember, we announced the new iMacs late in October and when we announced those, we announced that they would ship, the first one, the 21.5-inch would ship in November and we did ship it at the end of November, we announced that the 27-inch would ship in December and we did ship that in mid-December. And so there were limited weeks of ramping on these products during the quarter, we left the quarter with significant constraints on the iMac. And we believe we know that our sales would have been materially higher if those constraints would not have exist. We tried to tell people this on the conference call in October, I think I said that we would have significant constraints on iMacs, but I recognized to some folks this maybe to surprise… Number two, if you look at last year… we had 14 weeks in the quarter. We have 13 weeks in the quarter this year. Last year, in the average week, we sold 370,000 Macs. The third part of the bridge here would be that our channel inventory was down from the beginning of the quarter by over 100,000 units. And that’s because obviously we didn’t have the iMacs channel inventory was in significant constraint. So, if you just take these three factors, they bridge more than the difference of between this year sales and last year sales.

• We are working on some incredible stuff. The pipeline is chock-full, I don’t want to comment about a specific product, but we feel great about what we have got in store.

• In terms of Maps, we have made a number of improvements to Maps since the introduction of iOS 6 back in September and will roll out even more improvements across the rest of the year and we are going to keep working on this as I have said before until it lives up to our incredibly high standards. Users can already see many of these improvements because they include things like improved satellite and improved imaginary and improved categorization, improved local information for 1000s of businesses and so forth. The usage in maps is significantly higher than it was prior to iOS 6.

• In terms of other services we feel fantastic about how we’re doing, in notification center we’ve sent over 4 trillion Notifications – this is mind blowing… For iMessage we’ve sent over 450 billion and are currently sending those 6 billion per day…. We have over 200 million registered users [and] we have 800,000 apps on the App Store with over 40 billion downloads and so I feel really, really great about it, there is obviously more stuff we can do and you can bet we’re thinking about all of it.

• I can tell you that the number of ramps were unprecedented in the fact that we had new products in every category is something we have not done before. We feel great to have delivered so many products for the holiday season though and our customers have certainly expressed joy over it.

• If you look at our total China, total Greater China, which would include our retail stores that are in China. Our revenues were $7.3 billion in the quarter. So, this is incredibly high, it’s up over 60% year-on-year. And again, that’s comparing 13 to 14 weeks and so it’s really the underlying growth, it’s higher than that. We saw exceptional growth in iPhones into the triple digits. iPad, we shipped iPad very late in the quarter in December, and despite that, saw very nice growth. We are expanding in Apple retail there. In the year ago quarter, we had 6 stores we now have 11. We obviously have many more to open there. In our premium resellers, we went over 400, up from a little over 200 in the previous year. And we increased iPhone point of sales from 7,000 to over 17,000 there. And now this isn’t nearly what we need and it’s not the final by any means, we are not even close to that, but… I feel that we are making great progress that was just over there recently. And I was talking to a lot of different people and I am very happy with how things are going. It’s clear that China it’s already our second largest region as you can see from the data that we have given you and it’s clear, there is a lot of potential there.

• In terms of the product that we sell today, the Apple TV, we sold more last quarter than we’ve ever sold before, eclipsing 2 million during the quarter. It was up almost 60% year-on-year and so there is actually very, very good growth in that product… I have said in the past this is an area of intense interest for us and it remains that and I tend to believe that the, there is a lot we can contribute in this space and so we continue to pull the string and see where it leads us but I don’t want to be more specific.

• I think overall our team did just a fantastic job ramping a record number of new products during the quarter. We did have significant shortages due to robust demand on both iPad mini and both models of the iMac that persisted the entire quarter. And we are still short of both of those today as the matter of fact. Additionally, supply of iPhone 5 which short to demand until late in the quarter and iPhone 4 was short for the entire quarter, we believe that we can achieve a supply demand balance on iPad mini during this quarter and on iPhone 4 during this quarter. On iMac, we are confident that we are going to significantly increase the supply, but the demand here is very strong and we are not certain that we will achieve a supply demand balance during the quarter.

• I see cannibalization as a huge opportunity for us. One, our base philosophy is to never fear cannibalization. If we do, somebody else will just cannibalize it and so we never fear it. We know that iPhone has cannibalized some iPod business. It doesn’t worry us, but it’s done that. We know that iPad will cannibalize some Macs that doesn’t worry us. On iPad in particular, we have the mother of all opportunities here, because the Windows market is much, much larger than the Mac market is. And I think it is clear that it is clear that it’s already cannibalizing some and I think there is a tremendous amount more opportunity there. And as you know, I have said for two or three, actually three years now I believe that I believe the tablet market will be larger than the PC market at some point. And I still believe that. And you can see by the growth in tablets and the pressure on PCs that those lines are beginning to converge.

• If somebody will buys an iPad mini or an iPad and it’s their first Apple product, we’ve had great experience through the years of knowing that when somebody buys their first Apple product that a percentage of these people wind up buying another type of Apple product. And so if you remember what we had termed “the halo effect” for some time with the iPod, with the Mac, we are very confident that will happen and we are seeing some evidence of that on the iPad as well. And so I see cannibalization as a huge opportunity.

• Today we have 24 carriers on LTE around the world for iPhone 5. Those are in countries like the US, Korea, UK, Germany, Canada, Japan and Australia and a few others. Next week, we are adding 36 more carriers for LTE support. And these carriers will be in countries that were currently not supporting LTE, so the LTE coverage now as of next week in Italy, Denmark, Finland, Switzerland, Philippines, also several Middle Eastern countries. And so if you look at the total of all of these and the incremental subscribers that are in those countries, that’s over 300 million. And so that’s the next range of LTE rollouts that I am pleased to tell you about today.

• I am not going to go into our pricing strategy, but we feel great about the opportunity of getting products to customers and a percentage of those buying other Apple products. And that we have obviously seen evidence of that through history and continue to see evidence of that today.

Related article:
MacDailyNews presents live notes from Apple’s Q113 Conference Call – January 23, 2013


        1. Gee, as a result of using a particular explicit expression, hmmm I think a lot of people have used that word from time to time. They might be broken as you say, but can it be fixed?

        2. “Broken is as broken does,” therefore to fix it one must stop swearing. Profanity has no good place in public discourse. It is not an idea, it is not a position, but it is rude.

        3. I don’t know, the use of profanity in public discourse to accentuate an emotion can be effective but I do see your point and the point of others. I am just bemused at times about the concept of swearing, sometimes it is about sex, bodily functions, other times religion and sometimes, well golly it’s just funny.

          I think the f word has incorporated itself into the language so much that it’s lost its intensity. I know there are some people that use the word constantly, repeating it. Then again there are others who repeat a phrase over and over again…LOL, LOL, LOL, or DOH!!!

          I think that rudeness is often in the eyes of the beholder. Yes I think that using the F word is rude, however it is as I have pointed out, part of the freedom of expression.

          Modern day music makes a lot of use of that word, much more than previously. It used to be shocking, now well it’s just another word.

          Frankly I prefer grokking myself, it’s a lot sexier.

        4. Come off it. With any freedom there is an associated responsibility. Language like that does not show thoughtfulness or intelligence, politeness or respect. As far as I know, none of us readers deserve to be spoken to in that way. He may be upset by the article but he should take it out directly with the author.

        5. 1. Come off it.: There is no need for me to do that.

          2. “With any freedom there is an associated responsibility.”: True, that is like yelling “fire” when there isn’t one. The author is expressing an opinion.

          3. “Language like that does not show thoughtfulness or intelligence, politeness or respect.”: I disagree, it shows that the person has enough thought and intelligence to assess information, make a personal evaluation of it and communicate it to others. It also shows a politeness and respect as he/she wrote “The f**king system is broken!” in lieu of the actual full spelling of the word that probably offends you.

          4. “As far as I know, none of us readers deserve to be spoken to in that way.” From my interpretation the post was about the system and not about or to us. On the other hand I don’t mind being spoken to that way so consider yourself informed.

          5. “He may be upset by the article but he should take it out directly with the author.”

          Well from what I interpret about what he/she said the situation is upsetting, and sometimes the reaction is to exclaim oneself in the parlance of our times.

        6. For most people, the ‘f’ word is a bad habit and has about as much of a meaning to them as a grunt. On the other hand, those of us that come across that language garner no real meaning from it and see the writer as just a vulgar foul person. You don’t hear or see this behaviour nearly as much in the educated well healed people of influence. I wonder if we should aspire to creating a better society of just living the lowest form of it.

        7. What the hell are you on about? I’m angry because a bunch of hacks are playing the system with my investment. It has nothing to do with you! It’s based on a guttural disgust expressed through a profane statement that (almost) all adults here can deal with…geez.

        8. I agree with your disgust sir, but I disagree with your juvenile expression of that disgust. Your credibility drops with each f-bomb and I am less likely to listen to you.

        9. Hey, I got your idea of your first post…LOL and it looks like there are a group of people that cannot deal with it. I thank you for using the asterisk in lieu of certain letters. Actually I find your second post more offensive with the use of the h work but I do love “gee” as in gee whizz…or cheese whizz or as they say in Israel Cheeses of Nazareth…well maybe they don’t.

          As Evelyn Beatrice Hall once wrote: “I disapprove of what you say, but I will defend to the death your right to say it”.

          Now I understand you are upset about the stock performance, but I’ve seen this before and I would like to add that you won’t lose any money on your stock until you decide to sell it. It will go up, pass $700. Patience is key.

        10. That was a very thoughtful move, and you can go back and look at what would have happened if you invested your money in another stock at that time. I do believe then you will get an idea of how well you (and I) have done.

          I think if you have invested that long you have noted the trends with Apple. This isn’t the first time a brilliant earnings report has resulted in the stock being down.

          I like you am not overly impressed by a system that is rigged but it’s part of the territory, and yes it warrants using the F word every now but over the long term, well you made a good investment. May you live to see $700 in the rear view mirror.

      1. At it again we see, Take your self inflated morals and Stick them 3I3c7ro.

        You pull this finger pointing all the time when someone says how they feel, if you don’t f**king like its just to f**king bad chump.

        1. You make my point and possibly 313c7ro’s point also. Yes children do talk like this, but again they are children, they don’t know better, they are still learning how to be polite and well behaved. You will never find foul language in scientific papers, laws, legal documents, court decisions, or any above board honorable transaction, like Apple finance reports. This is because it serves no good purpose. It only degrades, offends, and lessons a person. You have every right to use profanity, but you are the one whom looks bad when you do. I ask everyone to please clean it up. It doesn’t belong. It is not polite. It is in fact, childish.

        2. Are you advocating that we use children as our role model? Do you think that we should aspire to the lowest language in our society?

          I think that we can do much better than the standard that you aim for.

    1. The only entity that is a total disappointment is Wall Street and anal-ysts in general. Meanwhile Apple will continue to kill in numbers and products. I am glad if a 4.8″ iPhone comes out just to shut up the Fandroid losers. Apple should add cell phone capability to iPads too as an option. That way they’re covered for 8″ and 10″ “phones” too, REALLY shutting down the Fandroiders.

  1. Society in general, the financial markets, governments, and man’s general intelligence has been broken for years. Thank Goodness Apple is focused on excellent products and not the shenanigans of idiots and corrupt morons.

      1. Jony doesn’t like public speaking, so I doubt you’ll ever see that happen. I’m not sure if he actually has glossophobia or not, but I actually think we wouldn’t see the “normal” Jony if he were made to do so.


    The Market for technology products is fickle, flighty, transparent, changes on a nano-turn, has mood swings that NO ONE can predict or explain, yet Tim Cook, as smart as he is, keeps trying to chop it up into manageable little, behaviorally consistent nuggets he can spin up a can of blinking lights, buttons and tightly wound antenna to keep them ‘stable’…… “BULLSHIT”!!!

    The last 6 or 7 weeks of press, speculation, lies, manna, arguments, rights and wrongs, strong and weak statements, and a lot of what ever it takes to settle the noise down, has managed to crash the value of Apple down by 40 %….. THAT’ s OVER $ 200 BILLION DOLLARS because people like to scream at each other and calm heads can’t scream as loud as morons. AND, because the morons that have been screaming for the last 6 or 7 weeks like lunatics straight out of the asylum, got EXACTLY WHAT THEY THOUGHT TODAY… A CRAPPY APPLE EARNINGS REPORT – FROM A HOLIDAY PERIOD !! W T F !!!

    I don’t care if it was the law of big numbers (they got reduced by $ 200 BILLION over the last few weeks), I don’t care if it’s Klowns making up bad FUD halfway around the world that was a LIE the instant it hit a keyboard. It resulted in a BAD EARNINGS REPORT FROM APPLE TODAY and that’s NOT ACCEPTABLE. ESPECIALLY IN A STONG HOLIDAY QUARTER where they should have had a performance that just left global pundits stunned and speechless …. Instead, Apple got laughed off the stage and the stock went down ANOTHER $ 60 BILLION DOLLARS !!!


    1. Apple doesn’t have its head up its arse. I have studied the history of the stock market and “shorting” going back to Holland several hundred years ago. I have also studied the infamous “stock pools” of the 1920s which paid the press to lie about stocks. You’ve gotta look elsewhere for the problem. You won’t find a problem at Apple (APPL).

      1. Stock pools

        Called something different now, but the game is the same. When you have hundreds of millions of dollars in the hands of corrupt WS brokers, it is only a matter of time for them to buy the press.
        Once that happens, they control the stock.

        Look at yesterday and today. The average user did not listen to the actual meeting, they do the casual glance at the papers and TV and all they see is report after report of doom, gloom and Apple is going to hell. So they react by selling their stock. Why not, the newspapers who are “trust worthy” are telling them Apple is going under.

        Yet, looking at the actual numbers, Apple is kicking ass.
        No other tech company is making the money they make.

        This is a full court press to destroy Apple for some reason.
        The shorts had their wildest dreams come true and want even more. Greedy, lying bastards.

    2. And it is Tim Cook’s fault that the world, particularly Wall Street, is full of nimrods? The only thing Steve might have done differently is call them out for being nimrods – Tim is too much a gentleman for that. On the other side of the fence, I think one thing that was done very poorly is the rollout of the new iMac. The announcement should have waited until after the first of the year if both sizes were not ready for shipping in quantity by mid-November. As it is, the 27″ is still 3-4 weeks for shipment — not good!

      1. The launch of the iMacs had more impact if they were rolled together with the iPad mini launch. Although supply was constrained, they did announce to the world that new iMacs were coming.

        Would you have been a happy camper if you went out and bought the old model iMacs for Christmas only to be blindsided a couple of weeks later with the newer, sleeker, sexier models. You’d have a bunch of angry Apple customers cursing you from one end of the country to the other.

        1. The other thing is that when they announced the new iMacs the old ones were taken off the online store – You couldn’t even buy one if you wanted to – that is why the sales were low.

    3. They can’t sell what they don’t have and ultimately it’s no one’s fault but Apple. Doesn’t matter how great their product is (and its the best) if their supply is constrained (hell, I’m still waiting to buy some new Mac Pros!). Combine that with increased competition and Apple is forced to make the iPad Mini and have shorter refresh schedules. Thus the margins and projected margins have come down. And the law of large numbers is a fact. No company can grow to the size that Apple was and continue 40 to 50% growth every year. That’s just not possible. But investors kept piling on anyway. They closed their eyes and bought more Apple. Or they watched their AAPL investment go up and never pulled the trigger. You just can’t do those things. So yes sir, sadly you are correct.

    4. There is nothing wrong about Apple, except that Wall Street has its own agenda. Revenues are growing still, not at he torrid rate of yesteryear which cannot be sustained indefinitely, but growing nevertheless and Apple is making tons of money, more so than any companies out there.

  3. Tim, everything you said is the truth and shows a trajectory to the stars. (By the way, I still have a Mac Classic that works!) But the grifters on Wall Street are in a state of profound delusion. They see black as white, up as down, and stunning success as the harbinger of failure to come. Please ignore everything that Wall Street says—which would not surprise me if they said, Apple needs to hire Steve Ballmer and fire Tim Cook.

  4. To all the idiots who are or will be calling for Tim Cook to be replaced: the only ones who need to be replaced are the Wall Street d*ckheads who are clearly gaming the system. These jerks don’t know a good thing when it slaps them in the face.

  5. how the hell do you make 10 products a second to sell?
    if they wee able to produce 20 products a second they would sell 20 . cook said they are loaning the machines to do just that to the factories! its production speed not market limiting apple! what company does not need that problem ?

  6. The only people wailing and gnashing teeth are the ones disappointed by AAPL’s performance, not Apple’s. Apple has said over and over that their emphasis is not on pleasing stockholders, since they can’t control how the company is valued in the markets (obviously). Consequently, there’s an inherent risk in buying Apple stock, and you should do so only with the understanding that its YOUR risk, and YOUR responsibility to decide when to buy or sell. Apple as a company is performing at ridiculously high levels, and I love watching their success (and using their products). If you think they aren’t doing their best (and indeed, the best possible) to intelligently control development, production, supply, and inventory, then your expectations are unrealistic, and need to be adjusted.

    AAPL performance is a function of Wall Street, and all the things that implies. It is not to be taken as any kind of indicator of the performance of the company or its officers. So get angry at the Wall Street system, if you want, but don’t blame Apple for AAPL.

  7. None of the above matters. Apple nada meteoric run up and then a deflation.

    There is nothing wrong with the company. It produces popular products and sells them like crazy. The market expected the golden goose. But the market decided it was better to eat the eggs.

    What is Apple worth? Whatever the markets want it to be worth.

    The stock market is not the Super Bowl.

    1. It’s not Tim or Apple. Analysts spend the first 10-12 weeks of a quarter saying how low Apple’s sales will be because they are broken, out-competed or no longer innovative, but then, somehow, post really high expectations prior to earnings reports. I think it’s part hit-whoring, part paid market manipulation and part fun. The catch phrase “constrained’ referring to supply chain, has a negative connotation. Every company would like to be able to sell every widget they can make. It’s not a dearth of supply, but rather an over abundance of demand that leads to “constrained supply.” It’s not a bad thing to be a little behind on orders.

      1. Absolutely! Anyone in a production environment knows you adding capacity at Apple’s rate of growth is a monumental task. Therefore, backlogs are generated and as capacity plays catchup. Having some backlog allows you to operate in a more effective manner as you can do better production scheduling. Yes, lead times may suffer a little, until capacity does catch up.

        Tim mentioned in his Grand Central Apple Store talk about the need for skilled engineers and technicians to design and implement the manufacturing processes…in order to increase capacity. He mentioned it is even worse in the US.

        It doesn’t matter who the suppliers are, adding capacity in huge chunks is scary for them.

        The law of big numbers applies to capacity increase too. This is beyond adding a few workers to the line, or working overtime, or adding another shift or another line or even another production plant.

        And I believe Tim is just the guy to make it happen.

    2. I don’t see how anyone could get Apple to do better than it is, and I can’t really imagine how anyone else at the helm would have produced a different outcome over the last 6 months (and that includes Steve Jobs, if he had lived). APPL has had much greater falls (percentage-wise) under his reign, and they’ll likely have them again.

      Again, celebrate Apple’s successes, but if AAPL is too erratic for you, blame the Wall Street system and put your money on a different bet. It isn’t under the control of anyone at Apple.

    1. I agree. An honestly, I don’t really care if their stock price drops or their market share never rises. I just want Apple to earn enough profit to keep doing what they have been doing. I am a happy Apple customer.

  8. Is it really bad that Apple turns into a value company than a growth company?
    Perhaps all of the commentators should just buy this cheap inexpensive stock and stop listening to what the WS analysts “divine”.

  9. Apple is in good shape and will undoubtedly be bringing out new devices as their product cycle permits. Seems people want new iphones every 6 months or something.

    Tim Cook is a bit of a square when dealing with the media or presentations but people just need to deal with it and their pessimism and see that Apple hasn’t lost its shine.

    1. Yes, and they want a bigger screen not necessarily 4.8″or 5″. Tim
      seems to be in denial that IPhone 5 is the best screen size there is.
      Look around, trend is to bigger , the only drawback is handling it, no big deal sacrifice a little. Don’t ever be in denial just like RIMM a few
      years back insisting on qwerty smartphones. Blind and Cocky.

  10. To me this report is great. While logic dictates that the stock should go up at some time according to fundamentals, the short term is always subject to emotion. If I had more money, I would buy more shares. In the meantime, I can wait.

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