MacDailyNews presents live notes from Apple’s Q214 Conference Call

MacDailyNews presents live notes from Apple’s Q214 Conference Call with analysts starting at 5pm EDT/2pm PDT today.

Apple today announced Q214 financial results with quarterly revenue of $45.6 billion (vs. $43.6 billion YOY) and quarterly net profit of $10.2 billion (vs. $9.5 billion YOY), or $11.62 per diluted share (vs. $10.09 YOY).

• iPhone: 43.719 million units, $26.064 billion revenue (vs. 37.430 million units, $22.955 billion revenue YOY)
• iPad: 16.350 million units, $7.610 billion revenue (vs. 19.477 million units, $8,746 billion revenue YOY)
• Mac: 4.136 million units, $5.519 billion revenue (vs. 3.952 million units, $5.447 billion revenue YOY)
• iPod: $2.761 million units, $461 million revenue (vs. 5.633 million units, $962 million revenue YOY)
• iTunes/Software/Services: $4.573 billion revenue (vs. $4.114 billion revenue YOY)

Live notes from Apple’s Q413 Conference Call in reverse chronological order:

• End of conference call.

• AAPL After Hours : $565.00 up $40.25 (7.67%) @ 6:00PM EDT

• Cook on Apple TV: Sales of Apple TV and the content purchased = Over $1 billion in 2013. That’s why it’s no longer a “hobby.” Apple continues to invest and improve Apple TV. Amazon got some old HBO content. I haven’t had a chance to evaluate that and therefore don;t have an opinion on that right now. Appel has sold some 20 million Apple TV units. Cook feels good about Apple Tv and where it can go.

• Cook: All-time revenue record of 9.8 billion in China, iPhone sales up 28%, Mac units up 13% – gained share in both. More than doubles iTunes/Software/Services in China. iPad grew over 6% in China. Apple did well in every single area in Chine in Q214. First time iPhone buyers – heavy Android switchers. Apple is taking users from Android.

• Cook: The part of the market that we are interested in is the part of the market that are interested in the best smartphones. Not the most expensive; Apple has multiple price points for people who want the best. [Basically, as always, Apple most wants the customers who “get it.” – MDN Ed.]

• Cook: We acquire to help us continue to make insanely great products
• Cook: We look for great companies with great people that fit our need and our philosophy and our strategy; that add value to our shareholders.
• Cook on acquisitions: The key thing for us is to stay focused on things that we can do best and that we can perform at a really hgih level of quality that our customers expect. We are working on things, but we’re not quite ready to pull the string on the curtain. To get every detail right, it takes quite a bit of time.

• Cook: “I am very bullish on iPad.”
• Cook: I feel great about iPad. This doesn’t mean than every quarter, every 90 days, numbers are going to please everyone, but over the arc of time, iPad is extremely exciting.
• 2/3rds of customer planning to buy tablets paln to buy iPad
• Cook wholeheartedly welcomes Office for iPad to App Store.
• Cook: MS Office for iPad does help. If Microsoft did it earlier, it would have been better for them, but it is still good that its on iPad.
• iPad in retail (consumer) market: 46% share in U.S. (NPD) and that include a bunch of tablets that Cook feels dont; belong in the “tablet” category.
• iPad: 98% of Fortune 500 using iPad. Good Technology: 91% of activation of enterprise tablets are Apple iPads. Many enetrprises are writing key proprietary iOS apps for iOS devices. Focus is also on penetration
• Cook: 95% share for iPad in education, so focuse is on penetration, getting more schools to buy. Student achievemnet is higher with iPad in classroom than without iPad.
• Cook: iPad has been the fastest growing product in Apple’s history – instantly a hit in consumer, enterprise, and education. We’ve sold over 201 million units since iPad debuted. Almost 2X iPhone sales in same period of time.

• Cook: We are nit stuck at certain price points. We price based on the value our products are delivering.

• Cook: “The most important thing that we do is to make great products… and that will always be the case.”
• Cook: The bulk of the things you see happening at the U.S. carriers are not happening in other markets
• Cook: Entry-level iPhones are great products and get customers into the superior ecosystem.
• Cook on iPhone replacement cycles, unsubsidized, no-contract carrier plans: Some of the carrier programs may serve to increase the upgrade cycle. Some customers can now upgrade each year, some will hold onto phones longer – the balance is difficult to determine right now. Apple has the ability to attract new users to iPhone to be very significant in emerging markets, new-to-iPhone users upwards of 80% on large geos.
• Maestri: We continue to do very well in emerging markets with iPhone 4s – this accounts for about half the iPhone ASP decline

• Cook: We feel very, very, very good that [iPhone] strength is broad-based
• Cook: We gained share with iPhone in a whole host of markets over the quarter

• AAPL After Hours : $568.17 up $43.42 (8.27%) @ 5:30PM EDT

• Katy Huberty wishes Oppy much luck in his upcoming retirement
• Cook on iPhone ASPs: We price products fairly for the value we are delivering
• Cook on iTunes/Software/Services: There are several things in that revenue line. App Store-only looks different (better) by itself.

• Cook welcomes Luca Maestri
• Cook: Peter Oppenheimer has been Apple’s CFO for over ten year and his accomplishments is immense. Apple is over 20 times larger than when Peter became CFO. Cook thanks Oppy all the best and heartfelt thanks for his work. Cook says: Oppy has never missed guidance – ever – which must be a record for corporate CFOs.
• Cook: 7-for-1 stock split intended to make AAPL more accessible to investors

• Apple is providing the following guidance for its fiscal 2014 third quarter:
– revenue between $36 billion and $38 billion
– gross margin between 37 percent and 38 percent
– operating expenses between $4.4 billion and $4.5 billion
– other income/(expense) of $200 million
– tax rate of 26.1 percent

• To repatriate, Apple would incur significant tax liabilities. Not in the best interest of AAPL shareholder. Apple continues to advocate for corporate tax reform, tax simplification which the compnay believes would help improve the U.S. economy

• $3.29 quarterly dividend, up about 8% – Apple plans continues dividend increases annually
• Apple will increase buyback program from $60 to $90 billion total by Dec. 2015
• Maestri: By end of March Apple has used $46 billion on share repurchases since buyback program began

• At end of quarter, Apple had $150.6 billion in cash and securities

• iPad has over 95% share of the U.S. education tablet market
• Maestri discusses large corporate successes with iPad deployments

• iPhone: 43.719 million units, $26.064 billion revenue (vs. 37.430 million units, $22.955 billion revenue YOY)
• iPad: 16.350 million units, $7.610 billion revenue (vs. 19.477 million units, $8,746 billion revenue YOY)
• Mac: 4.136 million units, $5.519 billion revenue (vs. 3.952 million units, $5.447 billion revenue YOY)
• iPod: $2.761 million units, $461 million revenue (vs. 5.633 million units, $962 million revenue YOY)
• iTunes/Software/Services: $4.573 billion revenue (vs. $4.114 billion revenue YOY)

Live notes from Apple’s Q413 Conference Call in reverse chronological order:

• iOS users generate 4X the Web traffic as all Android settlers combined
• iPad results vs. Q213 due to significant channel inventory differences (YOY sell-through decline only ~3%)
• Mac has outgrown PC market for 31 of the last 32 quarters

• After Hours : $568.17 up $43.42 (8.27%) @ 5:15PM EDT

• iTunes Store = All-time record billings
• Maestri discusses large corporate successes with iOS deployments
• iPhone sales up over 50% YOY in Japan
• Maestri: March quarter record for iPhone unit sales; China Mobile and great response to iPhone 4s led to record sales
• Maestri: Strong sales of iPhone drove revenue upside

• The size and scope of Apple’s capital return program is unprecedented
• Around this time each year, Apple will update investors on the capital return program
• Cook: We’ve acquired 24 companies in the past 18 months
• Cook on Apple’s top priority: Create great products that enrich customers’ lives.

• Apple added tens of millions of new iPad and iPhone customers. Halo effect will continue to benefit Apple.
• Angela Ahrendts joins Apple’s executive team (SVP of Apple Retail) next week
• Cook: We continue to believe tablet sales will exceed PC sales and Apple will be a significant beneficiary of this paradigm shift
• Cook on iPad unit sales: Last year Apple significantly increased iPad channel inventory, this year significantly reduced
• Nearly 800 million iTunes Store accounts with credit cards now on file
• New all-time record for iPhone unit sales in BRIC countries
• iPhone sales set new March quarter record
• Cook EPS growth 15% – highest in last 6 quarters
• Cook: “Very strong results for the March quarter… Our strongest non-holiday quarter ever.”

• Apple CEO Tim Cook, Luca Maestri, VP of Finance and corporate controller, and Peter Oppenheimer, Apple CFO, present on call.

• AAPL After Hours : $561.36 up $36.61 (6.98%) @ 5:00PM EDT

• Apple’s Board of Directors has increased its share repurchase authorization to $90 billion from the $60 billion level announced last year.

• Additionally, the Board has approved an increase to the Company’s quarterly dividend of approximately 8 percent and has declared a dividend of $3.29 per common share, payable on May 15, 2014 to shareholders of record as of the close of business on May 12, 2014. The Company also plans to increase its dividend on an annual basis. With annual payments of $11 billion, Apple is among the largest dividend payers in the world.

• The Board of Directors has also announced a seven-for-one stock split. Each Apple shareholder of record at the close of business on June 2, 2014 will receive six additional shares for every share held on the record date, and trading will begin on a split-adjusted basis on June 9, 2014.

33 Comments

    1. These live notes cannot exceed my wildest dreams!
      I feel a minority report coming along any minute now!!!

      Zzzzzzz, Snorrrrrrr, Zzzleep bloggingzzzzzzz, Snorrrrrrrr!!!

  1. “dividend of $3.29 per common share… The Company also plans to increase its dividend on an annual basis”

    Current dividend payments are $11B/year. I can’t imagine them suddenly paying 7x this amount, so I expect the dividend is affected by the 7-1 stock split i.e. it’ll be about $0.47/post-split share?

    1. These people are either stupid or just want chaos in the way the company is run. They are just midges trying to nip at an elephant and the less effective the bites the more noise they make to compensate. Just listen for the buzz and keep a newspaper handy.

  2. I’m 100% happy but there is something else going on here. Obviously Tim and the board are aware of the up and coming products and know there is still growth ahead or they would have never agreed to a 7-1 stock split.

    I still believe it’s a wearable device that can hear me and I can move around in my daily motions and be integrated with Siri, my Apple TV, my Phone, my computer. Why else would Nike get out of the band business? Like I’ve been saying, it’s not a stupid watch, watches are jewelry. It’s a link to my Siri.

    Back to 100% happy and even happier to see all those analyst’s eat crow.

      1. I’m one of the non-watch wearing idiots.

        BUT: Imagine a ‘watch’ (whatever that’s going to become within the next year) that is so enticing, so enabling, that you feel you really must change your behavior and wear one.

        One enticing thing I could see: Fully functional Siri on my watch, no tethering required as long as I’m on WiFi. I can ask Siri anything and get an intelligent response. Just the voice interaction would be a killer gotta-have-it feature. That’s just one thing. Then there’s all the rest coming down the pipe…

    1. The rumors about the “Apple iWatch” leaked from Apple sources are just a smoke screen ploy to take your eyes off the ball so the Apple magicians can work their magic…slight of hand trick ala Steve Jobs.
      (iWatch is so Apple can “watch” others spend billions of R&D trying to beat Apple to the market that is just a illusion & “watch” them all flop big time…) THEN Apple will swoop in & steal the REAL market with their “Next Big Idea”! Booyah!

  3. when will Microsoft announce its profit and loss shit, i want to know about Microsoft performance for the Q214, and see how it compares with Apples result 🙂 what i also want to know is the losses incurred by the flop Surface 2, the surface 1 was a $800 million flop :):) iPad is KING, and there is NO SUBSTITUTE 🙂

  4. Cook: “We continue to believe tablet sales will exceed PC sales and Apple will be a significant beneficiary of this paradigm shift..”
    I’m not so sure.
    – I do not use my iPad in any way like my computer. Apple should know this.
    – You really need both for proper backup. 5Gb on iCloud is not going to do it. Only a nut trusts ‘cloud’ backup.
    -iPhoto on the Mac and on iOS *sucks* and they can’t talk to each other. Read the reviews. Yikes.
    -Apple would need to make significant updates to the capabilities of iOS for the iPad to approach a laptop’s ubiquity. Specifically, access to the file system so images/documents/etc aren’t held hostage. We all know that’s just not going to happen.
    -Apple makes far less money on an iPad than an iMac.
    -If anyone is seriously gong to replace a desktop computer a larger screen iPad is going to be important.
    Would love to hear your kind opinions chaps….

    1. I use my iPhone and iPad only where and when I can’t access my Mac. Out of the house, out of my room. In my car, in waiting rooms, on vacation. You can’t replace the truck. Trucks will still sell, and for quite some time yet, we’ll still need them.

    2. Sitting herd now using my iPad while my Mac is in sleep mode, it’s more convenient. That said my work is done on the Mac and can’t see that changing for a long time. Not sure what you mean about iPhoto mind, mine feeds pics between them seamlessly as far as I can see and I don’t need a review to tell me my own experience.

    3. You using that desktop for POS transactions? I think not.

      There will always be desktops but just fewer of them as Jobs pointed out. Ever heard of target audience?

      If you don’t back up your devices to your desktop then there are alternatives to iCloud. That’s a silly reason as is your comment about iPhoto. People don’t buy computers and devices for the backup or iPhoto. But, there are many artist and photographers that would argue with you the benefits of photography and video on iPads or iPhones.

    4. Only a nut trusts ‘cloud’ backup.

      Well, there are a few ways to look at cloud backup:

      1) Everyone should be backing up daily to an off-site location. Cloud backup qualifies.

      The drawbacks are the long restore times over the Internet and the illegal surveillance bullshit by The Corrupt Powers That Be. Everything Internet is going to have to be ENCRYPTED end to end to end, no exceptions. And the encryption is going to have to be proven as reliable, uncompromised, no backdoors, no crap random number generators, etc. THEN cloud backup would be trustworthy.

      2) Cloud servers have had occasional crashes, been illegally surveilled, had crap technology implementations leading to massive data theft, been infused with bad encryption technology. Lately, these problems have blown apart trustworthiness.

      3) For innocuous whatever files, the cloud is great. Many services are very well done. A few of them use entirely effective encryption. (I admire Backblaze). For general personal files, the cloud can be terrific and trustworthy.

      1. My point on backup is this: An iMac can be backed up easily. Plug in a HD, click ‘yes’ for Time Machine, off you go. Use some cloud service as a hedge. For the iPad? Not so simple.

    5. Go with Wondoze 8.1 then. Your choice…… a bad one but you have that choice. You can run Wondoze on your MacBook or iMac…. You can’t loose…. Well you could loose you data & get infected on the Wondoze partition. :-0 true.

  5. … Don’t you just love all those “Seeking Alpha” stories about how bad AAPL is to the core… National Enquire has more credibiity than SA.

    Nice quarter, albeit bit short on iPad sales. Now lets get going with new categories of stuff.

  6. Cook: “Very strong results for the March quarter… Our strongest non-holiday quarter ever.”

    Darn, most of the stock analcysts were wrong.

    Therefore, what are the stock analcysts actually worth? What is the point of them even existing, seeing as they are doing nothing but shooting in the dark? I consider the analcysts, in general, to be a bunch of lazy bums, unwilling to do their research, but very willing to be well paid for bullshitting the public and their employers. 😛

    1. Some of us suspect they are influencers — conscienceless hirelings, furtively frequenting dark places to retrieve grimy envelopes of cash from shadowy corporate figures anxious to twist reality into a narrative suitable to their iniquitous ends

      1. No doubt. But the septic swirl vortex circles around one thing: Why does anyone care what these ‘analysts’ have to say? Is this just another predator in sheep’s clothing fleecing the sucker flock? Considering that this fleecing is going on constantly, day in and day out, why haven’t the sheeple smarted up? Are they really so out-of-touch with investing that they don’t recognize the predator and prey relationship going on in today’s self-destructive Wall Nut Street?

        –Apparently that is indeed the case, or worse. Investor beware.

        1. They listen because their intelligence is even more encrusted with verdigris than that of analysts, who claim to understand technology stocks. They don’t. Only a handful stand apart from the herd, but they are little heeded. The gladhanders and inside traders poison the whole relationship between producers and investors, and the situation is made worse by corporate bribery and other high jinks. It’s very, very dirty. But when it comes to moolah, shame goes out the window. Despicable people pay little mind to such foolish ethical items; they grin as they walk away with their jiggered winnings, sneering at the little man.

          1. What amuses me most about all this verdigris (new word!) is that this is all merely a game and the players are childish minds. They all hide from the real world where we all have to grow up and make mature, responsible choices.

            Irresponsible: Children’s choices.

  7. Of course Derek is right again. If analysts’ job security was related to accuracy of their predictions, there would be very few analysts. Analysts are really marketing tools of financial firms. They help firms sell their products. That’s why they don’t have to be right. Just flashy.

  8. Hey folks at Apple….”iWear”, it’s a watch a ring, a necklace a bracelet, an earring…way way out of the box. You heard it here first, this is the source.

    Stock down, as predicted.

    Ppeterson, J Morrison, Zune Thang still AWOL.

    1. They all speak with a single deep, multi-timbre voice, in Luciferian cadences, reciting dark koans: your success is illusory, your leadership is unqualified, your desires will be dashed, your days are numbered; your existence is a joke, all is vanity.

      Exactly the silken tones of the Great Deceiver.

  9. Bravo Apple for selling a lot of great product and making a lot of money! But the high-key excitement suggests they got something big and something special under-wraps to announce, soonish.

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