MacDailyNews presents live notes from Apple’s Q214 Conference Call

10 years ago

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

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.