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Notes of interest from Apple's Q1 2012 conference call

post #1 of 31
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Apple on Tuesday posted a massive holiday quarter with record sales of more than 37 million iPhones, 15.43 million iPads and 5.2 million Macs. Following the news, Apple executives participated in a conference call with analysts and the press, and notes of interest follow.

Participating in Tuesday's call was Apple Chief Executive Tim Cook, Chief Financial Officer Peter Oppenheimer, and Treasurer Barry Whistler.

Highlights

Apple ended the quarter with $97.6 billion in cash, an increase of $16 billion from the previous quarter.

Oppenheimer said Apple executives are "actively discussing" potential uses for its massive cash hoard, but there are no specifics to share. But the CFO did say that the company is "not letting it burn a hole" in their pockets.

Cook said Apple made a risky bet on the high side for iPhone sales, and even that came short of actual sales. "As it turns out, we didn't bet high enough," Cook said. "Our customers are loving iPhone, and we're very happy with that."

1.5 million iPads already in use in education.

Cook said there will come a time when the tablet market is larger than the PC market. Tablets already exceeded desktop PC sales in the U.S. last quarter, based on the latest data from IDC.

Cook doesn't see "limited function" tablets like the Amazon Kindle Fire being in the same category as the iPad. He said Amazon and others will probably sell a "fair number" of units, but people who want an iPad won't settle for the limited function.

More than 600,000 copies of iBooks Author have been downloaded since it was announced last week.

More than 3 million downloads of the iTunes U application for iOS since last week.

iCloud has more than 85 million customers.

There are now 550,000 applications available for iOS, including more than 170,000 for iPad.

A favorable component environment led to high gross margins of 44 percent, even in the face of a hard drive shortage. Cook believes that favorable component environment will continue going into the next quarter.

Cook on the acquisition of flash memory maker Anobit: "Anobit has Fantastic technical talent. We're really fortunate to have them join us."

Apple's iPhone business

iPhone unit sales were up 128 percent year over year, and revenue saw a 133 percent increase from the first fiscal quarter of 2011.

The quarter ended with about 6 million iPhones in the channel at the end of the quarter.

"Nearly all of the top companies in the Fortune 500 now approve and support iPhones on their networks," Oppenheimer said.

Companies are developing and deploying "mission critical apps" specifically for their employees.

New companies supporting the iPhone include Credit Suisse, Kimberly Clark, St. Jude Medical, Nike and Facebook.

Cook said Apple made a risky bet on the high side for iPhone sales, and even that came short of actual sales.

"As it turns out, we didn't bet high enough," Cook said. "Our customers are loving iPhone, and we're very happy with that."

Cook said the iPhone 4S was the most popular iPhone model during the quarter, beating out the also-available iPhone 4 and iPhone 3GS.

Demand in China has been "staggering." Apple saw strong iPhone sales even in the last quarter, when the iPhone 4S hadn't launched.

Apple's iPad business

The iPad saw a 111 percent increase in unit sales from holiday 2010 to holiday 2011. Revenue from the iPad also saw a 99 percent increase year over year.

iPad was "extremely popular" with holiday buyers, Oppenheimer said, and the company remains excited about the market opportunity.

iPad sales exceeded Apple's expectations, with sell-through exceeding sell-in by about 200,000 units.

"Unprecedented" iPad adoption in business, Oppenheimer said. Nearly all top Fortune 500 companies are actively using iPads.

iPad is also "extremely" popular with students and teachers. 1.5 million iPads already in use in education.

Cook looked at weekly data after the Kindle Fire launch. Not an "obvious effect" on the numbers for iPad plus or minus.

There is "clear" cannibalization of the Mac by the iPad. But he thinks that there's a lot more cannibalization of Windows PCs by the iPad, which makes it a trend he's fine with.

Apple's App Stores

More than 600,000 copies of iBooks Author have been downloaded since it was announced last week.

More than 3 million downloads of the iTunes U application for iOS since last week.

iCloud has more than 85 million customers

550,000 applications available for iOS, including more than 170,000 for iPad.

The App Store has now paid out over $4 billion to developers.

Cook said there will come a time when the tablet market is larger than the PC market.

Tablets already exceeded desktop PC sales in the U.S. last quarter, based on the latest data from IDC.

Doesn't see "limited function" tablets like the Amazon Kindle Fire being in the same category as the iPad. He said Amazon and others will probably sell a "fair number" of units, but people who want an iPad won't settle for the limited function.

Apple's Mac business

Mac desktop sales were up 21 percent year over year, while revenue saw a 12 percent increase.

The MacBook lineup saw even more growth of 28 percent in unit sales, while revenue grew by 22 percent.

Mac sales growth of 26 percent compared to zero growth overall for the entire PC market. Oppenheimer said average weekly Mac sales were up strongly across the quarter.

Oppenheimer cited the MacBook Pro, MacBook Air and iMac as the company's top sellers.

Hard drive prices were higher in the quarter because of the flooding in Thailand. That's expected to continue going into the next quarter, Cook said.

Apple TV business

Apple TV is doing "very well," Cook said, with a bit above 2.8 million units sold last fiscal year. 1.4 million of those came in the most recent quarter.

"We continue to add things to it," Cook said. "If you're using the latest one, I don't know about you, but I couldn't live without it.

Apple's iPod business

iPod unit sales were down 21 percent year over year, with a 26 percent decline in revenue.

Oppenheimer said total iPod sales were ahead of Apple's expectations. iPod U.S. market share remains over 70 percent.

The iPod touch accounts for more than half of all iPod sales.

The CFO revealed that there were more than 140 million downloads of apps and content on Christmas Day.

Apple's regional business segments

Apple saw its largest overseas growth in Japan, where revenue was up 148 percent from the same period in 2010.

Apple's second largest region for revenue growth was the Americas, were revenue was up 92 percent year over year.

Now more than 130,000 points of sale throughout the world, up 35 percent year over year.

After China, Cook sees Brazil as a country where Apple could see major growth in the coming years. He doesn't expect Apple to expand its retail presence into Brazil in the near future however.

Apple's retail business

New EasyPay checkout process with personal pickup have made it much easier for customers and Apple's retail employees.

110 million people visited Apple's stores last quarter. On average, the stores see 22,000 visitors per week.
post #2 of 31
Quote:
Originally Posted by AppleInsider View Post

iPhone unit sales were up 128 percent year over year, and revenue saw a 133 percent increase from the first fiscal quarter of 2011.

Beginning of the end.

Quote:
The iPad saw a 111 percent increase in unit sales from holiday 2010 to holiday 2011. Revenue from the iPad also saw a 99 percent increase year over year.

Better license Android.

Quote:
iPod unit sales were down 21 percent year over year, with a 26 percent decline in revenue.

And now for a serious statement: Sounds like this will be the year of the discontinuation of the iPod classic.
post #3 of 31
So much for all the know-it-all tech pundits.

And I think I heard Tim say iPhone was "supply constrained".
post #4 of 31
Astonishing.

Lemon Bon Bon.

You know, for a company that specializes in the video-graphics market, you'd think that they would offer top-of-the-line GPUs...

 

WITH THE NEW MAC PRO THEY FINALLY DID!  (But you bend over for it.)

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You know, for a company that specializes in the video-graphics market, you'd think that they would offer top-of-the-line GPUs...

 

WITH THE NEW MAC PRO THEY FINALLY DID!  (But you bend over for it.)

Reply
post #5 of 31
Holy cow. Even more of a blowout than the best estimates.

Who among the bloggers and analysts came closest this time?

Proud AAPL stock owner.

 

GOA

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Proud AAPL stock owner.

 

GOA

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post #6 of 31
Still, Apple stock will take a hit tomorrow. Remember, investors don't use math; they don't know it very well. Instead, they use guts, which they've plenty of.

What this all means is that the stock will get pummeled because they think Apple won't be able to do as good NEXT quarter compared to this one. Insane, isn't it? Basing future pessimistic performance potential on optimistic actual present and past performance.

Investors need to get laid more often.
post #7 of 31
"Oppenheimer said Apple executives are "actively discussing" potential uses for its massive cash hoard, but there are no specifics to share"

You left out one important word: "TODAY" That was at the end of the first time it came up, and again at the end of the second discussion later on.
post #8 of 31
Quote:
Originally Posted by macinthe408 View Post

Still, Apple stock will take a hit tomorrow. Remember, investors don't use math; they don't know it very well. Instead, they use guts, which they've plenty of.

In after-hours trading:
Up over $30 - as much as $37 at one point.
post #9 of 31
Slappy just got slapped!
post #10 of 31
Quote:
Originally Posted by SpamSandwich View Post

Holy cow. Even more of a blowout than the best estimates.

Who among the bloggers and analysts came closest this time?

http://www.technobuffalo.com/compani...2012-earnings/

For the first time that I recall, even the most optimistic independent analysts missed the numbers.
"I'm way over my head when it comes to technical issues like this"
Gatorguy 5/31/13
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"I'm way over my head when it comes to technical issues like this"
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post #11 of 31
Thanks Apple
post #12 of 31
Quote:
Originally Posted by MacHead75 View Post

Slappy just got slapped!

Where is Slapppy today? Its been awful quiet. TS is filling in admirably, but who's going to try to tell us that this is proof that Apple is doomed with a straight face?
post #13 of 31
Quote:
Originally Posted by jmmx View Post

"Oppenheimer said Apple executives are "actively discussing" potential uses for its massive cash hoard, but there are no specifics to share"

Just got off the phone with Tim. I've agreed to take it off his hands.
post #14 of 31
I'm pleased the Mac is still doing so well. For all the Apple gadgets I have, the Mac is the most important to me.
post #15 of 31
Quote:
Originally Posted by PaulMJohnson View Post

I'm pleased the Mac is still doing so well. For all the Apple gadgets I have, the Mac is the most important to me.

I feel the same way, but the Mac is still becoming a tiny portion of the overall business, which scares me. How much investment will Apple continue to make in the Mac when all the action is on the iPhone and iPad side of the business?

One example of that is that we haven't heard a thing about the next major upgrade of the Mac OS, have we?
post #16 of 31
Quote:
Originally Posted by jragosta View Post

For the first time that I recall, even the most optimistic independent analysts missed the numbers.

Yeah... and by no small measure either. The most bullish of the independent's would have made it if they had guessed the gross margin was as high as it was, but just barely. Zacky was 5% low adjusting gross margins.

I was a little nervous last night how leveraged up I was on Apple--- something like 2.8x, but once I saw them down this morning I knew it would be a great evening!
post #17 of 31
What a disappointing 37 million iphone sales number.

/s

I bet CNET or anti-Apple sites will have headline of 'Apple falls short of 40 million iphones, $50 billion dollars. Android is catching up."
post #18 of 31
In anticipation of another dismal financial report from Apple, stock holders drove the stock down $7.00 a share on Tuesday. Go figure!
post #19 of 31
Quote:
Originally Posted by zoetmb View Post

I feel the same way, but the Mac is still becoming a tiny portion of the overall business, which scares me. How much investment will Apple continue to make in the Mac when all the action is on the iPhone and iPad side of the business?

Yet it's still a huge business (many billions of profitable dollars) - and it is the hub of their entire iphone/ipad/ipod/cloud strategy.

They're not going to abandon Macs any time soon.

Quote:
Originally Posted by zoetmb View Post

One example of that is that we haven't heard a thing about the next major upgrade of the Mac OS, have we?

So? Would you rather have an OS that's so bad that they need to release a massive restructuring every couple of years to hide how bad the previous version was?

I'm not sure what I'd even like to see added to Mac OS X. And most of the things that COULD be added are relatively minor for most users.
"I'm way over my head when it comes to technical issues like this"
Gatorguy 5/31/13
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"I'm way over my head when it comes to technical issues like this"
Gatorguy 5/31/13
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post #20 of 31
Quote:
Originally Posted by zoetmb View Post

One example of that is that we haven't heard a thing about the next major upgrade of the Mac OS, have we?

Because Lion JUST CAME OUT. We won't hear about 10.8 (or, in my opinion, OS XI) until WWDC 2013.
post #21 of 31
Quote:
Originally Posted by Tallest Skil View Post

Because Lion JUST CAME OUT. We won't hear about 10.8 (or, in my opinion, OS XI) until WWDC 2013.

That's not historically true. In the past, Apple has started talking about new versions of the OS roughly a year after the release of the previous one (sometimes less). That would put it sometime this summer when Apple would start talking about it.

Bloggers, rumor sites, and even the legitimate press have typically started talking about new versions even before the previous version was released - and that hasn't happened this time around. So there is some truth to the claim that there's no talk about the next OS version - but as I said, I don't see it as an issue. OS X works great and I'm not sure what major changes need to be made.
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"I'm way over my head when it comes to technical issues like this"
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post #22 of 31
Quote:
Originally Posted by jmmx View Post

In after-hours trading:
Up over $30 - as much as $37 at one point.

Now it comes down $7. So we aren't going anywhere.

That said, Apple stock remains out of reach, way unaffordable for anyone who doesn't have some already.

Don't let Freerange, Apple][ or any hardline Apple bulls tell you otherwise. Good investment AAPL is but it is now a HOLD, not BUY. If you aren't in it is now too late to buy AAPL. Try again in late February or March when the lull period sets in. $430 is the price I'd pay for cold, hard gold, not stock papers.
post #23 of 31
Quote:
Originally Posted by Fairthrope View Post

Now it comes down $7. So we aren't going anywhere.

That said, Apple stock remains out of reach, way unaffordable for anyone who doesn't have some already.

Don't let Freerange, Apple][ or any hardline Apple bulls tell you otherwise. Good investment AAPL is but it is now a HOLD, not BUY. If you aren't in it is now too late to buy AAPL. Try again in late February or March when the lull period sets in. $430 is the price I'd pay for cold, hard gold, not stock papers.

Just trying to be helpful: I am not sure that the stock market is for you.
post #24 of 31
I can dream, can't I?
post #25 of 31
Quote:
Originally Posted by anantksundaram View Post

Just trying to be helpful: I am not sure that the stock market is for you.

Proud AAPL stock owner.

 

GOA

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Proud AAPL stock owner.

 

GOA

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post #26 of 31
Quote:
Originally Posted by tpf1952 View Post

I can dream, can't I?

Definitely so! I for one do believe they'll come out with an upgraded version, which will likely be a minor upgrade to the current mid-2010 model:
  • Most likely CPU: E5-2600 series. Link
  • Added Thunderbolt (2x back panel, 1x front panel)
  • SDXC card reader on front panel
  • Lights Out Management (as we are Xserve-less)
  • Backlit Keyboard[, Magic Mouse, Magic Trackpad
  • Either RAID controller on MB for HDD, or no HDD's at all; only SSD
  • New, large, non-glossy Cinema Display (dreaming here as well)

I think they'll leave the case as it is, it'll still come with a DVD burner and perhaps has a small 'OSX SSD boot drive'. And the standard upgrades (video, BT4, PCI etc.). If they go all SSD they might as well take the ODD out and create a smaller case. If not, they could put the HDD's on its side and squeeze 14 in (x4TB = 56TB)

MacRumors has a 'recent release' table:

??????? 547 days
07/2010 511 days
03/2009 420 days
01/2008 279 days
04/2007 240 days
08/2006 292 days


For me, it was a long wait for the 2010 model to come out. Happy with it now; it's a screamer, you can throw anything at, it keeps marching on. Only bottlenecks are the HDD's, although Aperture still is fast. With software, at my end, iTunes and Garmin BaseCamp are the only programs that are slow. Certainly planning on going SSD all the way this year, except for large media files; I'll put that on a software RAID0.
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post #27 of 31
Quote:
Originally Posted by PhilBoogie View Post

Definitely so! I for one do believe they'll come out with an upgraded version, which will likely be a minor upgrade to the current mid-2010 model:
  • Most likely CPU: E5-2600 series. Link
  • Added Thunderbolt (2x back panel, 1x front panel)
  • SDXC card reader on front panel
  • Lights Out Management (as we are Xserve-less)
  • Backlit Keyboard[, Magic Mouse, Magic Trackpad
  • Either RAID controller on MB for HDD, or no HDD's at all; only SSD
  • New, large, non-glossy Cinema Display (dreaming here as well)

I think they'll leave the case as it is, it'll still come with a DVD burner and perhaps has a small 'OSX SSD boot drive'. And the standard upgrades (video, BT4, PCI etc.). If they go all SSD they might as well take the ODD out and create a smaller case. If not, they could put the HDD's on its side and squeeze 14 in (x4TB = 56TB)

MacRumors has a 'recent release' table:

??????? 547 days
07/2010 511 days
03/2009 420 days
01/2008 279 days
04/2007 240 days
08/2006 292 days


For me, it was a long wait for the 2010 model to come out. Happy with it now; it's a screamer, you can throw anything at, it keeps marching on. Only bottlenecks are the HDD's, although Aperture still is fast. With software, at my end, iTunes and Garmin BaseCamp are the only programs that are slow. Certainly planning on going SSD all the way this year, except for large media files; I'll put that on a software RAID0.

There's a lot of truth to what you say. Historically, the Mac Pro has been upgraded when Intel came out with a new chip that was significantly faster than the previous ones. That hasn't happened for a while (the speed improvements are marginal).

However, this might be time for a change in strategy. Even if the new chips are only marginally faster than the previous ones, there are enough new things that need to be added. Thunderbolt is a big one and will certainly be added in the next revision.

A moderate sized SSD drive would be a good addition - with the user folders automatically mapped to the platter drive. For a couple hundred dollars, there would be a substantial speed increase with no impact on total storage capacity.

SDXC card reader? I'm not convinced about this one. Apple has historically resisted adding things to their computers that could become obsolete - and a card reader fits in that category. They did it in the MBP but that's different for two reasons. First, laptops tend to have a shorter life. Second, people carrying notebooks don't want to carry an SD reader with them while it's not a big deal for a Mac Pro to have an attached SD reader.

Software RAID 0? I doubt it. If you're going to go to the trouble of RAID 0, a hardware solution isn't that much more expensive. It's easy enough to do software RAID yourself, so I can't imagine why they'd make it standard.
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post #28 of 31
Quote:
Originally Posted by jragosta View Post

There's a lot of truth to what you say. Historically, the Mac Pro has been upgraded when Intel came out with a new chip that was significantly faster than the previous ones. That hasn't happened for a while (the speed improvements are marginal).

However, this might be time for a change in strategy. Even if the new chips are only marginally faster than the previous ones, there are enough new things that need to be added. Thunderbolt is a big one and will certainly be added in the next revision.

A moderate sized SSD drive would be a good addition - with the user folders automatically mapped to the platter drive. For a couple hundred dollars, there would be a substantial speed increase with no impact on total storage capacity.

SDXC card reader? I'm not convinced about this one. Apple has historically resisted adding things to their computers that could become obsolete - and a card reader fits in that category. They did it in the MBP but that's different for two reasons. First, laptops tend to have a shorter life. Second, people carrying notebooks don't want to carry an SD reader with them while it's not a big deal for a Mac Pro to have an attached SD reader.

Software RAID 0? I doubt it. If you're going to go to the trouble of RAID 0, a hardware solution isn't that much more expensive. It's easy enough to do software RAID yourself, so I can't imagine why they'd make it standard.

Good post!

I think a SDXC reader is possible because they added it to the iMac as well (and the iPad CCK, which was kind of... necessary). I know, maybe a lame argument, but still reasonable.

I should've mentioned that that was the way for me to go about it, not something Apple would make a default or something.

The RAID hardware is $ 699 from Apple, which has some problems (1, 2)
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post #29 of 31
Quote:
Originally Posted by PhilBoogie View Post

Good post!

I think a SDXC reader is possible because they added it to the iMac as well (and the iPad CCK, which was kind of... necessary). I know, maybe a lame argument, but still reasonable.

I should've mentioned that that was the way for me to go about it, not something Apple would make a default or something.

The RAID hardware is $ 699 from Apple, which has some problems (1, 2)

Apple's existing RAID hardware might have problems and be expensive, but if Apple wanted to add RAID across the board, adding the appropriate hardware would only add a few dollars to the system - a small enough cost that using a software RAID solution wouldn't make sense.
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post #30 of 31
Quote:
Originally Posted by AppleInsider View Post

Mac desktop sales were up 21 percent year over year, while revenue saw a 12 percent increase.

Quote:
Originally Posted by jragosta View Post

Yet it's still a huge business (many billions of profitable dollars) - and it is the hub of their entire iphone/ipad/ipod/cloud strategy.
They're not going to abandon Macs any time soon.

But what about:

Quote:
Originally Posted by Tallest Skil View Post

Desktop computers have been the same since 1983. That's not the future. It's a dead end.
post #31 of 31
Quote:
Originally Posted by Haggar View Post

But what about:

Apologies, I've been too broad. The keyboard/mouse paradigm is a dead end. There will always be a place for desktop-style computing devices.
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