Notes of interest from Apple's Q4 2012 conference call

Wow! That's fascinating!! What a great story!! So FULL if information!!

$52 billion guidance next quarter? Holy fucking hell.

iPad mini has lower profit margins than other devices....just goes to show that all those people complaining about the iPad mini pricing don't know what they are talking about. The iPad mini is priced at $329 because it is expensive to make. I predict Apple made the right decisions with regard to cost:benefit and the iPad mini will sell better than the iPad someday.

 

I predict that the touch display costs will go down at yields improve, and we'll see the Mini iPad at $279 this Spring.

"samesong"

Cook was also asked about pricing products like Amazon, where they sell Kindles near cost or below. Would Apple consider doing the same. Cook significantly said that looking at the web traffic for iPads vs competitors, the competitors devices are not being used after purchase.

>Cook also panned 7-inch tablets. "We don't think they're good products, and we would never make one."

Inches schminches, it's a 20cm iPad. Apple has gone metric: 25 & 20cm iPads and a 10cm iPhone. Now for the rest of the country!

As to iPad sales, they've just been released iPad in China where the iPad mini might be expected to go gangbusters. Expect huge sales next quarter, unless they can't make enough to meet demand.

Tim Cook should simply ignore the competition. Otherwise he risks appearing snarky like Ballmer and his "rounding error" comment about the iPhone. Of course outdoing Ballmer on this sort of thing would be very difficult. He's the absolute master of condescending comments about competitors that come back to bite him in the butt.

No doubt the headline tomorrow in many news outlets will be 'iPad mini drags down Apple profits'.

Terrific earning and sales, candid conference call, stock down ... Time to back up the truck! Stock will be over $1000 this time, next year.

If costs go down all that will happen is that Apple will make their usual margin on the iPad mini instead of the lower one they're currently making. Price won't change until the entire iPad lineup is refreshed. It can't. The mini is already technically superior to the more expensive iPad 2 so the price of the two products must remain close.

 

Despite Cook's comment I'm sure Apple would be happy if they never sell another iPad 2. Its only purpose in the store is to make the other models look good.

Even if you're on a tight budget it makes no sense to buy an iPad 2 when you could spend less for a more up-to-date mini or $100 more for a model that is night and day better in every respect including future resale value.

But 11 EPS is very low, there margins are getting hit hard.

I dont see how the 14 millions ipads is great, good thing they updated and release the mini to make sure they control that market.

Still a good quarter considering other business are coming up with horrible quarters right now.

Actually the stock is handlng the miss much better than expected. The Market makers cant be more happy, everyone on the weekly will lose.

I sure hope we go above 800 next year but i see a lot headwinds. They just refresh everything, so sales are going to dry in spring. They could annonce something else maybe , or do a surprise refresh, we will see.

Another worry is margins. They are great, but lower margins means less EPS which means the stock may go nowhere for months. On the other hand, they may compensate with large volume and margin will improved in time.

I think its in Apple best interest to have unpredictable product updates to avoid sales stalling months in advance.

 

Not a chance.  EPS missed, guidance is less than expected for the holiday season, margins are being squeezed.  Add a record market cap to slowing EPS growth and this thing probably won't ever go above 800.  It won't tank, it might go up, but the stock will stop rising 50% a year...  

 

He was asked specifically about the Surface, he didn't bring it up on his own accord. He said he hasn't used one, but has read that its a compromise and confusing- which is exactly what many reviews have been saying. Probably the best possible response he could have given. From the Verge review:

 

 

 

 

I don't see how the hell people consider the mini over-priced, considering:

 

- Its is in many ways superior to the iPad 2 (cameras, connector, display quality, etc) with ultra high build quality and shrunken components, but simply smaller. The iPad 2 currently retails for $399, and was $499 just a year ago. 

 

How the hell does that make it overpriced, when it's $70 cheaper than the iPad2 which is in no way a better device, and doesnt have a single higher spec?

 

So 90% of blocked web traffic will now originate from iPads?

 

When Surface was announced, I had my doubts. Now we know more, and Apple has announced a new version of the full-sized iPad, those doubts are reinforced.

 

Microsoft's key dilemma: how do they scale up to a low-cost app market that's comparable to Android or iOS without destroying the profits on their current expensive product line? If you could get Office on Windows RT for an iOS/Android-level price, wouldn't that annoy Windows users paying far more?

and Mondays' Google event may put even more pressure on Microsoft's Surface marketing. 

I didn't see mentioned in the article or comments either that Apple's iPad channel inventory was up again with 3.4M on retailer shelves and average selling price down, perhaps more evidence for the institutional investors of sales not meeting Apple projections?

Edited by Gatorguy - 10/27/12 at 5:59am

 

He commented about the Mac sales numbers not iPhone sales.

Who's now bitten in the butt?

Au contraire!

Apple aims for 30 days of channel inventory. So even for 14M iPads sold 3.4M channel inventory is low.

I think we've seen here a momentary snapshot of already drying out of new iPad inventory making place for the new new iPad.