or Connect
AppleInsider › Forums › Investors › AAPL Investors › Notes of interest from Apple's Q1 2013 conference call
New Posts  All Forums:Forum Nav:

Notes of interest from Apple's Q1 2013 conference call

post #1 of 61
Thread Starter 
Apple on Wednesday reported record sales of its iPhone and iPad lineups, along with record revenue, but sagging Mac sales and unmet Wall Street expectations dinged the company. Following its earnings report, the company held a conference call with investors and members of the media, and notes of interest follow.

Highlights


  • Apple Chief Executive Tim Cook started off the call by saying the most important thing to his company is that customers love their products.
  • More than a half-billion iOS devices have been sold, with 75 million sold in the last quarter alone.
  • This year's holiday quarter had one less week than the same period did in Q1 2012.
  • Apple's cash now totals $137.1 billion, a sequential increase of over $16 billion. Over $94 billion is overseas.
  • Cook on rumors of iPhone production cuts: People should question the accuracy of any reports about build plans.
  • iMacs were down by 700,000 units year over year
  • Cook also promised that Apple has "incredible stuff" coming down its product pipeline.

Apple's iPhone business



iPhone sales reached 47.8 million units in the quarter, good for a 29 percent increase from the same period a year ago.

Revenue from the iPhone business was similarly up 28 percent year over year, reaching $30.6 billion.

Average 3.7 million iPhones sold per week in first quarter compared to 2.6 million per week from a year ago, represents an average increase of 39 percent per week.

Sequential increase of 79 percent from September quarter, over 3.5 times IDC projection for overall smartphone market.

Ended quarter with about 10.6 million iPhones in channel inventory.

Chief Financial Officer Peter Oppenheimer noted that many government agencies are issuing iPhones "by the thousands," including NASA, NOAA, Immigrations and Customs Enforcement, and the Transportation and Security Administration.

Companies highlighted as rolling out thousands of units were also Neiman Marcus and Volvo.

The iPhone saw the highest growth in China ? "into the triple digits," Cook said.

Cook said "no one comes close" to matching the quality of the Retina display on the iPhone 5.

"We put a lot of thinking into screen size and believe we've picked the right one," he said, in response to a question about larger-screened smartphones.

iPhone 5 was fastest iPhone rollout ever, 100 countries by the end of December.

iPhone 5 production was in constraint to start the December quarter, while the iPhone 4 ??which is available for free with a service contract ? was constrained throughout the quarter.

"The supply chain is very complex, and we obviously have multiple sources for things," Cook said. "Yields might vary, supplier performance might vary." He suggested market watchers not pay attention to a "single data point."

Notification Center has sent more than 4 trillion notifications, a number Cook said is "mind blowing."

Apple's iPad business



Apple saw the most growth from its iPad business in the holiday 2012 quarter, with unit growing by 48 percent year over year to 22.9 million.

iPad sales average 1.7 million per week compared to 1.1 million a year ago, an average increase of 60 percent.

Revenue growth for the iPad wasn't as strong, as lower margins on the iPad mini affected the company's revenue, holding it to 22 percent year over year growth.

Financial institutions like Barclays, Nomura Securities and Bank of Beijing deploying iPads among employees for secure customer service. Barclays rolled out more than 8,000 iPads, Oppenheimer said.

State and local governments are also "rapidly adopting" the iPad, he said, replacing "huge amounts of paper."

International government deployments strong with Sweden deploying 10,000 iPads and over 5,000 purchased by the Netherlands for Dutch tax authority and court system.

Started and ended quarter with 3.4 million iPads in channel inventory, below target range of four to six weeks.

Apple's Mac business



The Mac took a major hit in the holiday quarter, with sales dropping from 5.2 million a year ago to 4.1 million in holiday 2012, a decrease of 22 percent.

Revenue wasn't down quite as much, sliding 16 percent year over year.

IDC estimates the total computer market contracted by 6 percent in the quarter, Oppenheimer noted.

Apple was "significantly constrained" of inventory of the new iMacs. Oppenheimer said the company believes Mac sales would have been "much higher" if not for those constraints.

"The most important thing to Apple is to make the best products in the world that enrich customers' lives," Cook said, adding that the company is "not interested in revenue for revenue's sake."

iMac took a hit and the company left the quarter with "significant constraints" on its all-in-one desktop.

Last year there were 14 weeks in the quarter. This year there were 13 weeks.

Channel inventory was also down from the beginning of the quarter by over 100,000 units.

"If you just take these three factors, they bridge more than the difference between this year's sales and last year's sales," Cook said.

He also pointed out some "lesser things," including the fact that the market for PCs is weak, and iPad cannibalization of the Mac.

Apple's iPod business



iPod sales continued their steady decline, reaching 12.7 million in the holiday quarter, off 18 percent from a year prior.

Revenue for the iPod line was also down by 15 percent.

iPod touch was a "popular item" over the holiday season and accounted for more than half of iPods sold, Oppenheimer said.

iPod share of U.S. mp3 player market stood at 70% in the December quarter, top seller internationally.

Apple's iTunes business



Revenue from Apple's iTunes business was up 25 percent year over year to $1.8 billion.

56 new iTunes countries were added during the quarter, now available in 119 countries. Over 20 million songs to choose from.

App Store had a record breaking quarter, and there were more than 2 billion downloads in the month of December alone.

App Store now offers over 775,000 apps to over 500 million users in 155 countries, including over 300,000 native iPad apps.

Cumulative app downloads at 40 billion with $7 billion paid out to developers

Apple's retail business



Retail sales were up just 5 percent year over year ? smaller than usual growth for the company which has seen its retail stores take off over the last decade.

A total of 11 new stores were opened in the quarter, including four new ones in Greater China.

14 stores were relocated or expanded during the quarter.

With an average of 396 stores open, average revenue was $16.5 million.

Hosted a record 121 million visitors during the quarter, compared to 110 million a year ago.

Apple's regional business segments



Record all-time revenue high of $6.4 billion in sales driven by iPhone and iPad, income at $1.6 billion.

Apple Stores averaged $16.3 million or $1.25 million per store per week, compared to $1.22 million per store per week during same period last year.

Record 121 million visitors compared to 110 million a year ago.

Apple was hardest hit by year over year revenue increases of 10 percent in Japan, 11 percent in Europe, and 15 percent in the Americas.

The company's strongest growth came from Greater China, where revenue was up 67 percent year over year.

This is the first quarter where Greater China has been broken out as its own business segment. It includes Greater China, Taiwan and Hong Kong.

Apple's next (Q2 2013) fiscal quarter



Guidance to be changed from single point to range guidance, Oppenheimer said.

Apple is projecting revenue between $41 billion and $43 billion for the next quarter, with gross margins between 37.5 percent and 38.5 percent.

Operating expenses are expected to be between $3.8 billion and $3.9 billion, with a tax rate of 26 percent.

Other income and expenses (OI&E) expected to be $350 million.
post #2 of 61
How much cash on hand?
post #3 of 61
In other words, everything is up which makes the company an utter failure according to Wall Street. Can we call Apple beleaguered again?
post #4 of 61
Quote:
Originally Posted by Postulant View Post

How much cash on hand?

 

Would you believe "a lot"?

Proud AAPL stock owner.

 

GOA

Reply

Proud AAPL stock owner.

 

GOA

Reply
post #5 of 61
Apple was doomed yesterday. Today's evidence that they are doing great... proves, somehow, that they are even MORE doomed. Time to "ding" the stock.

Apple's been in a nose dive since the 80s. Any appearance of their success is all illusion, believed only by fanboys. 1tongue.gif
post #6 of 61
time for TV!
post #7 of 61
Quote:
Originally Posted by SpamSandwich View Post

 

Would you believe "a lot"?


I think that Apple just moved into the "a helluva lot" bracket.

na na na na na...
Reply
na na na na na...
Reply
post #8 of 61
Apple Now Has $137 Billion In Cash... (Facebook + Dell + HP left with some cash )
post #9 of 61
Quote:
Originally Posted by island hermit View Post


I think that Apple just moved into the "a helluva lot" bracket.

 

Incidentally, if the stock plummets tomorrow as it has done after hours, I'm thinking of loading up on another $15-$20K. This is an insane buying opportunity.

Proud AAPL stock owner.

 

GOA

Reply

Proud AAPL stock owner.

 

GOA

Reply
post #10 of 61
Jeff Gundlach says its over for Apple when it comes to innovation. In his eyes, Apple only innovate by changing colors. Apple are doomed.
post #11 of 61
Quote:
Originally Posted by grayum View Post

Jeff Gundlach says its over for Apple when it comes to innovation. In his eyes, Apple only innovate by changing colors. Apple are doomed.

 

Let's watch closely and see if he sells all of his AAPL or if he's just talking out of his exhaust pipe.

Proud AAPL stock owner.

 

GOA

Reply

Proud AAPL stock owner.

 

GOA

Reply
post #12 of 61
With AAPL at about $482 last I checked, their cash and marketable securities now represent over 30% of their market cap. 1eek.gif1eek.gif1eek.gif
post #13 of 61

Now, I do have a question about how Apple is saying they will provide guidance going forward...

 

They are saying they will provide a "range of guidance". What does that mean exactly?

 

(Incidentally, I'm "watching" the live blog here:  http://www.macworld.com/article/2025948/live-blog-apples-2013-first-quarter-earnings-call.html#lsrc.twt_macworld )

Proud AAPL stock owner.

 

GOA

Reply

Proud AAPL stock owner.

 

GOA

Reply
post #14 of 61
Quote:
Originally Posted by quinney View Post

With AAPL at about $482 last I checked, their cash and marketable securities now represent over 30% of their market cap. 1eek.gif1eek.gif1eek.gif

 

They are maintaining their $2.65/share dividend, so that cash will not be going anywhere soon. :D

Proud AAPL stock owner.

 

GOA

Reply

Proud AAPL stock owner.

 

GOA

Reply
post #15 of 61
Quote:
Originally Posted by SpamSandwich View Post

 

Incidentally, if the stock plummets tomorrow as it has done after hours, I'm thinking of loading up on another $15-$20K. This is an insane buying opportunity.

Don't be stupid. Don't do it... Sell everything.

 

The stock has nothing to do with Apple's performance... it's a joke, pure gambling. Do you want to gamble all that money? Buy me an iPhone instead, i would love that and would contribute more for the world!

post #16 of 61
Quote:
Originally Posted by SpamSandwich View Post

Now, I do have a question about how Apple is saying they will provide guidance going forward...

 

They are saying they will provide a "range of guidance". What does that mean exactly?

 

(Incidentally, I'm "watching" the live blog here:  http://www.macworld.com/article/2025948/live-blog-apples-2013-first-quarter-earnings-call.html#lsrc.twt_macworld )

It simply means a min and a max within which they hope to come in (as opposed to a point estimate that they used to provide before).

post #17 of 61
Quote:
Originally Posted by SpamSandwich View Post

Now, I do have a question about how Apple is saying they will provide guidance going forward...

They are saying they will provide a "range of guidance". What does that mean exactly?

(Incidentally, I'm "watching" the live blog here:  http://www.macworld.com/article/2025948/live-blog-apples-2013-first-quarter-earnings-call.html#lsrc.twt_macworld )

When they say "guidance" they are predicting what results they will have in some future time period.

They used to just provide a single point. They would say things like $12.00 per share earnings and 38% margin. From now on they will say things like $11.00 to $13.00 in earnings and 37% to 39% margins. Most of the companies I follow, who provide guidance, use ranges rather than points. The ranges Apple provides will still probably be very conservative and the predictions by analysts will still probably be higher than what Apple provides.
post #18 of 61

I truly wish they would announce a massive share repurchase.

 

As an aside, is it getting a bit tiresome for others too, listening to phrases like "surprise and delight" and "laser focus"..... it's just getting a bit long in the tooth, at least for me....

post #19 of 61

The more interesting note (as posted on another site) is the average selling price for an iPhone of $641. This means that the iPhone 5 represented a large portion of total sales and not the 4 and 4S (like the haters try to imply).

 

Meanwhile Samsungs ASP for their smartphones is around $400 and for phones overall is something like $140. There's a clear indicator of just how many low-end devices they're moving to make up for the 30 million or so GS3's they moved this year.

post #20 of 61
Quote:
Originally Posted by quinney View Post


...They used to just provide a single point. They would say things like $12.00 per share earnings and 38% margin. From now on they will say things like $11.00 to $13.00 in earnings and 37% to 39% margins. Most of the companies I follow, who provide guidance, use ranges rather than points. The ranges Apple provides will still probably be very conservative and the predictions by analysts will still probably be higher than what Apple provides.

 

I see. That's a good, clear explanation. Thanks.

Proud AAPL stock owner.

 

GOA

Reply

Proud AAPL stock owner.

 

GOA

Reply
post #21 of 61

Unsurprisingly, superdolt Gene (Herman) Munster just asked Tim Cook a TV question and Tim slapped him down. LMAO!

Proud AAPL stock owner.

 

GOA

Reply

Proud AAPL stock owner.

 

GOA

Reply
post #22 of 61
"Tim Cook maybe not such the good supply guy" CNBC Pundit.
post #23 of 61
I can tell you the reason one customer didn't buy a new iMac during the season. The Apple store in Philadelphia refused to honor the 8% corporate discount it usually gives us on computers. If they denied us, they probably denied anyone else who usually gets a discount. In addition, they were sold out of the model we wanted. We were willing to upgrade to the "faster" model, but the deal fell apart when they would not honor the discount.
post #24 of 61
Originally Posted by grayum View Post
"Tim Cook maybe not such the good supply guy" CNBC Pundit.

 

So the last decade of his work leading Apple to insanely low operational costs and high revenue were… what? lol.gif

Originally Posted by Marvin

The only thing more insecure than Android’s OS is its userbase.
Reply

Originally Posted by Marvin

The only thing more insecure than Android’s OS is its userbase.
Reply
post #25 of 61
Quote:
Originally Posted by emileg View Post

I can tell you the reason one customer didn't buy a new iMac during the season. The Apple store in Philadelphia refused to honor the 8% corporate discount it usually gives us on computers. If they denied us, they probably denied anyone else who usually gets a discount. In addition, they were sold out of the model we wanted. We were willing to upgrade to the "faster" model, but the deal fell apart when they would not honor the discount.

 

Guess what, someone else bought "your" iMac and did a double fist pump that they were able to get it.

post #26 of 61
Next quarter they might approach or cross $150 billion mark. I think it is just unprecedented. And most of the money is a return on an original investment into the iPhone. Could have been much better for Apple today, if they simply bought out all the multi-touch related patents before the original iPhone release. When they were cheap, when it was obvious for Apple how big this disruption is going to be, and not so obvious to anyone else.
post #27 of 61

so, what did we learn of significance?

 

1. overall profit margins are down notably. this is probably a permanent change. it reflects the impact of increased market competition from all directions.

 

2. the iPad mini is a big hit, and they still can't make them fast enough. but it also results in fewer big iPad sales and is a major reason for the overall lower profit margin.

 

3. the iPhone 5 is a big hit.

 

4. China will be a source of tremendous future growth for Apple (and some others too).

 

5. too soon to tell how Apple computer sales will trend in 2013 compared to overall market.

 

did they mention the growth in total iOS/iTunes user accounts? that is the important measure of the overall net growth of Apple ecosystem users.

post #28 of 61
Quote:
Originally Posted by Alfiejr View Post

so, what did we learn of significance?

1. overall profit margins are down notably. this is probably a permanent change. it reflects the impact of increased market competition from all directions.

I disagree with the cause and effect. Saturation at the higher levels appears to be a great reason than increased competition. If it was just increased competition there would be a lose of relative sales and discounted prices. Introducing a lower priced iPhone and iPad mini that use older components is a clear sign of adjusting for market saturation. We see the same thing with the Mac which I believe used to have an APR of $1400 and now it's $1100 despite Apple's market share increasing in the PC market.

"The real haunted empire?  It's the New York Times." ~SockRolid

"There is no rule that says the best phones must have the largest screen." ~RoundaboutNow

Reply

"The real haunted empire?  It's the New York Times." ~SockRolid

"There is no rule that says the best phones must have the largest screen." ~RoundaboutNow

Reply
post #29 of 61

This was the most interesting note from the conference call IMO:

 

Quote:

Originally Posted by AppleInsider View Post

iPhone 5 production was in constraint to start the December quarter, while the iPhone 4, which is available for free with a service contract, was constrained throughout the quarter.

 

This information combined with Verizon saying half of their iPhone sales were 4/4S is very interesting. People obviously want more affordable iPhones, but I think what makes the 4 a success is that it's an extremely beautiful high quality device that trumps anything else in the "Free" category.

 

I wonder if the "low cost" iPhone for China and other PAYG markets will simply be the iPhone 4. It's a great phone and I could see Apple selling it for $249 once the 5S comes out later this year.

post #30 of 61
Apple's profit margins are dropping, due to being forced by competitors. 
 
Google and Amazon are very scary to Apple's bottom line because they don't give a crap about hardware profits. Google would put a nexus 7 in every cereal box if it could. 
 
Nexus 4, Nexus 10, Nexus 7, Amazon Kindle fire HD, ect.. are all about getting people to buy more stuff and looking at ads. 
 
But by far the biggest threat to Apple is the Telecom Subsidy economy going bust in the U.S. 
Apple should be doing whatever it can to make sure T. mobiles plan of eliminating phone subsidy fails. Because if it does work and get adopted by the other telecoms, well that $600+ iphone is not going to cut it. 
post #31 of 61
"Google would put a nexus 7 in every cereal box if it could!"

LOL! Reading this nearly made me blow the granola I was eating through my nose!
post #32 of 61
Quote:
Originally Posted by Techstalker View Post

Apple's profit margins are dropping, due to being forced by competitors. 
 
Google and Amazon are very scary to Apple's bottom line because they don't give a crap about hardware profits. Google would put a nexus 7 in every cereal box if it could. 
 
Nexus 4, Nexus 10, Nexus 7, Amazon Kindle fire HD, ect.. are all about getting people to buy more stuff and looking at ads. 
 
But by far the biggest threat to Apple is the Telecom Subsidy economy going bust in the U.S. 
Apple should be doing whatever it can to make sure T. mobiles plan of eliminating phone subsidy fails. Because if it does work and get adopted by the other telecoms, well that $600+ iphone is not going to cut it. 

 

For the consumer, there is no much of a difference between a subsidy and a partial credit (what T-Mobile seems to want to do) besides a choice to pay outright with lower monthly fees or get it cheap and pay more every month.

post #33 of 61
Quote:
Originally Posted by jason98 View Post

 

For the consumer, there is no much of a difference between a subsidy and a partial credit (what T-Mobile seems to want to do) besides a choice to pay outright with lower monthly fees or get it cheap and pay more every month.

 

Isn't that what European customers do now anyway?

 

I think the cost of an iPhone would be cheaper with such a plan than it is on Verizon or AT&T.

post #34 of 61
Originally Posted by macart View Post
LOL! Reading this nearly made me blow the granola I was eating through my nose!

 

Connie? Zazzles? Is that you?

Originally Posted by Marvin

The only thing more insecure than Android’s OS is its userbase.
Reply

Originally Posted by Marvin

The only thing more insecure than Android’s OS is its userbase.
Reply
post #35 of 61
Quote:
Originally Posted by macart View Post

"Google would put a nexus 7 in every cereal box if it could!"

LOL! Reading this nearly made me blow the granola I was eating through my nose!

 

And it won't even end up with this.

Eventually I believe Google will even pay you to get a phone or a tablet (for example in a form of free or discounted Data access, Amazon does it already though Kindle's price is still above $0)

post #36 of 61
Quote:
Originally Posted by jason98 View Post

 

For the consumer, there is no much of a difference between a subsidy and a partial credit (what T-Mobile seems to want to do) besides a choice to pay outright with lower monthly fees or get it cheap and pay more every month.

when the nexus 4 is sitting at $299 base price at tmobile and the iphone is sitting at $650+ base price, it starts to show up in the bill, 

 

The difference is buying a $299 phone outright and paying $30 a month, buying a phone a $299 for $200 base price and paying maybe $35 a month, buying a $650 outright iphone and paying 30 a month or buying a $650 iphone for $200 and paying $50 a month. 

post #37 of 61
Quote:
Originally Posted by blackbook View Post

 

Isn't that what European customers do now anyway?

 

I think the cost of an iPhone would be cheaper with such a plan than it is on Verizon or AT&T.

 

It depends on the service charge they will choose. They could obviously tune it in such a way that service + principle + interest = VZ/ATT fees.

post #38 of 61

Apple is in a weird situation with U.S Telecoms, telecoms love and hate the iphone, but they mostly hate it. 

 

Apple doesn't like telecoms much, but subsidy model that rules the U.S market, Apple loves (even though it hurts customers, higher monthly bills). 

 

That is why U.S telecoms love to push cheap, crappy android phones on customers, they bend you over with monthly bill doesn't matter if you buy Apple or android, you pay the same bill. 

 

U.S telecoms would love to end subsidy economy. It knee caps apple, who they don't like, makes people pay for their own phones, it also means they no longer have to negotiate long term contracts with Apple. Sprint no longer has to go to Apple and say we will give you "x" amount of money if you give us the iphone.

 

It helps the consumer, monthly bills drop, but it might also hurt the customer as product quality might drop, no more Iphone, samsung S3 ect.. just a bunch of budget smartphones, or it might destroy the ridiculous high profit margin of the likes of samsung of Apple. They would still make a profit but not the ridulous margins those companies have today. 

post #39 of 61
Quote:
Originally Posted by Techstalker View Post

Apple's profit margins are dropping, due to being forced by competitors. 
 
Google and Amazon are very scary to Apple's bottom line because they don't give a crap about hardware profits. Google would put a nexus 7 in every cereal box if it could. 
 
Nexus 4, Nexus 10, Nexus 7, Amazon Kindle fire HD, ect.. are all about getting people to buy more stuff and looking at ads. 
 
But by far the biggest threat to Apple is the Telecom Subsidy economy going bust in the U.S. 
Apple should be doing whatever it can to make sure T. mobiles plan of eliminating phone subsidy fails. Because if it does work and get adopted by the other telecoms, well that $600+ iphone is not going to cut it. 


Very interesting post. Alarmist, but interesting. Yes, I was wondering about the subsidies going away. And Apple will be in a lurch. Tech moves fast now. My teenage daughter says that her and other teenagers don't use FB very much anymore. They are switching to other communication tools. FB is kind of a one trick pony.

post #40 of 61
Quote:
Originally Posted by SpamSandwich View Post

Unsurprisingly, superdolt Gene (Herman) Munster just asked Tim Cook a TV question and Tim slapped him down. LMAO!

 

Better yet... you'll really love this link (before clicking be sure to make a promise to yourself not to break your monitor):

 

http://www.cnbc.com/id/100402531

na na na na na...
Reply
na na na na na...
Reply
New Posts  All Forums:Forum Nav:
  Return Home
  Back to Forum: AAPL Investors
AppleInsider › Forums › Investors › AAPL Investors › Notes of interest from Apple's Q1 2013 conference call