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Notes of interest from Apple's Q3 2014 conference call

post #1 of 29
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Apple on Tuesday fell just short of Wall Street expectations for its third fiscal quarter of 2014 amid disappointing results for the iPhone and iPad, though the Mac continued to outpace the PC market. Following the announcements, executives from the company participated in a conference call with analysts and the media, and notes of interest follow.




Participating in the call were Apple Chief Executive Tim Cook, and recently-appointed Chief Financial Officer Luca Maestri. Former CFO Peter Oppenheimer announced his retirement in March.

Highlights



  • More than 20 million people watched the WWDC keynote in 2014
  • Earnings per share up 20% y/y, the highest growth rate in 7 quarters
  • iPhone sales up 55% year over year in Brazil, Russia, India, and China
  • Apple ended the quarter with $164.5 billion in cash and cash equivalents, $133.7 billion of which was offshore
  • Apple has completed 29 acquisitions since the end of FY 2013, 5 since the end of Q2 2014
  • $2 billion in commercial short paper obligations outstanding at the end of June
  • Tim Cook says Apple has sold more iPads than even they would have predicted at the beginning
  • Apple sells 2.5 iPads for every Mac in K12 education
  • Revenue growth in China up 26% year-over-year, stronger than Apple's internal predictions
  • Less than 25% of iPhones sold on a traditional subsidy plan last quarter
  • Apple "has the capability" to acquire a sizable company and manage it, if "more like [Beats or IBM] presented themselves"



Apple's iPhone business



35.2 million iPhone sales are the most ever sold in the June quarter

Apple believes new product rumors resulted in purchase delay

Tax and regulatory changes -- scheduled VAT increases and government instruction not to incentivize network switchers -- affected iPhone sales in Japan

iPhone in the enterprise: Medical device leader Metronic has developed more than 175 internal iOS apps deployed to more than 16,000 iPhones. Nestle has deployed more than 25,000 iPhones; NASA has more than 26,000

iPhone growing at 2x the overall mobile phone market in China

Apple believes iPhone trade-ins are "hugely beneficial" for the company's ecosystem, especially as it enables price-sensitive consumers in the same or different countries

Trade-in customers may be more likely to purchase another Apple product, but "difficult to quantify with certainty"

Apple "incredibly bullish" that customers on quick-upgrade plans from U.S. carriers will upgrade to new generations quickly

Apple's iPad business



Tim Cook says iPad sales met Apple expectations, but they "realize they didn't meet yours."

iPad sales were gated by reduced channel inventory, continue to be in the 4-6 week range

iPad in the enterprise: Qantas has deployed more than 15,000 iPads; Sweden has deployed more than 100,000

More than 13 million iPads sold for education globally

iPad's penetration in business is only 20%; Cook believes there is "substantial" room for improvement, which was the driver behind the IBM agreement

"The market is very bifurcated on iPad. In the BRIC countries, the iPad did extremely well. In the developed countries, like the U.S., the market is clearly weaker there," Cook said.

Apple's iTunes and App Store businesses



iTunes billings grew 25% year over year to reach an all-time high

Developers have now earned more than $20 billion on the App Store, nearly half in the last 12 months

iTunes software and services "almost doubling" every quarter in China

Apple's Mac business



Macs saw double-digit growth in K-12 education driven primarily by the MacBook Air

Mac sales up 39% in China year over year
post #2 of 29
Originally Posted by AppleInsider View Post
Tim Cook says iPad sales met Apple expectations, but they "realize they didn't meet yours."

 

That’s the polite way of saying, “Hey, idiots. Maybe we know a little bit better than you about what will and won’t be purchased, yeah?”

post #3 of 29
Quote:
Originally Posted by Tallest Skil View Post
 

 

That’s the polite way of saying, “Hey, idiots. Maybe we know a little bit better than you about what will and won’t be purchased, yeah?”

LOL.

 

And true.

 

The one worrisome aspect of their getting a little bit dragged kicking and screaming into the larger screens.... You just know WS is going to expect the biggest one to dominate sales and it might not..

post #4 of 29
Quote:
Originally Posted by Tallest Skil View Post
 

 

That’s the polite way of saying, “Hey, idiots. Maybe we know a little bit better than you about what will and won’t be purchased, yeah?”


I know better than Tim Cook.  I have criticized the iPad memory pricing since last year.  Apple marketing team was fool. 

post #5 of 29
Ha! Well Apple knows an iPad is closer to a computer than a phone so the upgrade cycle won't be every 2 years or every year like the phone. It arguably will compete with a mac in terms of upgrade cycle.
post #6 of 29
Growth in Macs continues to rebound, despite the claim they were declining just a few weeks prior.

Growth in the iPad Air will explode this fall, along-side the iPhone 6.

Cloud Services will explode with iDrive and Continuity driving more sales across the ecosystem, including Enterprise with IBM.

Macs will steadily continue to grow more rapidly within the Enterprise and Education markets and we are overdue on a few models.

iBeacon and Airport based products should be imminent
post #7 of 29
Originally Posted by jfc1138 View Post

You just know WS is going to expect the biggest one to dominate sales and it will not..


Yep.

post #8 of 29

Doomed!  Doomed, I tell you!  (and no, I didn't read the article - don't try to confuse me with information)

 

On a serious note, the one thing that stood out to me was the < 25% subsidized iPhone sales.  I remember reading a Deidu article a while back that discussed subsidies being palatable for carriers because the iPhone was such an effective sales tool, and that iPhone growth was greatly facilitated by the subsidization.  But this makes me think that people just want iPhones even w/o the carrier subsidies.  Guess iPhone is even more desirable than I'd thought (as compared to the alternatives).  Am I interpreting that right?

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You did not come into the world to fail. You came into the world to succeed.

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post #9 of 29
Does the fact that Apple have repurchased alot of shares have anything to do with the 20% y/y earnings per share increase?
post #10 of 29
I didn't hear the call, but I am willing to wager $10,000 that Tim Cook, at some point, said, "We have great new products that we just can't wait to introduce this year. We are really excited about what we've been working on. For example, we are about to release the most exciting update our AC adapters have ever seen."
post #11 of 29

“Heeeeeeeeere's Maestri!”

 

post #12 of 29
Quote:
Originally Posted by jfc1138 View Post

LOL.

And true.

The one worrisome aspect of their getting a little bit dragged kicking and screaming into the larger screens.... You just know WS is going to expect the biggest one to dominate sales and it might not..
We already know that it won't. Large cell phones are a niche market that is already in decline. Just look at the trouble Samsung is having with its bricks

I'm waiting for Apple to pull a rabbit out of the hat and deliver a large screen cell phone that is a folder. The idea being to make it pocketable.
post #13 of 29
Quote:
Originally Posted by wizard69 View Post

We already know that it won't. Large cell phones are a niche market that is already in decline. Just look at the trouble Samsung is having with its bricks

I'm waiting for Apple to pull a rabbit out of the hat and deliver a large screen cell phone that is a folder. The idea being to make it pocketable.

What do you consider large? Right now most phones not named iPhone are bigger than 4 inches. That's not a niche market.
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post #14 of 29
Originally Posted by dasanman69 View Post
Right now most phones not named iPhone are bigger than 4 inches. That's not a niche market.


That sounds incredibly wrong, but only because it is.

post #15 of 29
Quote:
Originally Posted by mdriftmeyer View Post

Growth in Macs continues to rebound, despite the claim they were declining just a few weeks prior.

Growth in the iPad Air will explode this fall, along-side the iPhone 6.

Cloud Services will explode with iDrive and Continuity driving more sales across the ecosystem, including Enterprise with IBM.

Macs will steadily continue to grow more rapidly within the Enterprise and Education markets and we are overdue on a few models.

iBeacon and Airport based products should be imminent

 

Agree with everything you say. Possibly the most exciting time to be an Apple customer!

post #16 of 29
Completely OT, but I like this "Falling Android" video. Only posting because I read it as 'Failing Android', plus I haven't slept yet, and it's 9.30, so off to bed:





Oh, yeah, of course I need to make a point on the subject. Uhm, I suppose if I multiply their 13M iPads sold to Education I don't get a full calendar year iPad sales number, correctomundo?
I’d rather have a better product than a better price.
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post #17 of 29
Analysts would be falling all over themselves about how amazing these numbers are for any other company. Since it's Apple the expectation was too high and Apple is happy with its numbers. They know that there is a consumer hold on purchase because of anticipated new product.

Those speaking about Apple getting into the phablet market to copy others and being too late should remember that Apple doesn't do anything that sacrififcess quality. Display quality, battery life, case size, and most of all app devopment are all issues that need to be addressed first.

Apple might not be first to market but they are always the best to market.
post #18 of 29
Quote:

Originally Posted by AppleInsider View Post

 

...

  • Apple "has the capability" to acquire a sizable company and manage it, if "more like [Beats or IBM] presented themselves"

...


iPhone in the enterprise: Medical device leader Metronic has developed more than 175 internal iOS apps deployed to more than 16,000 iPhones. Nestle has deployed more than 25,000 iPhones; NASA has more than 26,000
...

Tim Cook says iPad sales met Apple expectations, but they "realize they didn't meet yours."

...

 

So...Apple has the capability to acquire large companies.  To include IBM in the above statement, since they purchased Beats, does that mean they will purchase IBM?  Will we then start to get Macframe's???? (yes, I know about www.macframes.com)

 

Bet the company I work at has more iPhones in use than the above quoted numbers.

 

Tim Cook to media/analysts ... slap slap slap

post #19 of 29

iPhone sales up 55% year over year in Brazil, Russia, India, and China

 

I suspect this is directly related to the iPhone 5C.

 

So Apple was right all along.  Now the media and all the pundits on this forum need to apologize for saying the 5C was a flop...

 

And I expect even more massive growth when the 5C occupies the bottom level once the 6 comes out.

 

5C - $400

5S - $500

6 - $650

6X - $750

 

That's a killer lineup

Apple Purchases last 12 months - iPhone 5S (two), iPhone 6, iPhone 6+ (two), iPadAir, iPadAir2, iPadMini2, AppleTV (two), MacMini, Airport Extreme, iPod Classic.
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Apple Purchases last 12 months - iPhone 5S (two), iPhone 6, iPhone 6+ (two), iPadAir, iPadAir2, iPadMini2, AppleTV (two), MacMini, Airport Extreme, iPod Classic.
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post #20 of 29
Quote:
Originally Posted by Allvar View Post

Does the fact that Apple have repurchased alot of shares have anything to do with the 20% y/y earnings per share increase?

 

Profit was up 12% compared YoY.

 

So yes the repurchase of shares did help increase EPS to 20%

Apple Purchases last 12 months - iPhone 5S (two), iPhone 6, iPhone 6+ (two), iPadAir, iPadAir2, iPadMini2, AppleTV (two), MacMini, Airport Extreme, iPod Classic.
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Apple Purchases last 12 months - iPhone 5S (two), iPhone 6, iPhone 6+ (two), iPadAir, iPadAir2, iPadMini2, AppleTV (two), MacMini, Airport Extreme, iPod Classic.
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post #21 of 29
So Mac sales were up....where are all the whiners from the one thread a couple weeks back bitching about the prices of Macs and thats why Mac sales are down?

What do you have to say to now?

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post #22 of 29
Quote:
Originally Posted by sog35 View Post
 

iPhone sales up 55% year over year in Brazil, Russia, India, and China

 

I suspect this is directly related to the iPhone 5C.

 

So Apple was right all along.  Now the media and all the pundits on this forum need to apologize for saying the 5C was a flop...

 

And I expect even more massive growth when the 5C occupies the bottom level once the 6 comes out.

 

5C - $400

5S - $500

6 - $650

6X - $750

 

That's a killer lineup

 

And everyone else on here who thought it was a stupid idea and that they wouldn't sell. We just didn't give it enough time. I don't see the C model going away anytime soon and I think this just enhances this point. I wouldn't be surprised to see some kind of upgraded 5C at some point. 

 

I think it just goes to show that ONLY Apple knows whats best and what it seems people wanting. Just because 1 or 2 people don't see it, doesn't mean Apple doesn't know what they're doing. Lets leave Apple to make the decisions down the road here, not the peanut gallery. 

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post #23 of 29
Quote:
Originally Posted by Tallest Skil View Post
 


Yep.

Well, I do know that for me anyway the "auto-buy" is the 4.7 unless there's an overwhelming impression when I handle the other one, and I'm not anticipating that.

post #24 of 29
Quote:
Originally Posted by jfc1138 View Post

LOL.

And true.

The one worrisome aspect of their getting a little bit dragged kicking and screaming into the larger screens.... You just know WS is going to expect the biggest one to dominate sales and it might not..

Apple does not release sales by model
Apple Purchases last 12 months - iPhone 5S (two), iPhone 6, iPhone 6+ (two), iPadAir, iPadAir2, iPadMini2, AppleTV (two), MacMini, Airport Extreme, iPod Classic.
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Apple Purchases last 12 months - iPhone 5S (two), iPhone 6, iPhone 6+ (two), iPadAir, iPadAir2, iPadMini2, AppleTV (two), MacMini, Airport Extreme, iPod Classic.
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post #25 of 29
Quote:
Originally Posted by PhilBoogie View Post

Completely OT, but I like this "Falling Android" video. Only posting because I read it as 'Failing Android', plus I haven't slept yet, and it's 9.30, so off to bed:





Oh, yeah, of course I need to make a point on the subject. Uhm, I suppose if I multiply their 13M iPads sold to Education I don't get a full calendar year iPad sales number, correctomundo?

Lol. I liked her before she turned into a vampire.

iPads are just fine. I expect them to go forth and flourish.
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post #26 of 29
Quote:
Originally Posted by macxpress View Post

So Mac sales were up....where are all the whiners from the one thread a couple weeks back bitching about the prices of Macs and thats why Mac sales are down?

What do you have to say to now?

They're in the dog house. They have nothing to say, and are hanging their heads in shame.
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post #27 of 29
Quote:
Originally Posted by macxpress View Post

Quote:
Originally Posted by sog35 View Post

 
iPhone sales up 55% year over year in Brazil, Russia, India, and China

I suspect this is directly related to the iPhone 5C.

So Apple was right all along.  Now the media and all the pundits on this forum need to apologize for saying the 5C was a flop...

And I expect even more massive growth when the 5C occupies the bottom level once the 6 comes out.

5C - $400
5S - $500
6 - $650
6X - $750

That's a killer lineup

And everyone else on here who thought it was a stupid idea and that they wouldn't sell. We just didn't give it enough time. I don't see the C model going away anytime soon and I think this just enhances this point. I wouldn't be surprised to see some kind of upgraded 5C at some point. 

I think it just goes to show that ONLY Apple knows whats best and what it seems people wanting. Just because 1 or 2 people don't see it, doesn't mean Apple doesn't know what they're doing. Lets leave Apple to make the decisions down the road here, not the peanut gallery. 

DED and I were two of the few defenders of the 5C.

Schadenfreude.
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post #28 of 29
Quote:
Originally Posted by sog35 View Post


Apple does not release sales by model

Which has never stopped WS from whining has it?

post #29 of 29
Quote:
Originally Posted by Benjamin Frost View Post


DED and I were two of the few defenders of the 5C.

Schadenfreude.

 

As was I. I never thought it was a bad idea at all. Its just that first, people thought the 5C was going to be a "cheap" phone and I think some assumed it would match or maybe even outsell the 5S which I can't really say that was Apple's plan with the 5C anyways. I think that would actually have been a very bad thing. 

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