Notes of interest from Apple's Q4 2010 conference call

Posted:
in AAPL Investors edited January 2014
Apple on Monday reported another record quarter, achieving $4.46 billion in profit thanks in part to a whopping 14.1 million iPhones sold. Following the news, Apple executives conducted a financial conference call with analysts and the press, and notes of interest follow.



In addition to record-breaking iPhone sales in its fourth fiscal quarter of 2010, Apple also achieved a best for Mac sales, which hit 3.89 million, up 27 percent from a year prior. iPad sales were also 4.19 million.



It was a record quarter for Mac, iPhone and iPad sales. In all, it amounted to the company's highest revenue and earnings ever. CEO Steve Jobs, COO Tim Cook and CFO Peter Oppenheimer participated in Monday's call to discuss the results with analysts and media.



Apple's regional business segments



Sales in the Americas generated $7.2 billion in revenue. Europe accounted for $5.4 billion, while Asia Pacific was $2.7 billion.



Apple's Mac business



Most Mac sales, as usual, came from notebooks, which represented 2.6 million units. Desktops accounted for the remaining 1.2 million Mac sales.



It was the best-ever quarter for Mac sales, reaching a total of 3.89 million, exceeding the previous record of the June quarter by 400,000.



Apple's iPhone business



The iPhone continues to be the biggest money maker for Apple, accounting for $8.8 billion in revenue for the quarter on sales of 14.1 million units.



The 14.1 million units sold easily bested last quarter's sales of 8.4 million units.



Sales value of iPhones alone was about $8.6 billion, which led to an average selling price of about $610.



Strong year-over-year growth, particularly in Asia, Europe and Japan. Also began shipping China in the last day of the September quarter.



Oppenheimer said the company believes they could have sold even more iPhones if they had them available, but Apple is struggling to keep up with demand.



"Very impressed" with early results for iAd, Oppenheimer said.



"We've now passed RIM, and I don't see them catching up with us in the foreseeable future," Jobs said.



He also slammed Google's attempt to characterize iOS as "closed," versus its own "open" Android platform.



Jobs was asked by Gene Munster of Piper Jaffray about Adobe Flash. The CEO quipped back: "Flash memory? We love flash memory."



Jobs said he thinks there is room for "some number of companies to be successful" as the smartphone market continues to grow, but in the future he sees it turning into a zero-sum game.



"Right now iPhone and Android are winning that battle (for mindshare of customers)," Jobs said.



Apple's iPad business



With just two quarters on the market, the iPad is officially a major part of Apple's business. It accounted for $2.8 billion in total revenue, more than the $1.4 billion iPod hardware sales generated.



Over 65 percent of the Fortune 100 are already deploying or trying the iPad, including Procter & Gamble, Lowes, NBC Universal and Hyatt.



U.S. iPad distribution will include Walmart, Target, AT&T and Verizon stores for the holiday season.



Cumulative iOS device sales topped 120 million last month, including iOS, iPod touch and iPhone.



App Store has more than 65K game and entertainment titles, and more than 30K apps designed specifically for iPad.



Jobs slammed iPad competitors with 7-inch screens. Said that because the screen size is measured diagonally, it's only 45 percent as large as the iPad's 10-inch screen.



Jobs also revealed there are more than than 35k apps for iPad on the App Store.



"The iPad is clearly going to affect notebook computers," Jobs said. "I think the iPad proves it's not a question of if, it's a question of when."



"We haven't pushed it (the iPad) real hard in business, and it's being grabbed out of our hands," Jobs said.



"We've got a tiger by the tail here, and this is a new model of computing which we've already got tens of millions of people trained on with the iPhone, and that lends itself to lots of different aspects of life, both personal and business," he said.



On the competition, Jobs said he isn't worried. "We're not done. We're working on a lot of things for the future." He added: "We're out to win this one."



Apple's iPod business



The iPod dropped 4 percent sequentially and 11 percent year over year in unit share to 9 million units sold.



Oppenheimer said that iPod share of the U.S. market remains more than 70 percent. iPod is the top MP3 player in most countries overseas, and has seen significant overseas growth.



iTunes had revenue of more than $1B for the quarter.



The newly launched Apple TV sold a quarter-million units. "We're thrilled with that," Jobs said.



Apple's retail business



Retail sales were a record $3.5 billion for the quarter, up 75 percent year-over-year in terms of revenue. That's also an increase of 38 percent from the previous quarter's revenue.



Sold 874,000 Macs, an increase of 30 percent from a year ago. About half of Macs sold in stores were to customers who never owned a Mac before.



Opened 16 stores outside the U.S., including "spectacular" stores in Beijing, Shanghai and London, Oppenheimer.



Total of 317 stores worldwide as of the end of the quarter, with 84 of them outside of the U.S.



Average revenue per store was $11.8 million, up 52 percent from a year ago.



Apple's next (Q1 2011) fiscal quarter



For the upcoming holiday season, Apple has projected revenue of $23 billion, and expects diluted earnings per share of about $4.80. Gross margins are expected to be about 36 percent.



"We see great opportunity to continue our retail growth," Oppenheimer said of the coming fiscal year. Apple expects to open 40 to 50 stores in the next year, with more than half of them overseas.
«134

Comments

  • Reply 1 of 63
    Fantastic quarter.



    So how many ipads have been sold since introduction?
  • Reply 2 of 63
    The main note of interest for me was Steve's comment:



    "We still have a few surprises left for the remainder of this calendar year."
  • Reply 3 of 63
    BIGGEST NOTE FROM CALL:



    Steve Jobs delivers a long, lengthy rant speaking frankly (albiet from a well written script) about a number of issues that must have been weighing on his mind.
  • Reply 4 of 63
    mr. hmr. h Posts: 4,698member
    Quote:
    Originally Posted by FormerARSgm View Post


    BIGGEST NOTE FROM CALL:



    Steve Jobs delivers a long, lengthy rant speaking frankly (albiet from a well written script) about a number of issues that must have been weighing on his mind.



    Indeed. Interesting that he spent quite a while laying into the idea of 7" tablets. If anyone's waiting for a smaller iPad from Apple, they're going to be waiting a loooooooooong time
  • Reply 5 of 63
    Steve Jobs delivers a long, lengthy rant about how 7" screen size is too small for a tablet and 10" is the right form factor.



    Expect Apple to introduce a 7" iPad early next year...
  • Reply 6 of 63
    "iPad will clearly affect notebook computers. It is not a matter of if, it's a matter of when."



    "The more time passes, the more I am convinced that we've got a Tiger by the tail here."
  • Reply 7 of 63
    solipsismsolipsism Posts: 25,726member
    Quote:
    Originally Posted by bigdaddyp View Post


    Fantastic quarter.



    So how many ipads have been sold since introduction?



    All of them.



    3.27M (Q2 2010) + 4.19M (Q3 2010) = 7.46M
  • Reply 8 of 63
    Steve's speech was clearly one of those "C-E-Oh-no-he-didn't!" moments. Not only did he slam RIM as yesterday's news, but threw the gauntlet down at Android. This call is the most interesting in some time.
  • Reply 9 of 63
    herbapouherbapou Posts: 2,214member
    Quote:
    Originally Posted by solipsism View Post


    All of them.



    3.27M (Q2 2010) + 4.19M (Q3 2010) = 7.46M



    People are making a big deal out of this but you cant expect record sales when the product is unavailable to buy for a walking customer.



    I think next quarter is going to be much better for the ipad.
  • Reply 10 of 63
    solipsismsolipsism Posts: 25,726member
    Quote:
    Originally Posted by macshark View Post


    Steve Jobs delivers a long, lengthy rant about how 7" screen size is too small for a tablet and 10" is the right form factor.



    Expect Apple to introduce a 7" iPad early next year...



    Sometimes it?s pretty obvious when Steve pooh-poohs an idea that they are planning to tackle it. Usually it?s by stating how others are struggling in that area, but the 7? iPad response didn?t sound like Apple is planning to come at the 7? tablet anytime soon.
  • Reply 11 of 63
    Apparently that performance wasn't enough for the investment community; aapl down ~6% in after-hours trading. maybe they can get a government bail out....
  • Reply 12 of 63
    Quote:
    Originally Posted by macshark View Post


    Steve Jobs delivers a long, lengthy rant about how 7" screen size is too small for a tablet and 10" is the right form factor.



    Expect Apple to introduce a 7" iPad early next year...



    Hmm... I don't think so. The smaller form factor is because the other guys can't figure out how to make a larger pad for the same money.



    I do anticipate the next iPad to be lighter, possibly with FaceTime+vid cam. If Steve's going to get FaceTime integrated with Facebook, they'll need every possible device equipped for videoconferencing.
  • Reply 13 of 63
    Quote:
    Originally Posted by Sevenfeet View Post


    Steve's speech was clearly one of those "C-E-Oh-no-he-didn't!" moments. Not only did he slam RIM as yesterday's news, but threw the gauntlet down at Android. This call is the most interesting in some time.



    How's that massive lawsuit against Google progressing?
  • Reply 14 of 63
    postulantpostulant Posts: 1,270member
    Quote:

    Steve Jobs on the call:

    - I couldn't help dropping by for our first $20+ billion quarter.

    - Discussing iPhone performance. Handily beat RIMM in their last quarter. We just passed RIMM, and we don't see them catching back up. They must move beyond their comfort zone and become a software company, and we don't see them being successful at it. They have a high mountain ahead of them.

    - What about Google? Apple activates 275,000 iOS devices per day, sometimes over 300,000. Unfortunately, no solid data on how many Android handsets shipped per quarter. Gartner says 10 million in June quarter, and we wait to see whether iPhone or Android won in the most recent quarter.

    - Discussing Google claiming Android is "open". We find this disingenuous. Android is fragmented.

    - "TwitterDeck" (probably TweetDeck) revealed that it had to contend with over 100 different versions of Android in developing its app. Compare to Apple with two different versions.

    - Amazon, Vodafone, and Verizon have announced creating their own Android app stores. A mess for users and developers. Contrast with Apple's integrated App Store.

    - Even if Google was right, open doesn't always win over closed. See Microsoft's "Plays for Sure" system that they were forced to scrap. Google flirted with integrated approach with Nexus One. Google's claims are a smokescreen for what is best for customers: integrated or fragmented. We believe integrated will trump fragmented every time. Users and developers will agree.

    - Commenting on avalanche of tablets heading to market. Just a handful of credible entrants. Almost all use 7" screen, compared to iPad at nearly 10" screen. 7" screen is only 45% as large as iPad's screen. Hold an iPad in portrait view and draw a horizontal line halfway down. What's left is a 7" screen...too small. There are clear limits to how close elements can be on the screen before users can't touch accurately. We believe 10-inch screen is minimum necessary.

    - All of these tablets are using Android, but Google is telling them it isn't ready for tablets and to wait until next year.

    - Even with smaller, less-expensive screens, competitors are having a hard time matching iPad pricing. We have tons of experience in design...we've designed everything on ours. The 7-inch tablets will be dead on arrival. Their manufacturers will learn the painful lesson and abandon them for larger sizes next year, abandoning customers and developers. Sounds like a lot of fun.



    Steve cracks me up!! AI left out the best parts...
  • Reply 15 of 63
    mr. hmr. h Posts: 4,698member
    Interesting. When asked about Apple's huge cash stockpile, Steve said he strongly believes there will be one or two strategic opportunities in the future that they will need the cash for. He is saving up to buy Microsoft!
  • Reply 16 of 63
    Quote:
    Originally Posted by macshark View Post


    Steve Jobs delivers a long, lengthy rant about how 7" screen size is too small for a tablet and 10" is the right form factor.



    Expect Apple to introduce a 7" iPad early next year...



    Or at least a 10" one without the stupid side bezels so someone can actually type on it.



    Steve Jobs is far from perfect in terms of "seeing the future" of tech and has been forced to make quite a few complete turnarounds in his thinking by the realities of the market over the last few years. Thinking that the iPad is a usable portable computer for any kind of serious work is one of them.



    He's just wrong about this, but I guess we are the ones that will suffer until he figures it out.
  • Reply 17 of 63
    Steve basically told one analyst, through several examples, that he doesn't understand the Industries involved.



    Spot on.
  • Reply 18 of 63
    mr. hmr. h Posts: 4,698member
    Quote:
    Originally Posted by mdriftmeyer View Post


    Steve basically told one analyst, through several examples, that he doesn't understand the Industries involved.



    By "he", you mean the analyst, right?
  • Reply 19 of 63
    solipsismsolipsism Posts: 25,726member
    Quote:
    Originally Posted by Postulant View Post


    Steve cracks me up!! AI left out the best parts...



    Thanks for these.
  • Reply 20 of 63
    Quote:
    Originally Posted by Mr. H View Post


    By "he", you mean the analyst, right?



    would you prefer a colon in there?
Sign In or Register to comment.