Notes of interest from Apple's Q3 2012 conference call

Posted:
in AAPL Investors edited January 2014
A record quarter for the iPad was the stand-out performance of Apple's third quarter of fiscal 2012. Following Tuesday's earnings release, the company held a conference call with analysts and the media, and notes of interest follow.

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

Highlights
  • New all-time quarterly record for iPad unit sales.
  • Mac sales only grew 2 percent year over year, but that was enough for a new June quarter record on sales of 4 million units.
  • Number of iPhones in the Fortune 500 have more than doubled in the last year, while iPads have more than tripled.
  • More than 410 million iOS devices (iPhone, iPad, iPod touch) have been sold to date.
  • More than $5.5 billion has been paid to iOS App Store developers.
  • Weekly iPhone sales continue to be negatively impacted by rumors of new products, Oppenheimer revealed. Cook said he believes there is "incredible anticipation" for future products that has affected sales, though the exact impact is "difficult to sort out."
  • "We could not be more confident in our new product pipeline," Oppenheimer said, though he unsurprisingly declined to offer any specifics or details.
Apple's iPhone business

iPhone growth was 28 percent year over year with 26 million units. Distribution is now at over 250 carriers in over 100 countries.

iPhone channel inventory ended the quarter at 4-6 weeks.

$16.2 billion in recognized revenue from iPhone sales, an increase of 22 percent from a year ago.

Oppenheimer highlighted iPhone adoption in the enterprise, saying it helps businesses and employees be more productive.

Apple's iPad business

iPad sales grew 84 percent to 17 million. Apple is now selling iPad in 97 countries.

Recognized revenue was $9.2 billion in the quarter, an increase of 52 percent from a year ago.

About 3.2 million units were in the channel at the end of the quarter, leaving Apple at 4-6 weeks of inventory.

Interest in the new iPad was "high," but sales of the reduced-price iPad 2 in the K-12 education market were particularly strong, Oppenheimer said.

Apple's Mac business

The June quarter was the best ever for U.S. education institution sales of the Mac.

Portables represented nearly three quarters of all Mac sales for the quarter.

Apple ended the quarter with 3-4 weeks of Mac channel inventory.

Mac sales were hurt by the timing of the portable announcement last quarter, Cook said, as new products were announced with less than three weeks remaining in the quarter.

Prior to WWDC, weekly Mac sales were running below the previous year, but after WWDC, new MacBook Pros and MacBook Airs drove sales growth and pushed Apple into a positive.

MacBook Pro with Retina display was "incredibly well received." Apple hasn't yet met demand, but Cook said he expects they will do so next month.

Apple's App Stores, iTunes, iCloud, and Apple TV

iTunes had sales of over $1.8 billion, iTunes Store launched in over 12 countries including Hong Kong, Singapore and Taiwan last month.

Apple TV sales were 1.3 million in the quarter, up over 170 percent year over year. 4 million units in the fiscal year, which Cook called "pretty incredible."

Apple's iPod business

iPod touch accounted for more than half of iPods sold, and iPod sales were higher than Apple expected.

Ended quarter with 4-6 weeks of iPod channel inventory.

Apple's retail business

Revenue at retail stores was $4.1 billion, an increase of 17 percent from a year ago. Apple's stores sold 791,000 Macs.

9 new stores opened during the quarter. There are now 373 total Apple stores, with 123 of them outside of the U.S.

Average revenue per store was $11.1 million.

Apple's regional business segments

Asia-Pacific grew 25 percent in the quarter. Greater China represents about a third of Apple's growth in the region.

China's revenue was $5.7 billion, a 48 percent year over year increase.

Cook said Apple was "incredibly pleased" with the performance of the iPhone greater China. Sales were up more than 100 percent year over year.

Europe was "essentially flat" year over year for the iPhone, Cook said. He highlighted that region as the biggest disappointment.

U.K. was relatively solid with 30 percent growth, but France, Greece and Italy were singled out as "particularly poor," while Germany saw just single-digit growth for the quarter.
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Comments

  • Reply 1 of 96
    tallest skiltallest skil Posts: 43,399member


    I'm happy that Mac sales grew, particularly since they didn't update for… what, all of last quarter?

  • Reply 2 of 96
    blackbookblackbook Posts: 1,361member
    With iPad still selling like gangbuster is there really a [I]need[/I] for a Mini?
  • Reply 3 of 96
    jfc1138jfc1138 Posts: 3,090member


    Portability. So a smaller one would be a nice option as a compromise between a phone and the current large pad.

  • Reply 4 of 96
    drfreemandrfreeman Posts: 111member

    Quote:

    Originally Posted by Tallest Skil View Post


    I'm happy that Mac sales grew, particularly since they didn't update for… what, all of last quarter?



     


    Agreed... I am surprised they did not update them for so long!

  • Reply 5 of 96
    tallest skiltallest skil Posts: 43,399member

    Quote:

    sales of the reduced-price iPad 2 in the K-12 education market were particularly strong, Oppenheimer said.


     


    There. No need for a smaller one.

  • Reply 6 of 96
    mj1970mj1970 Posts: 9,002member

    Quote:

    Originally Posted by Tallest Skil View Post


    There. No need for a smaller one.



     


    I interpreted this differently.


     


    I read this to say that the lower cost iPad was doing very well.


     


    Particularly, the full statement was:


     


     


    Quote:


    Interest in the new iPad was "high," but sales of the reduced-price iPad 2 in the K-12 education market were particularly strong, Oppenheimer said.



     


    This seems to be saying that the new iPad is doing well but the lower cost one may be doing better.


     


    The best (or only) pathway to lower cost iPad might be smaller iPads. Maybe not. Apple seems to have found ways to keep previous generations (e.g., iPhone) online at lower cost. Perhaps this will be the route they take. I think they'd like to try to get an iPad down closer $200 and pretty much end any traction any competitors might be gaining.

  • Reply 7 of 96
    red oakred oak Posts: 679member
    There. No need for a smaller one.

    We get it. You don't want a mini. We get it
  • Reply 8 of 96
    tallest skiltallest skil Posts: 43,399member

    Quote:

    Originally Posted by MJ1970 View Post

    This seems to be saying that the new iPad is doing well but the lower cost one may be doing better.


     


    I doubt that.


     




    The best (or only) pathway to lower cost iPad might be smaller iPads.




     


    That's not… no.


     



    Quote:

    Originally Posted by Red Oak View Post

    We get it. You don't want a mini. We get it



     


    No, you haven't even begun to get it: there's no purpose for a smaller one.

  • Reply 9 of 96
    focherfocher Posts: 645member

    Quote:

    Originally Posted by blackbook View Post



    With iPad still selling like gangbuster is there really a need for a Mini?


    The issue is around the concept of a "price umbrella". At a $399 entry point, the problem is that Apple created a tablet market and competitors finally figured out that they can come in at the lower price points (now at $199 with the Nexus 7) and capture market share without competing with Apple. It was one thing when there was no traction for the other products, but Apple can't realistically leave that segment unanswered because it will just dilute the iPad's domination of the tablet market - or at least make it look diluted when you look at market share numbers.


     


    I'm not suggesting Apple would enter that segment just to be in that segment. I firmly believe Apple doesn't enter a market or segment unless it feels it is going to field the best product in that segment. But if they are confident of their product offering, they aren't going to fail to make the right business decision out of some allegiance to a past stated "rule".

  • Reply 10 of 96
    jfc1138jfc1138 Posts: 3,090member

    Quote:

    Originally Posted by Tallest Skil View Post


     


    I doubt that.


     


     


     


    That's not… no.


     


     


     


    No, you haven't even begun to get it: there's no purpose for a smaller one.



    For you undoubtedly. Others?


     


    Sure there is.

  • Reply 11 of 96
    tallest skiltallest skil Posts: 43,399member

    Quote:

    Originally Posted by jfc1138 View Post

    Sure there is.


     


    You have to weigh the single 'benefit' of a smaller device against the losses.


     


    It makes no sense. There are far too many losses.

  • Reply 12 of 96
    focherfocher Posts: 645member

    Quote:

    Originally Posted by Tallest Skil View Post


     


    No, you haven't even begun to get it: there's no purpose for a smaller one.



     


    The purchasing public is actually starting to say that it does also want the choice of a smaller tablet, and the longer Apple leaves that price umbrella in place the more likely a competitor is going to field a viable product. The reviews of the Nexus 7 are suggesting that could be now. I'll give you credit for consistency, but Apple has shown itself to be more open to competing in segments where it previously declared it would not ... once they feel they have a compelling product to offer.

  • Reply 13 of 96
    zunxzunx Posts: 620member


    How to increase Mac (and display) sales: offer Matte option. No matte, no purchase!!!

  • Reply 14 of 96
    mj1970mj1970 Posts: 9,002member

    Quote:

    Originally Posted by Tallest Skil View Post


    I doubt that.



     


    OK. Good for you.


     


     


    Quote:

    Originally Posted by Tallest Skil View Post


    That's not… no.



     


    You know this...how?

  • Reply 15 of 96
    tallest skiltallest skil Posts: 43,399member

    Quote:

    Originally Posted by zunx View Post

    How to increase Mac (and display) sales: offer Matte option. No matte, no purchase!!!


     


    STOP. NOW. This is spam.




    Quote:

    Originally Posted by MJ1970 View Post

    OK. Good for you.



     


    So post some numbers, otherwise you've no argument.


     


    Quote:


    You know this...how?




     


    Because that doesn't follow from what they've done previously? They didn't make a smaller iPhone without data or apps, they took last year's model and made it cheaper. Same with the iPad.


     


    And when the 4th iPad comes out next spring and the iPad 2 is $299, all this 7" crap will peter out.

  • Reply 16 of 96
    mj1970mj1970 Posts: 9,002member

    Quote:

    Originally Posted by Tallest Skil View Post


     


    You have to weigh the single 'benefit' of a smaller device against the losses.


     


    It makes no sense. There are far too many losses.



     


    Understood. However, how do you know what these benefits and losses are from Apple's perspective?

  • Reply 17 of 96
    daylove22daylove22 Posts: 215member

    Quote:

    Originally Posted by AppleInsider View Post



    A record quarter for the iPad was the stand-out performance of Apple's third quarter of fiscal 2012. Following Tuesday's earnings release, the company held a conference call with analysts and the media, and notes of interest follow.

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

    Highlights


    • New all-time quarterly record for iPad unit sales.


    • Mac sales only grew 2 percent year over year, but that was enough for a new June quarter record on sales of 4 million units.


    • Number of iPhones in the Fortune 500 have more than doubled in the last year, while iPads have more than tripled.


    • More than 410 million iOS devices (iPhone, iPad, iPod touch) have been sold to date.


    • More than $5.5 billion has been paid to iOS App Store developers.


    • Weekly iPhone sales continue to be negatively impacted by rumors of new products, Oppenheimer revealed. Cook said he believes there is "incredible anticipation" for future products that has affected sales, though the exact impact is "difficult to sort out."


    • "We could not be more confident in our new product pipeline," Oppenheimer said, though he unsurprisingly declined to offer any specifics or details.



    Apple's iPhone business

    iPhone growth was 28 percent year over year with 26 million units. Distribution is now at over 250 carriers in over 100 countries.

    iPhone channel inventory ended the quarter at 4-6 weeks.

    $16.2 billion in recognized revenue from iPhone sales, an increase of 22 percent from a year ago.

    Oppenheimer highlighted iPhone adoption in the enterprise, saying it helps businesses and employees be more productive.

    Apple's iPad business

    iPad sales grew 84 percent to 17 million. Apple is now selling iPad in 97 countries.

    Recognized revenue was $9.2 billion in the quarter, an increase of 52 percent from a year ago.

    About 3.2 million units were in the channel at the end of the quarter, leaving Apple at 4-6 weeks of inventory.

    Interest in the new iPad was "high," but sales of the reduced-price iPad 2 in the K-12 education market were particularly strong, Oppenheimer said.

    Apple's Mac business

    The June quarter was the best ever for U.S. education institution sales of the Mac.

    Portables represented nearly three quarters of all Mac sales for the quarter.

    Apple ended the quarter with 3-4 weeks of Mac channel inventory.

    Mac sales were hurt by the timing of the portable announcement last quarter, Cook said, as new products were announced with less than three weeks remaining in the quarter.

    Prior to WWDC, weekly Mac sales were running below the previous year, but after WWDC, new MacBook Pros and MacBook Airs drove sales growth and pushed Apple into a positive.

    MacBook Pro with Retina display was "incredibly well received." Apple hasn't yet met demand, but Cook said he expects they will do so next month.

    Apple's App Stores, iTunes, iCloud, and Apple TV

    iTunes had sales of over $1.8 billion, iTunes Store launched in over 12 countries including Hong Kong, Singapore and Taiwan last month.

    Apple TV sales were 1.3 million in the quarter, up over 170 percent year over year. 4 million units in the fiscal year, which Cook called "pretty incredible."

    Apple's iPod business

    iPod touch accounted for more than half of iPods sold, and iPod sales were higher than Apple expected.

    Ended quarter with 4-6 weeks of iPod channel inventory.

    Apple's retail business

    Revenue at retail stores was $4.1 billion, an increase of 17 percent from a year ago. Apple's stores sold 791,000 Macs.

    9 new stores opened during the quarter. There are now 373 total Apple stores, with 123 of them outside of the U.S.

    Average revenue per store was $11.1 million.

    Apple's regional business segments

    Asia-Pacific grew 25 percent in the quarter. Greater China represents about a third of Apple's growth in the region.

    China's revenue was $5.7 billion, a 48 percent year over year increase.

    Cook said Apple was "incredibly pleased" with the performance of the iPhone greater China. Sales were up more than 100 percent year over year.

    Europe was "essentially flat" year over year for the iPhone, Cook said. He highlighted that region as the biggest disappointment.

    U.K. was relatively solid with 30 percent growth, but France, Greece and Italy were singled out as "particularly poor," while Germany saw just single-digit growth for the quarter.


    Why are you lying? Apple missed revenue big time


    http://www.bloomberg.com/news/2012-07-24/apple-falls-short-of-analysts-expectations-amid-iphone-slump.html

  • Reply 18 of 96
    tallest skiltallest skil Posts: 43,399member

    Quote:

    Originally Posted by MJ1970 View Post

    Understood. However, how do you know what these benefits and losses are from Apple's perspective?


     


    Apple cares about the user experience more than anything. From a usability perspective, a 7" tablet is worse at everything than a ~10" one.


     


    This is just like the netbook craze five years ago. Companies made 7" laptops. No one actually wants a 7" laptop, since they're unusable. So netbooks got bigger. They made 8" and 9", and finally netbooks settled around 10" before becoming completely worthless. Let's ISOT Apple away in… 2007. I figure netbooks would have only gotten even bigger until they weren't even netbooks anymore, but rather very cheap, very poorly hardware'd laptops.

  • Reply 19 of 96
    applegreenapplegreen Posts: 421member


    Co guides Q4 margins to 38.5% vs 43.1% consensus. Co expects this decline to come from fall transition and the impact of the stronger US dollar.


     


    What I conclude from this is that a smaller iPad with lower margins is coming. 

  • Reply 20 of 96
    mj1970mj1970 Posts: 9,002member

    Quote:

    Originally Posted by Tallest Skil View Post


    So post some numbers, otherwise you've no argument.



     


    I don't have any and you know that full well. Bu then neither do you. We're both interpreting subjective statements from the call. Get off your fucking high horse.


     


     


     


    Quote:

    Originally Posted by Tallest Skil View Post


    Because that doesn't follow from what they've done previously? They didn't make a smaller iPhone without data or apps, they took last year's model and made it cheaper. Same with the iPad.



     


    Except it is what they've done with other products like iPod and MacBooks, iMacs, etc. You've picked the one product that fits your thesis for comparison and ignored the others.


     


     


    Quote:

    Originally Posted by Tallest Skil View Post


    And when the 4th iPad comes out next spring and the iPad 2 is $299, all this 7" crap will peter out.



     


    Maybe you're right. I'm just baffled by why you seem to be so concerned about being right.

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