Notes of interest from Apple's Q2 2016 conference call

Posted:
in AAPL Investors edited April 2016
Calling it a "busy and challenging quarter," Apple Chief Executive Tim Cook gave commentary and fielded questions on his company's fiscal 2016 second quarter. Notes of interest from the call with investors and the media follow.




In addition to Cook, also participating in Tuesday's call was Chief Financial Officer Luca Maestri.

Highlights



  • Cook said the iPhone business remains healthy, with higher upgrades than the iPhone 5s cycle
  • Apple expects to see its best iPad revenue compares in over two years in the current June quarter
  • "Our product pipeline has many innovations in store," Cook said
  • Apple made 15 acquisitions in the last four quarters
  • Apple's $250 billion capital return program will run through the end of March of 2018
  • Dividend is growing to 57 cents per share, growth of about 10%


Apple's iPhone business



iPhone customers are incredibly loyal, Cook said, noting that studies show the highest retention level of any smartphone.

Apple added more switchers from Android in the first half of this fiscal year than any other six-month period ever.

iPhone sales were up 56 percent year over year in India.

iPhone SE was not reflected in March quarter results, but Cook said so far it's seen "terrific customer response."

On the iPhone SE, Cook said there are "even more people than we thought" who wanted the latest technology in a smaller package.

Maestri revealed that 78% of businesses planning to purchase smartphones in the June quarter will chose iPhone, according to a new survey.

Apple's Services business



Services was the second-highest earner for Apple last quarter, up 20 percent to $6 billion.

App Store and Apple Music revenue continues to grow. App Store was up 35% to a new all-time high.

Music revenue has "hit an inflection point after many quarters of decline," Cook said.

He said Apple's 1 billion active devices in use continue to bring in recurring revenue.

Apple Pay is said to be adding 1 million new users per week.

Apple's Mac business



More than half of Mac buyers are new to the platform. In China, more than 80 percent were new.

Maestri said it was a "challenging" quarter for PC sales, with Apple seeing declines, but the company still gained market share.

Apple Watch



Apple expects the Watch to have seasonality similar to the iPod. Sales last quarter met Apple's expectations.

Unit sales of Apple Watch in its first year exceeded iPhone in its first year in 2007.

Cook said the Apple Watch has "an exciting future ahead."

Apple Watch is now available in 60 countries, Maestri said.

Apple's iPad business



Cook touted the launch of the new 9.7-inch iPad Pro, and noted that Apple expects to see its best iPad revenue compares in over two years.

Maestri said NPD data shows iPad has 78% share of tablets priced over $200.

451 Research measured a 97% satisfaction rate for iPad Air 2.

Corporate buyers reported a 94% satisfaction rate for iPad and a June quarter purchase intent of 71%.
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Comments

  • Reply 1 of 39
    mac_128mac_128 Posts: 3,454member
    Wow. The "Other" category dropped significantly post holiday -- back to pre-watch levels. No wonder they dropped the price on the Watch.
    edited April 2016 tallest skil
  • Reply 2 of 39
    rogifan_newrogifan_new Posts: 4,297member
    mac_128 said:
    Wow. The "Other" category dropped significantly post holiday -- back to pre-watch levels. No wonder they dropped the price on the Watch.
    Highly seasonal plus it's a first gen product with a number of kinks to work out. I'm not surprised people are holding out for 2nd gen. I'm an owner and I'd tell people to wait for gen 2.
    nolamacguy
  • Reply 2 of 39
    adrayvenadrayven Posts: 460member
    mac_128 said:
    Wow. The "Other" category dropped significantly post holiday -- back to pre-watch levels. No wonder they dropped the price on the Watch.
    Meh, its a seasonal item.. People buy watches, Apple TV's during fall season.. Only reason last year this time was up was because of the Apple crowd buying the 1st gen model. We didn't see a new model this Spring, so no up-tic in sales. /shrug. I'm honestly thinking we won't see a new model this year.. or maybe they will plan it more in time for back-to-school ... which wouldn't surprise me in the least.
    edited April 2016
  • Reply 4 of 39
    calicali Posts: 3,494member
    How in the f*** was this a "disappointing" quarter?????
  • Reply 5 of 39
    mac_128mac_128 Posts: 3,454member
    adrayven said:
    mac_128 said:
    Wow. The "Other" category dropped significantly post holiday -- back to pre-watch levels. No wonder they dropped the price on the Watch.
    Meh, its a seasonal item.. People buy watches, Apple TV's during fall season.. Only reason last year this time was up was because of the Apple crowd buying the 1st gen model. We didn't see a new model this Spring, so no up-tic in sales. /shrug. I'm honestly thinking we won't see a new model this year.. or maybe they will plan it more in time for back-to-school ... which wouldn't surprise me in the least.
    Right, "seasonal". Nobody gives watches and jewelry for Valentines Day. /s

    Let's see what happens next quarter after the price drop and a major watch giving period: graduation and wedding anniversary season. 
    edited April 2016
  • Reply 6 of 39
    As long as you also sync them to some master device so if the cloud evaporates you should be fine.
    cali said:
    How in the f*** was this a "disappointing" quarter?????
    It's not really disappointing at all. It is just lower than a quarter where Apple had their best sales ever. In the end Apple is doing just fine. Apple is still packing on more revenue (and profits) in a quarter than many "successful" companies will see in a lifetime.
    edited April 2016
  • Reply 7 of 39
    nhughesnhughes Posts: 767editor
    cali said:
    How in the f*** was this a "disappointing" quarter?????
    It's the first time Apple's revenue fell since 2003, and the first time the iPhone ever saw a decrease in sales. Pretty simple.
    anantksundaramtallest skil6Sgoldfish
  • Reply 8 of 39
    entropysentropys Posts: 3,200member
    a succinct summary by Machiavelli of Apple's current problems on macrumors:


    Messy and cluttered product lines.

    Poor and outdated product specs.

    Exploitative upgrade prices.

    Terrible marketing.

    Glib focus on crass fashion items.

    Tacky accessories.

    Apple needs to refocus. Now.
    Unless you really had to, you would have to be nuts to buy a mac right now.  Seriously out of date, and still at premium prices.
    edited April 2016 geekmeetallest skil6Sgoldfish
  • Reply 9 of 39
    geekmeegeekmee Posts: 489member
    If this is what "Doomed" looks like....
  • Reply 10 of 39
    geekmeegeekmee Posts: 489member
    ...lets get "Dooming!"
    entropys
  • Reply 11 of 39
    sog35 said:

    The iPhone6 cycle was a SUPER CYCLE and an .... Etc etc
    Stop spouting nonsense. You're just making up stuff. 
    edited April 2016 singularitytallest skil
  • Reply 12 of 39
    macplusplusmacplusplus Posts: 2,091member
    entropys said:
    a succinct summary by Machiavelli of Apple's current problems on macrumors:


    Messy and cluttered product lines.

    Poor and outdated product specs.

    Exploitative upgrade prices.

    Terrible marketing.

    Glib focus on crass fashion items.

    Tacky accessories.

    Apple needs to refocus. Now.
    Unless you really had to, you would have to be nuts to buy a mac right now.  Seriously out of date, and still at premium prices.
    People always bought the Mac when they really had to... This is not a product to buy and sell at leisure...
  • Reply 13 of 39
    There are many articles about Apple's financial results today and didn't know which article to post this link. It's from the Sydney Morning Herald. http://www.smh.com.au/business/iphone-sales-are-down-but-heres-why-you-can-ignore-apples-shock-result-20160426-gofq60.html
  • Reply 14 of 39
    rogifan_newrogifan_new Posts: 4,297member
    entropys said:
    a succinct summary by Machiavelli of Apple's current problems on macrumors:


    Messy and cluttered product lines.

    Poor and outdated product specs.

    Exploitative upgrade prices.

    Terrible marketing.

    Glib focus on crass fashion items.

    Tacky accessories.

    Apple needs to refocus. Now.
    Unless you really had to, you would have to be nuts to buy a mac right now.  Seriously out of date, and still at premium prices.
    You don't think Apple would have new Macs out there if the hardware was available? We'll see something at wwdc if not before.
  • Reply 15 of 39
    beltsbearbeltsbear Posts: 314member
    entropys said:
    a succinct summary by Machiavelli of Apple's current problems on macrumors:


    Messy and cluttered product lines.

    Poor and outdated product specs.

    Exploitative upgrade prices.

    Terrible marketing.

    Glib focus on crass fashion items.

    Tacky accessories.

    Apple needs to refocus. Now.
    Unless you really had to, you would have to be nuts to buy a mac right now.  Seriously out of date, and still at premium prices.
    No, but some machines are. The new Macbook is in a category by itself and priced well if that is what you want. The air is quite reasonable for what you get as well. The pro's all need work, the iMac needs a big upgrade. Apple needs to rethink the mini.
  • Reply 16 of 39
    entropysentropys Posts: 3,200member
    entropys said:
    a succinct summary by Machiavelli of Apple's current problems on macrumors:

    Unless you really had to, you would have to be nuts to buy a mac right now.  Seriously out of date, and still at premium prices.
    You don't think Apple would have new Macs out there if the hardware was available? We'll see something at wwdc if not before.
    Yes, yes I do. 
    That they haven't been released clearly means that they are not available. Yet. But they should have been available well before Christmas and at least for macs this quarter would have been much better.  I for example would have bought three, but only got two low end MBAs for the Miss entropys and crossed to the dark side for an HP spectre x360 for master entropy.  The reason Apple sold half a million less macs is because their product line is well and truly out of date.  If Apple leaves it too long people will have moved on and they won't get as big a blockbuster quarter for next September as they would have if Apple had updated earlier.  it might be forgivable if Ives has been chewed out over the one port rMB fiasco and the new rMBP had to be redesigned to be something a bit more flexible (i.e. a decent number of ports).  We will have to keep on waiting, waiting to see...  Not holding my breath for an rMBA though, even though that would be the best!
    And don't get me started on the approaching fossilisation Mac Pro.
  • Reply 18 of 39
    nhughesnhughes Posts: 767editor
    sog35 said:
    nhughes said:
    It's the first time Apple's revenue fell since 2003, and the first time the iPhone ever saw a decrease in sales. Pretty simple.
    The iPhone6 cycle was a SUPER CYCLE and an ANOMALY.  That was not a regular cycle. That was TWO or THREE years of pent up demand for a large iPhone. People were waiting YEARS to buy that phone. And many people who bought the 5s just months earlier also bought the iPhone6. 

    For godsake iPhone units were up 40% during the iPhone6 cycle.

    Do you seriously think it was realistic to think that Apple could match or beat last years sales? HELL NO.

    Now compare this years results with the last NORMAL CYCLE (iPhone 5s).
    You will see that revenue and iPhone units are up nicely at 15%

    This is like winning the lottery one year and being disappointed the next year that you didn't make as much money. Please.

    The iPhone6 cycle was a once in a generation SUPER CYCLE.  But the good thing is Apple will benefit from this super cycle for years to come with Android switchers and an increase in install base.
    Based on this logic, virtually every year of the iPhone's existence was a "SUPER CYCLE" -- until this year. Right or wrong, the 6s has underperformed compared to expectations. I am not spouting doom or gloom, just reporting the facts. 
    singularity
  • Reply 19 of 39
    rezwitsrezwits Posts: 760member
    Yeah "Doomed" the Mac Segment, that should be going bonkers with all these iOS people. iOS, watchOS, tvOS, sure they are all practically BONKERS! but they need to have every model of Mac, available have a new version every year, except maybe the Mac Pro (every 2 years maybe), FLAT OUT! We are in this cycle rhythm with buying our Apple Products, and the Mac side is, just, you can see them slacking, and not caring, and it's like ARE YOU GOING TO LET THIS DIE? or go all ARM? Probably ARM, and it's going to suck... it's a lame choice...
  • Reply 20 of 39
    MacProMacPro Posts: 19,428member
    How the media can write about the worst results in 13 years when the fact is Apple just fell short of the best year ever and really the press should be writing, first time in 13 years Apple did not beat y.o.y. growth is beyond insane and probably deliberately manipulative.  How about second best results in history?

    quadra 610nolamacguy
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