Notes of interest from Apple's Q4 2016 conference call

Posted:
in AAPL Investors edited October 2016
Apple closed the book on its fiscal 2016 with a quarterly earnings conference call, marking the end of the first year where iPhone sales declined. However, Apple is bullish on its outlook, particularly with the newly released iPhone 7 series and a growing services business.




Participating in Tuesday's conference call with analysts and members of the press were Apple Chief Executive Tim Cook and Chief Financial Officer Luca Maestri. Notes of interest follow.

Highlights

  • iPhone 7 and iPhone 7 Plus demand continues to outstrip supply
  • Apple expects to have more than 100 HomeKit-certified accessories available by year end
  • In a rare move, Maestri teased that Apple has news for Mac fans coming very soon
  • Apple ended the quarter with $237 billion in cash, an increase of more than $6 billion from last quarter

Apple's iPhone business

iPhone sales were up 33 of top 40 markets

More customers switched from Android to iPhone than ever before

Apple has seen a marked increase in monthly active users for Messages since the launch of iOS 10

iPhone ASP edged slightly higher above $600. The company expects a marked increase in iPhone ASPs in the December quarter, reflecting the launch of the iPhone 7 and iPhone 7 Plus.

Maestri cited a survey saying that 79% of consumers planning to buy a smartphone in the December quarter will choose an iPhone.

"On an anecdotal business, the upgrade programs are a win," Cook said of the iPhone 7 launch.

Cook said Apple will likely catch up with iPhone 7 demand by the end of the quarter. He's less certain about iPhone 7 Plus.

Apple's services business

Music revenue grew 22% thanks to Apple Music

Apple Pay completed more transactions in the month of September than across all of fiscal 2015

Apple Watch

Cook highlighted how Aetna is subsidizing Apple Watch for customers to encourage healthier lifestyles, and also distributing the wearable among 50,000 of its own employees.

HomeKit

Cook said Apple expects to have more than 100 certified HomeKit accessories available before the end of the year.

Nodding to the recent Internet of Things botnet attack that took down huge swaths of the internet, Cook noted that Apple's HomeKit only allows approved devices to ensure customer security.

Apple's iPad business

Apple once again cited best-in-market purchase intentions among consumers and businesses for iPad. Satisfaction ratings for the iPad are also north of 90%.

Apple's next (Q1 fiscal 2017) quarter

Revenue is projected between $76 billion and $78 billion, representing a return to growth and an all-time record.

Gross margin is expected to be between 38% and 38.5%.

Comments

  • Reply 1 of 15
    Details would be appreciated.
  • Reply 2 of 15
    Personally, my own use of Apple Pay has certainly spiked. Even my local grocery store, a local chain of just 5 or 6 locations, now takes it at checkout. Always a weirdly simple pleasure. 
    watto_cobraslprescottmike1cali
  • Reply 3 of 15
    "In a rare move, Maestri teased that Apple has news for Mac fans coming very soon"

    This I like.
    battiato1981watto_cobraSpamSandwich
  • Reply 4 of 15
    slurpyslurpy Posts: 5,107member
    Wait, I thought stock price was about the future (even though it beat current expectations)? And yet, it is down, even though Apple is predicting a record-breaking quarter? Of course.
    watto_cobracali
  • Reply 5 of 15
    eightzeroeightzero Posts: 2,244member
    Personally, my own use of Apple Pay has certainly spiked. Even my local grocery store, a local chain of just 5 or 6 locations, now takes it at checkout. Always a weirdly simple pleasure. 
    Wish my Safeway would take it. Who is your grocer?
  • Reply 6 of 15
    lkrupplkrupp Posts: 6,703member
    slurpy said:
    Wait, I thought stock price was about the future (even though it beat current expectations)? And yet, it is down, even though Apple is predicting a record-breaking quarter? Of course.
    Apple is the most manipulated stock on the market. So said Jim Cramer some time ago.
  • Reply 7 of 15
    eightzero said:
    Wish my Safeway would take it. Who is your grocer?
    Writing from Seattle here, locally owned Town and Country has the Ballard Market, my go-to place. But also works at the local coop chain, PCC, I think. You've got me curious about the national chains now, I want to check a few. 
  • Reply 8 of 15
    eightzero said:
    Personally, my own use of Apple Pay has certainly spiked. Even my local grocery store, a local chain of just 5 or 6 locations, now takes it at checkout. Always a weirdly simple pleasure. 
    Wish my Safeway would take it. Who is your grocer?
    Safeway is lame. I have to use them most of the time.

    Molly Stone's and Whole Foods both accept Apple Pay.
  • Reply 9 of 15

    Wait, I thought stock price was about the future (even though it beat current expectations)? And yet, it is down, even though Apple is predicting a record-breaking quarter? Of course.
    This might be people who were betting on a bigger surprise and a quick buck. It could well be up before weeks end. Never put too much importance on after-hours movement of a couple percent, esp Apple. 
  • Reply 10 of 15
    eightzero said:
    Personally, my own use of Apple Pay has certainly spiked. Even my local grocery store, a local chain of just 5 or 6 locations, now takes it at checkout. Always a weirdly simple pleasure. 
    Wish my Safeway would take it. Who is your grocer?
    Safeway is lame. I have to use them most of the time.

    Molly Stone's and Whole Foods both accept Apple Pay.
    Whole Foods is a fabulous store that thankfully takes Apple Pay. As for Safeway, who don't AW owners complain to store management, insisting they talk with corporate higher ups to provide Apple Pay.
    watto_cobra
  • Reply 11 of 15
    Rayz2016Rayz2016 Posts: 4,556member
    Tesco doesn't support Apple Pay, but occasionally you run into a small outlet where they've forgotten to turn off the NFC on the card readers. 
    cali
  • Reply 12 of 15
    eightzero said:
    Personally, my own use of Apple Pay has certainly spiked. Even my local grocery store, a local chain of just 5 or 6 locations, now takes it at checkout. Always a weirdly simple pleasure. 
    Wish my Safeway would take it. Who is your grocer?
    My grocer in the DC area, Giant Foods, began accepting Apple Pay about 2 months ago.

    For early adopters like many of us on this forum, I think Apple Pay is transitioning from a novelty to an every-day-convenience.  That's what will drive transaction growth: people adopting it as their default method of payment for purchases they make several times a week: groceries, gas, lunch, etc.
  • Reply 13 of 15
    Agree use it locally at Fresh Market and I check out so much faster than the chip enabled credit card customers.  It's great.
  • Reply 14 of 15
    mike1mike1 Posts: 1,819member
    Personally, my own use of Apple Pay has certainly spiked. Even my local grocery store, a local chain of just 5 or 6 locations, now takes it at checkout. Always a weirdly simple pleasure. 
    I am finding that independent stores and smaller chains are more likely to accept it. Ironically, some don't even know they do. The NFC just works.
  • Reply 15 of 15
    calicali Posts: 3,495member
    Rogifan, last quarter (I believe)  you were concerned that Tim Cook was putting too much emphasis on services signaling a decline in hardware. 

    guess you don't have to worry anymore.
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