Notes of interest from Apple's Q209 quarterly conference call

Posted:
in General Discussion edited January 2014
Apple on Wednesday announced a mixed second quarter, providing its best-ever earnings and iPhone sales for a March quarter but relatively weak Mac numbers. It just concluded a financial conference call with analysts and members of the media. Several notes of interest from the call follow:



Apple on Wednesday announced financial results for its fiscal 2009 second quarter ended March 28, 2009, posting revenue of $8.16 billion and a net quarterly profit of $1.21 billion, or $1.33 per diluted share.Â*



Apple's regional business segments



Apple Americas accounted for 809,000 Mac sales and $3.517 billion in revenues. These figures are down sequentially from the holiday by 11 percent in units and 22 percent in revenue, but better year-over-year; units dropped 8 percent, but revenue increased 8 percent.



Apple Europe represented 658,000 Mac sales and $2.097 billion in revenues. Sequentially, he numbers are down 17 percent in units and 24 percent in revenue, but stand as increases of 5 percent in units and 18 percent in revenue annually.



Apple Japan was responsible for 109,000 Mac sales and exactly $500 million in revenues. These are both up sequentially, boosting unit shipments by 10 percent and revenue by 4 percent, but present a mixed bag as unit shipments are down 8 percent annually while increasing revenue 18 percent over the same period.



Apple's Asia Pacific (and FileMaker Inc) divisions accounted for 202,000 Mac sales and $578 million in revenues. Unusually, the difference is flat in terms of units both sequentially and year-over-year, though revenue is down 14 percent compared to the last quarter and 2 percent versus early 2008.



Apple's "Other Music Related Products and Services" segment produced $1.049 billion in revenue. The achievement is a 4 percent boost from the prior quarter and up 19 percent from year to year.



Apple's "Peripherals and Other Hardware" added $358 million in revenue, signaling a 5 percent drop in sequential revenue and a 13 percent drop annually.



Apple's "Software, Service and Other Sales" segment generated $625 million in revenue, a 3 percent gain over the December quarter and an 18 percent rise compared to the March 2008 quarter.



Apple's Mac business



Apple sold a total of 818,000 desktops during the quarter, generating $1.05 billion in revenue. The shipments and revenue are up 12 percent and 1 percent sequentially, but down 4 percent and 22 percent year-over-year.



In notebooks, Apple shipped 1.398 million of its portables during the quarter, creating $1.895 billion in revenue. These statistics are down sharply from the holiday quarter, falling 22 percent in units and 25 percent in revenue, but are softer in annual changes at decreases of 2 percent in shipments and 12 percent in revenue.



There is between 3 and 4 weeks of channel inventory.



Sales of iLife 09 and iWork 09 have been strong.



There was an "acceleration" of desktop sales after Apple updated all of its lines near the end of the quarter, helping to improve its relative results.



Apple is "positive" about Mac performance, which shrank more slowly than the rest of the industry (3 percent versus 7 percent). On a sell-through basis, Macs were actually flat. It was hard to compare sales from a year ago as those were spurred by the launch of the MacBook Air.



The US was Apple's weakest segment due to the economic crunch, but a significantly larger percentage of Apple's economic sales are in the US and so were hit harder. Less pro systems were also sold in the US, where the pro market has been more deeply affected by reduced spending. Apple is convinced that it will still earn share over the long term and isn't worried about each quarter.



Apple's iPhone and Apple TV businesses



Apple sold 3.793 million iPhones during the quarter, producing $1.521 billion in revenue. This is down 13 percent in sheer units compared to the previous quarter, but up 22 percent in revenue. It's also a dramatic year-over-year increase of 123 percent in units and 302 percent in revenue.



Over 21 million iPhones have been sold to date.



iPhones are being sold in 81 countries and 50,000 storefronts. Apple has 100,000 iPhone demo units across those points, which are counted as channel inventory even if they can't be resold.



Apple ended the quarter with 1.83 million iPhones in its channel inventory versus 1.75 million for the December quarter.



The iPhone plus iPod touch equate to about 37 million total OS X iPhone devices.



Apple declined to break down App Store downloads between free and paid apps, or between genres. However, it will acknowledge that many of the most popular downloads are games.



iPhone business was relatively "linear" in the quarter, with relatively little fluctuation either up or down.



AT&T is still viewed as a "very good partner" in spite of some customers declining to buy iPhones because of the network. They put the "full force" of the company behind it. Apple doesn't have a plan to change this. From a technology perspective, Apple wants to have one phone for the whole world and so can't support Verizon (or Sprint), which uses CDMA.



Apple would like to have the iPhone in China within the next year but doesn't have any details on how likely that is.



Apple's iPod business



Over 11.013 million iPods were sold this quarter, resulting in $1.665 billion in revenue. The sequential decrease is the single largest registered in this quarter's results, plummeting 52 percent in units and 51 percent in revenue. Compared to early 2008, however, units are up 3 percent while revenue is down slightly by 8 percent.



The sales results are a new unit record for a non-holiday quarter.



Apple has between 4 and 6 weeks of iPod channel inventory.



Sales of the iPod touch are strong, and buyers responded well to the third-generation iPod shuffle. The iPod touch is likened to a "runaway hit."



Apple's market share of digital media players in the US continues to be over 70 percent, according to NPD data. There have also been gains in Australia, China, France, Japan and the UK.



The App Store continues to be an "unparalleled success" and has over 35,000 apps. The company is "within hours" of reaching 1 billion apps downloaded.



Apple's retail business



Apple's retail stores combined to sell 438,000 Mac units and generate $1.471 billion in revenues during Apple's fourth fiscal quarter, representing sequential declines of 15 percent in both units and revenue. Yearly, the retail segment had a 4 percent decrease in Mac units but a 1 percent climb in revenue.



About half of Mac buyers at Apple retail stores were new to the platform.



There were 39.1 million visitors to Apple's retail stores, an increase from 33.7 million a year ago. Retail segment margin was $308 million.



Just one store opened during the quarter, giving Apple a total of 252 stores. With an average of 251 stores open during the period, average revenue per store decreased from $7.1 million in early 2008 to $5.9 million and was attributed directly to the "grim macroeconomic environment."



Apple plans to open 25 stores in its fiscal 2009, with half of those outside the US.



There was a higher mix of Mac mini sales and a lower mix of Mac Pro sales following the March updates compared to before.



Average selling prices for MacBooks dropped due to a shift towards the $999 white MacBook, which was upgraded to the aluminum model's internals in most respects.



The company believes the consumer (home user) market is holding up much better than the educational and pro markets, which are much more likely to trim their budgets. However, these are delaying their purchases rather than giving up or switching to competitors.



Apple isn't worried about pure market share, saying it remains committed to making the best computers in the world, not the most computers in the world.



The financial side of Q2



Outside of the subscription accounting Apple needs for the iPhone and Apple TV, Apple's actual sales were $9.06 billion, while net income was $1.66 billion.



Operating margin was the highest ever at 20.4 percent.



Gross margin was 36.4 percent and helped by component costs that were significantly lower than expected as well as better-than-expected sales of high-margin products and lower freight costs.



The tax rate for the quarter was 33 percent.



Direct sales accounted for 48 percent of Apple's business.



Apple made about $1.3 billion in tax payments during the quarter. This is a quarter where Apple's tax payments start to come due. Some expected audit settlements were also paid in advance.



Apple's next (Q309) fiscal quarter



The company says it expects revenue in the spring quarter to hover between $7.7 billion and $7.9 billion, with diluted earnings per share ranging between $0.95 and $1.



Apple's finances are "very robust" and give the company $28.9 billion in cash and marketable securities as of the end of March. This is up from $28.1 billion in the December quarter. Apple plans to hold on to the cash to maintain its capital.



The US dollar impacted Apple as it had made hedges when the dollar wasn't as strong as it is now.



Apple is "very excited" about the products in the pipeline.



Component pricing will still be very favorable, but Apple expects NAND flash prices to go up as companies cut their shipments to improve their profitability and reduce inventory. It doesn't expect a drop as severe as in Q1 (fall).



Schools start their buying during the June quarter, which Apple expects will help its performance.



Apple wouldn't provide an update on the development of its new Cupertino office.



Steve Jobs is still expected to return to his post at the end of June.



Quotes from the conference call



Apple CFO Peter Oppenheimer on netbooks: "I see cramped keyboards, terrible software, junky hardware, very small screens. And just not a consumer experience and not something we would put the Mac brand on, quite frankly. It's not a segment we're interested in and we don't believe customers are interested in."



"A customer who wants to buy a small computer for e-mail or web browsing may want to buy an iPod touch or an iPhone."



"If we find a way to deliver a product that makes an innovative contribution," Apple may enter the space if a real market market materializes.



It's a "stretch" to call a netbook a personal computer. They're "propping up numbers for the industry as a whole."



The Mac pipeline "looks fantastic."



"We have a plan that we believe will continue to make the company a leader in the smartphone space." Als, Apple promises that it will "not leave a price umbrella" that will let competitors sneak underneath.



Apple sees itself as "years ahead" of competitors and isn't worried about the Palm Pre. It notes the breadth of software on the App Store. "We are just scratching the surface" of the opportunity.



On whether the Palm Pre may violate Apple IP, and whether the lack of lawsuits is an indication of Apple's response: "We think that Apple's innovation is leading the industry by years, and we think that competition is great... as long as other companies invent their own stuff."
«1345

Comments

  • Reply 1 of 97
    john.bjohn.b Posts: 2,717member
    Quote:
    Originally Posted by AppleInsider View Post


    In notebooks, Apple shipped 1.398B of its portables during the quarter, creating $1.895B in revenue.



    s/b: Apple shipped 1.398M of its portables during the quarter, ...
  • Reply 2 of 97
    quadra 610quadra 610 Posts: 6,743member
    I'm not bothered whatsoever by a slight decline in Mac sales.



    There's no escaping the economy. BUT . . . it seems Apple is still recession proof.



    Let's all understand this:



    Apple has posted it's best non-holiday quarter EVER . . . in a a recession!



    It's called having the best business model in the biz . . . and the products to back it up.
  • Reply 3 of 97
    teckstudteckstud Posts: 6,476member
    ...because Apple is not giving people what they want.



    1. High gloss screens. Prepare for the return of matte- the 17 inch matte I saw yesterday was absolutely stunning.

    2. Smaller form factor. Prior owners of the old 12 inch PowerBook want that size and Apple refuses. This will change as well with these NetBook numbers going through the roof. Apple needs an 11 inch Notebook not a NetBook.

    3.) Price- drop price of the MacMini ASAP. Apple only hurts itself with this pricing.



    The iPod Touch is amazing and it's soon to be released big brother will be amazing. but we need great Macs. I need to buy a new one and am stuck trying to figure out which one has the least drawbacks.
  • Reply 4 of 97
    walshbjwalshbj Posts: 864member
    Shouldn't Abramsky be asking questions on the conference call to better serve his clients??
  • Reply 5 of 97
    mazda 3smazda 3s Posts: 1,565member
    How about this quote from Tim Cook (on Netbooks)



    Quote:

    "If we find a way we can deliver an innovative product that really makes a contribution, then we'll do that. And we have some interesting ideas in this space."



    http://i.gizmodo.com/5223490/apple-o...vative-product
  • Reply 6 of 97
    hattighattig Posts: 830member
    They can say what they want about netbooks, sales are good and people are happy with them for the casual tasks that they are using them for. There's a world of difference between a 9" screen and a 3.5" screen, not least the 8x larger display area. I do agree that few, if any, of the current netbook designs are Apple-esque or perfect.
  • Reply 7 of 97
    solipsismsolipsism Posts: 25,726member
    Quote:
    Originally Posted by teckstud View Post


    Macs aren't selling...

    ...because Apple is not giving people what they want.



    1. High gloss screens. Prepare for the return of matte- the 17 inch matte I saw yesterday was absolutely stunning.

    2. Smaller form factor. Prior owners of the old 12 inch PowerBook want that size and Apple refuses. This will change as well with these NetBook numbers going through the roof. Apple needs an 11 inch Notebook not a NetBook.

    3.) Price- drop price of the MacMini ASAP. Apple only hurts itself with this pricing.



    The iPod Touch is amazing and it's soon to be released big brother will be amazing. but we need great Macs. I need to buy a new one and am stuck trying to figure out which one has the least drawbacks.



    Troll much?



    ? 2% decline in worldwide unit sales year-over-year in a worldwide recession and you honestly write crap like "Macs aren't selling".



    ? If you think that no one likes gloss screens you need to up your dosage.



    ? Apple isn't refusing to give people a 12" 4:3 machine, it's the market that doesn't want it. I can't imagine you would have thought your response through so I'll explain it to you. As it stands now, the 13" MB display is shorter than the old 12" PB display. If you go to an 11" widescreen format you get yourself a display that is worthless for viewing pages of text on, whose only value is for video.



    ? You want price drops yet their profit is down 12% yet their sales only down 2% year-over-year. I'd say they already put in a price cut.



    ? Your previous comments that the Shuffle sucks is obviously false now that they stated " buyers responded well", or are you going to try to weasel yourself out of that comment, too.
  • Reply 8 of 97
    walshbjwalshbj Posts: 864member
    I want to moderate a podcast with a discussion between Solipsism and Teckstud. Musical guest, Ireland.
  • Reply 9 of 97
    solipsismsolipsism Posts: 25,726member
    Quote:
    Originally Posted by walshbj View Post


    I want to moderate a podcast with a discussion between Solipsism and Teckstud. Musical guest, Ireland.



    Don't forget to include his other trolltards, italiankid and jfanning, so I can beat on them, too.
  • Reply 10 of 97
    mr. hmr. h Posts: 4,698member
    Quote:
    Originally Posted by AppleInsider View Post


    Apple CFO Peter Oppenheimer on netbooks: "I see cramped keyboards, terrible software... very small screens... not something we would put the Mac brand on. It's not a segment we're interested in and we don't believe customers are interested in."



    What planet is this guy on? He doesn't believe customers are interested? How come netbooks are selling so well then? People are buying products they don't want?



    He says he sees cramped keyboards and very small screens, then suggests an iPhone or iPod touch as an alernative? What the hell? Last I checked, a 3.5" iPhone screen is much smaller than the "very small" 8"+ screens on netbooks, and the on-screen keyboard of an iPhone is even more cramped than the physical netbook keyboards.



    The only thing Oppenheimer got right in his quote above is the terrible software - that's why there's so much interest in installing OS X on netbooks.



    Given Apple's apparent refusal to make a netbook, it's looking more and more likely that I'll be getting a Dell mini 9 or two and installing OS X on them.
  • Reply 11 of 97
    rot'napplerot'napple Posts: 1,839member
    Quote:
    Originally Posted by AppleInsider View Post


    AT&T is still viewed as a "very good partner" in spite of some customers declining to buy iPhones because of the network. They put the "full force" of the company behind it. Apple doesn't have a plan to change this. From a technology perspective, Apple wants to have one phone for the whole world and so can't support Verizon (or Sprint), which uses CDMA.



    Looks like Verizon and Sprint hopefuls will have to wait for 4G Service or, when they purchase their iPhone, use AT&T in spite of the network.



    If Apple "doesn't have a plan to change this", does that mean a deal extension between Apple and AT&T is imminent?
  • Reply 12 of 97
    rot'napplerot'napple Posts: 1,839member
    [QUOTE=Mr. H;1406441]What planet is this guy on? He doesn't believe customers are interested? How come netbooks are selling so well then?/QUOTE]



    They are "netbook hunters" that just aren't "cool enough" or have the financial means to purchase a PC laptop! Where is that Lauren?!
  • Reply 13 of 97
    paxmanpaxman Posts: 4,594member
    Quote:
    Originally Posted by teckstud View Post


    .. but we need great Macs. I need to buy a new one and am stuck trying to figure out which one has the least drawbacks.



    I am buying one, too. I am moving my alu iMac (beautiful machine) home and buying either a
    • MacBook with a 24" monitor. My fave choice at the moment - great portability with a great monitor for desk work.

    • A 17" mbp. I would choose the matte screeen. A little large and a little pricey but what a great machine!

    • A 15" mbp. All around work horse and I know I would be very happy. Also the best price

    I am stuck trying to figure out which will be the most amazing thing to own and the most practical on a day to day basis. Gimme any and I'll be happy. Ouch!
  • Reply 14 of 97
    solipsismsolipsism Posts: 25,726member
    Quote:
    Originally Posted by Mr. H View Post


    What planet is this guy on? He doesn't believe customers are interested? How come netbooks are selling so well then? People are buying products they don't want?



    He says he sees cramped keyboards and very small screens, then suggests an iPhone or iPod touch as an alernative? What the hell? Last I checked, a 3.5" iPhone screen is much smaller than the "very small" 8"+ screens on netbooks, and the on-screen keyboard of an iPhone is even more cramped than the physical netbook keyboards.



    The only thing Oppenheimer got right in his quote above is the terrible software - that's why there's so much interest in installing OS X on netbooks.



    Given Apple's apparent refusal to make a netbook, it's looking more and more likely that I'll be getting a Dell mini 9 or two and installing OS X on them.



    He has a point. These netbooks are small and cramped, but they run software optimized for larger displays on normal PCs. I have an MSI Wind with Mac OS X installed, it's okay, but it is in no way a PC replacement. Regardless of the processing power, the small screen and keyboard make it less than ideal for everyday use. The iPhone is not a PC replacement, it's a cellphone and iPod with some functions of a PC done in a completely different way. It's meant to supplement your PC, not replace it.



    Netbook sales are growing but they are not overshadowing smartphone or notebook sales in any way. If you are going to have a portable device to supplement your PC an iPhone is much more portable and convenient while on the go. If you are going to use it as your only machine, I don't see why one wouldn't get a full-sized notebook for $400 fora 15" display, full sized keyboard and dual-core CPU, instead of $300 for something vastly slower and less capable.



    To each their own, I see a place for netbooks, but I understand Apple's position here. And I can't really see them making one for less than $700-$800.
  • Reply 15 of 97
    paxmanpaxman Posts: 4,594member
    Quote:
    Originally Posted by Mr. H View Post


    What planet is this guy on?



    Yeah, dude, what a loooser! Really, fire, the man. He has NO idea.
  • Reply 16 of 97
    postulantpostulant Posts: 1,270member
    Although I own a Macbook Air and an iPhone, I'd buy a netbook in a heartbeat if Apple were to build one.
  • Reply 17 of 97
    virgil-tb2virgil-tb2 Posts: 1,416member
    Quote:
    Originally Posted by walshbj View Post


    I want to moderate a podcast with a discussion between Solipsism and Teckstud. Musical guest, Ireland.



    I don't think it would be much of a discussion.



    It would just be teckstud jumping up and down and yelling about stuff while solipsism tried to make himself heard over the shrieking without getting too mad.
  • Reply 18 of 97
    solipsismsolipsism Posts: 25,726member
    Quote:
    Originally Posted by Rot'nApple View Post


    Looks like Verizon and Sprint hopefuls will have to wait for 4G Service or, when they purchase their iPhone, use AT&T in spite of the network.



    If Apple "doesn't have a plan to change this", does that mean a deal extension between Apple and AT&T is imminent?



    I think Apple is happy dealing with one carrier in the US. To go to other carriers means they have to add another radio chipset in an already small space so that T-Mobile can join up. But even then that is the 4th largest carrier and they have very poor coverage for 3G, so I don't think it's a concern. For Sprint or Verizon they would need a new device with CDMA/CDMA2000 radios, but Apple probably wants a simpler inventory in their stores. On top of that, without deals with carriers the carriers won't sell the device and won't support their Visual Voicemail, at least not for free. Will Verizon want to wipe the OS and charge you for Google Maps and YouTube like they have historically done with other phones or would they now be willing to let Apple control their environment?



    Beyond all that, Apple is not going to tell you that they are leaving AT&T before they do it as it would hurt sales for both companies. They will give you a canned oblique answer and then do whatever they do in the future.
  • Reply 19 of 97
    mr. hmr. h Posts: 4,698member
    Quote:
    Originally Posted by solipsism View Post


    He has a point. These netbooks are small and cramped, but they run software optimized for larger displays on normal PCs.



    He has a point, and it doesn't make any sense. He lambasts netbooks for having small screens and cramped keyboards, but suggests the iPhone as an alternative. Hello? The iPhone screen is even smaller and the "keyboard" even more cramped. So if a netbook is no good, that must mean the iphone is total rubbish, right?



    Your argument against netbooks doesn't have much credibility given that you've got one.



    I'm interested in netbooks because they are small, and low power, but run full operating systems. I'm thinking of using one as a server (with external USB 2.0 HDD) and one as a network audio player - eventually I'll have several, around the house - it'll be cheaper than a Sonos system but much more flexible as I'll be able to get sound from anywhere - iTunes server, internet radio, spotify etc. etc.
  • Reply 20 of 97
    tenobelltenobell Posts: 7,014member
    Over 2008 Apple sold 2 million more iPhones and made more revenue than all of the netbooks combined.





    Quote:
    Originally Posted by Mr. H View Post


    What planet is this guy on? He doesn't believe customers are interested? How come netbooks are selling so well then? People are buying products they don't want?



    He says he sees cramped keyboards and very small screens, then suggests an iPhone or iPod touch as an alernative? What the hell? Last I checked, a 3.5" iPhone screen is much smaller than the "very small" 8"+ screens on netbooks, and the on-screen keyboard of an iPhone is even more cramped than the physical netbook keyboards.



    The only thing Oppenheimer got right in his quote above is the terrible software - that's why there's so much interest in installing OS X on netbooks.



    Given Apple's apparent refusal to make a netbook, it's looking more and more likely that I'll be getting a Dell mini 9 or two and installing OS X on them.



Sign In or Register to comment.