Notes of interest from Apple's Q4 2015 conference call

Posted:
in AAPL Investors edited October 2015
Apple grew its revenue another 22 percent year over year in its September 2015 quarter, a result set by record iPhone and Mac sales. Following the announcement, executives from the company participated in a conference call with analysts and the media, and notes of inventory follow.




Participating in Monday's call were Apple Chief Executive Tim Cook, and Chief Financial Officer Luca Maestri.

Highlights

  • Apple sold over 300 million devices over the last 12 months
  • Apple is partnering with American Express to bring Apple Pay to customers in Australia & Canada this year, expanding to Spain, Singapore & Hong Kong in 2016
  • Gross margins were at 39.9 percent, better than Apple's expectations, mainly due to lower-than-expected costs
  • Apple ended the quarter with $205 billion in cash, a sequential increase of $2.8 billion
  • Android users switched to iPhone at their highest rate ever, 30 percent, last quarter

Apple's iPhone business

Apple exited the quarter with iPhone demand outstripping supply.

iOS 9 is on track to be downloaded by more users than any software release in Apple's history.

Apple is partnering with American Express to bring Apple Pay to customers in "key global markets" in Australia and Canada this year, expanding to Spain, Singapore and Hong Kong in 2016.

More than 50 brands are working on HomeKit-enabled accessories.

iOS News app is "off to a great start," with nearly 40 million people reading, Cook said. Just launched last week in the U.K. and Australia.

Total iPhone sales were up 120 percent in mainland China.

iPhone ASP was $670, an increase of $67 year over year.

LTE penetration in emerging markets remains low, giving more room for iPhone growth.

Cook said that China is poised for continued tremendous change in the coming years. "I feel like we're reasonably well positioned in China," he said.

Apple believes that iPhone upgrade programs, both from itself and carriers, will have a positive impact on replacement cycles.

Apple's Mac business

The Mac set an all-time record in the quarter, reaching 5.7 million units in the three-month period.

Mac revenue was up 4 percent.

Apple Watch

Sales of the Apple Watch were up sequentially, and were ahead of Apple's expectations. As expected, Apple declined to reveal specific sales.

More than 13,000 apps are available for Apple Watch, with 1,300 of those native apps for watchOS 2.

Tim Cook has heard from people who credit Apple Watch with saving their lives.

Apple Watch was available at almost 5,000 stores in 32 countries by the end of the quarter.

Apple's business in China

Revenue nearly doubled year over year in China.

Cook recently visited China, announcing new environmental initiatives and visiting local stores.

Apple is on track to have 40 stores in China by the middle of next year.

Apple is investing in China for the "decades ahead," not the short-term, Cook said.

He vowed that China will be Apple's top market not just for sales, but also in terms of development of apps.

40 percent of new iPad buyers in China had never owned an Apple product before.

Apple TV

Apple had a "huge" first day of sales for the fourth-generation Apple TV, Cook said.

Preorders began on Monday, and the first units will arrive in the mail on Friday.

Apple's iPad business

iPad Pro is on track to begin shipping in November.

Corporate buyers report a 95 percent satisfaction rate for iPad.

NPD estimates that iPad has 73 percent share of U.S. tablets priced above $200.

App Store, Apple Music and services

Over 15 million individual and family accounts are currently using Apple Music, including 6.5 million paying customers.

Services revenue reached an all-time high in the September quarter of $5.1 billion, up 10 percent, mainly due to strong growth from apps.

App Store revenue was up 127 percent year over year in China.

App Store business grew 25 percent last quarter.

Apple's enterprise business

Apple estimates that enterprise markets represented about $25 billion in revenue for Apple over the last 12 months, up 40 percent year over year.

Over 30,000 Macs within IBM, with 1,900 more being added each week. IBM says each Mac saves $270 compared to a traditional PC, thanks to reduced support costs.

Cook said that investors should not underestimate Apple's enterprise business, built to large numbers in "not too many years."

Apple's retail business

Apple expects to upgrade or replace between 40 and 50 stores in fiscal 2016.

The retail-only iPhone Upgrade Program has generated interest among customers, Maestri said.

Apple's next (Q1 F2016) quarter

Apple is projecting revenue between $75.5 billion and $77.5 billion, with gross margins between 39 and 40 percent

Operating expenses are expected to be between $6.3 billion and $6.4 billion, with other income of $400 million, and a tax rate of 26.2 percent.
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Comments

  • Reply 1 of 21
    Apple Pay for Australia!!!!!!!!!
  • Reply 2 of 21



    They have enough money to BUY Australia.

  • Reply 3 of 21
    Go Apple! Go Go Go.
  • Reply 4 of 21
    lkrupplkrupp Posts: 7,096member
    Quote:

    Originally Posted by AppleInsider View Post

     

    • Android users switched to iPhone at their highest rate ever, 30 percent, last quarter


     

    Dem’s fight’in words. Expect to hear from the AI troll army about this atrocity. 

  • Reply 5 of 21
    lkrupplkrupp Posts: 7,096member
    Quote:

    Originally Posted by AppleInsider View Post

     

    Apple's Mac business




    The Mac set an all-time record in the quarter, reaching 5.7 million units in the three-month period.



    Mac revenue was up 4 percent.

     

    But we are reminded by the naysayers that the Mac is stale, OS X is stale, no slots, no ports, no headless Mac, blah blah blah blah blah. Yet we have to treat these types with respect or risk infractions or banning. Go figure.

  • Reply 6 of 21
    nagrommenagromme Posts: 2,834member
    It's a crying shame that Heath Ledger passed away. He would have played CFO Luca Maestri unforgettably.
  • Reply 7 of 21
    normmnormm Posts: 568member
    Quote:

    Originally Posted by lkrupp View Post

     

     

    But we are reminded by the naysayers that the Mac is stale, OS X is stale, no slots, no ports, no headless Mac, blah blah blah blah blah. Yet we have to treat these types with respect or risk infractions or banning. Go figure.




    It's worth remembering that Apple's Mac business alone represents more than 60% of all the profits in the PC hardware industry.  If you add in the iPad, it's more than 75%.  So this small stale business is most of the profitable part of the PC business.

  • Reply 8 of 21
    pmcdpmcd Posts: 394member
    snailer wrote: »

    They have enough money to BUY Australia.

    No they don't, perhaps one of the smaller states!
  • Reply 9 of 21
    Bad news all around. Stock will do its predictable quarterly drop.
  • Reply 10 of 21
    Quote:

    Originally Posted by nagromme View Post



    It's a crying shame that Heath Ledger passed away. He would have played CFO Luca Maestri unforgettably.



    Or one of the Mario brothers.

  • Reply 11 of 21
    I found it interesting -- if not surprising -- that the analysts didn't ask any questions (that I remember) about:
    - iPad
    - Apple Watch
    - Apple TV
    - Apple Pay
    - Car Play
    - etc.

    Tim's comments DID hit these points because he wanted to emphasize the BREADTH of Apple's revenue and potential growth engines. But because iPhone represents such a large % of current rev & profit, that's what got all the attention.

    As an AAPL shareholder, I do care about these other areas because many of them represent Apple laying the foundation for its next-gen businesses.
  • Reply 12 of 21
    entropysentropys Posts: 1,711member
    pmcd wrote: »
    snailer wrote: »

    They have enough money to BUY Australia.

    No they don't, perhaps one of the smaller states!
    Who on earth would want to buy South Australia?

    interesting it is AMEX only. Obviously the banks aren't coming to the party.
  • Reply 13 of 21
    Quote:

    Originally Posted by snailer View Post

     



    They have enough money to BUY Australia.




    But, umm, why would they want to?

  • Reply 14 of 21

    Great news.... so the stock will tank...

  • Reply 15 of 21
    Quote:

    Originally Posted by ImThatGuy View Post

     



    But, umm, why would they want to?




    Uh, I pressed the wrong reply button the first time.

     

    Wookie01 Said, "Apple Pay for Australia!!!!!!!!!"

     

    And I too was wondering why Apple would pay for Australia? But they (just about) could pay for Australia with their cash and marketable securities. It was just a joke, jeez.

  • Reply 16 of 21
    Quote:

    Originally Posted by AppleInsider View Post



    Apple grew its revenue another 22 percent year over year in its September 2015 quarter, a result set by record iPhone and Mac sales. Following the announcement, executives from the company participated in a conference call with analysts and the media, and notes of inventory follow.

     


     

    "...and notes of inventory to follow." I'd be much more interested in notes of interest than notes of inventory.

     

    Damn you auto-correct and no proof-reading!

     

    LOL

  • Reply 17 of 21
    I love the first analyst's question which essentially was why Apple can't be more like Google and MSFT which are growing services 20% YOY on the back of the burgeoning iPhone mobile ecosystem.

    It illustrates their mindstate, they innately understand selling "services" without the tangible exchange of a physical product. Profit to them means you have to exploit and rip off people for it to truly count.

    Like when they sell the "service" of their expertise.
  • Reply 18 of 21
    imthatguy wrote: »

    But, umm, why would they want to?

    Tax haven?
  • Reply 19 of 21
    Quote:

    Originally Posted by Suddenly Newton View Post





    Tax haven?



    I suppose so - if they buy Oz, they can make their own tax rules, can't they?

  • Reply 20 of 21
    We need some stock photos of Luca Maestri in pimp-stripe banking suits with a tophat and monocle.
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