10.09: And that’s all over, red rover – without a single question about Steve Job’s illness, or about Cook running the company, which is a real surprise. Not much given away, except for the fact that Apple are going to be concentrating on growing their range of Macs. Yep, they’re already working on a new iPad, and yep, they’re working on a new iPhone. Also interesting was the admission that the company is still really struggling to meet demand for iPhones (which in reality is probably music to Apple shareholder’s ears).
10.03: Cook on iPad for business: The places we could go were unimaginable just af ew months ago. Enormous potenetial. iPad started shipping in April, and we’re already up to 80 percent of largest companies deploying or piloting. Unheard of in my dealings with enterprise. Generally enterprise is much smaller, much more cautious, and uses products that have been on the market a lot longer. I think to everyone’s credit, theyv’e seen the value, and they’re really moving fast. I think we’re just scratching the surface right now.
10.01: ‘Consumerisation of enterprise is one of the megatrends that’s occurring.’ says Cook. ‘You could end up running your entire business off an iPad.’
9.59: Taking an integrated approach to products, according to Tim Cook, is better for the end user because it removes complexity. Cook says he ‘doesn’t know many people who want to be a systems integrator,’ so Apple does that for them. Getting an iPhone into as many hands as possible will demonstrate that the approach works.
9.53: Here Cook speaks about the merging of Apple platforms, and the integration of iOS into Mac devices: :Part of the magic of Apple is that there’s not high walls between these product groups. They like each other, talk to each other, they’re of the same DNA, they want to produce the best products. There’s not a “not invented here” in the group. Key learning from iPad: they love instant on. So MacBook Air incorporated that. That’s one simple example, but there are tons of examples throughout all of our products where something started on one and went to another. Not in the same direction, either.
9:47: Tim Cook says that although there’s probably some cannibalisation of the Mac market from sales of the iPad, on the whole the introduction of the device has had a ‘halo effect’ on all Apple products. He makes a comparison to the iPod in previous years, which introduced ‘millions of users’ to Mac. Mac sales grew 23 per cent in the quarter, compared to an overall market growth of 3 per cent, which is 8 times larger. In our own region, Mac sales grew a whopping ten times more than other PC sales. Cook says, “If this is cannibalisation, then it feels pretty good.”
9.40: Tim Cook has ‘no concern’ over competitor’s tablet devices, but the company is ‘not sitting still’ on the development of future versions of the iPad. According to Cook, there’s ‘not much out there’ in the way of tablet devices – the two categories that are available are either Windows devices that are ‘big, heavy and expensive’ or they run Android, an OS ‘not designed for tablets’ that ultimately makes it a scaled-up smartphone (which Cook says is a ‘bizarre product’).
Here’s a quote from Tim Cook: Then you have the Android tablets, and the variety that are shipping today, the OS wasn’t really designed for a tablet, and Google has said this. This isn’t an Apple view. You wind up having a size of tablet that is less than we believe is reasonable for providing a real tablet experience: basically you end up with a scaled-up smartphone, which is a bizarre product in our view.
9.31: Tim Cook on flash memory: On operational side of house, we’ve historically entered into agreements with others to supply; largest one was with flash memory suppliers back in 2005 that totaled over a $1 billion, because flash would become increasingly import across product line and industry. We think that was an absolutely fantastic use of Apple’s cash, and we constantly look for more of these. In the past several quarters, we’ve identified another area and come to recent agreements.
High-resolution retina screens, anyone?
9.28: Tim Cook says that the company’s long-term planning is part of the ‘magic of Apple,’ and doesn’t want to let anybody in on the magic. However, he does point out that Mac products have a relatively low share of the entire PC market, and there’s a huge opportunity for growth there. He also says that the iPhone has a relatively low share of a smartphone category that’s ‘growing like a weed.’ So – a tacit acknowledgement that we’ll see more Macbooks and iPhones in the next couple of years.
9.23: Apple identified China a couple of years back as ‘top priority’ for the company, and are placing more and more resources in the area to look for expansion in Asia.
9.21: Tim Cook says they’ve increased their capacity for building iPhones, but they’ve still got more to do to meet demand. Cook says that he doesn’t want to give a prediction when supply and demand will cross – so it looks like we’ll still have shortages in the coming year.
9.15am: Apple are ‘extremely pleased’ with their record-breaking result. I think would be too.
9.11am: Here’s the first on the official results from Apple, and, perhaps unsurprisingly, it’s been epic quarter for the company, which turned over US$26.74 billion and took in a profit of US$6 billion. iPhone sales are up an incredible 86 per cent on last year, and Mac sales are up 23 per cent to 4.13 million units. Here’s their presser:
The company posted record revenue of $26.74 billion and record net quarterly profit of $6 billion, or $6.43 per diluted share. These results compare to revenue of $15.68 billion and net quarterly profit of $3.38 billion, or $3.67 per diluted share, in the year-ago quarter. Gross margin was 38.5 percent compared to 40.9 percent in the year-ago quarter. International sales accounted for 62 percent of the quarter’s revenue.
Apple sold 4.13 million Macs during the quarter, a 23 percent unit increase over the year-ago quarter. The Company sold 16.24 million iPhones in the quarter, representing 86 percent unit growth over the year-ago quarter. Apple sold 19.45 million iPods during the quarter, representing a seven percent unit decline from the year-ago quarter. The Company also sold 7.33 million iPads during the quarter.
“We had a phenomenal holiday quarter with record Mac, iPhone and iPad sales,” said Steve Jobs, Apple’s CEO. “We are firing on all cylinders and we’ve got some exciting things in the pipeline for this year including iPhone 4 on Verizon which customers can’t wait to get their hands on.”
“We couldn’t be happier with the performance of our business, generating $9.8 billion in cash flow from operations during the December quarter,” said Peter Oppenheimer, Apple’s CFO. “Looking ahead to the second fiscal quarter of 2011, we expect revenue of about $22 billion and we expect diluted earnings per share of about $4.90.”
8.50 am: We’re here for this morning’s announcement of Apple’s first quarter results, which take place this year under something of a cloud after the announcement of CEO Steve Job’s new bout of illness. Analysts are expecting yet another strong quarter, regardless of the boss’s illness.
Analysts on Apple’s conference will likely pepper company executives with questions about Jobs’s leave of absence, as they try to get more details on Monday’s news. And Apple executives figure to be just as circumspect in what information they provide.
But, it is possible that Tuesday’s conference call could fill in some details about Jobs’s leave of absence. When he stepped back from his CEO duties two years ago, Jobs specified a six-month leave (returning in June 2009, as promised). Monday’s announcement to Apple employees included no return date, an omission analysts are sure to ask about during the question-and-answer portion of Tuesday’s conference call.
Although, if history is any indication, Apple executives are likely to respect Jobs’s request for privacy. In past conference calls—including those during Jobs’s last medical leave—the company has declined to answer questions about his health, calling it a private matter.
While Jobs’s condition figures to be on the minds of analysts during today’s call, Apple will try to keep the focus on its performance for the company’s fiscal first quarter. That three-month period covers the holiday shopping season—an important time for Apple’s business given the company’s growing focus on consumer electronics.
Analysts are looking for the company to announce earnings of $5.38 a share on revenue of $24.38 billion, according to figures compiled on Yahoo’s finance site. That would outpace the guidance Apple chief financial officer Peter Oppenheimer during Apple’s last analyst briefing. Apple told analysts to expect revenue of $23 billion and earnings per share of $4.80, though the company’s forecasts are notoriously conservative.
Topping last year’s performance for the fiscal first quarter would certainly be an impressive feat. For the three-month period ended December 29, 2009, the company tallied sales of $15.68 billion and a net quarterly profit of $3.38 billion—both records at the time. Year-ago earnings per share were $3.67.
As with the 2010 fiscal fourth quarter, much of the spotlight for the 2011 first quarter numbers will fall on the iPad. Apple sold 4.19 million iPads during its fourth-quarter—the first full quarter of sales for the tablet—and analysts will be eager to see how that momentum carried over into the holiday shopping season, particularly with Apple expanding its iPad retail efforts to Verizon, AT&T, Target, and Walmart.
iPods will be a source of fascination, too, on Tuesday, but for entirely different reasons. Apple’s music player line, which still dominates the MP3 market, no longer enjoys the skyrocketing growth of half-a-decade ago; in fact, year-over-year sales growth has declined in recent quarters. Still, the holiday season is the biggest quarter for iPod sales, as consumers snatch up the devices for gifts and stocking stuffers.
In the year-ago holiday quarter, Apple sold 21 million iPods (which was still a decline of 8 percent from the 2009 fiscal first quarter). It will be interesting to see what impact the September refreshes of the nano, shuffle, and touch models will have on the iPod’s sales momentum. Apple will likely focus its attention on the iPod touch, a model that’s still enjoying strong sales while helping to drive up the average sales price of the company’s MP3 offerings.
iPhone sales have helped fuel Apple’s performance in recent quarters, a trend that is likely to continue with Apple’s first-quarter numbers. During the fiscal fourth quarter, for instance, iPhone sales jumped 91 percent year-over-year to 14.1 million phones. Analysts will want to see if holiday sales helped Apple improve upon the 8.7 million phones it sold over the same period last year.
Last week’s announcement of an iPhone capable of running on Verizon’s network will likely inspire questions about what the end of Apple’s exclusive arrangement with AT&T will mean for U.S. smartphone sales. Analysts may also pick up on the news that Apple’s arrangement with Verizon is not exclusive and ask whether a Sprint press event scheduled for next month could mark the arrival of another CDMA-based iPhone. Given Apple’s reluctance to talk about future products, executives will probably not be forthcoming about any iPhone prognostications.
As for Apple’s still-thriving Mac business, analysts will look to see if the company beat last year’s first quarter sales mark of 3.36 million Macs—a record at the time, but one that Apple later passed with the 3.89 million computers it sold during 2010’s fourth quarter.
The Mac App Store didn’t debut during the fiscal fourth quarter—it only opened its doors in January. But Apple executives may give some details about the store’s performance so far. The company has already disclosed that the Mac App Store passed the 1 million download mark just 24 hours after its January 6 opening.