MacDailyNews presents live notes from Apple’s Q212 Conference Call

MacDailyNews presents live notes from Apple’s Q212 Conference Call with analysts starting at 5pm EDT/2pm PDT today.
Live notes from Apple’s Q411 Conference Call in reverse chronological order:

• AAPL: $600.58, +$40.30 (+7.19%) @ 6:00PM EDT

• End of conference call
• Cook: iPad demand not in balnce, but Apple will be able to supply a significant supply in the June quarter.
• Oppy: We do expect a sequential decline in iPhone sales since we’ve built 2.6 million unit channel inventory in March quarter in order to get to desired inventory levels.

• Apple is applying more resources to continue iPad’s rapid adoption rate into the enterprise
• Cook on iPad in enterprise: Initial focus was on Global-500 and Fortune-500. 94% of Fortune-500 and 75% of Global-500 are are testing or deploying iPad,
• Cook: Hard drives are now in supply-demand balance, but will still be higher that pre-flood levels after tragedy in Thailand.
• Cook: NAND Flash and mobile DRAM supply continue to exceed demand, so Apple expects favorable pricing
• Apple is very confident in the R&D investments that they are making and Apple is investing for the long-term.

• AAPL: $599.58, +$39.30 (+7.01%) @ 5:52PM EDT

• Oppy: R&D increases: We are investing in order to bring out the most innovative products in the world in order to delight our customers. We have some fabulous products in the pipeline.
• Cook: I’ve always hated litigation and I continue to hate it. We just want people to invent their own stuff. If we could get agreements that would ensure that, I’d highly prefer to settle than continue litigating. But, it is very important that Apple not become the developer for the world. (You already are, Tim – MDN Ed.)

• Oppy expects significant YOY and sequential increase in iPad unit sales.
• Cook: Spain has been weak for us. Spain is just in a “terrible economic situation.” What the carriers did in Spain: they still have subsides for existing customers; they pulled subsidies on new customers. Not all carriers did that. A couple of carriers did. “I wouldn’t use Spain as a proxy for the world.”

• Cook: We are doing everything we can to understand China and serve the market as well as we can.
• Cook: We are still supply constrained on iPad (2012). We are selling as many as we can make.
• Cook: We have supply-demand balance now, at end of this quarter, with iPhone 4S. We had the “Mother of All Januaries.”

• Cook: Wal-Mart Apple store-within-a-store. We are trying some things in some Wal-Mart stores (doesn’t include the Mac). They have been a “very good partner” with us on iPod and increasingly on iPad and “an evolving partner” on iPhone.
• Cook: We don’t comment about future products.

• Oppy: We are thrilled with rate that we are adding content (TV SHows movies, music) into iTunes Store. We have to do it country-by-county, so it take some time.

• Cook: There is a lot of headroom in China in our view
• Cook: Incredible $7.9 billion in revenue in China, up over three times YOY. “Mindboggling.” Partly due to iPhone 4S launch (launched in January) and also iPad 2. The halo that iPad and iPhone created for Mac was remarkable: Mac sales up over 60% YOY in China.

• Oppy: iCloud intended not to monetize storage, but to “increase customer delight.” (It helps sell iPhones and iPads)
• Oppy: Customers are using all parts of iCloud. Upgrades on storage is occurring. We just launched in October. Storage growth will come more over time.

• By far the largest opportunity for Apple and carriers: Getting customers to upgrade from cell phones to smartphones (iPhone).
• Cook: iPhone data efficiency is better than other smartphones
• Cook: iPhone churn is lowest of any phone; that has a significant direct financial benefit to the carriers
• Cook on subsidies: Carriers want to provide what their customers want to own and use. Apple is therefore focused on making the best smartphone on the planet.

• MacBook Air is also great product. To “converge” iPad and MacBook Air, would lead to too many tradeoffs. We’re not going there. We’ll do both; making each the best they can be.
• In 2015, tablets look to be in the mid-300 million unit area – which is about where PCs are today. It’s going to be a big market
• 67 million iPads sold in first two years, 24 years to sell that many Macs, 5 years to sell that many iPods, 3 years to sell that many iPhones.

• Cook: iPad has taken off in education, enterprise, consumer – “It’s everywhere you look now.”
• Cook: On notebooks and tablets (convertible notebooks): “Anything can be forced to converge… You can converge a toaster and a refrigerator, but those things are probably not going to be pleasing to the user.”
• AAPL: $595.90, $35.62 (6.36%) @ 5:24PM EDT

• Cook: iPhone 3GS and iPhone 4 pricing contributed to ability to achieve 35 million iPhone units
• Cook: New iPad is still constrained.
• Cook: $399 iPad 2 – Apple is thrilled with the results, but it’s too early to come to a clear conclusion. It unlocks some education demand and also in several other countries. “In the early going we feel great about it.”
• Cook: Mac outgrew PC market for 24th straight quarter. Macs grew 7% vs. PCs at 2%.

• Oppy: Sales of new iPad are on fire
• Apple still learning about elasticity of demand and the $399 iPad 2 price point

• Stronger U.S. dollar will also affect June quarter YOY
• Apple did much better satisfying iPad demand in March quarter YOY
• Different channel builds last June quarter vs. this March quarter will influence June quarter YOY
• Manufacturing ramps for iPhone 4S and iPad (2012) met demand this year vs. last year. Hence the sequential guidance decline YOY for June quarter

• Oppy: iPhone 4S now available in over 140 countries
• Cash on-hand now totals $110.2 billion vs. 97.6 billion at the end of last quarter, a $12.6 billion increase. $71 billion of which is outside U.S.

• 85 million vs. 71 million visors to retail stores in March quarter, a 19% increase YOY
• 363 Apple Stores (1/3rd now outside the U.S.A.)
• Half of Mac sold in Apple Retail Stores to customers new to Macintosh

• iCloud: +125 million users
• App Store now has 600,000 apps; Over 200,000 apps specifically for iPad
• 365 iOS devices now sold; Over 50 million iOS devices sold in March quarter
• Education: Apple sold two iPads for every Mac to schools even while setting new March uarter mac sales record

• 2 million iPads in inventory, below target range of 4-6 weeks
• New iPad now available in over 40 countries. iPad + accessories %6.6 billion vs. $2.8 billion YOY
• iPhone 4-6 weeks channel inventory – which is in Apple’s desired range
• China iPhones sales up five-fold YOY

• App Store generated $1.9 billion 35% YOY increase. A new record.
• iPod continues to lead MP3 player market; Over 70% in USA based on NPD numbers.
• iPod touch accounts for over 50% of all iPods sold

• OS X Mountain Lion due this summer; Apple excited to launch next-gen Mac OS
• 3-4 weeks of Mac inventory, below desired level of 4-5 weeks

• New March quarter records for iPads, iPhones, and Macs. New record revenue for March quarter. Second only to last quarter (Christmas).

• Cook: “We’re thrilled with sales of over 35 million iPhones and almost 12 million iPads in the March quarter. The new iPad is off to a great start, and across the year you’re going to see a lot more of the kind of innovation that only Apple can deliver.”
• Oppy: “Our record March quarter results drove $14 billion in cash flow from operations. Looking ahead to the third fiscal quarter, we expect revenue of about $34 billion and diluted earnings per share of about $8.68.”

• 35.1 million iPhone units, 88% unit growth YOY
• 11.8 million iPad units, 151% unit growth YOY
• 7.7 million iPod units, 15% unit decline YOY
• 4.00 million Mac units, 7% unit growth YOY

• Versus $24.7 billion revenue and net profit of $6.0 billion, or $6.40 per diluted share, in the year-ago quarter
• Quarterly net profit of $11.6 billion, or $12.30 per diluted share
• Quarterly revenue of $39.2 billion
• Apple’s fiscal 2012 second quarter ended March 31, 2012

• Present: Apple CEO Tim Cook, Apple CFO Peter Oppenheimer, Treasurer Gary Whistler
• Conference call begins

• AAPL: 601.43, 41.15 (7.34%) 5:01PM EDT
• Awaiting start of conference call

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s