Tuesday, January 24, 2012, 05:00 pm
Notes of interest from Apple's Q1 2012 conference callApple on Tuesday posted a massive holiday quarter with record sales of more than 37 million iPhones, 15.43 million iPads and 5.2 million Macs. Following the news, Apple executives participated in a conference call with analysts and the press, and notes of interest follow.
Participating in Tuesday's call was Apple Chief Executive Tim Cook, Chief Financial Officer Peter Oppenheimer, and Treasurer Barry Whistler.
- Apple ended the quarter with $97.6 billion in cash, an increase of $16 billion from the previous quarter.
- Oppenheimer said Apple executives are "actively discussing" potential uses for its massive cash hoard, but there are no specifics to share. But the CFO did say that the company is "not letting it burn a hole" in their pockets.
- Cook said Apple made a risky bet on the high side for iPhone sales, and even that came short of actual sales. "As it turns out, we didn't bet high enough," Cook said. "Our customers are loving iPhone, and we're very happy with that."
- 1.5 million iPads already in use in education.
- Cook said there will come a time when the tablet market is larger than the PC market. Tablets already exceeded desktop PC sales in the U.S. last quarter, based on the latest data from IDC.
- Cook doesn't see "limited function" tablets like the Amazon Kindle Fire being in the same category as the iPad. He said Amazon and others will probably sell a "fair number" of units, but people who want an iPad won't settle for the limited function.
- More than 600,000 copies of iBooks Author have been downloaded since it was announced last week.
- More than 3 million downloads of the iTunes U application for iOS since last week.
- iCloud has more than 85 million customers.
- There are now 550,000 applications available for iOS, including more than 170,000 for iPad.
- A favorable component environment led to high gross margins of 44 percent, even in the face of a hard drive shortage. Cook believes that favorable component environment will continue going into the next quarter.
- Cook on the acquisition of flash memory maker Anobit: "Anobit has Fantastic technical talent. We're really fortunate to have them join us."
Apple's iPhone business
iPhone unit sales were up 128 percent year over year, and revenue saw a 133 percent increase from the first fiscal quarter of 2011.
The quarter ended with about 6 million iPhones in the channel at the end of the quarter.
"Nearly all of the top companies in the Fortune 500 now approve and support iPhones on their networks," Oppenheimer said.
Companies are developing and deploying "mission critical apps" specifically for their employees.
New companies supporting the iPhone include Credit Suisse, Kimberly Clark, St. Jude Medical, Nike and Facebook.
Cook said Apple made a risky bet on the high side for iPhone sales, and even that came short of actual sales.
"As it turns out, we didn't bet high enough," Cook said. "Our customers are loving iPhone, and we're very happy with that."
Cook said the iPhone 4S was the most popular iPhone model during the quarter, beating out the also-available iPhone 4 and iPhone 3GS.
Demand in China has been "staggering." Apple saw strong iPhone sales even in the last quarter, when the iPhone 4S hadn't launched.
Apple's iPad business
The iPad saw a 111 percent increase in unit sales from holiday 2010 to holiday 2011. Revenue from the iPad also saw a 99 percent increase year over year.
iPad was "extremely popular" with holiday buyers, Oppenheimer said, and the company remains excited about the market opportunity.
iPad sales exceeded Apple's expectations, with sell-through exceeding sell-in by about 200,000 units.
"Unprecedented" iPad adoption in business, Oppenheimer said. Nearly all top Fortune 500 companies are actively using iPads.
iPad is also "extremely" popular with students and teachers. 1.5 million iPads already in use in education.
Cook looked at weekly data after the Kindle Fire launch. Not an "obvious effect" on the numbers for iPad plus or minus.
There is "clear" cannibalization of the Mac by the iPad. But he thinks that there's a lot more cannibalization of Windows PCs by the iPad, which makes it a trend he's fine with.
Apple's App Stores
More than 600,000 copies of iBooks Author have been downloaded since it was announced last week.
More than 3 million downloads of the iTunes U application for iOS since last week.
iCloud has more than 85 million customers
550,000 applications available for iOS, including more than 170,000 for iPad.
The App Store has now paid out over $4 billion to developers.
Cook said there will come a time when the tablet market is larger than the PC market.
Tablets already exceeded desktop PC sales in the U.S. last quarter, based on the latest data from IDC.
Doesn't see "limited function" tablets like the Amazon Kindle Fire being in the same category as the iPad. He said Amazon and others will probably sell a "fair number" of units, but people who want an iPad won't settle for the limited function.
Apple's Mac business
Mac desktop sales were up 21 percent year over year, while revenue saw a 12 percent increase.
The MacBook lineup saw even more growth of 28 percent in unit sales, while revenue grew by 22 percent.
Mac sales growth of 26 percent compared to zero growth overall for the entire PC market. Oppenheimer said average weekly Mac sales were up strongly across the quarter.
Oppenheimer cited the MacBook Pro, MacBook Air and iMac as the company's top sellers.
Hard drive prices were higher in the quarter because of the flooding in Thailand. That's expected to continue going into the next quarter, Cook said.
Apple TV business
Apple TV is doing "very well," Cook said, with a bit above 2.8 million units sold last fiscal year. 1.4 million of those came in the most recent quarter.
"We continue to add things to it," Cook said. "If you're using the latest one, I don't know about you, but I couldn't live without it.
Apple's iPod business
iPod unit sales were down 21 percent year over year, with a 26 percent decline in revenue.
Oppenheimer said total iPod sales were ahead of Apple's expectations. iPod U.S. market share remains over 70 percent.
The iPod touch accounts for more than half of all iPod sales.
The CFO revealed that there were more than 140 million downloads of apps and content on Christmas Day.
Apple's regional business segments
Apple saw its largest overseas growth in Japan, where revenue was up 148 percent from the same period in 2010.
Apple's second largest region for revenue growth was the Americas, were revenue was up 92 percent year over year.
Now more than 130,000 points of sale throughout the world, up 35 percent year over year.
After China, Cook sees Brazil as a country where Apple could see major growth in the coming years. He doesn't expect Apple to expand its retail presence into Brazil in the near future however.
Apple's retail business
New EasyPay checkout process with personal pickup have made it much easier for customers and Apple's retail employees.
110 million people visited Apple's stores last quarter. On average, the stores see 22,000 visitors per week.