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Notes of interest from Apple's Q4 2010 conference call


Apple on Monday reported another record quarter, achieving $4.46 billion in profit thanks in part to a whopping 14.1 million iPhones sold. Following the news, Apple executives conducted a financial conference call with analysts and the press, and notes of interest follow.

In addition to record-breaking iPhone sales in its fourth fiscal quarter of 2010, Apple also achieved a best for Mac sales, which hit 3.89 million, up 27 percent from a year prior. iPad sales were also 4.19 million.

It was a record quarter for Mac, iPhone and iPad sales. In all, it amounted to the company's highest revenue and earnings ever. CEO Steve Jobs, COO Tim Cook and CFO Peter Oppenheimer participated in Monday's call to discuss the results with analysts and media.

Apple's regional business segments

Sales in the Americas generated $7.2 billion in revenue. Europe accounted for $5.4 billion, while Asia Pacific was $2.7 billion.

Apple's Mac business

Most Mac sales, as usual, came from notebooks, which represented 2.6 million units. Desktops accounted for the remaining 1.2 million Mac sales.

It was the best-ever quarter for Mac sales, reaching a total of 3.89 million, exceeding the previous record of the June quarter by 400,000.

Apple's iPhone business

The iPhone continues to be the biggest money maker for Apple, accounting for $8.8 billion in revenue for the quarter on sales of 14.1 million units.

The 14.1 million units sold easily bested last quarter's sales of 8.4 million units.

Sales value of iPhones alone was about $8.6 billion, which led to an average selling price of about $610.

Strong year-over-year growth, particularly in Asia, Europe and Japan. Also began shipping China in the last day of the September quarter.

Oppenheimer said the company believes they could have sold even more iPhones if they had them available, but Apple is struggling to keep up with demand.

"Very impressed" with early results for iAd, Oppenheimer said.

"We've now passed RIM, and I don't see them catching up with us in the foreseeable future," Jobs said.

He also slammed Google's attempt to characterize iOS as "closed," versus its own "open" Android platform.

Jobs was asked by Gene Munster of Piper Jaffray about Adobe Flash. The CEO quipped back: "Flash memory? We love flash memory."

Jobs said he thinks there is room for "some number of companies to be successful" as the smartphone market continues to grow, but in the future he sees it turning into a zero-sum game.

"Right now iPhone and Android are winning that battle (for mindshare of customers)," Jobs said.

Apple's iPad business

With just two quarters on the market, the iPad is officially a major part of Apple's business. It accounted for $2.8 billion in total revenue, more than the $1.4 billion iPod hardware sales generated.

Over 65 percent of the Fortune 100 are already deploying or trying the iPad, including Procter & Gamble, Lowes, NBC Universal and Hyatt.

U.S. iPad distribution will include Walmart, Target, AT&T and Verizon stores for the holiday season.

Cumulative iOS device sales topped 120 million last month, including iOS, iPod touch and iPhone.

App Store has more than 65K game and entertainment titles, and more than 30K apps designed specifically for iPad.

Jobs slammed iPad competitors with 7-inch screens. Said that because the screen size is measured diagonally, it's only 45 percent as large as the iPad's 10-inch screen.

Jobs also revealed there are more than than 35k apps for iPad on the App Store.

"The iPad is clearly going to affect notebook computers," Jobs said. "I think the iPad proves it's not a question of if, it's a question of when."

"We haven't pushed it (the iPad) real hard in business, and it's being grabbed out of our hands," Jobs said.

"We've got a tiger by the tail here, and this is a new model of computing which we've already got tens of millions of people trained on with the iPhone, and that lends itself to lots of different aspects of life, both personal and business," he said.

On the competition, Jobs said he isn't worried. "We're not done. We're working on a lot of things for the future." He added: "We're out to win this one."

Apple's iPod business

The iPod dropped 4 percent sequentially and 11 percent year over year in unit share to 9 million units sold.

Oppenheimer said that iPod share of the U.S. market remains more than 70 percent. iPod is the top MP3 player in most countries overseas, and has seen significant overseas growth.

iTunes had revenue of more than $1B for the quarter.

The newly launched Apple TV sold a quarter-million units. "We're thrilled with that," Jobs said.

Apple's retail business

Retail sales were a record $3.5 billion for the quarter, up 75 percent year-over-year in terms of revenue. That's also an increase of 38 percent from the previous quarter's revenue.

Sold 874,000 Macs, an increase of 30 percent from a year ago. About half of Macs sold in stores were to customers who never owned a Mac before.

Opened 16 stores outside the U.S., including "spectacular" stores in Beijing, Shanghai and London, Oppenheimer.

Total of 317 stores worldwide as of the end of the quarter, with 84 of them outside of the U.S.

Average revenue per store was $11.8 million, up 52 percent from a year ago.

Apple's next (Q1 2011) fiscal quarter

For the upcoming holiday season, Apple has projected revenue of $23 billion, and expects diluted earnings per share of about $4.80. Gross margins are expected to be about 36 percent.

"We see great opportunity to continue our retail growth," Oppenheimer said of the coming fiscal year. Apple expects to open 40 to 50 stores in the next year, with more than half of them overseas.