MacDailyNews presents live notes from Apple’s Q110 Conference Call

Mac Daily News ^ | January 25, 2010 - 05:05 PM EST<p>

[Swordmaker]

MacDailyNews presents live notes from Apple’s conference call discussing Q110 financial results.

•  Analysts' consensus estimates called for earnings per share (EPS) of $2.07 on $12.06 billion in revenue vs. Apple's Q110 guidance of "revenue in the range of about $11.3 billion to $11.6 billion and diluted earnings per share in the range of about $1.70 to $1.78."
  
•  Apple posted revenue of $15.68 billion and a net quarterly profit of $3.38 billion, or $3.67 per diluted share vs. revenue of $11.88 billion and net quarterly profit of $2.26 billion, or $2.50 per diluted share, in the year-ago quarter
  
•  Gross margin was 40.9 percent, up from 37.9 percent in the year-ago quarter
  
•  International sales accounted for 58 percent of the quarter's revenue
  
•  Apple sold 3.36 million Macintosh computers during the quarter, representing a 33 percent unit increase over the year-ago quarter
  
•  Apple sold 8.7 million iPhones in the quarter, representing 100 percent unit growth over the year-ago quarter
  
•  Apple sold 21 million iPods during the quarter, representing an eight percent unit decline from the year-ago quarter
  
•  During the quarter Apple elected retrospective adoption of the Financial Accounting Standards Board's amended accounting standards* related to certain revenue recognition. Adoption of the new accounting standards significantly changes how the Company accounts for certain items, particularly sales of iPhone and Apple TV.
  
•  "If you annualize our quarterly revenue, it's surprising that Apple is now a $50+ billion company," said Steve Jobs, Apple's CEO, in the press release. "The new products we are planning to release this year are very strong, starting this week with a major new product that we're really excited about."
  
•  Apple CFO Oppenheimer guidance: Expect revenue in the range of about $11.0 billion to $11.4 billion and we expect diluted earnings per share in the range of about $2.06 to $2.18
  
•  Oppenheimer: iMac response very strong. 70% YOY growth in desktop Macs.
  
•  Portables up 18% YOY on strong MacBook and MacBook Pro sales.
•  As expected sales of traditional iPods declined. 55% growth in YOY iPod touch sales.
  
•  iTunes Store delivered record-breaking quarter.
  
•  App Store in 77 countries with over 3 billion downloads.
  
•  Apple added 17 new carriers arounf the world during Q1 2010.
  
• iPhone now in 86 countries.
  
•  iPhone now have over 70% of Fortune 200 deploying or testing iPhone.
  
•  Apple Store sold 689,00 Macs. Half of those Macs sold to customers who had never owned a Mac before.
  
• Average of 278 stores open during quarter. 100 retails stores have been remodeled through end of quarter
  
• 586,00 personal training sessions conducted
  
• 40-50 more stores will open in fiscal 2010 with half of those outside U.S.
  
• 29% tax rate during quarter; better than expected due to higher than anticipated international sales
  
• Subscription accounting ended this quarter.
  
• Tim Cook: Apple thrilled to se Mac at 33% growth rate which is about 2X the PC market as a whole.
  
• Italy, France, Switzerland Spain Mac sales up 40% or higher
  
• Australia Mac sales up 70%
  
• China Mac sales up 100%
  
• Cook: AT&T is a great partner. They had more mobile broadband usage than any other carrier in the world.
  
• Cook: Apple has high confidence that AT&T plans will fix issues in certain cities and areas.
  
•  Apple expects gross margins of about 39% due to higher component environment, very typical seasonal decline in revenue, and the U.S dollar has strengthen which will impact as well.
  
•  Cook: DRAM market very constrained in upcoming quarter.
  
•  iPhone: 2.7 million units in channel which includes demos and in-transit inventories
  
•  Expect sequential seasonal declines in Macs, iPods, and iPhones (typical).
  
•  Cook: Apple iPhone inventory increased 230,000 units over quarter to 2.7 million unit level. Apple very conformable with inventory level.
  
•  Cook: Most of App Store rejections concern code errors. Over 90% of apps are approved within 14 days
  
•  Apple is way ahead of their competitors with well over 100,000 apps on App Store
  
•  Apple selects markets for multiple iPhone carriers that they believe will increase sales; Apple does not want to imply that they will open up every market to multiple carriers.
  
•  Apple had lower tax rate than anticipated in Q1. Apple expects tax rate of about 29% in fiscal 2010 due to higher mix of non-U.S. earnings
  
• Apple acquired Quattro to allow devs, especially free app devs, to achieve greater revenue on in-app advertising
  
•  Apple has no change of philosophy of keeping cash on hand (i.e. dividends)
  
•  Apple runs iTunes Store and App Store at a bit over break even
  
• Oppenheimer declined to say Q2 guidance reflects unannounced products
  
• Japan: iPhone is a runaway hit. Up over 4000% YOY in quarter; Mac growth is above market
  
• Asia/Pacific: Mac grew 54% YOY; iPhone up over 500% YOY
  
•  Oppenheimer: Apple works with Google in some areas and competes with them in others
  
• Apple sees mobile advertising as being in its infancy
  
•  Apple will work hard to provide developers a "great opportunity" in mobile advertising
  
• Apple saw a small YOY increase in pro software sales; Apple feels the pro arena is "economically challenged" right now
  
•  Apple's K-12 and higher education Mac sales up 16% YOY; best growth rate since recession began
  
•  6:02pm ET: End of conference call
  

[Swordmaker]

Detailed information on Apple's 1st Fiscal Quarter 2010 Results Conference call. PING!

Summary:

• Apple sold 3.36 million Macintosh computers during the quarter, representing a 33 percent unit increase over the year-ago quarter
  
• Apple sold 8.7 million iPhones in the quarter, representing 100 percent unit growth over the year-ago quarter
  
• Apple sold 21 million iPods during the quarter, representing an eight percent unit decline from the year-ago quarter, but a 55% growth in YOY iPod touch sales.
  
• Apple posted revenue of $15.68 billion and a net quarterly profit of $3.38 billion, or $3.67 per diluted share vs. revenue of $11.88 billion and net quarterly profit of $2.26 billion, or $2.50 per diluted share, in the year-ago quarter
  
• Gross margin was 40.9 percent, up from 37.9 percent in the year-ago quarter

Apple Blows Away Street! Ping!

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[SunkenCiv]

Gosh, don’t the transvestite atheist hairdressers who buy these things realize they’ll be tied into a single supplier? For forty dollars, anyone can build a Mac with off-the-shelf parts. /sarc

[freedumb2003]

Windows Vista — the best advertisement for Apple Mac since the famous SuperBowl commercial.

I am a Windows guy (gotta be — its what runs ERP apps) and I can’t begin to tell you the number of times I have wanted to viscerally flay Billy-boy Gates and his “designers” one layer of skin at a time with a rusty butter knife.

And office 2007 makes me REALLY angry.

[TheStickman]

With a Macbook, Mini and Time Capsule all running perfectly without any issues, I am not surprised Apple is doing so well.

[TheStickman]

With a Macbook, Mini and Time Capsule all running perfectly without any issues, I am not surprised Apple is doing so well.

[TheStickman]

With a Macbook, Mini and Time Capsule all running perfectly without any issues, I am not surprised Apple is doing so well.

[TheStickman]

With a Macbook, Mini and Time Capsule all running perfectly without any issues, I am not surprised Apple is doing so well.

[TheStickman]

Arrgggg hate when I multi-post. Sorry folks.

[dayglored]

> Arrgggg hate when I multi-post. Sorry folks.

That's okay, don't worry about it.

That's okay, don't worry about it.

That's okay, don't worry about it.

That's okay, don't worry about it.

That's okay, don't worry about it.

;-)

[dayglored]

Yeah, but you know, Swordmaker, these numbers don't mean a thing. Apple products are only of interest to a tiny fraction of electronics and computer users, and they're all fanbois who want nothing more than to buy everything Apple makes!

Apple is DOOMED! They are dying! Any minute now, POOF! DEAD! See???

;-)

[Swordmaker]

Apple is DOOMED! They are dying! Any minute now, POOF! DEAD! See???

Yes, Apple is but an iridescent bubble, floating in the wind, wafting along in misty morning dew light, bouncing effortlessly, safely buoyed up on the happy thoughts of butterflies and hummingbirds, until it touches something substantially attached to reality, when, regrettably in a splash of bursting rainbow light, it disappears with an etherial chime, echoing across the wooded glen, to be missed only by weeping fairies and elves sadly dancing to the haunted melodies of piping fauns when they gather for the annual day of remembrances of things that once were but that will never be again...

[dayglored]

> Yes, Apple is but an iridescent bubble, floating in the wind,...

Damn, fella! That was GOOD!! :)

[PA Engineer]

You gotta fix that return key.

[PA Engineer]

I might have to have that engraved on my tombstone.

[Swordmaker]

Damn, fella! That was GOOD!! :)

Blush... thanks... It's so wretched I'm thinking I should submit it to the Bulwer-Lytton literature contest... I just tossed it off in response to your "Poof!" which needed something ... something...

[Swordmaker]

I might have to have that engraved on my tombstone.

Will you have it done in some very nice Calligraphy? With flowers?

[PA Engineer]

Will you have it done in some very nice Calligraphy? With flowers?

Flowers would be a nice touch, however I was thinking along the lines of a bubble gum font. ;-)

[TheStickman]

LOL!!!

[Swordmaker]

Flowers would be a nice touch, however I was thinking along the lines of a bubble gum font. ;-)

Oooh, Oooh! Can we have a perpetual Soap bubble blowing machine ???? Can we... that would be soooooo cool...