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
  

[PA Engineer]

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

Wait! How about an iTombstone touch to play ones music and videos in perpetuity? ;-)

[AFreeBird]

Wait! How about an iTombstone touch to play ones music and videos in perpetuity? ;-)

Loaded up with apps for the iAfterLife

[PA Engineer]

Loaded up with apps for the iAfterLife

Good!

[Ted]

Those numbers, in this economy, are simply amazing. Wow.

I bought a 128K Mac in 1984, and have had many other Macs/Apple products since then. It’s always been fun, but over the last few years it’s been amazing to see how Apple products have influenced our lives. Good for them, and as a new small publisher I look forward to Wednesday. I’m thinking books/mags with supporting video clips are a no-brainer.