Apple Earnings Conference Call Full of Juicy Tidbits
Apple Earnings Conference Call Full of Juicy Tidbits
by , 6:50 PM EDT, April 23rd, 2008
Apple's Q2 earnings report included a conference call for analysts. While Peter Oppenheimer (CFO) and Timothy Cook (COO) never comment on unannounced products and keep things pretty close-to-the-vest, there were a few notable and interesting items.
In the current quarter, the average revenue per retail store rose from $4.8M to $7.1M year over year. With average selling prices (ASP) fairly constant, that means a significant increase in the visitors to the Apple stores, roughly 34 million in the last year. Fifty percent of those customers are new to the Mac. Apple conducted 580,000 one hour training sessions in that time.
Apple's guidance for the June quarter was US$7.2B which will reflect a 33 percent growth, year over year.
Ben Reitzes with UBS asked about Apple's growth trends, and Tim Cook responded that the 35 percent growth in education sales was larger than Apple had seen in eight years. While he always worries about institutional investors pulling back, he hasn't seen it yet. Also, Apple has now surpassed Dell in notebook sales to education.
Mr. Cook also reiterated his firm belief that Apple would sell 10M iPhones in CY 2008.
David Bailey of Goldman Sachs asked if there is a specific date for the release of the iPhone 2.0 software. Mr. Oppenheimer said only that it would be in "late June."
Richard Gardner of Citigroup asked about the change in Gross Margins and wondered why they weren't better given the decrease in prices for DRAM and NAND. Mr. Cook replied that there were several offsetting factors including the reduction in Leopard's sales ($170M in Q1 vs. $40M in Q2), iPod shuffle price reductions and deferred iPhone revenue.
Later, asked about the recent reduction iPhone prices in Europe, Mr. Cook said "carrier partners can price the iPhone as low as they wish," by their agreement. But he declined to offer any additional information, which is confidential. He was also asked about the Pro[fessional] business, and Mr. Cook offered that Apple is seeing "strength everywhere" in their markets.
Asked about the shortages of the iPhone lately, Mr. Cook said that the company underestimated demand in Q2 in Europe. It didn't drop off as rapidly as they expected, based on seasonal experience in the U.S. "We learned something," Mr Cook said.
Analysts continued to question Apple about the relative number of unlocked iPhones because they provided a number in the past. However, Apple no longer does that. Analyst Toni Sacconaghi with Bernstein Research asked why Apple couldn't just extrapolate the numbers, but Mr. Cook said that the number is very hard to estimate and "we can't stand by the number." However, Mr. Oppenheimer added that the unlocking of iPhones is "significant." He took that as a proxy for the fact that world wide demand for the iPhone is strong and that it gives Apple confidence in the 10M number for CY2008.
Tim Cook was asked by Charles Wolf of Needham & Company if Apple had a feel for the demographics of the MacBook Air and whether sales seemed tied to "road warriors." My Cook said that the MBA is "appealing to all sorts of people" including college professors and others not limited to travelers. However, favorably, the MBA has not resulted in cannibalization of the rest of the MacBook line.
Apple ended the quarter with $19.4 billion in cash, up some $1.2 billion. The company continues to horde its cash, and told analysts it would not announce any future acquisitions or price drops in its product lines.
Finally, slightly lower guidance than expected for the June quarter drove AAPL down slightly, at first, in after house trading.
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