Notable Comments from Apple’s Q411 Earnings Report

| Analysis

Apple Earnings Reports are full dry numbers, careful guidance and side-stepping the dicier questions from the analysts. Even so, there were some notable comments from CEO Tim Cook and CFO Peter Oppenheimer this time around, and the those “dry” numbers tell quite a story. These are not exact quotes, unless I put them in quote marks, and come from my written notes, listening to the call.

Oppenheimer: Mac sales set an all-time record. The growth was 26 percent year over year, six times the iDC forecast for PC growth of 4 percent. Fueled by MacBook Air. 74 percent of Macs sold are notebooks.

Oppenheimer: Customers downloaded 650 million TV shows in the quarter. Abou 180 million books.

Oppenheimer: We have 230 iPhone carriers in 105 countries. iPhone sales doubled in Asia-Pacific. The 4S is now shipping in seven countries with 22 more to be added by the end of October. [One can surmise the international rollout might be gated by the U.S. initial demand. - JM]

Oppenheimer: The iPad is distributed in 90 countries with an additional 28 being added. Sales represented US$6.9B in revenue. [That’s an average revenue of $620 each.]

Oppenheimer: There are 500,000+ iOS apps, 18 billion downloads in the quarter. App Store is in 123 countries. 33 more being added.

Oppenheimer: The average annual revenue for each retail store has climbed to $10.7M. The new Hong Kong store is one of the highest revenue stores. There were 77.5 million visitors to the the retail stores in the quarter.

Cook: The opening sales of the iPhone 4S “exceeded our wildest dreams.”

Cook: Apple has 7,000 points of sale for iPhone in China. China is #2 in top revenue countries. “Certainly in my lifetime I’ve never seen a country with so many people rising into the middle class.” Apple did US$900M in sales in Brazil by doing almost nothing.

Cook: Asked about cannibalization, Tim Cook pointed out that they’ve seen it. Some buyers are buying an iPad instead of a Mac. But many more are buying an iPad instead of a Windows-based PC. So with the record sales of Macs, Mr. Cook said Apple is doing well in the cannibalization trade-off.

Cook: Asked about the US$81B in cash and cash equivalents, Mr. Cook said: the money isn’t burning a hole in Apple’s pocket, they’re patient, they’re investing the money ($54B is outside the U.S.) and has used it well. Examples were: using it to acquire companies, acquiring IP, investing in the supply chain and re-tooling some retail stores. Interestingly, Mr. Cook said he is “not religious” about holding cash.

Cook: Mr. Cook was asked if he has new sales goals for the iPhone. Originally Apple said it wanted one percent of the mobile phone market. They’ve achieved five percent. Mr. Cook responded: “Not one that I’ve published.”

Cook: Asked about the Kindle Fire, Mr. Cook was not at all concerned, pointed to 140,000 apps for the iPad, and said Apple was “confident.” Asked about the potential market for the iPad, Mr. Cook said he thought it would end up being “larger than the PC market.  But that’s not a guidance number.”

Cook: Asked a tricky question about whether Apple would go down market with the iPad for the advantages of price elasticity and a broader market or up market to compete with the PC, Mr. Cook replied, coyly, “I think we have a pretty good handle on what to do next with the iPad.”

 

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Comments

wab95

Many thanks for that summary, John.

If I had to summarise these points in one word, it would be, “momentum”. Apple have good, if not gaining, momentum on all fronts, with very little headwind.

I think we can anticipate further gains in Mac marketshare as the competition continues to grapple with 4% growth with little, if any, answer to the MBA and its counterpunch, the iPad, both of which will continue to take the wind of out PC sales (pun intended) through the winter holiday buying season. Expansion of the iPhone and iPad into the Asian markets has only begun, and has very substantial growth capacity.

The share price plunge post quarterly report seems a perennial event, even if not for the faint of heart.

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