There were lots of numbers thrown about today in Apple’s FY Q2 earnings report and lots of technical, even boring questions from analysts. Hidden between the lines, however, were several gems. Here’s my list.
Holiday momentum. Peter Oppenheimer said that there is usually a loss in momentum after the Christmas holiday quarter. This time, however, the momentum continued into Q2. Apple’s dream may be coming closer — sequential growth in every quarter, rather than a seasonal up and down, yet year-over-year growth.
Apple is working with 151 wireless carriers in 88 countries.
There were 47 million visitors to Apple’s retail stores in Q2. Apple conducted 700,000 individual training sessions. Apple expects to open 40-50 news stores in 2010.
Apple now has US$41.7B in cash and investments. The goal, according to Peter Oppenheimer, remains preservation of capital. That implies a big acquisition that would deplete most of that money is not a current goal. Apple continues to buy small, strategic companies.
Apple is taking a hit on gross margins for the iPad by keeping the price down. That’s because, according to Tim Cook, the perceived market for the iPad is large, and they want to penetrate that market aggressively. In time, reduced parts cost will improve the gross margins.
Apple will introduce the iPad to nine countries in May.
In every case, in foreign countries, where Apple changed from exclusive agreements with carriers to non-exclusive agreements, market share went up. The only remaining exclusive agreements with carriers are the U.S., Germany and Spain.
Gene Munster (Piper Jaffray) asked if Apple had seen any cannibalization of iPhones or Macs due to the iPad. Tim Cook answered that it’s too early to tell.
Shannon Cross (Cross Research) asked if there were any gating factors for the iPad production. Tim Cook said there were none. The demand simply exceeded Apple’s expectations.
Richard Gardner (Citigroup) asked if there will be a charge for iPad OS upgrades. Pete Oppenheimer said Apple will announce that in July.
Brian Marshall (Broadpoint AmTech) asked about ambitions for the Apple TV. Tim Cook said that the sales units were small compared to other products, even though sales were up 34% year-over-year. Because the relative sales units were small, Apple TV remains a hobby, but Tim Cook continues to think that “there’s something interesting there.”
Mike Abramsky (RBC Capital) asked about the iPad. Tim Cook admitted: “I’m already personally addicted to mine and couldn’t live without it.” He also claimed that in order for a product to fit between an iPhone and a MacBook, it has to do some things better than each. He cited e-mail, browsing, video and reading books. He couldn’t think of anything a netbook does really well.
Finally, what interested me is that iPod (yes, iPod) sales held up really well at 10.9 million. That tells me that while a lot of really young people would like to have an iPhone, the monthly AT&T bill is just too expensive for many parents accumulated over 24 months. So the kids get an iPod touch or a nano. Later, when they’re older, guess which smartphone they’ll buy in college?
That’s my list of tidbits. Watch for additional coverage of key discussion items here at TMO.