As we previously shared last month, Apple is scheduled to hold its quarterly conference call to discuss its earnings report from the second quarter of its fiscal year: this includes 43 million iPhones, 16 million iPads, and 4 million Macs. As the company reported, it earned $45.6 billion in revenue during Q2. Apple has already made news as it announced the first split of its stock since February 2005.
In terms of product announcements during that timeframe, Apple was relatively quiet; it expanded iTunes Radio to Australia and added NPR support, rebranded iOS in the Car as CarPlay with compatible cars arriving later this year, introduced a cheaper 8GB iPhone 5c in several non-US markets, replaced the iPad 2 with the iPad 4 at the same price point, and announced its worldwide developer conference scheduled for June 2. Apple is currently positioned to save new products for the latter half of the year as it did in 2013.
Investors and analysts are sure to raise this point during the call, and we’ll be listening and bringing you coverage starting at 5pm EST/ 2pm PST.
-20 minutes ahead of the call, very relaxing piano playing, this should keep everyone alert!
-After hours $AAPL jump after earnings/stock split announcement:
-11 minute warning…
-Call beginning…
-Tim Cook: “We have a lot to share with you over the next hour..”
-Cook: “Strongest non-holiday quarter ever”
-Cook: “New March quarter record” with iPhone sales
-Cook: “iTunes is a very important driver of our business… nearly 800 million iTunes account… most with credit cards”
-Cook: iPad sales above Apple’s expectations, below analysts expectations
-Cook: Continue to believe tablet market will surpass PC market in the next few years and Apple will be a great beneficiary
-Cook: Angela Ahrendts joining Apple next week to head retail
-Cook: Over half of added iPhone users with new to the product
-Discussing stock split now
-Cook: “Expanding into new categories”
-Cook: “We solicit input from a broad base of shareholders” Icahn comes to mind…
-Cook: “We believe our current stock price does not reflect the value of the company”
-Cook turning the call over to Luca Maestri
-Maestri cites China Mobile and iPhone 4s as source of record iPhone quarter
-Maestri citing both geographical and enterprise iPhone growth
-Maestri points out higher App Store revenue over Google Play Store despite fewer iOS devices
-Apple continuously points to reductions in channel inventory as reason for YOY iPad sales decline
-Maestri: iPad 95% of US education tablet market
-Apple after hours trading up 8.15% as of 5:20
-Maestri repeating that current stock price does not reflect value of the company
-Maestri says Apple planning on continued dividend increases
-Maestri cites tax consequences to domestic its offshore funds, will raise more debt
-Maestri offers Q3 guidance at $36-$38 billion for revenue
-Cook is back up to discuss stock split and his “dear friend” Peter Oppenheimer
-Cook thanks Oppenheimer for his time at Apple, 10 years
-Oppenheimer leaves in September as previously reported
Q&A Time
-First question on making money on future install base
-Cook says Apple can monazite more in new areas and existing areas better
-Follow up question regarding charging more for highly innovative products in the future after being surprised with iPhone 5s demand
-Cook says products are priced fair, decisions made with each thing as it gets closer to time to come to market
-Next question about March quarter and what drove the numbers
-Maestri walking back through what helped numbers and discussing upcoming Q3
-Follow up question about carrier upgrade policy changes and if demand was just strong enough to counter those changes
-Cook answers discussing stricter enforcement in the upgrade policy in the US, says strength of iPhone was generally broad based and host of other markets drove results
-Next question asking Luca Maestri about $41 iPhone ASP decline and what drove it, iPhone 4s?
-Maestri citing iPhone 4s success in emerging markets and success abroad, says as the company moves away from new product launch they see lower capacity mix
-Follow up question is asking Cook about carriers encouraging consumers to keep devices longer with new policy enforcements and that limiting upgrade cycles
-Cook says iPhone 4 sales were single percentage of sales, carrier policies could actually increase upgrade cycle with new programs offering higher price to upgrade more often, opportunity for Apple is that smartphone market is only a billion or so units and will eventually take over entire mobile phone market, certain large regions saw 80% new-to-iPhone numbers go to iPhone 4s (there’s an awful lot of talk about the iPhone 4s from two refreshes ago), cites ability to keep customers and introduce them to the “ecosystem”, Cook says some carrier plans help and some hurt but “completely unclear” to him how it will net result
-Next question about iPad sales and if Office for iPad could help
-Cook commenting on overall success of iPad in consumer, enterprise, and education markets; describing it by market and how it approaches each one, says student achievement is higher in the classroom with iPad than without it, says match has been lit as 95% share of education market is iPad, says 91% of tablets in enterprise were iPad with 98% of Fortune 500 using iPad, says company needs to focus on penetration and having it be broader, says he believes Office does help, would have been better for Microsoft if done earlier with so many alternatives brought to market now, believes it helps in enterprise area for iPad sales, cites 98% customer satisfaction and 4x web traffic on iPad than Android… all of that said to look at trend of iPad rather than quarter numbers
-Cook: There’s no shortage of work going into the next iPad, the next big idea
-Cook: “I am very bullish on iPad.”
-Cook discussing importance of staying focuses on products, company comfortable on expanding, working on things in the background, not ready to pull the string on the curtain
-Next question about competitive landscape for smartphones, cites Microsoft/Nokia deal and Motorola/Lenovo deal
-Cook: Lots of changes, some people giving up and pursuing other things, cites iPhone 4s as its affordable smartphone, says proud to ship that product, cites Apple’s entrance into a number of growing markets, says proud of results for Apple
-Follow up question about China specifically
-Cook likes to discuss growth in China, includes Mac growth by 13%
-Cook continues to cite 85% of iPhone 4s buyers were first time iPhone buyers, 69% iPhone 5c buyers, many switchers from Android (62% for iPhone 4s, 60% for iPhone 5c)
-Call wraps up, will be available on iTunes for a brief amount of time
[tweet https://twitter.com/markgurman/status/459066425970159616]
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