Apple sold twice as many iPhones as last year, although that still managed to be below Wall Street expectations. iPod continued its steady decline, with 8 per cent fewer sales than last year, and they managed to get 3.4 million Macs out the door, despite some functionality issues. Revenue was a whopping $US15.68 billion.
The actual money part of the results are affected by a change in accounting measures, so we’ll find out on the upcoming call just how well they actually did compared to years past. It starts at five, and we’ll be updating as it goes.
So it’s a record breaking-quarter even with the accounting change, by almost $US3.5 billion.
Response to the new iMac was “very strong”, although it’s not necessarily positive in some quarters.
The iTunes store now has 11 million songs, 8000 movies and over 50,000 TV episodes. The app store has over three billion (!) downloads to date in 77 countries.
Talking iPhone now, which did well but not as well as analysts had predicted. But then again, analysts just make stuff up anyway. Their average sales price of $US620 is something I’m sure they can sleep comfortably with.
Half the Macs sold in stores last quarter went to people who’d never bought a Mac before. This has been a trend for Apple for the last few years, and speaks well for the long-term, assuming they keep those converts in the Mac family.
Now talking accounting… basically, they used to defer iPhone and Apple TV revenue, but now they recognise revenue immediately (including estimated upgrade fees). Not too exciting unless you’re an investor or a CPA.
“We are incredibly excited about our new product pipeline.” Well, us too!
Q: Forty-four per cent of iPhone units are on AT&T (globally, presumably). What are the benefits of their being your only US partner, given their problems? (A little Verizon-baiting there.)
A: And COO Tim Cook doesn’t bite: “First of all, AT&T is a great partner… it’s important to remember that they have more mobile broadband user than any other carrier in the world… We have very high confidence that they’ll make very significant progress towards fixing [their problems] .”
Q: Could you elaborate on which component prices you expect to be up this quarter? (Like, um, tablet components HMMM?)
A: Tim Cook: We’re continuing to see that the market is constrained in D-RAM, and we do expect that to drive prices higher.
Q: Does your guidance include any unannounced products? (Like, um, tablet products HMMMM?)
A: CFO Peter Oppenheimer won’t slip that easy. No comment.
Q: Could you talk more about the iPhone in China? How is that looking into this year?
A: Tim Cook: We’ve cumulatively activated over 200,000 units since October launch. We’re very, very focused on the quality of the point of sale and the customer experience. We’d prefer to move slow because we’re building the brand for the long term. I wouldn’t want to forecast where sales will go or what we may or may not do from a partner point of view.
Q: Any update on litigation? (Honestly, there’s so many people suing Apple right now that a full answer could take us through Wednesday’s announcement).
A: Nope! (thank goodness)
Q: What’s the deal with the bass ackwards App Store approval process?
A: Tim Cook says it’s important to “keep it in perspective”. Ninety per cent of apps are approved in 14 days or less. Porn gets dismissed outright (oh, really?) “Most of the rejections are bugs in the code itself, and this is protecting the customer and developer, to a great extent.”
Q: Here we go. How big of an impact do you expect your next product to have? As big as iPhone and iPod?
A: Tim Cook doesn’t want to ruin the surprise, which itself is not at all surprising. But it is disappointing!
Q: Can you provide more colour on the App Store in terms of changes in paid versus free apps?
A: Peter Oppenheimer “doesn’t want to share the answers to the question that you asked”. Peter Oppenheimer is NO FUN. He does say that Apple is “way ahead” of their competitors.
Q: Can you give an update on long-term strategy re: Lala and Quattro acquisitions?
A: Peter Oppenheimer: “We occasionally acquire small companies from time to time for their technology and talent.” Come on, Peter. Just show a little leg, that’s all I’m asking.
(Side note: Craig Hockenberry notes that with iPod Touch up 55 per cent this quarter, there are now about 77 million devices out there. Yowza).
Q: Can you characterise your changing relationship with Google?
A: Peter Oppenheimer: “We work with Google in some areas and compete with them in others.” Where’s the fire in the belly, Peter? Doesn’t the Nexus One tick you off even just a little?
Some talk about the K-12 market, and we’re done! Not nearly as much tablet-baiting as we’d hoped, but that’ll just make Wednesday all the sweeter.
Apple Reports First Quarter Results
All-Time Highest Revenue and Profit
New Accounting Standards Adopted
CUPERTINO, California-January 25, 2010-Apple® today announced financial results for its fiscal 2010 first quarter ended December 26, 2009. The Company posted revenue of $US15.68 billion and a net quarterly profit of $US3.38 billion, or $US3.67 per diluted share. These results compare to revenue of $US11.88 billion and net quarterly profit of $US2.26 billion, or $US2.50 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. The Company 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 $US50+ billion company,” said Steve Jobs, Apple’s CEO. “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.”
“We are very pleased to have generated $US5.8 billion in cash during the quarter,” said Peter Oppenheimer, Apple’s CFO. “Looking ahead to the second fiscal quarter of 2010, we expect revenue in the range of about $US11.0 billion to $US11.4 billion and we expect diluted earnings per share in the range of about $US2.06 to $US2.18.”
Apple will provide live streaming of its Q1 2010 financial results conference call utilizing QuickTime®, Apple’s standards-based technology for live and on-demand audio and video streaming. The live webcast will begin at 2:00 p.m. PST on January 25, 2010 at www.apple.com/quicktime/qtv/earningsq110/ and will also be available for replay for approximately two weeks thereafter.