Oppenheimer moves to outlook for next quarter, which runs 13 weeks as opposed to the same quarter which was 14.
by Josh Lowensohn
We expect revenue to be $52 billion for the fiscal first quarter, Oppenheimer says..
by Roger Cheng
Apple is targeted FYQ1 EPS at $11.75.
by Roger Cheng
We entered the holiday season with our strongest line up ever, Oppenheimer says.
by Roger Cheng
Now onto the Q&A -- the fun part. We're going to skip the in the weeds bits.
by Josh Lowensohn
First question: If guidance holds true, the fiscal first quarter would be the first decline. What about Wall Street reaction?
by Roger Cheng
The year-over-year change in FYQ1 EPS is driven by a few things: last year had an extra week in the quarter, a strong U.S. dollar, and a change in gross margins.
by Roger Cheng
This is an unprecedented launch of new products, which has resulted in record demand, Oppenheimer says.
by Roger Cheng
The dramatic change and demand has costs associated with it, he says.
by Roger Cheng
All of the new products have new designs and new features. We've never offered so many new products at once, he says.
by Roger Cheng
As a result, these new devices have higher costs. The difference this time is the sheer amount of new products at this time.
by Roger Cheng
Apple lowered price of iPhone 4S and iPhone 4, which cut into margins.
by Roger Cheng
The iPad Mini will also be added, and is priced "aggressively," he says.
by Roger Cheng
Oppenheimer says the gross margins on the iPad Mini is significantly lower than corporate advantage.
by Roger Cheng
He notes margins on new products are lower than predecessor, iPhone 4S and iPhone 4 have lower costs, the anticipated volume will generate greater deferred revenue.
by Roger Cheng
Apple defers revenue on products like iPhone, and amortize the revenue over the life of the product.
by Roger Cheng
The favorable items that benefited margins in the last quarter won't repeat in the next quarter, he says.
by Roger Cheng
We'll work hard to get costs down as we have in the past, he says.
by Roger Cheng
To be in a position to anticipate more than $50 billion in revenue is incredible, he says.
by Roger Cheng
CEO Tim Cook chimes in, says he won't cut corners on Apple's products. That's the driving force behind the company.
by Roger Cheng
"We're managing the company for the long run."
by Roger Cheng
"We remain confident in our strategy," he says.
by Roger Cheng
Cook says he'll use expertise to "delight customers."
by Roger Cheng
Next question from Goldman Sachs. How are you thinking about the supply ramp for the iPhone 5 in the quarter, and how's the demand?
by Josh Lowensohn
Cook: The demand for iPhone is extremely robust. We're thrilled with what we see.
by Josh Lowensohn
Cook: We are in a significant amount of backlog right now. Output has improved significantly since last month. I am pleased with the current level of output with what has been the biggest production run in Apple's history.
I'm feeling confident on our ability to supply a lot of iPhones.
by Josh Lowensohn
Next question: A follow-up to rampup of iPhones. Do you continue anticipating rolling out to all 100 countries as previously announced? Can you comment on whether the supply constraints have had a material impact on cost of goods sold?
by Roger Cheng
Cook: We still continue anticipate rolling out to 100 countries, which is the faster roll out ever. We anticipate hitting that goal.
by Roger Cheng
Cook: With each new product, we see learning curves when ramping up production. This isn't any different with our new products. The difference is that there are so many different products launching at once.
by Roger Cheng
Cook: I don't see those costs accelerating on a per-unit basis. I see it as a production ramp across many new products.
by Roger Cheng
Follow-up question: Over time, do you see tablet market evolving to larger tablets going forward to address different needs?
by Roger Cheng
aka "hey Tim, are you making a bigger iPad too?!"
by Josh Lowensohn
Cook: We don't comment on future views on products.
by Roger Cheng
Cook: We continue to be confident the tablet market will surpass the PC market. There's incredible development in ecosystem and products in tablet.
by Roger Cheng
"It's already extremely compelling," he says.
by Roger Cheng
The PC market is an enormous opportunity for Apple, Cook says. We do think the iPad mini, iPad, and iPad 2 will be all extremely attractive offerings in lieu of PCs.
by Roger Cheng
Cook: We will continue to focus on future of iPad, and confident with what we have in the pipeline.
by Roger Cheng
Cook: We can't wait to start selling the first units.
by Roger Cheng
Next question comes from Cross Research: Whats going on in China?
by Josh Lowensohn
Cook: In terms of what we've seen in China, revenue was $5.7B, Mac was up 47 percent. We launched portables for the first time there in July a month after U.S. launch. iPhone was up 38 percent for the quarter. That brings us to a full fiscal year revenue number of $23.8b in China, up $10b year over year, and now represents 15 percent for the fiscal year.
by Josh Lowensohn
Cook: We're continuing to invest in our own retail stores there, and extending our channel distribution., and continue to see it as a more exciting market.
Follow up question: Hey, Microsoft Surface -- how does Apple compete with that?'
by Josh Lowensohn
COok: I haven't personally played with a Surface yet, but what we're reading about it, is that it's a failrly compromised, confusing product.
by Josh Lowensohn
Cook: One of the toughest things you do with what product to make is to make hard trade-offs and decide what a product should be, and we've really done that with the iPad, so the user eperience is incredible. I suppose you could design a car that flies and floats, but I don't think it would do all of those things very well.
So when people look at the iPad vs. competitors, they're going to say they want an iPad, and that's what they've done today and I think they'll continue to do that.
by Josh Lowensohn
Next question: Can you go through a bit more on tablets and how the iPad Mini will do? How do you want to differentiate it from the iPad? Will it sell better than the original?
by Roger Cheng
Cook: We don't have old products, just new ones, referencing the new fourth-gen iPad.
by Roger Cheng
