Apple second quarter earnings call w/analysts

Apple discusses the results of its second fiscal quarter with analysts.

  • Roger Cheng 4/24/2012 8:59:29 PM
    Welcome to our live blog of Apple's fiscal second-quarter earnings conference call. Josh and I will be bringing you the blow by blow from the call.
  • Josh Lowensohn 4/24/2012 8:59:34 PM
    Read CNET's earnings recap recap.
  • Roger Cheng 4/24/2012 9:00:56 PM
    In case you missed it, Apple again reported blow-out numbers, led by stronger iPhone sales, which offset weaker iPad sales.
  • Roger Cheng 4/24/2012 9:02:00 PM
    Okay, the call's about to start.
  • Josh Lowensohn 4/24/2012 9:02:06 PM
    Okay, call's underway. Operator going through the usual forward looking statements stuff.
  • Josh Lowensohn 4/24/2012 9:02:47 PM
    CFO Peter Oppenheimer talking, recapping that there were record iPhone, iPad and Mac sales.
  • Josh Lowensohn 4/24/2012 9:03:16 PM
    59% growth, which is a record and second only to Apple's previous quarter, Oppenheimer says. Fueled by iPhone and iPad sales (duh)
  • Josh Lowensohn 4/24/2012 9:04:01 PM
    Oppenheimer going over Mac. New records for desktops and portables. Growth of 7 percent year over year. Oppenheimer notes it's up from IDC's numbers.
  • Josh Lowensohn 4/24/2012 9:04:24 PM
    Oppenheimer giving a shout out to upcoming OS X release "Mountain Lion." Available in late Summer, Oppenheimer says.
  • Roger Cheng 4/24/2012 9:04:28 PM
    Oppenheimer says he expected Mountain Lion to be available late summer this year.
  • Roger Cheng 4/24/2012 9:04:58 PM
    iPod's share of the Mp3 market is over 70 percent. That's probably a large share of a small market.
  • Josh Lowensohn 4/24/2012 9:05:23 PM
    iTunes Store: $1.9B, that's up 30 percent year over year, Oppenheimer says. Now 28M songs on there too.
  • Roger Cheng 4/24/2012 9:05:58 PM
    Experienced strong iPhone sales in all of our segments, led by the Asia-Pacific region.
  • Josh Lowensohn 4/24/2012 9:06:33 PM
    Oppenheimer notes growth in china was big especially because of China Telecom being a new carrier.
  • Roger Cheng 4/24/2012 9:07:19 PM
    "iPhone momentum in enterprise has evolved," Oppenheimer said. Said it goes beyond email and browsing. Majority of Fortune 500 companies putting out in-house apps for iOS, he added.
  • Josh Lowensohn 4/24/2012 9:07:53 PM
    Now onto iPads: 11.8M iPads sold, a 151 percent boost from same quarter last year. Oppenheimer running down features here. Now available in more than 40 countries. Sales more than doubled in each segments, Oppenheimer says.
  • Roger Cheng 4/24/2012 9:09:00 PM
    Oppenheimer says interest in education is rising. Sold two iPads for every Mac to schools, and he sees more sales to schools.
  • Josh Lowensohn 4/24/2012 9:09:24 PM
    iPad in biz and govt: Oppenheimer mentioning Air Force Mobility Command is using iPads for pilots and trainers.
  • Roger Cheng 4/24/2012 9:09:39 PM
    Sold more than 50M iOS devices in the March quarter, Oppenheimer said.
  • Josh Lowensohn 4/24/2012 9:09:59 PM
    App Store now at 600,000 apps, with more than 200,000 just for the iPad, Oppenheimer says.
  • Josh Lowensohn 4/24/2012 9:10:27 PM
    Apple retail: $4.4B in revenue, up 8%. Second only to the last quarter.
  • Josh Lowensohn 4/24/2012 9:11:00 PM
    826K Macs sold in Apple retail stores, and more than half were to first time Mac users. 2 new stores opened, one in Amsterdam and one in Houston.
  • Josh Lowensohn 4/24/2012 9:11:43 PM

    85M visitors during the quarter, up from 71M during the same quarter last year. 18K visitors per store, per week Oppenheimer says.
  • Roger Cheng 4/24/2012 9:12:20 PM
    Cash totaled $110.2 billion at the end of the March quarter.
  • Roger Cheng 4/24/2012 9:12:34 PM
    Cash flow from operations was $14B, Oppenheimer said.
  • Josh Lowensohn 4/24/2012 9:13:39 PM
    Now onto outlook for next quarter: $34B revenue, 41.5% gross margin.
  • Roger Cheng 4/24/2012 9:14:13 PM
    Okay, Q&A time.
  • Josh Lowensohn 4/24/2012 9:14:40 PM
    Now onto questions and answers. First up, a question from Morgan Stanley.
  • Roger Cheng 4/24/2012 9:15:09 PM
    The manufacturing ramp for iPhone 4S and iPad were extremely successful for us, Oppenheimer said. As a result, we were able to fulfill demand in March quarter as opposed to the June quarter.
  • Roger Cheng 4/24/2012 9:15:40 PM
    That's different from last year, when demand was still in 3Q high due to inventory constraints in 2Q, he said.
  • Roger Cheng 4/24/2012 9:16:47 PM
    So, basically everyone who wanted an iPhone or iPad got one, so fewer people are going to want one in the next quarter. That's what Apple's arguing.
  • Roger Cheng 4/24/2012 9:18:05 PM
    The stronger U.S. dollar will have a negative impact on comparisons in 3Q, Oppenheimer said.
  • Roger Cheng 4/24/2012 9:19:08 PM
    "We're still learning about the elasticity of demand on the lower priced iPad," Oppenheimer said, in response to a question about the potential for more lower priced iPad products.
  • Josh Lowensohn 4/24/2012 9:19:15 PM
    Q: What are your views on slow down in growth rate in the Mac category. Is it transition related? iPad cannibalization?
  • Josh Lowensohn 4/24/2012 9:19:39 PM
    Tim Cook: We did outgrow the market. This is the 24th straight quarter we've outgrown the market and we're extremely pleased about that.
  • Roger Cheng 4/24/2012 9:20:21 PM
    Points to tough comparisons as a result of a change in the Macbook line last year, Cook says.
  • Roger Cheng 4/24/2012 9:20:44 PM
    There was some cannibalization from the iPad, Cook said.
  • Roger Cheng 4/24/2012 9:20:58 PM
    Cook, however, largely blamed one fewer week for the sequential weakness in Mac sales.
  • Josh Lowensohn 4/24/2012 9:21:26 PM
    Q: Berstein Research: What are you learning about lower price points for the iPhone and iPad. e.g. was the decrease in iPad product mix related?
  • Roger Cheng 4/24/2012 9:22:11 PM
    Cook: The change in entry price to $399 for the iPad 2: we're thrilled with the early reaction, but still unclear what the long-term reaction will be.
  • Josh Lowensohn 4/24/2012 9:22:14 PM
    Cook: On the iPad 2, the change in the entry price at $399, we're thrilled with the results we've seen, but as Peter said it's only been a few weeks. From what we are seeing, this unlocked some education demand that is our more price sensitive customer. Also in several other countries there was a marked change of demand at that price point.
  • Josh Lowensohn 4/24/2012 9:22:48 PM
    Cook: The mix of the new iPad and the iPad 2, we're not certain of that is yet. But the absolute sales of the iPad 2 is very exciting.
  • Roger Cheng 4/24/2012 9:23:15 PM
    Cook: Continue to be happy with the pricing change on iPhone 3GS and iPhone 4, which helped to contribute to total sales.
  • Josh Lowensohn 4/24/2012 9:24:02 PM
    Q (follow-up): How do you think about the markets for tablet and PC devices going forward? You've been fairly clear with saying you think tablets and PCs will eclipse PCs in volume at some point. There seems to be a lot of work on PC-based platforms to combine the PC and tablet experience going forward, in part because Windows 8 is a touch-based OS at first.
  • Josh Lowensohn 4/24/2012 9:24:30 PM
    This is all a very roundabout way of saying "where's my MacBook Air/iPad combo Tim!?"
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