Apple bulldozes Street: $1.26 EPS; Mac sales reach all-time high of 2.6m, 6.9m iPhones

Mac Daily News ^ | 10/21/2008

[Swordmaker]

Live notes from Apple’s Q408 Conference Call Tuesday, October 21, 2008 - 06:01 PM EDT

• 5pm EDT: Conference Call has begun
• CFO Peter Oppenheimer: Record breaking results on a number of fronts
•  Apple posted revenue of $7.9 billion and net quarterly profit of $1.14 billion, or $1.26 per diluted share
•  These results compare to revenue of $6.22 billion and net quarterly profit of $904 million, or $1.01 per diluted share, in the year-ago quarter
•  Gross margin was 34.7 percent, up from 33.6 percent in the year-ago quarter
•  Apple shipped a record 2,611,000 Macs during the quarter, representing 21 percent unit growth and 17 percent revenue growth over the year-ago quarter
•  Apple sold 11,052,000 iPods during the quarter - the most of any non-holiday quarter - representing eight percent unit growth and three percent revenue growth over the year-ago quarter
• 13 million total iPhones sold as of September 27, 2008: Quarterly iPhone units sold were 6,892,000 - more than all other quarters since iPhone's release combined: 6.9 million units were sold, exceeding the 6.1 million first-generation iPhone units sold in the prior five quarters combined
•  "We are providing a wide range for our guidance, targeting revenue of $9.0 to $10.0 billion and earnings per diluted share between $1.06 and $1.35.”
•  Apple has already surpassed 10 million iPhones sold in calendar 2008 goal with a full (holiday) quarter remaining
• 30,000 iPhone distribution points worldwide, 3,100 in U.S.
• Apple very enthusiastic about MacBook, MacBook Pro models released last week
•  3-4 weeks of Mac channel inventory at quarter end (9/27/08).
•  Apple share of U.S. market over 70% in September (NPD). Apple continues to gain share abroad.
• iTunes Store: Over 65 million customer accounts, 8.5 million song library.
• Apple Retail Stores: 31 new stores; 247 stores total. Over 50% of Macs sold in stores were to customers new to Mac.
•  Higher than anticipated mix of foreign (non-U.S.) earnings
•  Apple is a debt-free company with $25 billion in cash on hand
•  Apple sold more phones in the quarter than RIM (bloodbath).
•  Oppenheimer: "Apple headed in holiday season with best product mix ever."
•  Special Guest: Apple CEO Steve Jobs: Remarkable things happening at Apple.
•  Jobs: Non-GAAP financial result eliminate the impact of subscription accounting (spread impact of iPhone's contribution to income over 2 years)
•  Now that iPhone business has grown to 39% of Apple's entire business. That is why Non-GAAP financial results are offered.
•  Jobs" "Apple beat RIM." 6.9m iPhones vs. 6.1m RIM phones. RIM is a good company that makes good products. Beating them is remarkable.
• Jobs also reported that, measured by revenue, Apple has become the world's 3rd largest mobile phone supplier:

  1. Nokia, $12.7b
  2. Samsung ,$5.9b
  3. Apple, $4.6b
  4. Sony/Ericsson , $4.2b
  5. LG, $3.4b
  6. Moto, $3.2b
  7. RIM, $2.1b

• 200 millionth app will be download from App Store tomorrow (5,500 apps on store in 62 countries around the world)
• Level of quality of new MacBooks, MacBook Pros: unique features, advanced products, greenest products APple has ever offered
•  Economy. Jobs, "We are not economists." "We have the best customers in the world." "They are more likely to delay purchases than switch."
• Jobs: "I feel very good about our product lineup as we head into the holiday season and beyond."
•  Apple employees make some of the best products int he world: Macs, iPods, iPhones... None of our competitors can deliver products in this class.
• Jobs: We have $25 billion in the bank, the best customers, the best products, and the best employees in the world.
• Jobs: We may get buffeted around in the waves a little bit, but will emerge in good shape when the water's calm.
• October and April are Apple's slowest in the year: Foggy months for us to predict.
• Jobs: This economic downturn may present wonderful opportunities to companies with cash.
• Oppenheimer: Aluminum unibody enclosures for MacBook family will initially have higher costs; volume will bring down the cost to Apple over time
•  Jobs on Mac pricing: The downturn is not creatign a market of cheaper computers. There are parts of that market that we choose not to play in. We are actually price competitive in the parts of the market in which we choose to participate. I think there are a tremendous amount of customers who would like and can afford to buy Apple products. We are not tremendously worried.
• Jobs: Netbooks are a nascent category. iPhone is a pretty good solution for that category "and it fits in your pocket." We have some pretty good ideas if that category takes off.
•  Oppenheimer: 3-4 weeks Mac channel inventory, 4-6 weeks iPod, less than 6 weeks for 44 iPhone countries; about 2 million iPhones in total channel inventory. Oppenheimer: "We feel this amount of inventory is about right."
•  U.S. K-12 education sales down about 7% due to budget constraints.
•  Apple saw slowing of notebooks ahead of new MacBook family; saw "considerable rebound with release of new MacBook family.
• Jobs: "Not likely" that I'll be special guest regularly on these conference calls.
• Jobs on iPhone wannabes: "We are way out ahead of everybody and, with the most talented people in the world, we'll stay that way. We are committed to making iPhone the best value for customers."
•  Apple expanded iPhone sales from 6 to 51 countries.
•  Jobs: "We're just happy to beat them [RIM] on a number to number basis."
•  Oppenheimer: We will expand into over 70 total countries by the end of the year. "We are confident that year-over-year our sales will be up significantly."
•  Oppenheimer: "We are delivering state-of-the-art products at prices points that our competitors cannot match."
•  Jobs asked about acquiring companies: "I think there are going to be some significant opportunities."
•  Jobs: "We want to deliver an increasing level of value to our customers. We choose not to serve some customers. We don't know how to make a $500 computer that's not a piece of junk and our DNA will not allow us to ship products like that."
•  Peter Oppenheimer and Tim Cook virtually ignored due to Jobs' surprise presence on call.
•  Jobs: "Apple TV is still a hobby with us. I continue to believe it will be a hobby in 2009."
•  Cook on supply: Still filling channel with iPods; iPhone at right level of channel inventory; Macs show significant backlog of new products: Apple confident that Apple can produce "a lot," but if it's enough he does not know.
•  Jobs: "Babe Ruth had only one home run. He just kept hitting it over and over again." As software starts to become the differentiating technology of the [smartphone] product category. Hundreds of different hardware configurations are not going to be attractive to developers. MDN Note: Think Google Android, Windows Mobile, etc.
• End of conference call.

[hinckley buzzard]

Glad I bought some AAPL calls this am. See the after hours trading?

[Swordmaker]

Apple blows through expectations on last quarter's expectations.

Some quarterly state:

• 2.612 million Macs,
• 11 million iPods,
• 6.9 million iPhones during the quarter.
• $7.9 Billion Revenues for the quarter,
• $1.14 billion profit
• Gross margin up to 34.7% from 33.6% a year ago.

Apple topped over 10,000,000 iPhones in 2008 with 1 complete quarter yet to go.

Apple WOW! Ping!

If you want on or off the Mac Ping List, Freepmail me.

[Swordmaker]

Your question has now been answered... yes, Apple WILL indeed sell more than 10,000,000 iPhones in 2008 and in fact will sell far more than 1% of the market.

[BigFinn]

Ditto

[Spktyr]

RIM has become the next victim being crushed beneath the treads of the Apple iPod/iPhone Juggernaut.

Which is good, because their products are in fact crap. :P

Nokia and Samsung are now in the unenviable position of needing to innovate or die in the smartphone space.

And Ballmer has the answer to his question - Who’s going to buy a $500 smartphone? Answer: Apparently a lot of people - just not if it runs Palm, WindowsMobile, or RIM.

[101st]

Which is good, because their products are in fact crap.

After using Macs and Apple products for almost 24 years, I didn't know that. My company offers cross platform software to two distinct markets. One is 79% Mac and the other is almost all Windows. Guess which platform costs me more money to support. If you said Windows, you are right.

We have remote software where we can see our clients machines. Windows is a nightmare. I see the difference every day.

[Spktyr]

The products that are crap are RIMs, not Apple’s. Thought I’d made that clear. :P

[dennisw]

AAPL way down from 24 days ago. 30% off. Maybe you’ll get nice dividends

[Tribune7]

And MSFT is down only about 18 percent since Sept. 26. Probably just a coincidence.

Of course MSFT has lost about a third of its value since the first of the year.

[Swordmaker]

AAPL way down from 24 days ago. 30% off. Maybe you’ll get nice dividends

And so are many stocks.

If you really want it to look bad, it's down 50% from six months ago.

Look at is a bargain. Some analysts have not backed off of their target prices on AAPL of $250 or there abouts.

[Texas_shutterbug]

This quarter included the lucrative months of send your kid off to college with a new computer. :) And Apple’s part of the pie is impressive.

[Spktyr]

Dell is down over 50% from its 30 day high. Your point being....

[vox_freedom]

Thanks for the !

[dennisw]

I don’t buy Dell but you buy Apple. I have never bought a Dell but I have bought HP products.

[dennisw]

Hey Microsoft is your enemy. How much did it go down compared to Apple?

[Spktyr]

HP is also down almost 50% in the last month.

[Spktyr]

AAPL close today: 96.87
MSFT close today: 21.53

Also, YTD, Apple’s stock has been pretty stable. Microsoft’s been in a dive.

[Spktyr]

MSFT, 1YR:

AAPL, YTD:

One shows a downward spiral, the other shows a generally stable price.

[Spktyr]

Gah, stupid FR non parser.

MSFT Chart: http://finance.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&chvs=maximized&chdeh=0&chdet=1224726124663&chddm=1173&q=NASDAQ:MSFT&ntsp=0
AAPL Chart: http://finance.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&chvs=maximized&chdeh=0&chdet=1224725999371&chddm=98923&q=NASDAQ:AAPL&ntsp=0