We're waiting on the line for Apple's Q4 2011 earnings call. This used to be Tim Cook's big gig, but we don't know if he'll be on this one now that he's CEO.
And we're off. Tim Cook is on the line.
"This is our first earnings call since the passing of Steve Jobs... His spirit will forever be the foundation of Apple and we look forward to creating the amazing work that he loved so much."
"I'd like to take this opportunity to express our gratitude for all of the condolences and appreciation we've received."
And with that, it's CFO Peter Oppenheimer to go over the results. He's basically reading the PR, as always.
760,000 more Macs sold than any previous quarter, setting a record. Increase "fueled by strong performance of MacBook Air," as well as strong performance of Mac Pro.
Also generated record desktop sales, thanks to iMac.
6m Lion downloads in the quarter.
Sold 6.6m iPods, down year over year but exceeded Apple's expectations. iPod touch was over half of units sold.
Going over iTunes and iBookstore — over 180m books sold to date.
21 percent year over year growth in iPhone, a new September record. Asia / Pacific sales doubled.
They expected sales to decline after WWDC "as new product speculation intensified." That's the first time Apple has ever said anything like that.
"Given the October launch of the iPhone 4S, we opted to defer new carrier additions until after launch."
Did you know that people like the iPhone? Peter's making sure we know.
Peter's also making sure that we know the enterprise loves the iPhone — talking about how Lowe's is rolling out the iPhone, as well as L'Oreal, Texas Instruments, SAP, and many others.
Peter also thinks everyone will love the iPhone 4S.
New record for iPad sales — 166 percent increase.
6.9b in iPad and iPad accessory revenue, another 160-odd percent increase.
Now we're talking about airlines using iPad instead of flight manuals. Apple loves this story — Tim Cook talked about the same thing at the iPhone 4S launch.
Customers also love iOS 5 and iCloud, says Peter.
Going over the retails stores — as usual, about half the Macs sold were to people who've never owned a Mac before. Noting that people were waiting for a new iPhone again.
Apple will be expanding or replacing high-volume stores, primarily in the US.
Apple has $84b in cash, after accounting for the Nokia settlement and the purchase of the Nortel patents.
Peter's pretty excited about Apple's 2011 — they generated $108b in revenue.
And now for the interesting part — the Q&A.
Q: Are you confident you can ramp up the iPhone 4S for the holidays?
A: (Cook) We're thrilled with the supply we have... I don't want to predict when supply and demand will balance because demand is extremely high, but I think we'll set another record.
Q: You didn't have any inventory draw down issues that affected shipments?
A: (Cook) Going through the numbers."We knew there was great expectation for a new iPhone in June or July because that was the pace we were on.... the reduction [in sales] in in the back half of the quarter as speculation hit a high. In our wildest dreams we couldn't have gotten off to a start like this with the 4S."
Q: Just curious why you can't do better than 40 percent gross margins in the fourth quarter?
A: (Oppenheimer) We think things will remain at 40 percent, some savings offset by lower price points and stronger US dollar.
Q: How are you doing in China?
A: (Cook) The China progress has been amazing. Two percent of revenue in '09, 12 percent this year, 16 percent this quarter. Fastest growing region by far. ... It is growing at a feverish pace. ... How far did they go? I've never seen a country with so many people rising into the middle class that aspire to buy products Apple makes.
A: (Cook) We're also placing emphasis on other areas that show great promise: Brazil, Russia, the Middle East. There are several of these markets that the iPhone has opened up.... I think the iPad will be doing the same.
Q: Can you talk about how Apple is amazing at managing suppliers and components?
A: (Cook) I think we have an outstanding team and a track record that is unparalleled in the industry. We try and use our balance sheet to do strategic deals for specific products. As we get larger, there are some areas that we've elected to diversify. Our approach though is to do business with as few people as we can so we can get deep with them and be innovative. We get great quality and reasonable prices.
Q: Can you talk about the Kindle Fire?
A: (Cook) We had an outstanding quarter selling 11m iPads, and we set a Mac record as well. We've seen several competitors try and compete with the iPad, and I think it's reasonable to say that none of them have gained any traction — in fact our share actually went up. When you really assess this thing and look at iOS 5, iCloud, the ecosystem, 140,000 native apps vs a number in the hundreds for the other guys, I feel very confident in our ability to compete and in our product pipeline.
Q: Can you talk about deferring new carriers and countries for the iPhone 4S?
A: (Oppenheimer) We wanted to launch new carriers with our latest products, so we waited. The biggest impact was the rumors that were very pervasive, particularly in the second half of the quarter, it was like every day.
Q: How big do you think the tablet market could be?
A: (Cook) We thought from the beginning that it would be a huge market, and it's even bigger than we thought. We think it'll be even bigger than the PC market — that's just what I think it can be. It's a huge opportunity for Apple across time.
Q: Can we talk about the iPhone 4 and 4S — how will pent up demand affect sales?
A: (Cook) I believe the pent-up demand was substantial, you can monitor the press. The feedback on the 4S has been fantastic.
Q: Any thoughts on how the iPad will do seasonally?
