tim_cook_redchair

Asa Mathat

Mobile


Apple executives praised the company’s record quarterly iPhone and iPad sales Monday.

Were it not for foreign exchange and other issues, revenue would have been $2.5 billion higher than the $57.6 billion that Apple took in during the October-to-December quarter, CFO Peter Oppenheimer said in a conference call with investors.

Investors, meanwhile, had been hoping for more than the 51 million iPhones sold last quarter as well as a greater revenue forecast for the current quarter. Apple said it expects this quarter’s revenue to be between $42 million and $44 million.

Here’s more in our live coverage of the conference call, which is just getting under way.

Ina Fried January 27, 20142:07 pm

There’s the usual discussion of business use of iPhones and iPads, Apple cites IDC figures that it has 59 percent of U.S. commercial smartphone market.

Ina Fried January 27, 20142:09 pm

The iPad, meanwhile, has more than three-quarters of the commercial tablet market, also per IDC. 

Ina Fried January 27, 20142:10 pm

Educational use of iPads now totals more than 7 million, including 750,000 Apple tablets in Texas alone, says CFO Oppenheimer.

Ina Fried January 27, 20142:12 pm

Lots of stats on how use of iPhones and iPads even higher than market share Apple has in phones and tablets.

Ina Fried January 27, 20142:13 pm

Strong Mac sales came amid a six percent contraction in the global computer market, Apple notes.

Ina Fried January 27, 20142:14 pm

Oppenheimer now waxing poetic on what the Mac has accomplished in its 30 year history.

Ina Fried January 27, 20142:14 pm

“Happy Birthday Mac,” he says. “Imagine what we can accomplish in the next 30 years.”

Ina Fried January 27, 20142:15 pm

Meanwhile, Apple shares now off more than 8 percent in after-hours trading. Shares were down more than 5 percent just after the earnings report was released.

Ina Fried January 27, 20142:17 pm

Oppenheimer now talking up App Store, pointing to studies that show that 63 percent of app revenue comes from its store vs. Google Play’s 37 percent. (Not sure if others weren’t included or are less than one percent of app sales.)

Ina Fried January 27, 20142:19 pm

Apple retail stores delivered a record $7 billion in revenue, with 420 stores now open (four of them newly opened); 166 stores are outside the U.S.

Ina Fried January 27, 20142:20 pm

Apple notes that it is using its iBeacon technology in its stores, which uses Bluetooth to deliver highly-targeted location-based messages. Oppenheimer says retailers and sports teams will use iBeacon in lots of exciting ways, but doesn’t offer any new details.

Ina Fried January 27, 20142:23 pm

Vague discussion that the company is investing in R&D in both categories where Apple has products today as well as some new categories. Excited about future and new products. (And that’s likely about as specific as Apple is going to get.)

Ina Fried January 27, 20142:26 pm

First question is about Apple’s cautious revenue outlook, which forecasts a greater quarter-on-quarter decline than Apple saw last year.

Inventory is part of the issue, Oppenheimer said. Basically, Apple was largely in supply and demand balance for the iPhone and iPad exiting the quarter vs. quite constrained on both products a year ago.

The inventory issues, along with a stronger U.S. dollar weakness against Yen and Australian dollar and lower iPod sales will all combine for a roughly $2 billion impact.

iPod sales were down 52 percent in December quarter from a year ago, and Oppenheimer says Apple expects a similar decline in the current quarter.

Ina Fried January 27, 20142:28 pm

Asked about impact from China Mobile, Oppenheimer says that the company is “thrilled” to be working with the world’s largest carrier. However, he said China’s 4G service is only available in 16 cities now, as compared to hundreds of cities that will have it by year’s end.

Ina Fried January 27, 20142:31 pm

Tim Cook said that launch week last week of iPhone with China Mobile gave the company its best week ever in mainland China sales.

“It’s been an incredible start,” he said. However, he also cautions on the limited number of cities offering 4G service.

Ina Fried January 27, 20142:34 pm

Cook hasn’t said much on the call, but has taken on last two questions including China as well as a new one on mobile payments and the use of Touch ID.

He dodges specifics on any new payment plans, but does note a lot of commerce goes through iOS and its demographics include a lot of spenders.

“It’s a big opportunity on the platform.”

Ina Fried January 27, 20142:38 pm

Analyst asks the usual question about what Apple might do to increase phone share by lowering prices.

“Our objective has always been to make the best, not the most,” Cook said, repeating an oft-used line. He noted that the company is growing in emerging markets such as Latin America, Central and Eastern Europe, the Middle East and Africa. He also pointed to the launch of the iPhone 5c as an example of efforts to ensure new products hit more prices.

Cook said Apple actually lost ground in the U.S.

“In North America we did not do as well. Our North American business contracted somewhat year over year.”

Cook said that the company forecast it would sell more iPhone 5c models and it took it time to adjust to the iPhone 5s demand, leaving some sales on the table.

Ina Fried January 27, 20142:40 pm

Cook also said that in North America, Apple also took a hit as some U.S. carriers extended the length of time between upgrades, eliminating the ability for customers to get a subsidized upgrade earlier than the end of their 24-month contract.

Ina Fried January 27, 20142:40 pm

Cook pressed to detail the size of the opportunity with China Mobile.

“I do see it as a watershed moment for Apple,” but says he won’t give a forecast.
Ina Fried January 27, 20142:48 pm

More adjectives on future products, no nouns.

Ina Fried January 27, 20142:51 pm

Analysts are still pressing Cook and Apple on willingness to change pricing. With iPhone 5c, the company didn’t break any new pricing ground, just substituted a new product for what would have been the iPhone 5’s place in the lineup. Cook is non-committal.

Commitment is to quality, not price, he says.

“Our line in the sand is making something that’s not fantastic,” Cook said.

Ina Fried January 27, 20142:52 pm

Pressed on why 5s demand greater than expected (and 5c therefore much less): “People are really intrigued with Touch ID,” Cook said. “It is a major feature that excited people.”

Ina Fried January 27, 20142:55 pm

On the business market, Cook notes that tons of businesses are using the iPad and iPhone. “It’s clear that the enterprise area has great potential,” Cook said. Ninety percent of tablet activations in corporations were iPads. “I think the road in enterprise is a longer one … but I think we’ve done a lot of the groundwork. … I would expect it would have more and more payback in the future.”

Ina Fried January 27, 20142:57 pm

As for new product possibilities, Cook says there is no shortage of categories ripe for disruption. “The challenge is always to focus on the very few that deserve all of our attention,” Cook said.

Ina Fried January 27, 20142:57 pm

And with that, Cook is done not answering questions about Apple’s product roadmap … and the call is over too.

Ina Fried January 27, 20143:51 pm

And with that, Cook is done not answering questions about Apple’s product roadmap … and the call is over too.




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