Apple Q3 2009 Conference Call - 5.2 Million iPhones Sold

Apple announced their Q3, 2009 financial results today. - Press release is live: The Company posted revenue of $8.34 billion, with 5.2 Million iPhone sales in the quarter. (That makes an install base of 45 million plus iPhone OS devices, including iPod touch). Boom. “We’re making our most innovative products ever and our [...]

Apple announced their Q3, 2009 financial results today. - Press release is live: The Company posted revenue of $8.34 billion, with 5.2 Million iPhone sales in the quarter. (That makes an install base of 45 million plus iPhone OS devices, including iPod touch). Boom.

“We’re making our most innovative products ever and our customers are responding,” said Steve Jobs, Apple’s CEO. “We’re thrilled to have sold over 5.2 million iPhones during the quarter and users have downloaded more than 1.5 billion applications from our App Store in its first year.”

Apple also hosted an accompanying conference call, highlights after the break!

(Updates posted in reverse chronological order from latest or oldest)

• And we’re done!
• App Store pricing. Race to the bottom with $0.99 apps? Can Apple help sort out quality vs. quantity? Tim Cook: has ideas on categorizing Apps differently. Today does it based on type. As App Store grows, makes sense to have lower prices but that’s up to developers.
• iPhone sales, anything on new activations vs. upgrades? Tim Cook: Can’t share, confidential to carriers.
• iPhone in China? Tim Cook: Nothing to add today but continues to be priority project. Hopes to be there within a year.
• Supply constraints to effect international rollout? When will it balance? Tim Cook: Won’t balance in short term but won’t give prediction. Too hard to judge demand without supply. Vast majority will be selling 3GS by end of quarter, may move date by a week or more.
• iPod touch user base, how many upgraded? Tim Cook: a good number, won’t be specific. Priced aggressively. Want to get platform out there, good for ecosystem, developers. Try to get people to upgrade.
• Competitors tinkering with pre-paid model. Apple interested? Tim Cook: Apple doing that as well in markets that are predominantly pre-pay. Apple has lots to learn. Still a beginner. Can make improvements. Model works well in post-paid, but pre-paid could be interesting. Have multiple things going on. Hope to improve going forward.
• Asking about iPhone activations. US represents 40% of activations. Shouldn’t international side pick up, grow faster? Tim Cook: don’t release sales by geography. Smartphones in general sell better in post-pay environment. Not unique to Apple, reality of market.
• Follow up on netbook. Think an emerging market for a truly mobile device, larger screen, do more than with iPhone? Tim Cook: Never discount anything, won’t answer about new products. Customers want full featured notebooks. Apple delivers those, delivers value. Customers very happy. Current netbooks are very slow, software is old, don’t have robust computing experience, lack horsepower, small screens, cramped keyboards. People not happy. Apple will only play where they can deliver products that are innovative, proud of.
• Will Apple invest in NOC to take pressure off carrier? Cook: No plans to do so. When they entered business, they came to conclusion they could deliver world class handset, deliver something revolutionary. Other people have better skills at networks. Apple working with them as partners.
• AP asks if growth of Apps constrained by network capacity of carrier partners? Tim Cook: better question for them. Without singling out [AT&T] Cook sees them investing in making better networks, happy with rising ARPU, lower churn. Changes customer acquisition. Thinks they will continue to make investments to deliver faster networks.
• Has outgrown market 18/19 quarters. Cook thinks that means they have right approach.
• Asking about netbooks. Tim Cook: Apple’s goal is not to build most computers but to build the best. Will play at whatever price point they can build the best. Don’t see a way to build a great product at $399/$499. Thinks customers, many customers, become disenchanted after they buy them. Continue to focus on building best and giving tremendous value.
• Additional distribution and pricing model needed to sustain growth? Tim Cook: Just took major change with intro of $99 product. Reason to do that was view of elasticity. Working hard to continue expanding distribution in countries they’re in, (where it makes sense) and adding new countries. Still large markets left uncovered. [China?]
• RBC Capital asking about competitive App Stores and software. How to out innovate in user experience and leadership? Tim Cook: Won’t talk about future plans. Summarize last 30 days: shipped iPhone 3.0, App Store now available in 77 countries. Install base more than 45 million (iPhone + iPod touch). Quotes App Store stats. 65,000 apps compares RIM/Nokia, Android. Substantial lead in Apps and innovation. Years ahead of other people.
• Asking why iPod channel was reduced. Tim Cook: to support new Shuffle and easter holiday, they increased. When that was done, they decreased, and also demand was lower and iPhone cannibalized. Shuffle, nano, and classic demand also lowering (”classic MP3 player market”). Still in target range, however.
• Apple benefitting from higher iPhone revenue. [No doubt!]
• Asking if $99 iPhone 3G actually served as traffic driver for iPhone 3GS. Was that it’s role, or is it really part of iPhone story. Tim Cook: Focused on total iPhone story. Too early to tell ultimate mix due to only shipping in 18/80 countries and supply constraints. Also upgrades happen early, upgraders likely to pick newer version.
• Talking about $999 MacBook vs. cheaper MacBook Pro pricing mix. Tim Cook: competitive info.
• Asking why Snow Leopard was priced so low. Tim Cook: Even better Leopard, redefines 90% of projects. Something about not even Windows building in (Exchange support?). Priced aggressively so all users can upgrade. Hoping they do. Expect to ship later this quarter.
• Talking about MacBook pricing elasticity. When they can do it at lower prices, they will but won’t put Apple brand on products that don’t innovate.
• Asking about 5.2 million iPhone sales in Q3 and supplies still constrained. How’s inventory. Tim Cook: Flat sequentially. What that means is selling more units at the end, don’t have a channel loaded. Haven’t seen anything like it. About 1.83 million inventory, including in transit, invoice, demo — counted conservatively.
• Talking about reduced margins due to back to school promotions, lower MacBook prices, etc.
• Questions on guidance and margins…
• Follow up question on progress in enterprise accounts? Tim Cook: Growing interest with release of iPhone 3GS and iPhone 3.0 due in part to new hardware encryption and security policies. Doing best in corporate and government who allow individual purchases. 20% of Fortune 100 customers bought 10,000 iPhone, some have bought 25,000. In over 300 higher education institutions.
• David Baily asks how $99 iPhone is doing. Change in mix since launch? Tim Cook: Acceleration of total unit sales, can’t tell exact mix since it’s competitive data. iPhone 3GS supply is still constrained, so demand very robust.
• Nothing to announce about U-Verse, 3G in laptops. Happy with AT&T relationship.
• Tim Cook answering Gene Munster on how carrier relationships will evolve: most of the carriers they’re doing business with are thrilled with lower churn and higher ARPU. Customers demanding iPhone. Looking to expand.
• Closing canned remarks. Can has Q&A soon?
• $500M prepayment to Toshiba for NAND flash memory
• 31.1 BILLION in cash on hand(!)
• More financial stuff…
• 1.5 billion in revenue for Apple Stores.
• iTunes experience getting better. 8 billion songs purchased.
• Didn’t recognize iPhone revenue until iPhone 3.0 became available on June 17.
• 1.69 billion from iPhone, accessories, carriers, etc.
• App Store stats: 65,000 apps. 3.0 will create even more innovative apps.
• Continuing to roll out 3GS to 80 countries this summer.
• iPhone 5.2 million sold in June quarter! 1 Million iPhone 3GS in 3 day launch. Cannot make enough to meet demand. Working to address this.
• 70% of US market. iPod top selling MP3 player. Gaining share in almost every country tracked.
• iPod touch grew 30% year over year.
• 50% of iPod buyers are still new buyers, even in established markets
• Traditional MP3 players declined, as internally forecast. Reason why they developed iPod touch and iPhone. They’re cannibalizing themselves. Business will still last for years.
• 10.2 million iPods. Down from last quarter. Reduced channel inventory and sell-through declines.
• 13% increase in laptop sales. Customers favorable on new portables.
• 2.6 million Macs. Sales increased 100K units over prior year.
• Lots of financial info we shan’t bore you with. Read press link below…
• Record June revenue. Highest non-Holiday revenue in history.
• Call’s about to start. Will update as news is announced.

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Apple Q3 2009 Conference Call - 5.2 Million iPhones Sold

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