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Apple Earnings Report Q3 - 2012 on July 24th, 2012

[10:00 PM] Bryan: The call is over! Thanks for tuning in, and check out The Mac Observer for more detailed coverage of today's announcements.
[10:00 PM] Bryan: I predict that Apple will have a "product transition" this fall. You're welcome.
[10:00 PM] Bryan: He said he's glad that people want Apple's products so much that they want to speculate, and that he isn't going to waste energy trying to get people to stop speculating. Fair enough, Tim!
[9:59 PM] Bryan: Tim said that Apple is focused on secrecy, but that in a free country, people can speculate all they want.
[9:59 PM] Bryan: Brian also asked about the "product transition" this fall, but Tim said that Apple will continue to keep its roadmap secret.
[9:58 PM] Bryan: Tim also said that Apple has done some of what Mr. Marshall is saying with iPad 2, iPhone 3GS and iPhone 4, etc. The suggestion is Apple will continue to do that, but that the focus is on making the best product possible.
[9:57 PM] Bryan: Brian Marshall asked whether Apple would use older products to further address demand for less expensive price points. Tim repeated the line about focusing on making the best product possible.
[9:55 PM] Bryan: Shaw asked about iPad inventory. New iPad is in 4-6 range, but that China's iPad rollout is still in the early stages.
[9:55 PM] Bryan: Tim declined to talk about the "product transition" in the fall.
[9:54 PM] Bryan: Shaw Wu of Sterne Agee is on tap asking about components. Tim said that Apple is working hard to bring the Retina Display into supply-demand balance.
[9:53 PM] Bryan: Tim said that Apple has greater opportunity in the near-term in other countries. Tim said that Apple is seeing growth in India, but noted that the multi-layer distribution system in India make costs higher in that country.
[9:52 PM] Bryan: Analyst asking about Apple's lack of success in India. Apple doesn't have a big presence in that country.
[9:52 PM] Bryan: "The adoption rate of iPad in education is something I've never seen before," Tim said.
[9:50 PM] Bryan: Tim Cook said that he won't go into specifics, and made the case that Passbook will play a greater role going forward.
[9:50 PM] Bryan: Same analyst asking about Passbook, asking whether it will be a bigger deal in the future.
[9:49 PM] Bryan: iPad ASPs were down due to popularity of iPad 2 and a greater mix of lower-priced models.
[9:49 PM] Bryan: New analyst asking about average selling price (ASP). Peter said that iPhone ASPs were down slightly, due in part to economic conditions.
[9:48 PM] Bryan: That seems like code to me for Apple working on a television set. He also said that Apple isn't a company to keep a hobby for the sake of having a hobby. That's code for "the Apple TV means something to us."
[9:47 PM] Bryan: Tim said that they sold 1.3 million Apple TV settop boxes in the June quarter, up 170%. He said that Apple is continuing to "pull the strings to see where they go" on this device.
[9:46 PM] Bryan: He said that some markets have been "shocking" in terms of their growth rate.
[9:46 PM] Bryan: Gene Munster is asking about iPad growth. Tim said that many markets are showing triple digit growth. He said there is growth around the planet.
[9:44 PM] Bryan: He said that iPad had a record quarter, and that the device has outperformed both the iPod and iPhone.
[9:44 PM] Bryan: To a new analyst (I missed the name during my Toni Soccanaghi rant), Tim said that there have been hundreds of tablets introduced in the last couple of years, but that none have gained any real traction.
[9:41 PM] Bryan: Tim said that Apple will stick to its knitting and focus on making the best product it can.
[9:41 PM] Bryan: Why he gets airtime during Apple's conference calls is beyond me.
[9:40 PM] Bryan: Toni is always wanting Apple to be not Apple. For years he has consistently said that Apple has to do what every other company does. Apple sticks to its strategy, does well, and Toni keeps wringing his hand wanting Apple to change.
[9:39 PM] Bryan: Toni is asking about smartphone sales in China. Toni said that 70% of Chinese smartphone sales are $200-$300 per device, and he wants to know what Apple is going to do about that since Apple's devices are much more expensive (pre-subsidy).
[9:37 PM] Bryan: Toni Soccanaghi is asking about guidance. Peter said that Apple beat its own guidance, and that the economy sucks. He seems to be saying, dude, we did pretty darned good considering the state of the global economy.
[9:35 PM] Bryan: He also said that iPhone users bring higher revenues to carriers and come with a lower churn rate. He also said that iPhone is the most efficient smartphone on the market when it comes to use of data.
[9:34 PM] Bryan: He said Apple's goal is committed to making the best phone in the world, and that carriers want to carry what their customers want.
[9:33 PM] Bryan: Shannon asked more about the "product transition," which has clearly become code for the iPhone 5. Tim laughed and said he was going to be careful when talking about it.
[9:33 PM] Bryan: "I would attribute a large amount as to what happened to the timing of our [new MacBook Pro and Air] announcement," Tim said.
[9:32 PM] Bryan: Tim said that sales prior to the refresh were lower year-over-year, but exploded after the refresh. His point is that Mac demand remains strong.
[9:31 PM] Bryan: Tim said that the timing of Apple's mobile platform refresh, which took place late in the June quarter, is responsible for any perception of slowing Mac growth.
[9:30 PM] Bryan: Shannon Cross is asking about Mac sales. She's asking about the 2% growth, which is good, but represents slowing Mac growth for Apple in the PC market.
[9:30 PM] Bryan: Tim Cook danced around the specifics, but said that he believes there is incredible anticipation for "future products," also code for iPhone 5.
[9:29 PM] Bryan: Ben Reitzes asked about the "fall transition" for Apple, code for iPhone 5. Peter said he's not going to talk about it.
[9:28 PM] Bryan: Tim said that sales in some Euro countries undergoing financial crisis were weaker. Duh.
[9:26 PM] Bryan: Tim Cook said that Apple saw a difference in sell-in to sell-through for iPhone in the retail market. He said that difference was 3 million units and wanted to make sure the analysts understood that.
[9:25 PM] Bryan: Peter expects strengthening dollar to have an adverse effect on Apple's global sales.
[9:23 PM] Bryan: Peter is whining about rumors of an iPhone 5 having a negative impact on iPhone sales.
[9:23 PM] Bryan: Apple is expecting a sequential increase for Mac sales in the September quarter.
[9:22 PM] Bryan: Peter said that Apple is expecting year over year increases in iPhone and iPad sales. That suggests an expectation of a sequential decline in those devices.
[9:21 PM] Bryan: Bill SHope of Goldman is asking about guidance.
[9:20 PM] Bryan: CHina sales were up 100% year-over-year.
[9:20 PM] Bryan: Tim said that sales to end users did fine, but that Apple had lower sales into the China relating to earlier product rollouts.
[9:19 PM] Bryan: Tim Cook said that China represents 2/3 of Asia-Pacific region. Greater China iphone sales declined sequentially, including iPhone sales declines.
[9:18 PM] Bryan: Peter cited warranty costs, back-to-school promotions, etc.
[9:17 PM] Bryan: Katy Huberty is asking about gross margins. Peter guided for 38.5% gross margins, a huge decrease.
[9:16 PM] Bryan: Best quarter ever for education, record June quarter. The reality, though, is that it's a miss from Wall Street consensus. Moving on to analysts.
[9:15 PM] Bryan: Peter is emphasizing dividend plan and stock buyback plan. $10 billion in stock buback and $2.65 dividend. This was all announced earlier in 2012.
[9:15 PM] Bryan: $81 billion of that cash is currently offshore.
[9:14 PM] Bryan: $117.2 billion in cash on hand. Wow. That's $7 billion more this quarter.
[9:13 PM] Bryan: Gross margins were 42.8%. That's up from Apple's guidance, but below consensus.
[9:13 PM] Bryan: Apple had $4.1 billion in Apple Store sales. Macs and iPads both did well. Peter didn't mention iPhone sales in Apple Stores. Average sale per store was $11.1 million, up from $10.8 billion.
[9:12 PM] Bryan: Peter is touting iOS 6 and iCloud.
[9:11 PM] Bryan: Apple has paid out more than $5.5 billion to App Store developers.
[9:11 PM] Bryan: 410 million cumulative iOS devices sold to date.
[9:10 PM] Bryan: iPads in Fortune 500 have tripled over the last year.
[9:10 PM] Bryan: iPad 2 sales in K-12 market were particularly high. Mac sales to education were highest ever, but Apple sold twice as many iPads to schools as Macs. That's amazing!
[9:09 PM] Bryan: iPad units were up 84% year-over-year. iPad for sales in 97 countries. Ended quarter with 3.2 million iPads in the retail channel, within 4-6 weeks of inventory target.
[9:07 PM] Bryan: Peter said that iPhones in Fortune 500 have doubled.
[9:07 PM] Bryan: $1.8 billion in iTunes revenue for the quarter.
[9:06 PM] Bryan: Peter said that iTunes U has been gaining momentum, too.
[9:05 PM] Bryan: iPod sales of 6.8 million were ahead of Apple's expectations. Half were iPod touch. iPod remains top device in most markets around the world.
[9:04 PM] Bryan: Did say that a 22 school district in Colorado will be getting iPads for all students. Interesting.
[9:04 PM] Bryan: Peter said that Apple is seeing momentum for iPad in education. Will offer detail later, he said.
[9:03 PM] Bryan: 4 million Macs are a new June quarter record. That's 2% up from last year, while IDC says industry as a whole declined 1.1%.
[9:02 PM] Bryan: iPad sales of 17 million units are a quarterly record.
[9:02 PM] Bryan: Getting some introductory comments.
[6:00 PM] Adam: Please join us July 24th at 5:00 PM (EDT) for our live coverage of Apple's Q3 FY12 Earnings results call.
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