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Apple Earnings Report Q4 - 2010 on October 18th, 2010

[10:06 PM] Robert: I will be in the Apple Finance Board this afternoon and evening as TMO's coverage of Apple's 4th fiscal quarter results continues.
[10:04 PM] Robert: Bryan, thank you for allowing me to contribute to TMO's coverage of the call.
[10:03 PM] Robert: The conference call is over. it will be available online for rebroadcast starting at 5pm PDT.
[10:03 PM] Bryan: I'd also like to thank Robert (a.k.a. DawnTreader in the Apple Finance Boards) for his assistance today.
[10:03 PM] Bryan: And that's it. The conference call has been wrapped up. Thanks to everyone for tuning in! Stay tuned for further coverage in the form of news articles.
[10:02 PM] Robert: Tim Cook: ASPs on the iPhone remaining above $600 despite opening of markets to multiple carriers. In other words, Apple is able to keep ASPs high despite competition among carriers.
[10:02 PM] Bryan: Be that as it may, Steve said that Apple has economies of scale on its side, plus a number of innovations in design and manufacturing that its competitors can't match.
[10:01 PM] Bryan: Analyst asked why Apple thinks it has a pricing advantage on iPad vs. PC makers. Honestly, from his wording, I don't think he even vaguely understands Apple.
[10:01 PM] Bryan: Analyst is asking about markets where Apple has more than one carrier. Tim Cook said that ASPs have held steady, suggesting that such deals do not result in pricing pressure.
[10:00 PM] Robert: Commentary: Analysts apparently concerned about gross margin decline though Peter Oppenheimer cautioned about lower margins on the last conference call. Multiple questions on gross margins as to the cause of lower margins and whether or not management is concerned moving forward.
[10:00 PM] Bryan: iPhone 4 is in 84 of its target 89 countries.
[9:59 PM] Bryan: Analyst asked if Apple was seeing pressure on subsidies for iPhone. In other words, are carriers demanding to pay less in subsidies. Tim Cook said that the only pressure they are seeing is on supply. More companies want more iPhones.
[9:57 PM] Bryan: Tim cook said that Apple will not be splitting its product lines into consumer products and enterprise products, simply allowing users to use what they make as they choose.
[9:56 PM] Bryan: Tim Cook is talking about increasing corporate sales resources for iPad, and how the company is seeing that when companies offer choice to employees, they are choosing Macs along with their iPads or iPhones.
[9:53 PM] Bryan: Toni Sacconaghi asked Steve about what it will do with its cash holdings, and why the company doesn't offer a dividend. Steve essentially responded with a "We're going to keep doing what we're doing."
[9:53 PM] Robert: AAPL Update: $299.80 in after hours trading, off $18.20 from the NYSE close of $318 on Monday.
[9:52 PM] Bryan: As Robert said earlier, Steve is being very passionate about his response in some of these questions. He talked at length about how trying to make cheap products tends to result in inferior experiences.
[9:50 PM] Robert: Quick note: The September quarter is the only quarter in the fiscal year to record both a unit sales decline in iPods (11% decline to 9.051 million units) and a decline in revenue for the line (6% decline to $1.477 billion).
[9:50 PM] Bryan: He said that the reason Apple isn't going to make a 7" tablet isn't because they don't want to hit a lower price point, but rather because they don't think you can make a good interface on a device with a 7" screen. "We're all about making the best products at aggressive prices."
[9:49 PM] Bryan: Steve is talking about relentless improvement in the iPod line that allowed Apple to maintain market share. His implication is that relentless improvement will benefit the company in smartphones and tablets, too.
[9:48 PM] Bryan: Steve: "Our goal is to make great, breakthrough products."
[9:47 PM] Bryan: Analyst is asking about Apple's approach to iPhone in terms of what the company aspires to. He noted that Apple has been content with small market share in Macs, but that the company has clearly wanted high market share in smartphones.
[9:45 PM] Bryan: Steve said he believes Apple's approach to smartphone will be the winning approach over time.
[9:45 PM] Robert: Quick note: The Mac's 27% growth rate in the quarter to 3.885 million units was almost 2.5 times IDC's estimated global industry growth rate of 11.1%.
[9:45 PM] Bryan: Steve said that Apple doesn't want to be like Nokia, even if it admires Nokia for selling so many handsets. Apple wants to make the best products in the world, not necessarily the biggest.
[9:44 PM] Bryan: Katy Huberty is asking for more information on the quarterly decline in gross margin. Peter Oppenheimer emphasized that Apple was very aggressive with pricing on both iPhone 4 and iPad.
[9:42 PM] Bryan: Apple charged off $100 million for its free bumper program for iPhone 4.
[9:41 PM] Bryan: Steve said that Apple has already sold 250,000 of the new Apple TV model so far.
[9:41 PM] Bryan: Analyst asking about Apple TV. Steve: "I'm happy to tell you what I know about Apple TV." I'd hazard he won't exactly tell us *everything* he knows. ;)
[9:39 PM] Robert: Quick note: The September quarter iPhone unit sales growth rate of 91% was roughly inline with the average unit sales growth rate for the first nine months of the fiscal year.
[9:38 PM] Bryan: Analyst asked if Steve sees smartphones as a zero-sum game. Steve says there will be plenty of room for more than one company to be successful for the short term, but that it will eventually become something closer to a zero sum game.
[9:38 PM] Bryan: "We're out to win this one," Steve said about tablets.
[9:37 PM] Bryan: Asking if Apple can sustain share in tablets. Steve said that he can't imagine what competitor's strategies will be. "We think we have a very good product here that's going to be hard to match, and we're far from done."
[9:36 PM] Bryan: Mike Abramsky, RBC Capital, noted, "You are the tablet market right now."
[9:36 PM] Robert: Tim Cook: iPhone demand is staggering. The company was not prepared for September quarter demand.
[9:35 PM] Bryan: Mr. Munster also asked for an update on Flash, and Steve pretended that he was asking about Flash memory. "We love Flash memory."
[9:34 PM] Bryan: Gene Munster asked if iPad could become the second largest revenue source, but Steve declined to predict.
[9:34 PM] Bryan: Steve said that he has been surprised by the way business has "snatched [the iPad] out of our hands." He increasingly sees it as Apple having a tiger by the tail.
[9:33 PM] Bryan: Steve was asked about iPad sales. He said that they will affect notebook sales, and he's saying that it's no longer a question of "if," but whether "when." He said that education is embracing the device, as is business.
[9:32 PM] Robert: Gene Munster: Analysts not doing well gauging sales trajectory of the Apple iPad.
[9:31 PM] Bryan: Mr. Gartner also asked about gross margins. Peter Oppenheimer said that some commodity components were cheaper than expected, and that the heavier mix of iPhone helped.
[9:31 PM] Robert: Tim Cook: iPad supply reached balance in September, allowing Apple to expand distribution.
[9:30 PM] Bryan: That will be enough to allow the company to further expand distribution points heading into the holidays.
[9:30 PM] Bryan: Richard Gertner is asking about supply constraints on iPad. Tim Cook is saying that Apple hit a balance on supply and demand in September.
[9:29 PM] Robert: According to SJ, Google has cautioned tablet makers not to use the current release of Android on tablets and wait for a special tablet version to be released next year.
[9:29 PM] Bryan: Perhaps more importantly, Steve is saying that his company's competitors can't come close to Apple's pricing (due to a variety of factors), and that this gives iPad yet another advantage.
[9:28 PM] Bryan: Steve also says that iPad has 35K apps, while the new tablets coming online have just about "zero."
[9:28 PM] Robert: Commentary: Steve is impassioned in his tone.
[9:27 PM] Bryan: Steve is further arguing that the 7" tablets are "tweeners," too small for a tablet and too big for a smartphone.
[9:26 PM] Bryan: Steve is arguing that 7" tablets are too small for making a great touch interface for a tablet.
[9:26 PM] Robert: Steve: iPad screen size matters.
[9:25 PM] Bryan: As Robert noted, AAPL is giving back a lot after hours. Currently, the stock is trading at US$301.78, down $16.22 (-5.10%).
[9:25 PM] Robert: Integrated vs. Fragmented, Apple's new nomenclature about the iPhone v. Android debate.
[9:24 PM] Bryan: Steve: "We believe that when it comes to customers wanting something that just works, that integrated will beat open every time."
[9:24 PM] Robert: Steve is addressing the "open" vs. "closed" argument thrown at the iPhone. He's called it a smokescreen.
[9:24 PM] Bryan: Steve is making the case that Android is very fractured, and offers too many disparate interfaces and features. iOS, on the other hand, is integrated, and Steve is saying that integrated is better for customers.
[9:22 PM] Robert: Steve is really slamming Android and the inconsistent user experience.
[9:21 PM] Bryan: Apple is activating more than 250,000 iPhones, with a maximum of 300,000 on one day. "Google loves to characterize Android as 'open' and iOS as 'closed." We find that funny, he said.
[9:20 PM] Robert: Shares down now after hours. Excellent quarter but the iPad number is a disappointment.
[9:20 PM] Bryan: Steve is hammering into RIM, saying they have a lot to overcome to beat iOS and Android.
[9:19 PM] Bryan: Steve is crowing about outselling Research in Motion's 12.1 billion BlackBerry sales during the quarter.
[9:19 PM] Bryan: He's here because it's the company's first $20 billion quarter.
[9:18 PM] Bryan: Whoa! Steve Jobs is on hand for the call!
[9:17 PM] Bryan: Apple generated 5x revenue compared to five years ago, and earnings were up 10x!
[9:16 PM] Bryan: Cash up $5.2 billion!
[9:15 PM] Bryan: Apple will open another 50 stores throughout fiscal 2011. The company will be "replacing" some existing stores, as well.
[9:14 PM] Bryan: A record 74 million customers through the doors of Apple Stores.
[9:13 PM] Bryan: Apple opened 24 more Apple Stores during the quarter, 16 of which were outside the U.S.
[9:13 PM] Bryan: "We were very happy with [iAd] results so far," but he didn't give us any actual numbers about which to be proud.
[9:11 PM] Bryan: Several large companies adding iPad support, too. Sales value of iPad was $2.7 billion, with ASP of $645.
[9:10 PM] Bryan: Lots of companies are adding support for iPhone for their employees. "we believe we could have sold even more iPhones if we had been able to supply them."
[9:08 PM] Bryan: 91% year over year growth for iPhone, compared to 64% growth for the sector (according to IDC). ASP of iPhone was $610 after subsidies.
[9:08 PM] Bryan: 91% year over year growth for iPhone, compared to 64% growth for the sector (according to IDC). ASP of iPhone was $610 after subsidies.
[9:07 PM] Bryan: iTunes store had record revenue of $1 billion.
[9:07 PM] Bryan: iPod share in the U.S. remains at 70%.
[9:06 PM] Bryan: Mac sales were almost double IDC's estiamtes for the sector as a whole. iMac helped drive sales, as well as MacBook Pro and MacBook.
[9:05 PM] Bryan: $4.54 EPS.
[9:05 PM] Bryan: Peter is talking about Apple's records in the quarter, which we listed in our announcement coverage.
[9:03 PM] Bryan: It's beginning. Peter Oppenheimer is up first.
[9:03 PM] Bryan: We are awaiting more participants, is what the voice is telling us.
[5:19 PM] Adam: Just getting ready for tonight's live coverage.
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