Buster Hein (1:04 pm PDT, Jul 22nd 2014)
Tim Cook and newly-apointed CFO Luca Maestri are getting ready for Apple’s Q3 2014 earnings call with investors. The call will reveal just how much cash the company raked in over the past three months and what they should expect later this year. We’ll be right here, liveblogging the whole thing.
Apple hasn’t released a new product this quarter, but investors on Wall Street are still bullish about the future of AAPL, sending the company’s stock price surging 26% since its last earnings report.
Whether Apple was able to beat expectations of $38.4 billion in revenue without an explosion of new sales will finally be known today at 2 p.m. Pacific, and we’ll be ready to dish out all the news and juicy tidbits Tim and the team tell investors.
So keep this page open for the full scoop on how ridiculously profitable Apple was last quarter, as well as what’s to come its “most exciting product pipeline in 25 years.”
And the call’s over! Until next quarter, ladies and gentleman. Thanks for tuning into the liveblog!
Apple already lets businesses deploy apps specifically within just their company, and that isn’t changing with the IBM partnership.
“We’re all for taking friction out of the system and not adding it,” said Cook.
Cook is big on how Apple wants to deepen its penetration level in enterprise by selling more iPhones and iPads. IBM will help them fulfill that goal.
Apple’s Beats acquisition was its biggest ever, and the partnership with IBM is a surprise, so investors want to know what other purchases Apple might be making.
“I think we have a lot of really great people, and we have the capability to acquire sizable companies and manage them,” said Cook. “I think you can only do so many partnerships well, but in the case of IBM, our companies are so complimentary. We both feel mobile and enterprise is an enormous opportunity, and we’re not competing with each other.”
We don’t let our money burn a hole in our pocket, and we don’t do things that aren’t strategic. With Beats, the company felt it bought a rare set of talent, and gained access to a hugely successful headphone company.
“It was a great marriage,” said Cook about Beats, “and I think the partnership with IBM is a great marriage as well. If more partnerships present themselves, I think we can manage that, but it’s not my goal to acquire a certain amount of companies.”
Is Apple’s new trade-in program responsible for stalled iPhone sales? Tim Cook doesn’t think so.
“Trade-ins are hugely beneficial for our ecosystem,” said Cook.
Cook added that “it’s hard to say how much this canabalizes sales,” but he believes “the canabalization factor is low because you attract people who are price sensitive.”
It sounds like trade-ins are part of Apple’s ‘halo effect’ on customers. Get someone into the world of Apple with a cheap iPhone trade-in, and they’re hooked for life.
After the iPhone took off in Japan, sales have been flat, possibly because of regulation and taxes. VAT increased from 5% to 8% but there are also additional planned VAT increases in Japan this year which could hurt iPhone sales.
Cook also says carriers are receiving some guidance from regulators to stop incentivizing people to transfer from another carrier. We haven’t been able to get detailed data on share, but Cook expects there shouldn’t be much of a share change long term.
Asking about the competitive landscape of tablets, Goldman Sachs asked Tim Cook what Apple’s planning to boost sales.
Apple has sold 225 million iPads in the last four years, which is a larger number than anyone predicted. Tim Cook says the category is still in its early days, and there’s significant innovation that can be brought to the iPad, but he’s very encouraged by studies that show more than 50% of the iPads we’re selling are to a first time tablet buyer.
Tim says the core thing that will unleash iPad’s potential for penetrating enterprise is the partnership with IBM, but also apps that are built with mobile-first in mind, rather than being a desktop port.
The US market is clearly weaker than BRIC countries. “I think we have to do more to get the business side moving at a faster trajectory,” said Cook, “and I think we’re in a position now to do that.”
Apple expects revenue to be $37-40 billion for the September quarter. Coming in on the upper side of that prediction will likely be very reliant on the success of the iPhone 6.
In Q4 of last year, Apple made $37.5 billion in revenue. It will need to surpass that to impress Wall Street.
Beats is also expected to be officially part of Apple by next quarter, which will factor into its next earnings report.
Mac sales grew 18% year-over-year, which Maestri is contributing to the success of the MacBook Air.
Macs have gained world market share 32 out of 33 last business quarters, which is incredibly impressive when you consider that overall PC sales have been plummeting.
iPad still dominates in education. 75% of the U.S. tablet market is Apple’s tablet. 13 million iPads have been sold to education customers globally and Apple’s not letting up yet with the release of iTunes U that allows teachers to create, edit, and manage courses online, while students have more options for discussion and collaboration.
Can I just say that Apple CFO Luca Maestri has a glorious accent? It’s like having Zorro read you bank statements.
iPhone is the smartphone of choice by over 26,000 scientists and researchers at NASA, according to Luca Maestri.
iTunes has been the fastest growing part of Apple’s business this year, which is kind of surprising. The Beats acquisition makes more sense in that context.
Cook is excited about Apple’s growth in BRIC countries (Brazil, Russia, India and China). Growth in China particularly is insane. Revenue growth last quarter was highest in China over every other country at 28%.
iPhone sales rose 48% in China last quarter, which is likely due to Apple finally partnering with China Mobile, the largest carrier in the world.
iPad sales were lower than expected because of inventory reduction and softer sales demand in some areas according to Cook, but that doesn’t mean people don’t like it. Tim is bullish about the future of the tablet category.
iPad Air has a 98% satisfaction rate while iPad mini with Retina has 100% satisfaction rate.
Apple’s partnership with IBM should provide more sales in enterprise, which should catalyze sales this year.
Tim Cook is finally on the phone, giving his regular “Oh boy did we do really well this last quarter” speech, he tosses out at the beginning of every earnings call. This quarter Tim is citing Swift, iOS 8, CarPlay, HealthKit, and Yosemite as Apple’s latest and greatest areas of innovation.
As if we needed any more proof that the iPod is on its last legs, sales dropped 36% compared to the same quarter last year, with a paltry 2.9 million sold in Q3 while 4.5 million were sold in Q3 2013.
iPad sales whiffed, but keep in mind this is Apple’s weakest quarter and a new iPad hasn’t been released since fall of 2013.
Regarding this quarter’s earnings, Tim Cook told WSJ, “We’re thrilled with the results, and we’re thrilled with where we are going. The momentum is really strong.”
Apple CFO Luca Maestri on Apple’s Q3 2014 results: “We generated $10.3 billion in cash flow from operations and returned over $8 billion in cash to shareholders through dividends and share repurchases during the June quarter. We have now taken action on over $74 billion of our $130 billion capital return program with six quarters remaining to its completion.”
iTunes/Software/Services performed slightly worse with 12% growth vs. 16% expected, but the biggest shocker is the iPad. Some thought it would rebound year-over-year, but instead it fell by 9%.
Apple just announced its earnings for the third fiscal quarter, and it fell just shy of Wall Street’s predictions but well within its own guidance.
The company reported revenue of $37.4 billion, which is a decent number for its slowest quarter of the year. 35 million iPhones, 13.2 million iPads, and 4.4 million Macs were sold for a record $7.7 billion in profit for the quarter.
Everybody ready for Apple’s riveting Q3 2014 earnings announcement? The investor call starts at 2pm PT, but we should get the press release with all the numbers here pretty soon.
For a recap on what to expect, check out Alex’s post from yesterday.