Tuesday, October 27, 2015

Live Blog Updating Apple's Earnings -- Should Start Getting Data At 3:30 P.M. Central Time -- October 27, 2015

Drudge Headlines The Day After

Cook on fire: biggest annual profit in history.
Apple cash swells to $206 billion. 

Twitter stock plunge .. where are the users?

Tim Cook on the Apple Watch:
Sales of the Watch did exceed our expectations and they did so despite supply still trailing demand at the end of the quarter. And to give you a little additional insight, through the end of the quarter, in fact the Apple Watch sell-through was higher than the comparable launch periods of the original iPhone or the original iPad.
And we were able to do that with having only 680 points of sale. And as you probably know, as I had reviewed earlier, the online sales were so great at the beginning, we were not able to feed inventory to our stores until mid-June. And so those points of sale pretty much, the overwhelming majority of the low numbers of sales were not there until the last two weeks of the quarter.
Thinking differently:
Q: I think in your prepared remarks you talked a little bit about your market share of iPad in the US above $200 being 78%. And I'm wondering if you think about the iPhone and your market share in the premium category, how do you think about it? So I've seen market data that says 60% market share for phones above $300 or you have actually 90% market share for phones above $600. And I'm wondering if you could maybe talk about how you think about your market share, where you play given that your ASP is comfortably above $600? What do you think your market share is above $500 or $600 in smartphones? And how do we think about that, that market share going forward?

Tim Cook: We look at it a bit differently than you do. We look at it as our job is to grow our products regardless of the price, which means that we need to convince in some cases people to move from one price band to the other.
And that we think if we do a great job with the product that people will be willing to spend more because they get so much more out of it. And I think you can look at the results on the iPhone and see that in action. I mean, we grew 87% in China. We grew 90%-plus in India. Emerging markets are growing 65%.
These numbers are unbelievable and they're done in an environment where it's not the best of conditions. So that's how we look at. We don't do the MBA analysis of there's only X people buying in a price band and therefore we can only get X minus Y percent. That's not the way we've ever looked at it. If we did, we wouldn't be shipping any products.
Android Users Switching To Apple

From Macrumors:
During today's fourth quarter earnings call, Apple CEO Tim Cook said the company saw its highest rate of Android "switchers" Apple had ever measured in 4Q 2015.

According to Cook, 30 percent of customers who purchased an iPhone were upgrading from an Android-based smartphone, the largest number of switchers it had seen in the three years since it started measuring switching rates. "It's a huge number and we're very proud of it," said Cook.

Based on the growing number of Android users switching to an iPhone along with the number of people who have not yet upgraded, the company believes iPhone sales during the first quarter of fiscal 2016 will be strong.

Only one third of Apple customers have upgraded to an iPhone 6, 6s, 6 Plus, or 6s Plus, leaving two thirds of the company's customer base using older iPhones and ripe for a new iPhone.

For the past several quarters, Tim Cook has commented on the growing rate of Android switchers, noting earlier this year that the debut of the larger-screened iPhone 6 and iPhone 6 Plus, which better compete with larger-screened Android phones, had spurred high numbers of Android switchers. 
Almost 400 iPhones/Minute Sold In Most Recent Quarter

92 days in the quarter = 132,480 minutes in the quarter.

48 million iPhones / 132,480 minutes = 362 iPhones sold / minute

Live Blog Immediately As Numbers Were Being Released
Started at 5:30 P.M. Eastern Time
Live blog also at Wall Street Journal. MarketWatch live blog here.

From MarcketWatch:
Apple Inc. reported stronger-than-expected fourth-quarter earnings and sales after the market close on Tuesday.
While this is typically Apple’s second-weakest fiscal quarter of the year, coming just ahead of the busy holiday shopping season, analysts were anticipating strong iPhone sales, fueled by the release of the iPhone 6s and iPhone 6s Plus, for which Apple began taking preorders in September.
The notes below taken from the first link (the WSJ link).

Huge beat: $1.96 vs $1.88 forecast.

Shares up $1.50 (so far).

Net:  $11.12 billion.

Margin: 39.9% (wow).

Great China (Hong Kong): revenue, $12.52 billion. (That’s surpassed Europe recently, by the way. Europe in Q4 was $10.58 billion. Americas was $21.77 billion.

iPhones: revenue: $32.21 billion … unit sales: 48 million

Mac revenue: $6.88 billion … unit sales: 5.71 million.

Shares up $1.61.

iPad revenue: $4.28 billion … unit sales: 9.88 million

Shares up $.169.

Revenue from services, which includes iTunes and Apple Pay, was $5.09 billion.

Shares up $2.01.

Revenue from “other products,” which includes the Watch, the TV streaming box and Beats, was $3.05 billion.

Revenue from “other products,” which includes the Watch, the TV streaming box and Beats, was $3.05 billion.

Shares up $.275.

Over at CNBC.

Shares up $3.44.

The iPhone unit sales were more than the 39.27 million a year earlier, and that can safely be tied to the China bounce. The number was, though, short of the 48.2 million expected by analysts who were polled by Fortune. (The question is how much stock Wall Street puts in that forecast. Fortune has been doing it for a while.)

Comment: give me a break: 48 vs 48.2 million.

Shares up $3.50.

Net was up a robust 31%, and the per-share gain was even more — and above Street forecasts – thanks to Apple’s buyback program. Revenue was up 22%, and came in a hair above what analysts had expected. (Analysts’ forecasts, mind you, were pretty much the top end of what Apple said it would pull in during last quarter’s call with analysts.)

It looks like the shares will settle in around $2.50 higher in after-market trading.

Back to the WSJ blog:

Looking ahead, Apple expects gross margin of between 39% and 40%, and it sees revenue of between $75.5 billion and $77.5 billion. Analysts had penciled in 39.8% and $77.14 billion.
The Journal’s Daisuke Wakabayashi, who has his arms around all of these numbers, wrote his first cut at the earnings story.

In an interview, Cook told him that despite all the concerns about whether Apple can continue growing iPhone sales, “We’re pretty confident that we can grow this quarter despite having the mother of all comps.” Last year, the holiday quarter benefited from not only the bigger phones, remember, but the injection of sales from China.

I sometimes wonder if Apple’s press release can just be copied from a template, with new numbers filled in. In it, financial chief Luca Maestri nodded to the “record” quarter — Apple’s had so many record quarters I can’t keep count. He also threw some big numbers at people clamoring for a big capital return to shareholders: We returned $17 billion to our investors during the quarter through share repurchases and dividends, and we have now completed over $143 billion of our $200 billion capital return program.

Comment: I guess exuberance has died off. Shares are back to about $1.50 above the close in after-market trading.

The growth was fueled by record fourth quarter sales of iPhone, the expanded availability of Apple Watch, and all-time records for Mac sales and revenue from services. “Fiscal 2015 was Apple’s most successful year ever …”

Comment: about the only thing not mentioned -- iPads -- 'cause everyone in the world already had an iPad before this quarter and they last ... 4EVR!

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