This is a summary of the first quarter fiscal 2009 earnings call conducted by Apple, Inc. (AAPL) on January 21, 2009.
Management:
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Senior Director, IR and Corporate Finance: Nancy Paxton
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SVP and CFO: Peter Oppenheimer
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COO: Tim Cook
Key Investor Issues:
- Revenue increased 5.8% to $10.17 billion, with 54% of sales in the U.S.
- Excluding items, earnings came in at $2.56 a share.
- Gross margin was flat at 34.7%, but better than expected.
- Apple sold 2.5 million Macintosh computers in the latest quarter, up 9% from a year earlier. The company sold 22.7 million iPod media players, up 3%.
- Apple expects fiscal second-quarter earnings of 90 cents to $1 on revenue of $7.6 billion to $8 billion.
First Quarter Highlights:
- Revenue for the quarter was $10.17 billion, representing 6% growth over the prior December quarter''s result and exceeding the high end of the guidance range.
- Operating margin for the quarter was better than expected at 20.9% due to higher than anticipated gross margin and strong operating expense management.
- Net income was $1.6 billion, which translated to earnings per share of $1.78.
In terms of non-GAAP measures, adjusted sales totaled $11.8 billion for the December quarter, which was $1.6 billion higher than the reported revenue. Adjusted gross margin was $4.5 billion, which was $1 billion higher than the reported gross margin, and adjusted net income was $2.3 billion, which was $700 million higher than the reported net income.
For the December quarter, Apple sold 2.5 million Macs, representing 9% growth over the prior December quarter''s results.
In its latest update published last week, IDC estimated that the overall market for personal computers contracted during the December quarter. Customer response to the new MacBook and MacBook Pro introduced in October was very strong, driving year-over-year portables growth of 34% and an overall portable mix of 71%, the highest ever for Apple.
Desktop unit sales declined by 25% year-over-year.
It''s important to remember that in the prior December quarter, desktop sales grew by a phenomenal 53% year-over-year, given the very successful launch of the new iMac in August 2007. In addition to this tough comparison, the year-over-year decline in desktop sales is a reflection of the shift towards portables in the overall market in customer response to the October announcements. IDC''s latest published estimate indicates a 16% contraction in global desktop shipments during the December quarter.
Apple sold over 22.7 million iPods, a new quarterly record, representing 3% growth over the previous record sales in the year ago quarter.
- Apple’s share of the US market for MP3 players was over 70% in the month of December, based on the latest data published by NPD.
- For the latest period reported, iPod''s share of the MP3 market was over 70% in the UK and Australia, over 60% in Japan and over 50% in Canada.
The iTunes Store had a record quarter had a record quarter, thanks to strong music and video sales and the continued tremendous success of the apps store. Apple experienced the biggest music quarter ever including the highest sales ever for both Christmas day and Christmas week.
Apple sold 4.4 million iPhone handsets in the December quarter which brings the cumulative counter 2008 iPhone sales to $13.7 million, well ahead of the 10 million unit goal for the year.
Recognized revenue from iPhone handset sales, accessory sales, and carrier payments was $1.25 billion compared to $241 million in the year ago quarter. The sales value of iPhones sold was over $2.6 billion.
Apple retail stores which hosted a record 46.7 million visitors during the December quarter or 14,400 visitors per store per week.
Revenue of $1.74 billion also established a new record and grew 2% year-over-year. Apple stores sold 515,000 Macs during the quarter, almost half of which were to customers who have never owned a Mac before.
Average revenue per store was $7 million compared to $8.5 million in the prior year and the retail segment margin was $353 million compared to $405 million in the year ago quarter. This reflects the very difficult retail environment in the US where most of Apple stores are located. In addition, Apple expanded Mac distribution with Best Buy over the past year and third-party channels discounted and bundled aggressively this holiday season particularly with iPods to drive profit to their stores.
Apple ended the quarter with 251 stores, and now operates retail stores in 10 countries.
