This summary is based on the first quarter fiscal 2008 earnings call conducted by Apple Inc. (AAPL) on January 22, 2008.
Management:
Chief Financial Officer, Senior Vice President: Peter Oppenheimer
Investor Relations: Nancy Paxton
Chief Operating Officer: Timothy D. Cook
Key Investors Issues
- EPS were $1.76 a share compared to $1.14 a share last year.
- Profit was $1.58 billion compared to $1 billion a year ago.
- Revenue was $9.6 billion compared to $7.12 billion last year.
First Quarter Highlights
Revenue grew 35% year over year to $9.6 billion, an increase of almost $2.5 billion over the previous December quarter’s record-breaking results.
The revenue growth was driven by record Mac, iPod, and iPhone sales and strong demand for recent software releases.
- Domestic business performed well, with revenue growing 27% year over year and the company was especially pleased with international business, which grew 46% year over year.
- Operating margin was better than expected at 22.1%, resulting primarily from higher-than-anticipated gross margin and revenue.
- Net income was $1.58 billion, which was up 57% over the prior December quarter’s results and translated to earnings per share of $1.76.
- Cash generation was over $3 billion, or approximately two times net income.
Mac products and services represented 47% of total quarterly revenue.
The company shipped 2.32 million Macs, exceeding the previous December quarter shipments by over 700,000 units and representing 44% year-over-year growth, more than 2.5 times the overall market rate of growth for the December quarter based on the latest forecast published by IDC.
- Sales of the new iMac were announced in August continued to be robust, helping drive 53% year-over-year growth in desktop systems.
- Sales of portables were also strong, increasing 38% year over year.
- The company began and ended the quarter with less than three weeks of Mac channel inventory.
The company is pleased with the successful launch of Leopard on October 26th and the response from both customers and reviewers has been terrific.
Total Leopard revenue was about $170 million, increase from about $100 million in revenue generated by the Tiger release in its first quarter. The company believes that 19% of the Mac OS 10 installed based is already using Leopard.
Music products and services accounted for 50% of total revenue.
The company sold over 22.1 million iPods, surpassing the record levels sold in the year-ago quarter.
One of primary goals for this holiday season was to establish an entirely new type of iPod in the marketplace, the iPod Touch.
This new iPod has the potential to grow the iPod from being just a music and video player into being the first mainstream WiFi mobile platform running all kinds of mobile applications.
Because of the higher cost associated with the large touch screen and more powerful processor required to run applications like Safari, this was the most expensive iPod brought to market for some time. So the company had the challenge of establishing a completely new type of iPod at the top of the line at a price point above where it has been for some time, and succeeded.
In addition to selling successfully, the iPod touch was responsible for the overall increase in iPod ASPs to $181, which drove revenue up 17% year over year. The company announced a major software upgrade for the iPod Touch, including five great mobile applications and the ability to watch iTunes movie rentals on its gorgeous screen.
