Tim Cook Highlights:
● Best ever worldwide developer conference with over 20 million people watching keynote.
● Overview of Yosemite, iOS 8, and Swift
● 29 major car brands are integrating CarPlay
● Relationship with IBM to deliver solutions for enterprise. Will release over 100 apps.
● Record June quarter revenue. Thanks to strong performs from iPhone and Mac.
● Earnings per share up 20% year over year
● Sold over 35 million iPhones, new 3Q record
● In the brick countries iPhone sales were up 55%
● 18% growth year-over-year in Mac sales
● Demand strong for portables
● For the first 9 months of this fiscal year, the line item called iTunes Software & Services has been fastest growing part of Apple sales
● iPad sales gated by reduction in iPad inventory
● iPad Air registered 98% customer satisfaction rate. iPad mini with Retina has 100% customer satisfaction rate (ChangeWave)
● iPad accounts for 80% of tablet based purchases
● Very excited about agreement to purchase Beats. Will be great for music lovers. Provides Apple with fantastic music subscription service, access to talent
● Incredible pipleline of new product and services that we can't wait to show you.
Luca Maestri Highlights:
● New June quarter record for revenue
● Result was towards high end of guidance despite reduction in inventory
● Gross margin 39.4%
● Operating margin 27.5% of revenue
● Diluted E per S $1.28
● 35.2 million iPhones sold. 13% growth
● iPhone sales grew well across all categories despite new product rumors that likely resulted in purchase delays
● 13.2 million iPhone units sold compared to 14.6 million last year
● iPad channel inventory reduced by 500,000
● So far 13 million iPads have been sold to education globally
● 4.4 million Macs compared to 3.8 million last year, new June quarter record
● Strong growth of MacBook Air
● Macs have gained global market share for 32 out of 33 quarters
● Total revenue from iTunes Software and Services was 4.5 billion
● iTunes revenue $2.6 billion
● Software and Services revenue was $1.9 billion
● Over 75 billion app downloads
● Developers have earned over $20 billion, nearly half in the last year
● Ended quarter with $164.5 billion in cash + marketable securities
● Dividend of 47 cents per common share
● Outlook for the next quarter: Between $37 and $40 billion in revenue
How are you thinking about tablet market, competition landscape?
● We've now sold 225 million iPads.
● We still feel the category at a whole is in its early days and that there is significant innovation that there can be brought to the iPad.
● I get really excited when I see that more than 50% of the iPads were are selling are going to someone who is a first time tablet buyer.
● We're in 99% of Fortune 500 companies. Market share in in U.S. is 76% but penetration in business is 20%. We think there is a substantial upside in business. This was part of the thinking behind the partnership with IBM announced last week.
Overall Demand in China:
● We came in at 26% revenue growth including our retail.
● iPhone 48% up.
● iPad up.
● Mac was up 39% versus contracting market in China.
● We're seeing substantial strength there.
● iTunes Software & Services category is almost doubling year over year.
Impact of trade-in programs for the iPhone?
● If I look at the operating segment of Europe for 2014 versus last year, iPhone units were up 10%.
● Trade-ins are hugely beneficial for our ecosystem because we have more people that are able to join the party when we have a trade-in. For example, someone trades in a device and it goes to someone else in that country who is very price sensitive or to someone in another country.
● My gut is that the canalization factor is low (of new device sales).
You mentioned that Japan was flat due to regulation and taxes?
● VAT was increased from 5% to 8% at close to the beginning of the quarter. That was the first planned VAT increase. There are other or at least one more VAT increase in the future.
● Secondly, the carriers received some guidance from the regulators to essentially stop incentivizing people to transfer from another carrier at a higher amount than used to retain their own customers.
● These dampened the smartphone market in Japan.
● Usually a rush to buy before the tax increase, a pause after, then a return
On installment plans:
● There are a lot of different models being tried in the U.S. and around the world.
● We estimate that less than 1 out of 4 iPhones were sold on a traditional subsidy plan
● The installment plans that allow customers to upgrade faster play to our customers base. That makes us very bullish.
What are you seeing in Apple that is changing? Do you see a lot more partnership and acquisitions on the horizon?
● I think we have a lot of really great people and I think that we have the capability to acquire a sizable company and manage it.
● I think you can only do so many partnerships well. I think in this case the companies are so complementary. Both feel that mobile and enterprise is an enormous opportunity. We are not competing with each other so I think a partnership in that case is really great.
● We don't let our money burn a hole in our pocket.
● With Beats great music service, very rare set of talent, access to very fast growing business in their headphone and earphone space. Culturally we felt there was a match.
● If more like that presented themselves, I think we can manage more things.
Talk about the App Market for Enterprise. Will Apple continue to allow developers to sell direct to enterprise bypassing the App Store?
● Right now we are not going to change anything.
● Big thing for us is getting the penetration number up.