Apple Call: First, How's Steve? Now, Let's Talk About Strong iPod-iTunes Sales
This story was written by Tricia Duryee.
In Apple's first-quarter conference call today, prepared statements focused on iPod sales, a strong quarter for iTunes, including the iPhone App store, and even how the retail environment was challenging, however, the first question from the analyst community was about CEO Steve Jobs' health. Both Tim Cook, the company's COO, who is filling in for Jobs during his five-month leave of absence, and Peter Oppenheimer, Apple's CFO, addressed the concerns.
Oppenheimer: "Steve is the CEO of Apple; Tim will be responsible to day-to-day operators." Cook adds: "There is an extraordinary breadth and depth of tenure on the Apple (NSDQ: AAPL) team, who all would call wicked smart. The values of our company are extremely well entrenched. We believe we are on the face of the earth to make good products. We believe in the simple, not the complex. We believe we need to own the primary technologies that we make, and only participate in markets where we can make a significant contribution. We believe in deep collaboration and cross-pollination of our groups. We don't settle for anything less than excellence. We admit when we are wrong and have the courage to change. Regardless of who is in what job, those values are so embedded in the company, and I strongly believe that Apple is doing the best work in its history."
Other highlights from the call:
Music Products: Apple said it sold 22.7 million iPods during the first quarter, which is a new record. Oppenheimer: "We were thrilled with the response. People love the color design of the Nanos and the iPod Touch is an outstanding gaming, entertainment and information platform. We are very pleased with our MP3 share, which is over 73 percent during the quarter, according to NPD, and we continue to gain share year over year in international markets. Our iPod share is over 70 percent in the U.K. and Australia, 60 percent in Japan and 50 percent in Canada."
iTunes sales: The iTunes store had a record quarter, coming from strong music and video sales and App store sales. We had our biggest music quarter ever on both Christmas day and the week before. We now offer 15,000 applications, which is an increase over 10,000 since the last call, and with many being added every day. Customer downloads have surpassed 500 million.
iPhone ahead of competition: We sold 4.4 million handsets, representing 88 percent unit growth over the year-ago quarter, bringing the overall total sold to 13.7 million. Oppenheimer: "We are well ahead of the 10 million goal, and we continue to expand iPhone's reach." Cook: "It's difficult to judge products that aren't in the market.We like competition as long as they don't rip off our IP, and if they do, we'll go after anyone who does. I'm not talking about any specific company. I think competition is good, but we are ready to suit up and go against anyone. We will not stand having our IP ripped off. i don't know if I can be more clear than that."
More on AppleTV, retail environment and economy after the jump
On AppleTV: Sales of Apple TV were three times higher vs. the year ago quarter. Cook: "We still consider this a hobby, however, it is clear the movie rental business has helped AppleTV and there's more and more customers who want to try it. We fundamentally believe there is something here for us in the future. We will continue to invest in it."
Retail is slow: We plan to open 25 stores in fiscal 09, and half of them will be internationally. Oppenheimer: "The environment around us was tough, but our stores preformed really well." On the iPhone in Wal-MartCook: "We just started workin with Wal-Mart (NYSE: WMT) at the end of December, so we have not enough data to draw any conclusions, but from a reach point of view, it reaches a tremendous amount of people that we could not reach in our stores and they are areas of the country, where we don't have Apple stores."
On the economy: Apple generated more than $3.6 billion in cash during the quarter, and now has $28.1 billion in its coffers. "Our investment priorities is to preserve capital. We continue to focus on short, and high-quality investments." The company expects revenue in the range of about $7.6 billion to $8 billion and earnings per share between 90 cents and $1. As far as the iPhone, Cook said: "The economy may slow demand of smartphones because they command higher monthly fees, which might keep consumers from signing up for contracts, but we remain confident. We have an extremely good product pipeline."
By Tricia Duryee