Apple Conference Call Live Blog


Editor's Note: This is the transcript of Jim's live blog on Apple's Conference Call.

5:59 PM/ET: Hey! Call is wrapping up.

Sorry for some of the missed facts and statements.

Not my best, but I was distracted with "Fast Money." I'll keep that in mind when I'm assigned this way the next time.

Bottom line,Apple is blowing past every naysayer out there. Hasn't missed a beat. And the after-market rally tonight proves it.

Have a good evening.

5:57 PM/ET: Division between new activations and upgrades on iPhone sales? No comment, says Cook.

Also, on App Store, what about pricing? An increase of 99-cent offerings.

Cook says Apple is always looking at ways to categorize so consumers don't waste time with garbage. Cook says developer sets prices, and what they're doing is what any good business person would do based on elasticity. As installed base grows, makes sense to lower prices.

5:55 PM/ET: Supply constraints impact roll-out in other countries? And when will supply imbalance correct?

Cook says he doesn't want to predict when the supply imbalance will correct. I know, says Cook, that it will not balance in the short term.

Vast majority of countries that have the 3G already will be getting the 3GS by end of fiscal quarter. Also, no update on China. Continues to be a priority and Apple hopes to be there in a year.

That's disappointing.


5:50 PM/ET: Netbook question again. Some of the netbooks, many of them, are very slow, old software technology, lack horsepower, small displays, cramped keyboards. Many people not happy with them. (Gee, a "tablet" doesn't have a cramped keyboard! Yes? Maybe?)

5:49 PM/ET: House-keeping: Almost 20 percent of Fortune 100 companies have purchased at least 10,000 iPhones. Also, in retail stores, 38.6 million visitors versus 31.7 million a year ago June is growth of 22 percent. (Thanks Ted, for catching those. Live-blogging AND doinglive TV do not work together! Ugh!!)

5:46 PM/ET: Is lower priced PC category (netbooks) not attractive? Our goal is not to build the most computers, but the best, says Cook. We don't see a way to build a great product at $399 or $499, this priced-point unit. Many customers become disenchanted, disappointed once they buy one of these. So there you go. No Apple netbook. And why bother when Mac sales continue to soar. Mac sales outpacing the market for 18 of the last 19 quarters. Boom!

5:43 PM/ET: Crushing the competition.

No other App Store comes close. Feel extremely good about our competitive position, says Cook.

5:42 PM/ET: Now a question about App Store and user experience: Cook says, Apple just shipped world's most advanced mobile software; App Store now in 77 countries reaching an installed base of 45 million users.

5:39 PM/ET: Back now.

A flag showing the Apple Computer logo flies outside the Apple shop in Regent Street, London
Kirsty Wigglesworth
A flag showing the Apple Computer logo flies outside the Apple shop in Regent Street, London

Not sure what I just missed there, but still talking about gross margins. Analysts trying to pin down Apple on better 'gm' visibility. Oppenheimer isn't biting, saying they'll offer Sept 'gm' outlook, but that's about it.

5:34 PM/ET: Long term supply agreement with Toshiba. We view flash as a very key component for us, hence the half-billion dollar pre-payment deal with Toshiba.

5:33 PM/ET: Gonna jump on to Fast Moneyfor a quick update.

5:31 PM/ET: Talking about the $999 MacBook, and price elasticity: Cook says thrilled with results. Mac sales did accelerate after the price cut. We expected some number of people to buy up, because of the MacBookPro at $1199. We're not thinking fundamentally different about the Mac business. When we can do that at lower prices we do, says Cook.

5:28 PM/ET: Talking about gross margins now: The teams are executing phenomenally well. For the Sept quarter, guiding to 34 percent, down from the 36 percent just reported. Back to school promotions, higher component costs part of the reason. Many key components, costs are rising.

Apple will provide customers "ever-increasing value." Apple going after the market on price? Kinda guts that new Microsoft ad promotion.

5:26 PM/ET: Oppenheimer says institution (educational, not enterprise as I wrote earlier) spending continues to suffer huge budget pressures. That's the reason for the fall-off in that part of the business.

5:25 PM/ET: Oppenheimer says Apple has "reasonable confidence" in achieving its guidance numbers. My take: Duh.

5:24 PM/ET: Growing interest among enterprise customers for the iPhone 3GS. And with that, Apple shares continue to soar.

Tim Cook
Tim Cook

Almost 20 percent of Fortune 500 have purchased 10,000 iPhones or more. That's a remarkable fact and should quell concerns that Apple hasn't been able to crack the business customer.

5:23 PM/ET: Talking ASP (average selling price) mix. We saw a significant increase in total unit sales with release of 3GS and the $99 price cut of the older version. Growth of the 3GS is "significantly constrained," says Cook.

5:22 PM/ET: That negative 6 percent reference earlier was for enterprise business. Cook says growth of 4 percent is 7 to 9 points ahead of market research from IDC and Gartner.

5:20 PM/ET: Negative 6 percent, and k12 business was down more than that, says Cook in response to an analyst question.

5:19 PM/ET: Tim Cook now talking. Sorry, had to stop typing for that live update for Fast Money. Back now.

5:16 PM/ET: Apple also disclosed that the company made a $500 million payment to Toshiba as a prepayment to secure NAND flash products for future Apple devices.

5:15 PM/ET: Component prices rose, but not as much as thought, weaker US dollar, warranty issues less than expected. All contributed to the gross margin beat.

Apple iPhone 3G S
Apple iPhone 3G S

Apple generated another $2 billion in cash. Now over $31 billion. Also stunning.

5:14 PM/ET: Apple Stores traffic up more than 30 percent from a year ago. Opening first store in France in holiday quarter.

5:13 PM/ET: 492,000 Macs sold in Apple retail stores. Opened 6 new stores, now 258 stores.

5:12 PM/ET: iTunes delivered another strong quarter. As of last week, 8 billion songs sold.

5:11PM/ET: 1.5 billion downloads, as reported, on the App Store. IPhone handset sales, accessories and carrier payments totaled $1.69 billion, up 300 percent from last June.

5:09 PM/ET: Talking iPhone: thrilled to have sold 5.2 million. 1 million 3GS phones in three days. Currently unable to build enough 3GS's to meet demand. This is stunning since Apple knew demand would be significant. App Store now offers 65,000 applications.

5:08 PM/ET: Talking iPods: three categories of "pocket products." Shuffle, Nano and Classic products declined, as expected. IPod Touch and iPhone are cannibalizing those products. Research shows 50 percent of iPod purchasers are buying their first iPod. Touch grew 130 percent YOY

5:06 PM/ET: Mac portable sales increased 13 percent from prior June. 3-4 weeks of Mac inventory.

5:05 PM/ET: Particularly gratified with a performance like this in an economic environment like this one. Talking about Macs: 2.6 million in June is a record, up 100k units over prior June.


5:04 PM/ET: Record non-holiday quarter, and up 12 percent from the June quarter last year, says CFO Peter Oppenheimer.

5:02 PM/ET: Conference call is beginning now.

5:00 PM/ET: The Apple conference call is about to begin. All set and ready to go. Should be starting shortly.

This is a live blog of Apple Inc.'s conference call regarding the release of its third fiscal quarter.

Questions? Comments?