It’s not often that Steve Jobs appears on an Apple financial-results phone call. But there he was on Tuesday, appearing as a surprise “special guest” as Apple unveiled its fourth-quarter earnings. And he held court, making some scripted pronouncements, parrying with questioning analysts, and offering enough vague tidbits to whip Apple Kremlinologists into a frenzy.Read more ...
Among the biggest issues Jobs confronted was the ongoing global financial climate. Jobs opened by saying, “Some remarkable things are happening at Apple, but everything is set against this remarkable economic slowdown.” Later, he said, “We are not economists. Your next door neighbor can likely predict what’s going to happen as well as we can.”
But in general, Jobs was about as optimistic as he could be about Apple, given the global economic conditions. He said that Apple customers are the “smartest, most product-aware customers in the market.” While they may postpone purchases, he said, they’re unlikely to abandon Apple and would more likely just delay purchases rather than switch to a competitor.
More importantly, Apple’s cash reserves—Jobs said the company has almost $25 billion dollars in the bank, and is free of debt—will help the company invest its way through the downturn and emerge with better products and a stronger position over its competitors, as it did during the last economic downturn.
Apple, always conservative when it comes to estimating future financial results, was especially conservative this time out. Jobs, again, had an explanation: “There’s a lot of prudence in [our forecast],” he said. “And it’s also October. October has always been a foggy month for us. Sales often don’t often take off until November sometime…. We think we’re doing the right things, and we think we know what the results may be, but there’s a lot of prudence built in. We’re not economists and we read the same newspapers you do.”
One analyst suggested that Apple could use the cash to buy back its own stock, but Jobs intimated that the money would be better used for funding R&D and perhaps even acquiring other companies or talented employees. Or even better, much of it could remain as a safety cushion. “It [the cash] isn’t burning a hole in our pocket,” he said.
More than the economy, though, I suspect Jobs was on the call to crow about Apple selling more phones in the last quarter than its rival, Research in Motion (RIM), the maker of the Blackberry. But rather than purely gloating, Jobs actually sounded surprised and impressed by the news, and even paid RIM a compliment.
“Apple beat RIM!” he said. “In our most recent quarter, RIM sold 6.1 million Blackberry devices, compared to our 6.9 iPhones. Apple outsold RIM last quarter, and this is a milestone for us. RIM is a good company that makes good products, and so it is surprising that we could outsell them in any quarter after only 15 months in the market.”
Jobs went on to point out that, purely in terms of revenue (rather than units sold, since the iPhone is more expensive than most cell phones in the market), Apple is “the world’s third-largest mobile-phone supplier,” trailing only Nokia and Samsung. That’s amazing, though it’s important to remember that this quarter’s numbers are fueled in part by the pent-up demand for the iPhone 3G, including its roll-out to 50 countries. “There’s no guarantee that sustained sales will equal initial sales,” Jobs cautioned. “And who knows about the economic slowdown? But the fact is, we beat RIM. Not bad for being in the market only 15 months.”
For me, the two most interesting Jobs statements came during the question-and-answer period, in which many supposedly sober analysts fell all over themselves to compliment Jobs and ask him some fairly silly questions.
At Apple’s event launching the company’s new laptops last week, Jobs was asked about the emerging category of “netbooks,” low-cost and low-feature laptops. Last week, Jobs made skeptical noises about the category, saying it was just too early to tell what would happen. On Tuesday Jobs went a little further, dangling some suggestion that Apple is watching the category closely: “It’s a nascent category and we’ll watch while it evolves,” Jobs said. “And we’ve got some pretty good ideas if it does evolve.”
There, that should fuel months of endless speculation.
Another interesting Jobs response was on the subject of its competitors in the smartphone space. I’ll quote it in full here, because I think it both encapsulates Apple’s product philosophy—it’s the software, stupid—and manages to take a shot at Google’s Android and other phone platforms that will end up on numerous different hardware devices, making it difficult for third-party software developers to really embrace those platforms as they’ve embraced the iPhone.
“As software becomes the differentiating technology of this product category, people find that a hundred [hardware] variations presented to software developers is not very enticing,” he said. “And most companies in this phone business do not have much experience in a software platform business. So we’re extremely comfortable with our product strategy going forward, and we approach it as a software platform company, which is pretty different than most of our competition.”
And yes, during the session one analyst practically begged Jobs to return to making regular appearances on the quarterly financial conference calls. A true showman, Jobs left ‘em wanting more—while also complimenting the usual one-two phone call punch of Apple CFO Peter Oppenheimer and COO Tim Cook.
“Peter and Tim do such a good job that I don’t think I could add much,” Jobs said. Aw, shucks.