GlennF via Twitter - 2:40:38—Cook: "In 2012, after we are enslaved by alien overlords, we will revise our guidance for iPhone implant sales."
Dan Moren - 2:41:10—Sanford Bernstein: Very strong ASP performance in both Macs and iPhone. On Mac side, typically down with back to school, but were up even on notebook side this quarter. iPhone, ASP went up $50 sequentially on a cash basis. Last quarter, said 3GS oustripping 3G, mix alone, or something else?
Dan Moren - 2:41:56—Opp: iPHone ASP in quarter just over $600, high mix of 3GS sell-thru, and benefit of rebalancing ending channel inventory more towards 3GS. On a sequential basis, ASPs were up a bit, in portable space, was a function of higher mix new MacBook Pros.
Comment from MacJournals - 2:41:56—@Sam: well, that's kind of the point: for a MacBook Pro that retails for $1499, Apple gets $1499 if sold at retail, $1399 for a student sale, maybe $50 less for an education channel sale, and maybe around $1350 for someone like Best Buy. With lots of computers in the same price range, an ASP of $1400 wouldn't tell you a lot about that particular model's sales.
Dan Moren - 2:42:09—Opp: Very very strong quarter after June intro of MBPs, and back to school.
Dan Moren - 2:42:20—Opp: Year over year, dollar was a negative, but sequentially a small positive.
Comment from MacJournals - 2:42:37—It would mean that MacBook Pro sales were low if the ASPs were below $1000 or so, but since only one model costs under $1000, it's not at all surprising to see it tilting below the entry-level "traditional MacBook Pro" retail price
Dan Moren - 2:42:45—Sanford Bernstein: Supply of phone: any component availability issues that constrained supply of iPhones. Also, air freight going up next quarter, is that in relation to phones?
Dan Moren - 2:43:59—Cook: On availability, iPhone 3GS demand outstripped supply, so good old fashioned demand issues—a nice problem to have. Because it was outstripping supply, it creates component shortages. Generally speaking, hardest to get is silicon. Really happy that we were able to solve bulk of problems in Sep or early Oct. Feel good about position now. Air freight is not related to iPhone. Generally speaking, air freight is planned to get enough units into channel in time for the holidays.
bxchen via Twitter - 2:44:19—Seconded. RT @mattbuchanan still waiting for the inevitable tablet question on the apple earnings call
Dan Moren - 2:44:23—Sanford Bernstein: Typically in most Q4s, account for air freight. Is it larger than usual this quarter? Or is it a normal sequential seasonal headwind?
Dan Moren - 2:44:47—Cook: More the normal. More on freight in Q1, however, this increase is larger than usual. (Can't be specific on the product! Mystery!)
Comment from MacJournals - 2:44:53—When Apple says they're expecting higher air freight charges to get "units" into the channel for the holidays, and it's not related to iPhone, it's as clear a sign as you're going to get that new Mac units are coming yet this quarter.
MacJournals via Twitter - 2:45:06—TC: Planned Air Freight expenses are unrelated to iPhone, and are about getting units into the channel for the holiday.
Dan Moren - 2:45:11—UBS: Talk about how many non-Apple retail distribution points you have? Thinking abotu mix of retail vs. indirect.
Dan Moren - 2:45:15—Cook: Specific to Mac?
Dan Moren - 2:46:04—Cook: For the Mac, little less than 13,000 worldwide. Focus in terms of expansion in indirect is much more so in int'l areas. As probably could tell, grew the Mac much stronger outside the US than inside. Part of that is just economic difference. Int'l business, particularly in Europe/Asia last quarter.
Dan Moren - 2:46:10—UBS: Anything more specific in Europe?
Comment from Dave Barnes - 2:46:30—Asking MacJournals: What is the average air freight cost for a single iPhone? I mean when you are shipping pallets at a time.
Comment from Dane Deasy - 2:46:35—Could the planned air freight charges relate to a new product before holidays?
Jason Snell - 2:46:44—Dane, MacJournals would say: " That pretty much *has* to mean they're flying in new Mac models in the rest of the quarter. We dislike speculation, but it's a clear sign."
Dan Moren - 2:46:49—Cook: Highlights: Spain was strong. Germany was 40% growth, France was 39%. Western Europe, less the UK, extremely strong. Switzerland and Italy in the mid-30s. Several European countries were incredibly strong.
Dan Moren - 2:47:08—UBS: On cap-ex, 4.7% of sales. Normal replacement of existing capital assets. Any more info?
Comment from MacJournals - 2:47:39—@Dave Deasy: that's not information Apple makes available in any kind of detail that we could infer. Normally, products come from Asia on what Apple calls "the slow boat," but it takes 3-4 weeks to make the trip. Anything that has to get here faster must be air-freighted. But Tim Cook said such expenses were *not* about iPhones in Q1.
Dan Moren - 2:48:08—Opp: Continue to confidently open retail stores and keep them fresh and exciting from a remodel perspective. Spending capital on facilities, infrastructure, and manufacturing spaces. Not terribly capital intensive in past few years.
Dan Moren - 2:48:26—Chris Whitmore: On the Mac business, looking forward to Dec. quarter, Mac units roughly flat sequentially?
Jason Snell - 2:48:41—This is the "trying to trick Apple in announcing future products" portion of the program.
Dan Moren - 2:49:42—Cook: Don't give product specific forecasts. Things we considered: September quarter benefited by 50,000 units order from state of Maine. Other 20,000 had shipped in fiscal Q3. Extremely song back to school season, with extremely strong promotion. Also had Snow Leopard, and with every new OS, some pent-up demand that ships with the OS as people hold to get the latest software. Finally, and I wouldn't underestimate this, demand for portables announced in June, and some was demand that existed in June, but was unable to meet.
Dan Moren - 2:49:50—Cook: Those are the things we thought about as we forecasted the Mac business.
Dan Moren - 2:50:06—Whitmore: Can you quantify the unit shortfall—what would you have shipped if you had had the units?
Dan Moren - 2:50:35—Cook: Very tough question to answer, can't run experiment both ways. Almost entire quarter until Sep, iPhone 3GS was short virtually everywhere. What I don't know was how many people waited to available vs. bought a competitive phone. No good way to tell that.
Jason Snell - 2:50:44—Basically, the story here is that even Apple was surprised by the demand for the iPhone 3GS. What they don't know is, how many sales did they lose because of constrained demand? Did people wait, or buy a different phone?
Dan Moren - 2:50:45—Whitmore: On track to reach 80 countries by year end?
Dan Moren - 2:51:07—Cook: Shipped 3G in over 80 countries today. 3GS in 64 countries as of end of last quarter, forecast that would be in over 80 by end of calendar year with 3GS.
Dan Moren - 2:51:23—Whitmore: Last question, accounting change. Can you provide range of pro forma number for Dec.?
Jason Snell - 2:51:37—I failed accounting. (That's a joke. I never took accounting.)
Dan Moren - 2:51:48—Opp: Provided you the guidance that we provide, consistent with when we began to ship the iPhone, we report GAAP. Will report to you the number for Dec. quarter in Jan.
Comment from MacJournals - 2:51:51—Shorter Oppenheimer: "We'd be INSANE to project non-GAAP results so you had some other way to create ridiculous expectations for us, but thanks."
Dan Moren - 2:52:26—Shaw Wu!: On enterprise business. On iPhone business, any color on breakout between consumer and enterprise? Second question: one of key features with Snow Leopard is Exchange support. That helping your enterprise effort?
Jason Snell - 2:52:28—Answer to the first question: Orange. Well, actually, orangey yellow.
Comment from autoy - 2:53:10—@Jason Snell in my experience all the people I know that wanted a 3GS ended up waiting.
Dan Moren - 2:53:32—Cook: In terms of iPhone in corp. market, employee demand for iPhone is very strong. SInce launch of 3GS which, coupled with software, made improvements CIOs were looking for, the iPhone is being deployed or piloted in over 50% of Fortune 100. This is true, int'l, in abotu 50% of Financial Times 100. Feel very good in progress made since 3GS was announced. Also, very key market is over 350 higher ed institutions have approved iPhone for faculty, staff, and students. Very happy with sales in govt arena too.
Comment from MacJournals - 2:53:41—Shaw Wu's question is exactly the one CNBC's on-air talent wanted answered earlier in the hour.
Jason Snell - 2:53:54—I guess Shaw Wu watches CNBC.
Dan Moren - 2:53:56—Cook: In terms of SL and Exchange, no statistics. Very early, since just started shipping at end of August, last quarter. See how that does, but clearly makes it very simple for Windows user.
Jason Snell - 2:54:08—I also just love saying Shaw Wu.
Dan Moren - 2:54:27—Brian Marshall: Question, with regards to enterprise. Several govt agencies that have 35,000+ iPhone units installed. Granular updates?
Dan Moren - 2:54:36—Cook: No new update on specific number, but very pleased with market and agencies adopting.
Jason Snell - 2:54:43—I love it when an analyst says, "Hey, nice quarter." It's like the financial-analyst equivalent of "Love your show"
Dan Moren - 2:54:46—Marshall: Same in corp.?
Dan Moren - 2:55:03—Cook: [Now reiterating what he JUST ANSWERED in last question.]
Dan Moren - 2:55:13—C'mon, Marshall! Get with the game!
Jason Snell - 2:55:21—But hey: nice quarter!
Dan Moren - 2:55:37—Cook: Many of these companies would like to keep their specific numbers confidential.
Dan Moren - 2:55:47—Marshall: Any chance int'l activations grew?
Dan Moren - 2:56:33—Cook: iPhone sell-thru went up. Last year, expanded inventory. Only grew inventory this year by less than 600k, so that sell-thru increase of 38% compares to a projected rate of market growth of 5%, so it's a significant multiple. That 5% is a worldwide number.
Comment from MacJournals - 2:57:04—Ah, Bill Fearnley has a good question. Let's see if Cook answers it.
Dan Moren - 2:57:12—SB Capital [?]: On the Mac side, deeper dive in education sector. Pretty cautious, regarding state spending. What powered the upside in K-12 and higher ed. What happened in student by, expectations?
Comment from MacJournals - 2:58:13—Yeah, Fearnley (the current questioner) is on the ball. Good questions.
Dan Moren - 2:58:22—Cook: Student buy, can see those numbers trickling through retail. Significantly helped online and institutions that buy through bookstores. Attribute a great piece of that to individual business. Institutional business, been worried and still worried about state spending. Little stimulus funding last quarter, may see more this quarte,r but too early to tell. Institutions grew abotu 12%, and it was the state of Maine order that pushed them over.
Dan Moren - 2:58:42—Fearnley: Deeper dive on air freight. What's driving the increase? Timing? Component? Manufacturing yield issues? Why the uptick?
Dan Moren - 2:59:02—Cook: Haven't been able to figure out a way to move the holiday season. Have to get all these units into the channel for holiday season. Let's have a little bit of fun on these calls!
Dan Moren - 2:59:11—Tim Cook's getting a little punchy towards the end of the call!
Jason Snell - 2:59:14—"Sorry, I can't be more specific than that - we have to have a little fun on these calls" = WE AREN'T GOING TO TELL YOU WHAT WE'RE DOING NEXT.
Jason Snell - 2:59:21—We all get a little punchy, Dan.
Dan Moren - 2:59:40—And that was the last question. I never get to ask my question of Tim Cook, namely if he has a favorite spoon?
Jason Snell - 2:59:52—I'd like to thank everyone for joining us today... this is our first time using CoverItLive and we're still learning the ropes, but I like the fact that you didn't have to keep hitting Reload.
Jason Snell - 3:00:03—They're hanging up on us, Dan.
Jason Snell - 3:00:10—Do we have to go?
Dan Moren - 3:00:15—Thanks for putting up with my typos, which are usually fixed by Phil and Jon.
Dan Moren - 3:00:25—We don't have to go home, Jason, but we can't stay here.
Jason Snell - 3:00:27—We're letting it all hang out today.
Jason Snell - 3:00:46—Thanks to all of you for joining us.