MacCentral’s coverage of Apple’s Q4 conference call with analysts has concluded.
Anderson said that Apple is very optimistic about the iPod’s revenue potential going into the holidays — the Best Buy deal is just getting started and didn’t affect the Q4 numbers appreciably.
Anderson expects component costs to trend downward because of industry weakness. “Strong mix” of 17 inch (slightly over half) and 15 inch iMacs. Can’t say if it’s “cannibalizing” sales in the Pro line. Reaffirmed that Power Mac sales are weak because of the economy. Not constrained on 17 inch availability.
On questions from analysts: Anderson is pleased that Apple was able to reduce inventory faster than expected. Retail division “knocked the cover off the ball” this quarter because of a stronger sales culture. Emphasis on reaching out beyond installed sales base. Also attributes success to “Switcher” campaign, as evidenced by 40 percent of CPU sales going to non-Mac users. He also said they’re good at “selling beyond the box,” with AppleCare, iPod, more.
Expect revenues to be up for December quarter along with gross margins. Operating expenses will increase due to greater number of Apple Stores. Other income and expense should be flat. Expects “slight profit before non-recurring items.”
Cash was up $30 million for quarter. Remain pleased with asset management — particularly accounts receivable and inventory. Cash conversion cycle at -37 days.
Apple’s gross margin down because of price reduction. Operating expenses were higher than expected, due to increased spending on demand creation items.
Almost 40 percent of systems sold for education have been iBooks. Maine program is going well.
9 Apple Stores opened during quarter — 40 open stores. 63 million to 102 million in revenues. Average revenue rate of 12 million per store annualized. 2.25 million people visited stores. Transactions per store visitor increased over the year. Expect to open 10 stores by Thanksgiving. 31 percent of the US population will live within 15 miles of Apple Store. Comp USA stores still positive — up 80 percent with Apple sales consultants. Similar program planned for Japan.
Anderson said that .Mac subscriptions exceed 200,000.
By the end of calendar year, 20 percent of installed base (5 million) will use Mac OS X as primary operating system.
iPod accounted for 42 percent of MP3 players in Japan. Excited about expanded reach of iPods being sold in Best Buy stores.
Channel inventory reduced. 318,000 iMacs shipped. 76,000 were CRT iMacs, 129,000 eMacs, 113,000 flat panel. Sales exceeded expectations. iBook 180,000+ shipped. Combo drives were increasingly popular. Power Mac G4 and PowerBook sales are sluggish. Pro users have been adversely affected by weak economy during quarter.
Anderson: 1.44 billion in revenue for the quarter. Flat sequential revenues in line with guidance. Several non-recurring items during quarter: Several equity investments charged $49 million. Restructuring charge of $4 million. Emagic acquisition $1 million in R&D. Without non-recurring items, net income would have been $7 million.
Nancy Paxton introduced the call. CFO Fred Anderson and VP of finance Peter Oppenheimer will talk.