Notes from Apple’s Q1 2012 Conference Call


During Apple’s first-quarter 2012 financial results conference call, Apple CEO Tim Cook and CFO Peter Oppenheimer made a number of comments related to Apple’s iPhone, iPad, and iPod businesses, as the company celebrated record revenue, profits, and sales of iPhones, iPads, and Macs.

As usual Apple CFO Peter Oppenheimer gave the opening remarks, saying the company was “very proud” of the results. Oppenheimer said that despite the drop off in unit sales, iPod sales beat internal expectations, with the iPod touch representing more than half of all iPod sales. In addition, the iPod retains over 70 percent market share in the U.S., and is still the top-selling MP3 player in most of the countries Apple tracks.

Discussing the iPhone, Oppenheimer said that nearly all of the top companies in Fortune 500 now use and support iPhone on their networks. It is “changing the way companies use mobile devices for work”, he said, noting that many companies were developing mission-critical apps. The 128 percent year-over-year iPhone sales growth outpaced the expected 40 percent growth in smartphone sales overall, he said, adding that the iPhone 4S is now available in 90 countries.

Apple CEO Tim Cook later added that the company was thrilled with iPhone sales for the quarter, which were substantially above the prior 20 million unit sales record. He attributed the outstanding sales to several factors, including consumer enthusiasm, delayed sales from the prior quarter, and the fact that the company made a “large bet” on potential demand—but noted that it still ended the quarter with a backlog, and thus “didn’t bet high enough”. Cook said that sales in the U.S. and Japan were particularly strong, as were iPhone sales in greater China, which is especially surprising given that the iPhone 4S was not available in mainland China during the quarter – and later said that there was nothing to announce regarding the company’s likely tie-up with China Telecom.

Turning to the iPad, Oppenheimer said the company was “very pleased” with its record iPad sales during the quarter, saying that sales surpassed internal expectations. Overall, the company has now sold over 315 million iOS devices, including more than 62 million in the holiday quarter alone—suggesting that the company sold roughly 9.6 million iPod touch units during the period. Oppenheimer also revealed that iOS app developers earned over $700 million during the holiday quarter, and are quickly approaching $4 billion earned since the launch of the App Store in 2008.

Cook later reiterated that Apple is “very happy” with iPad sales, and believes that the record sell through is consistent with its long-term belief that the tablet market is a “huge opportunity” for the company. He said that the company still believes that the tablet market will grow to be larger than the PC market, and noted that based on research, it appears as if tablet sales have already overtaken traditional desktop PC sales. He added that there are now over 170,000 apps available specifically for the iPad compared to “hundreds” for competing products, and also noted that Apple doesn’t really see “limited-function” tablets and eReaders as direct competition for the iPad. Cook said that Apple will continue to “innovate like crazy in this area”.

In addition, Cook uncharacteristically revealed exact Apple TV sales for fiscal 2011 and for the holiday quarter. Saying the product was doing very well, Cook said that 2.8 million units were sold in fiscal 2011, with another 1.4 million units sold in the first quarter of 2012. He also said that the company will continue to add things to it, adding that he personally “couldn’t live without it”. Discussing iCloud, Cook revealed that the company has signed up over 85 million users in just three months, and described consumer response as incredible. He went on to describe the realization of iCloud as a “fundamental shift”, and said that, instead of being a product, per se, it’s actually a very important strategy for the next decade.

Finally, concerning the company’s massive cash balance, Oppenheimer said that the company’s executives and Board of Directors are “actively” discussing options as to what is the best use of the cash – whether it be investments in the supply chain, or acquisitions—before noting bluntly that the company had nothing to report as far as possible stockholder dividends or stock buybacks.


Charles Starrett

Charles Starrett was a senior editor at iLounge. He's been covering the iPod, iPhone, and iPad since their inception. He has written numerous articles and reviews, and his work has been featured in multiple publications.