Notes from Apple’s Q2 2014 earnings call


Apple’s conference call after the company’s reported Q2 2014 earnings started with CEO Tim Cook calling the results “very strong.” The results were Apple’s “strongest non-holiday quarter ever,” Cook said.

Cook pointed out that iPhone sales were strong in the quarter. Apple’s smartphone market share is now 55 percent in Japan. There are now 800 million iTunes accounts, “most of them with credit cards,” Cook noted. iPad sales were at high end of Apple’s expectations, though below analyst explanations — Cook spoke about why there was a difference between the two.

Cook also announced the company’s incoming head of retail, Angela Ahrendts, will join Apple next week.

Apple’s CFO-in-waiting, Luca Maestri, was up next, discussing the financial results in greater detail. He said iTunes revenue set a new record. Maestri then gave additional details about the expansion of the company’s capital return program.

Cook commented on the company’s stock split, and briefly discussed outgoing CFO Peter Oppenheimer.

In the Q&A portion of the call, Cook was asked about if Apple would charge more for “highly innovative products in the future,” considering the demand for iPhone 5s. Cook said Apple charges “a fair price for the value that we’re delivering.”

Cook was asked about replacement cycles for the iPhone over the long-term, considering recent plan changes that would cause customers to keep phones longer. “Some of the programs the carriers are running may serve to increase the upgrade cycle,” Cook said, noting some plans offer incentive to upgrade earlier. Cook also said, “The smartphone market is only a billion or so units and it will eventually take over the entire mobile phone market.” He discussed continuing to get some prospective iPhone buyers to purchase an entry-level version of the phone.

Questioned about “relatively flat” sales on the iPad, Cook notes it’s the fastest-growing product in Apple’s history, and was “instantly” a hit for consumers, businesses, and education. The iPad sold twice as many units as the iPhone in the same amount of time, and seven times more than the iPod, Cook noted, looking at the big picture in iPad sales. Cook said Microsoft’s Office for iPad may help the device, but it would have helped Microsoft more if the company would have released it earlier.

When asked about diversity in products when compared to other companies, Cook said Apple is focused and detail-oriented. Alluding to new products, he said, “We’re not ready yet to pull the string on the curtain.” While some companies aim to be first, he said Apple would rather be the best and introduce “insanely great” products.

When asked about the competitive landscape in smartphones, Cook said, “The market we’re really interested in” is simply people who want the best smartphones. Again, he mentioned that it didn’t necessarily have to be the most expensive smartphone. Cook mentioned many Chinese iPhone 4s and 5c buyers were first-time smartphone buyers, with many of those customers “Android switchers.”

Cook was asked why he felt it necessary to note Apple TV was “no longer a hobby,” and he said content bought directly off Apple TV in 2013 was more than $1 billion. “It didn’t feel right to me to refer to something that was over a billion as a hobby.” He noted Apple was making Apple TV “better and better,” and that about 20 million Apple TVs have been sold. Cook didn’t seem too concerned about the recent HBO-Amazon deal, noting that Apple TV already has HBO Go.


Phil Dzikiy

Phil Dzikiy was the Editor-in-Cheif at iLounge. He mostly edited and oversaw all site editorial content, managed staff and freelancers, made the final call on product review grades and awards, and led online coverage of all Apple events and live coverage of the International CES in 2015.