Notes from Apple’s Q3 2013 Conference Call

Apple CFO Peter Oppenheimer started the company’s third-quarter 2013 financial results conference call by discussing Apple’s June quarter record for 31.2 million iPhones sold. Total revenue for Apple is up one percent from Q3 2012. The iPhone has experienced 66 percent growth in Japan. Oppenheimer called the drop in iPad sales a “tough comparison” based on lower unit production.

Oppenheimer highlighted the success of iTunes, with total quarterly revenue of $4 billion from iTunes software and services. The last week of the quarter was the best ever for the App Store. Oppenheimer said there are more than 900,000 iOS apps now, with more than 375,000 apps for iPad. He said Apple is “on track to have a very busy Fall, I’d like to leave it there and go into more detail in October.” While the latter remark has been interpreted by some outlets to suggest that Apple will not make additional product announcements until October, it’s likely that Oppenheimer was referring to the company’s next conference call—the only time when he is present at public question and answer sessions such as this.

Apple CEO Tim Cook said growth for Apple would come from new products, again mentioning the products would be in both “existing and new categories.” Cook said he doesn’t believe the higher-end smartphone market has hit its peak. He also mentioned iPad has experienced double-digit growth in many markets.

Regarding iPhone sales, Cook said, “We saw very strong sales in several of the emerging markets or prepaid markets.” He acknowledged China was weaker in the quarter. “That is a lower growth rate than we have been seeing … I attribute it to many things,” he said, including the Chinese economy. Hong Kong sales were down, and Cook said, “It’s not totally clear exactly why that occurred.” He later said, “I continue to believe that in the arc of time here, China is a huge opportunity for Apple … I don’t get discouraged over a 90-day kind of cycle ….”

More after the break.

When asked a question about a possible iPhone trade-in program from Apple, Cook said, “We haven’t announced anything relative to a trade-in program, so what you’ve seen is rumor-oriented.” Cook also mentioned that he’s “not opposed” to the idea of such a program. Cook mentioned that iPhone 4 is attracting a large number of first-time smartphone buyers. When asked about dropping average sales prices for the iPhone, Cook again referenced the brisk sales of the iPhone 4, which he said is selling better now than the iPhone 3GS was as the entry-level iPhone.

Cook was mum on the possible impact of new products. “We’ll see,” he said. Cook also said if the company continues to focus on creating great products, “The financial metrics will also come.”

When asked about iOS being built into cars, Cook said it’s “very important” and “I see it as part of the ecosystem.” He also said, “I think Apple can do this in an unique way and better than anyone else.”

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