Notes from Apple’s Q4 2011 Conference Call


During Apple’s fourth-quarter 2011 financial results conference call, Apple CEO Tim Cook and COO Peter Oppenheimer made a number of comments related to Apple’s iPod, iPhone, and iPad businesses. As noted by Cook at the beginning of the call, it was the company’s first after the passing of the company’s co-founder and former CEO Steve Jobs. Cook repeated a message posted on the company’s website following Jobs’ death, expressing gratitude for the condolences and expressions of support the company has received, and reassuring listeners of the company’s dedication to “continuing the amazing work that he loved so much.”

Directly following Cook’s brief statement, Oppenheimer gave his opening remarks, touting new all-time quarterly records for Mac and iPad sales, and a new September-quarter sales record for iPhone. He said that while iPod sales were down year-over-year to 6.6 million, they beat the company’s internal expectations, as the iPod touch continues to account for more than half of all iPods sold, and the iPod continues to be the top-selling MP3 player in most countries the company tracks. Oppenheimer also briefly discussed the iTunes Store, which produced nearly $1.5 billion in revenue—a record result—and has seen over 16 billion song and 650 million TV show downloads, and the iBookstore, which has seen over 180 million downloads thus far.
Regarding the iPhone, Oppenheimer said that iPhone sales more than doubled year-over-year in the Asia/Pacific region, and also slowed noticeably over the second half of the quarter due to the intensification of new product speculation and rumors. This fact was alluded to several times throughout the call, with Cook saying that while he couldn’t estimate with any precision how many iPhone units the company would have sold without the rumors and expectations of a new iPhone, the effect was substantial, but added that sell-through decline wasn’t nearly as bad as the company had anticipated, knowing that consumers were expecting a new iPhone in June. Cook also stated that he is confident Apple will set an all-time record for iPhone sales in the current quarter.

Oppenheimer said during his opening remarks that the company is thrilled with the iPad’s momentum, as it set a new single-quarter sales record for the iPad, ended the quarter with distribution in 90 countries, and is seeing unprecedented adoption in the enterprise, with 92 percent of the Fortune 500 and 82 percent of the global 500 testing or deploying the device. When asked about the potential market for the device, Cook said that Apple thought from the beginning that it would be a huge market, but it turned out to be bigger than it thought, and reiterated that the company still believes it will be larger than the PC market. Cook later added that the company was definitely seeing some cannibalization, with some people buying an iPad rather than a Mac, but said that a much larger number of people, he believes, are opting to buy an iPad instead of a Windows-based PC.

The company rolled out the App Store to 33 different countries during the quarter, ending with a total of 123, and its retail stores hosted 77.5 million visitors. Looking ahead to 2011, Oppenheimer said that the company is focused on international expansions, and will open about 40 stores, three-quarters of which will be outside the U.S., while also expanding or replacing higher volume stores—primarily in the U.S.—that are too constrained to deliver an optimal customer experience. Speaking of international expansion, Cook later remarked that the company’s progress in China has been amazing, as the country accounted for 16 percent of revenue in Q4, putting revenue for the year over $13 billion. He said the company was committed to building more stores and making other investments in the country, but was also focusing on Brazil—where revenue was up 118 percent year-over-year—Russia, and the Middle East as potential growth areas.

Cook also made a few comments about the company’s cash position, which he said “isn’t burning a hole” in the company’s pocket, and is used to acquire select companies, purchase intellectual property, build out stores, provide for product tooling, and make component purchases. Still, he said that he wasn’t “religious” about holding cash, and said that he and the company’s board will continually ask what is in the company’s best interest, and act accordingly. Finally, he said that the company preferred to work with as few component suppliers as possible “so we can do great, innovative stuff together,” and called the new Siri assistant found in the iPhone 4S a “profound innovation,” saying that the company feels it is a substantial technology, and not simply a feature.


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.