And they don't look good. As you can see below, Apple missed the expectations of buy-side investors, pretty much across the board.
The thing that should make investors super worried is that iPhone sales were 47.8 million for the quarter. The buy-side was looking for 50 million units.
The stock is off in after-hour trading by 10%.
Here's how Apple did versus what buy-side investors were looking for (via Piper Jaffray analyst Gene Munster):
In the press release announcing the earnings, CEO Tim Cook said, "We're thrilled with record revenue of over $54 billion and sales of over 75 million iOS devices in a single quarter," adding, "We're very confident in our product pipeline as we continue to focus on innovation and making the best products in the world."
HERE ARE KEY DETAILS FROM THE EARNINGS REPORT AND THE EARNINGS CALL IN MORE DEPTH
5:03 PM | Call is starting...
5:04 PM | Tim Cook starts...
Incredibly pleased to report an extraordinary quarter. No tech company ever reported numbers like this. We are in an incredible prolific period. Apple thinks about the smallest details, refuse to cut corners. Always deliver great customer service.
Over 80,000 strong. Part of my job is to preserve our culture.
5:04 PM | We continue to believe our ecosystem, our retail stores, will help us
5:05 PM | Tomorrow makes a big anniversary
The launch of the Mac... On the news they said it was about making an easy to use computer.
5:06 PM | Most important thing is that customers love our products
Sold half a billion iOS devices, 10 per second last quarter. Unmatched execution. It's simply phenomenal.
5:06 PM | We are proud to share latest results, here's Peter Oppenheimer
5:08 PM | Peter
New iPhone and iPad sales. Highest quarterly revenue and net income. Revenue was $54.5 billion.
As a reminder, this quarter was 13 weeks, last quarter was 14 weeks.
Strong y/y growth, iPhone, iPad, and iTunes sales.
Net income $13.1 billion, just ahead of last year's 14 week quarter.
5:10 PM | Reorganizing our results
Breaking out China to show it's a great part of our business.
Second, moving certain tooling costs. Recast op income for 2011 and 2012 for these changes and have info on Apple.com.
Third, realigned presentation of product information to show revenue from product information. Exclusive of service and accessories. And revenue from accessories as a single line item.
5:12 PM | iPhone
47.8 million, up 10%. 3.7 million per week, versus 2.6 million in year ago quarter. Consistent with IDC's forecast for smartphone market.
On Q/Q basis up 78%, more than IDC's projection.
Strong iPhone growth in each geographic segment. Up 2X in China.
iPhone 5 sales drove growth. 4-6 weeks of iPhone channel.
iPhone and iOS an exceptional experience people love.
5:13 PM | More iPhone...
Gov agencies issuing iPhones. NASA, transportation,
In businesses, across the board deploying iPhone.
5:15 PM | iPad...
22.9 million, 1.7 million per week, compared to 1.1 million, avg increase of 60% per week, better than IDC forecast.
Customers love 4th gen iPad. iPad Mini a tremendous hit. In addition to the tremendous response, hit in the enterprise.
Barclays roll out of 8,000 iPads was most successful in Barclays IT history.
Outside US, 10,000 government workflow in Sweden, 10,000 in Netherlands.
3.4 million iPads in channel inventory, below target of 4-6 weeks of inventory.
5:17 PM | Mac...
4.1 million v. 5.2 million. IDC says market fell by 6% in the quarter.
We intro'd new iMacs and retina macbooks. We were constrained on iMac. We believe Mac would have been higher without constraints.
5:18 PM | iTunes
$2.1 billion, new records. Expanded footprint in 56 countries. The App Store had a record breaking quarter with 2 billion downloads. 500 million accounts.
5:18 PM | iCloud
250 million accounts. 200 million iMessages per day.
5:19 PM | Retail stores
opened 11 new stores, including 4 in China. 401 stores, 150 outside the U.S.
Avg reveue per store was $16.3 million. Hosted 120 million visitors versus 110 million a year ago. 7% increase y/y.
5:19 PM | GM: 38.6%, better than expected
Higher mix of iPhones, weaker dollar.
5:22 PM | As move into March quarter, review outlook
Changing approach to guidance. Guidance reflected conservative. Going forward, providing range of what we believe we will achieve. In the range of guiance we provide. $41-$43 billion. Expect GM 37.7%-38.5%. OpEX $3.8-$3.9 billion. Expect tax rate of 26%. (No mention of EPS).
5:25 PM | Katy Huberty: International sell thru mixed. How would you describe outside US?
Tim: Sequentially up over 70%, which was 3.5X market, could not be happier with that. In terms of geogrpahic, highest growth was in China, into the triple digits. We're extremely pleased.
Katy: Why not buy more stock?
Peter: This is something continuously assess. We are pleased. Expect to return $45 billion over three years.
5:29 PM | Bill Shope at Goldman: Bigger screen for iPhone?
Tim: iPhone 5 offers as you know offers 4-inch retina display, the most advanced display in the industry. Larger without sacraficing the one handed ease of use customers love. We put a lot of thought into screen size and think we chose the right one.
Shope: Deterioration at end of the quarter?
Tim: If you look at iPhone sales across the quarter, constrained. iPhone 4 in constraint for entire quarter and sales remained strong.
Peter: For iPhone, as we told you last year, 2.6 million in March quarter, so underlying sell thru 32.5 million, expect sell thru growth.
Tim: One more point, I know there's been lots of rumors about order cuts. Let me take moment to comment, but not on any rumor. I would suggest it's good to question accuracy of any rumor about build plans. Even if any data point were accurate impossible to extrapolate for our business. Yields can vary, we have different suppliers, a long list that make any single data point not a great proxy for what's going on.
5:31 PM | Toni Sacconagi w/ Bernstein: Want to be clear on guidance... in past was conservative and no longer? Real planning range?
Peter: In the past we provided a single point estimate that was conservative. This quarter and going forward, a range of guidance that we believe were are likely to report within that range.
Toni: Comparing words... you will report in range, in past you beat EPS by 35%. Was there a buffer in there?
Ptere: In the past a single point estimate, it was conservative, as reasonable confidence as you could have. Range of guidance we expect to report within as best we can.
5:33 PM | Follow up from Toni: How important is market share?
Tim: Mot important is products that enrich customers lives. That's not revenue for revenue sake. We only want to make the best product. What does that mean for market share? We have a great track record on iPod. Different products at different price points. I wouldn't view as mutually exclusive. High order bid is make a great product that enriches lives.
5:35 PM | Barclays Ben Reitzes: Macs, what happened? Shortfall is over a billion how much pushed forward?
Tim: If you look at the previous year. Mac was 5.2 million. Diff is 1.1 million. iMAc down 700K y/y. new iMac in late October, shipped in late November. So limited weeks of ramping. Left the quarter with significant constraints. We tried to tell people this on conference call in October. 14 weeks in the quarter last year. Sold 370,000 Macs in extra weeks. That these factors, more than bridge the difference.
I would point out 2 other things.
1. Market for PCs is weak. IDC around -6%.
2. We sold 23 million iPads. And we could have sold more than this because we could not build enough iPad Minis to come in to a demand balance. Some cannibalization there.
Difference in 7 days, channel inventory, and late iMac more than explains the difference. If you look at portables alone.
5:39 PM | Barclays Ben Reitzes: Maps update? iOS 7?
Tim: Second part, incredible stuff. Pipeline is chalk full. We feel great about what we have in store. In terms of maps, keep working on this. Usage in maps significantly higher.
Notification, 4 trillion notifications. As Peter mentioned, 450 billion messages. 200 million Game Center, 800,000 apps. There's more we can do and you can bet we're thinking of all of it.
5:42 PM | Steve Milunovich at UBS: Gross margin? Where are you on product cost curve? Product mix?
Peter: Constrained every week with the Mini. Significant backlog. GM for december. We expect to benefit in the March quarter. We expect a more typical level. Expect these factors to be more than offset.
Regarding mix, as example, iPad Mini GM sig below corp avg. Expect to meet demand in March.
Tim: iPhone mix, 1. ASP for iPhone was essentially the same. Underneath that, mix of iPhone 5 to total iPhone v. iPhone 4S to total iPhone, those mixes are similar. In Q1 saw similar results on capacities.
5:44 PM | Follow from Steve: On CapEx ... akin to Intel. Strategy?
Peter: Going over numbers on CapEx, retail stores, buying equipment we will put in partner facilites, we get other benefits. That's where capital going.
5:45 PM | Shannon Cross: Tim 80% of revenue refresh? Ship when products are ready?
Tim: 80% was an unusually high percentage for us. Number of ramps were unprecedented. We feel great to have delivered so many products for the holiday season.
5:47 PM | Shannon Cross: Talk about China?
Tim: If you look at total Greater China, which include ... $7.3 billion in quarter. Up 63% y/y. Underlying growth is higher than that (because of y/y comps).
Shipped iPad late in the quarter. Expanding in retail. Increased point of sales from 7k to 17k. Making great progress.
5:49 PM | Gene Munster: Question about Apple TV...
Tim: Apple sold 2 million Apple TVs, up 60% y/y. Very good growth in that product. What was a small niche is a much larger number. Area of intense interest, tend to believe there is a lot we can contribute in this space, continue to pull string, don't want to be more specifc.
5:50 PM | Munster: No EPS guidance?
Peter: Our prior method was point estimate for P&L including EPS. Guidance, revenue, OpEx, GM, you can figure out the EPS.
5:53 PM | Question on iPad mix...
Tim: iPad mini very constrained. We believe we can achieve supply demand balance this quarter.
Peter: I'll add to that, for total iPad, we would expect large y/y increase, but a post holiday sequential decline which is typical.
Tim: Worth pointing out, from last quarter strong sales of iPad and iPad mini.
5:56 PM | Tablet in relation to Macs and PCs? Cannibalization? Componenet constraints...
Tim: Team did a great job ramping. Still short of iPad and iMac. iPhone 5 was short, iPhone 4 was short. iPad Mini and iPhone 4 this quarter, but iMac not certain achieve supply demand.
In terms of cannibalization, huge oppty for us. Never fear cannibalization, if we do, someone else will cannibalize.
If someone buys iPad mini and it's first product, we know people buy other apple product. The halo effect. We're confident that will happen and we're seeing evidence of that on iPad.
5:58 PM | JP Morgan: Question around iPhone?
Tim: In year ago quarter for iPhone, underlying sell thru 32.5, so in thinking thru # of iPhones to predict, used 32.5 as baseline, believe we will grow y/y but don't want to be specific.
6:00 PM | JP Morgan: have slow LTE roll outs had an impact?
Tim: 24 carriers around the country carrying iPhone 5. Next week, we're adding 36 more carriers for LTE support.
6:03 PM | Deutsche Bank: Guiding to mid to single high digit for iPhone business. That right?
Peter: Um, we're not going to talk about guidance on product level. Let me give you something things. 5-10% y/y increase.
iPhone 5 is fastest roll out. Made good strategic decision to introduce the iPad Mini and keep iPad 2 in the line. Reduction of ASP by $101 y/y, iPad unit grew faster than revenue. Expect ASP down on y/y basis. Finally, PC market grew in March quarter last year, will shrink this year. Underlying performance of company stronger than 5% growth implies.
6:04 PM | DB follow up: Lot demand at low price points, why not move down market?
Tim: Not going into pricing strategy, we feel great about oppty getting products to customers. Evidence of that today.
6:04 PM | And that's that. Thanks for joining us!
Source: http://www.businessinsider.com/apple-q1-earnings-2013-1
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