Apple CEO Won’t Predict When iPhone 4S Sales Will Meet Demand
Apple is “confident” that it “will have a large supply” of the iPhone 4S for consumers to buy, but CEO Timothy Cook said in an earnings call late Tuesday that he wouldn’t “predict when supply and demand might balance because the demand is obviously extremely high right now.” The company said it sold more than 4 million units of its new smartphone in the device’s first three days available. Apple is “confident that we will set an all-time record for iPhone” in Q1 that started Sept. 25, he said.
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Shares in the company fell Wednesday, after Apple, for the first time in a long while, reported weaker earnings and iPhone sales in Q4 than analysts had expected. Shares fell more than 5 percent Wednesday, finishing the day at $398.62. Apple, however, still reported stronger Q4 revenue and profit than it did in Q4 the prior year. Profit grew to $6.62 billion, or $7.05 per share, from $4.31 billion, $4.64. Revenue jumped to $28.27 billion from $20.34 billion.
The company said it sold 17.07 million iPhones in Q4, 21 percent growth over the 14.1 million sold in Q4 the prior year, Chief Financial Officer Peter Oppenheimer said. Some analysts had expected Apple to sell about 20 million iPhones in Q4. The resulting iPhone sales were still “a new September quarter record,” Oppenheimer said. The company saw “particularly strong” iPhone sales growth in the Asia-Pacific, where iPhone sales “more than doubled” from Q4 the prior year, he said. Apple expected iPhone sales to fall from the June quarter due to rumors starting in June that the company would soon announce a new iPhone, he said. As Apple expected, iPhone sales “did decline across the quarter, especially in the second half as new product speculation intensified,” he said. The company went on to announce the iPhone 4S, which went on sale Oct. 14. Apple ended Q4 with about 5.75 million iPhones in channel inventory, a decline of about 180,000 from the June quarter, but that fell “within our target range of four to six weeks” of iPhone channel inventory, Oppenheimer said. Revenue from iPhone handset and accessory sales came in at $11 billion for Q4, up from $8.8 billion in Q4 the prior year, he said.
Apple is seeing “cannibalization” of computer sales from the iPad, but is not concerned, in part because it sold more Macs in Q4 than it did in any prior quarter, Cook said. “With cannibalization like this, I hope it continues,” he said. The cannibalization is “showing up in two ways,” he said. Some consumers “are electing to buy an iPad rather than a Mac,” he said. But he said “a materially larger number of people are electing to buy an iPad instead of a Windows-based PC.”
Apple is also not concerned about rival tablets, including the coming Kindle Fire from Amazon, Cook said. Apple has seen “several competitors come to market to try to compete with the iPad over time,” in “different form factors” and at “different price points,” but “none of these have gained any traction thus far,” he said. Instead, “as all of those competitors were coming to market, our share actually went up, such that in the June quarter” three of every four tablets sold was an iPad, he said, citing IDC data. “I feel very, very confident about our ability to compete and extremely confident in our product pipeline,” he said. Apple, from the start, expected there “would be a huge market” in tablets, but it “has been even greater than we thought,” he said. Apple has sold 40 million iPads cumulatively, he said. He predicted the tablet market “will be larger than the PC market.”
The company “set a new record” for the iPad in Q4, with sales of 11.1 million, up from 4.2 million in Q4 the prior year, said Oppenheimer. Apple shipped the iPad 2 in 20 more countries in Q4, ending the quarter with distribution in 90 countries, he said. Q4 revenue from sales of iPad and iPad accessories totaled $6.9 billion, up from $2.8 billion in Q4 the prior year, he said. Apple ended Q4 with about 2.5 million iPads in channel inventory, an increase of about 1.45 million from the June quarter, which placed Apple within its “target range of four to six weeks,” he said.
In the fiscal year that ended Sept. 24, Apple “blew past historical records by selling over 72 million iPhones, 32 million iPads and almost 17 million Macs,” Oppenheimer said. It opened 40 new stores in the year, he said. The company expects to report revenue of about $37 billion and earnings per share of about $9.30 for Q1 of fiscal 2012, it said.