Peter Oppenheimer

Apple announced monster sales of 37 million iPhones yesterday for the holiday quarter that spanned 14 weeks and ended Dec. 31, 2011. It’s a 128 percent unit increase and 133 percent revenue increase, annually, and enough to knock Samsung off the No. 1 spot it briefly held in the previous quarter. However, it appears that the popularity of the iPhone 4S also helped Apple thrive over Google’s platform, especially with Android backers such as Motorola Mobility, HTC and Sony Ericsson reporting disappointing results.

According to research firm Kantar Worldpanel ComTech (via Reuters), iPhone sales gave iPhone a lead over Android in smartphone sales in the United States. Specifically, Apple’s share of the U.S. market during October to November of last year doubled from 22.45 percent a year ago to 44.9 percent. Meanwhile Google’s Android smartphones dropped from 50 percent to 44.8 percent in the same period. Kantar’s global consumer insight director Dominic Sunnebo:

Apple has continued its strong sales run in the U.S., UK and Australia over the Christmas period. Overall, Apple sales are now growing at a faster rate than Android across the nine countries we cover.

Another way to look at iPhone numbers: The iPhone business generated $24.42 billion revenue. During the same quarter, all of Microsoft raked in $20.89 billion revenue. In fact, all of Apple’s holiday-quarter revenues and profits were two times higher than Microsoft’s.

Yet another look at iPhone numbers: Apple sells more iPhones in a day than babies born.

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Chart via

Apple had another blowout quarter this holiday and set records across the board.  iPhones, which many estimated optimistically at 30 million, leapt to over 37 million to create the biggest quarter ever.  iPads crossed 15 million for the first time, and even Apple’s venerable Mac line crossed 5 million units for the first time (likely helped by the popular MacBook Air lineup). iPods, if you needed a downside, were off by 20-percent —which is not terrible, because Apple did not upgrade most of the iPods available last Christmas.

Apple recorded revenues of $46.33 billion and record quarterly net profit of $13.06 billion, or $13.87 per diluted share.

(Click to enlarge)

“We’re thrilled with our outstanding results and record-breaking sales of iPhones, iPads and Macs,” said Tim Cook, Apple’s CEO. “Apple’s momentum is incredibly strong, and we have some amazing new products in the pipeline.”

“We are very happy to have generated over $17.5 billion in cash flow from operations during the December quarter,” said Peter Oppenheimer, Apple’s CFO. “Looking ahead to the second fiscal quarter of 2012, which will span 13 weeks, we expect revenue of about $32.5 billion and we expect diluted earnings per share of about $8.50.”

The full press release follows, and do not forget the live blog coming shortly.

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The Grand Central Terminal store opening had Steve Cano and Bob Bridger in attendance

Until November 1, 2011, Apple’s widely successful retail branch was headed by Ron Johnson, J.C. Penney’s new CEO. Since announcing his leave in June of this year, discussion has run ramptant in regards to the successor of Apple’s vital retail division’s leader. Under Ron Johnson sat three central executives responsible for the upkeep and success of Apple’s retail business: Jerry McDougal, Vice President of Merchandising; Bob Bridger, Vice President of VP of Real Estate; and Steve Cano, Senior Director of  International Retail Operations.

In early November, a report claimed that Steve Cano was tapped as the successor of Ron Johnson, but Apple quickly shot down this report and provided comment to 9to5Mac on the situation:

The search for a replacement for Ron Johnson continues, and Apple has nothing to announce about this subject at this time.

With Apple yet to announce a successor for Ron Johnson, the above comment still stands true. Apple has been actively searching for a new retail chief and according to a report from August, Apple has been working with world-renowned executive search firm Egon Zehnder International to find their new retail chief. At this point, it also appears that Jerry McDougall and Bob Bridger won’t be running Apple retail as neither of them are running the retail show right now.

So, who is running Apple retail? 
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UPDATE [Thursday, December 1, 2011 at 8:50am ET]: Carrier NTT DoCoMo has issued an official statement addressing the Nikkei Business report, included at the end of the article.

According to the Japanese blog Macotakara, which relayed a Nikkei Business story, Apple is gearing up for a 2012 release of both 4G LTE iPhone and iPad on NTT DoCoMo, the predominant mobile phone operator in Japan. According to the machine-translated article:

NTT DOCOMO releases iPad for LTE in the summer of next year and releases iPhone for LTE by autumn.

The Fall 2011 timeframe for a 4G LTE iPhone 5 sounds right as it’s about a year since the October 14 debut of iPhone 4S. The carrier’s president Takashi Yamada and vice president Kiyoyuki Tsujimura allegedly met with Apple CEO Tim Cook mid-November to discuss the deal. They reportedly “agreed in principle” to sell both the next-generation iPhone and iPad. The executives apparently pinned down the rules of the game at the meeting, including order commitment.

Despite the rumor-mill insisting that Apple was readying a 4G LTE iPhone, the company’s management downplayed the fourth-generation Long Term Evolution radio technology because the current crop of 4G LTE chips are not fully optimized for low power consumption on mobile devices. Apple’s chief financial officer Peter Oppenheimer said on an April 2011 earnings call:

The first generation of LTE chipsets force a lot of design compromises with the handset, and some of those we are just not willing to make.

The Wall Street Journal reported mid-November that negotiations with carriers in Asia came to a standstill because Apple was requiring iPhone sellers to commit to too large a volume. Additionally, NTT DoCoMo wanted to control what software goes on users’ iPhones, a concession Apple was unwilling to make.

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A few Apple execs have been departing over the past few weeks which might lead some to believe that Apple could have a talent retention problem in the wake of the recent leadership transition.

Perhaps hoping to put that kind of talk to rest, Apple just dropped fat bonus stock on their heavy hitters according to SEC filings.  With Apple’s stock riding at 400-ish per share, the below bonus shares are certainly a great incentive to stay – worth $60 million/each at today’s value.

Bruce Sewell — 150,000 shares, 50 percent vest on June 21, 2013, 100 percent on March 21, 2016
Jeffrey Williams — 150,000 shares, 50 percent on June 21, 2013, 100 percent on March 21, 2016
Philip Schiller — 150,000 shares, 50 percent on June 21, 2013, 100 percent on March 21, 2016
Peter Oppenheimer –150,000 shares, 50 percent on June 21, 2013, 100 percent on March 21, 2016
Robert Mansfield — 150,000 shares, 50 percent on June 21, 2013, 100 percent on March 21, 2016
Scott Forstall — 150,000 shares, 50 percent on June 21, 2013, 100 percent on March 21, 2016
Eddy Cue — 100,000 shares, 25 percent vest September 21, 2014, 100 percent September 21, 2016.

Strangely, there is no mention of Jonathan Ive who could be considered “on a different level” since Steve Jobs made him untouchable (though there have been rumors that he may want to retire).  Perhaps that’s why he’s the only guy without a big fat smile, above. (Ha, actually Apple isn’t required to file bonus paperwork with the SEC for Ive –

…Jonathan Ive, the company’s senior vice president for industrial design, whose position at the company does not trigger S.E.C. rules requiring public disclosure of stock awards.

– Because his role isn’t important to Apple’s well being?!)

CEO Tim Cook already has a huge bonus package (1 million shares) if he sticks around to 2021.
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Lion just hit the Mac App Store!!  Ladies and Gentlemen, start your downloads!

The $29.99 download is 3.5GB so your download times may vary.  After Lion downloads we are expecting an update to iWork shortly as well.  On the hardware side we are expecting some new Sandy Bridge MacBook Airs, new Mac Minis and a new Thunderbolt Display as well.

How fast is your download?  Are you getting the good speed?  Full specs and details below:

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Apple’s beautiful Bejing Retail Store

Apple felt incredibly bullish on China in today’s conference call, rattling off numbers that even Tim Cook admitted they wouldn’t have believed if they had been told a year ago.  How big is China for Apple?

In the year ago quarter, Apple counted $630 Million in revenues from China.  Today, Apple grew that by a factor of six to $3.8B of the total $28+B of their total revenues for the quarter.  That’s 13.3% of Apple’s total business by revenue which now comes from China.

To put that in perspective, $3.8B would have been over two-thirds of Apple’s 2007 (iPhone release) same quarter revenue and more than Apple’s whole global revenue for June ’05.

But ‘we’re only scratching the surface’.

Cook talked again about pre-paid phones (which are dominant in China) and a deal with the 600M-user China Mobile which is said to be in the wings.  Apple is also said to be exploring a cheaper iPhone offering which would appeal to a much broader swath of the Chinese market (Indian too).  This comes against a backdrop of Google Chairmen Eric Schmidt who is also bullish on Asia for Android.

Apple is also being aggressive in their China retail stores, choosing to open larger flagship stores which take more time to build.  CFO Peter Oppenheimer mentioned that the Hong Kong Flagship store at the IFC would be opening this quarter.  But Apple has an order of magnitude more stores opening up across China.  Apple now sells through four stores.  They have over 30 planned just for the next year.

If Apple’s growth in China stays on the current pace, which ‘scratching the surface’ seems to at least partially imply, China will account for over $20B in revenue at this time next year – which could start approach Apple’s US revenues even if Apple continues to grow globally as it has.

Below is an edited transcript of Cook’s remarks on China from Macworld:
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mockup

On the earnings call Q&A just now, CFO Peter Oppenheimer said that a ‘September Quater  product transition’ would affect the revenues for the upcoming quarter.  Obviously, that screams iPhone, which is now Apple’s biggest product.

To be clear, the September Quarter spans three months so it doesn’t necessarily mean ‘September’…but that isn’t unreasonable either.

On that note, he also mentioned in the opening statement that 220 million iOS devices have been sold all time.  We’re not sure if that includes AppleTVs.

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image via Bloomberg

As part of the prepared statement of today’s earnings call, CFO Peter “Griffin” Oppenheimer told the audience that Lion was launching tomorrow.  In case you didn’t know.

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