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Apple Fourth Quarter 2015 Earnings Call : October 27, 2015

Join us at 5PM Eastern Time today for an up to the minute breakdown of the ins and outs of the conference call, hosted by Apple CEO Tim Cook and others. Will Apple's stock fall again at the end of the call after reporting stupendous earnings? Wait and see!
9:06 - You're early! Come back closer to 5PM Eastern Time for our full launch of today's event, spanning both the quarter, and the year.
4:36 - The numbers are up! We'll be posting them in full on the main MacNN page. Looking good...
4:39 - $51B in net sales for the quarter, up from $42B in the year-ago quarter.
4:40 - Net income of $11.1B, as opposed to $8.5B in the year-ago quarter.
4:41 - $290 billion in assets on hand, including cash and property.
4:42 - We'll be back in 15 minutes with live coverage of the 5PM ET / 2PM PT financial results call.
4:54 - Great numbers all around, except for a decrease in China sales. Wall Street's not going to like that at all.
4:57 - AAPL is up a bit since close, but not enough to make any kind of definitive statement on a resounding win from the earnings.
5:00 - Apple could safely play We Are the Champions here, instead of the classical. Really astounding numbers, since it only includes a scant few days of iPhone 6s series sales.
5:02 - Some chatter on an open mic. "Quite soothing" somebody called the music. Here we go!
5:02 - Tim Cook leads.
5:04 - $234B on the year, up 28%, largest revenue growth ever. Growth in one year was greater than the revenue of 90% of the companies on the Fortune 500.
5:04 - Foreign Exchange rate problems mentioned again.
5:04 - 300M devices, 231M iPhones, 55M iPads, 21M Macs sold
5:04 - 100B cumulative app store downloads
5:05 - "very early innings" of the Apple Watch
5:06 - Ending the year on a high note, with 48M iPhones sold in September.
5:06 - New launch record for 6S, 6S plus
5:06 - Exited the quarter with demand for iPhones exceeding supply
5:07 - 5.7M Macs in September. App store quarterly record for number of customers and revenue. $5.1B in services.
5:07 - Apple Watch sales up sequentially, ahead of Apple expectations. No numbers given, but that's expected.
5:07 - Over 13K Watch apps, 1300 native apps.
5:08 - Revenue in greater China doubled YOY
5:08 - 25th store in greater China opened Saturday
5:09 - Huge first day for new Apple TV, no numbers given (not relevant to quarterly results)
5:09 - iPad Pro ships next month, no date given.
5:10 - iOS 9 on track to be downloaded more times than any other release in Apple history, 61% of users on new OS.
5:10 - El Capitan: no numbers
5:10 - 15M accounts on Apple music. 6.5M paid (already knew the latter)
5:11 - Apple Pay: double digit transaction growth.
5:11 - Starbucks Apple Pay in all stores by end of year.
5:12 - Partnering with American Express for global access to Apple Pay, Australia and Canada this year; Spain, Singapore, Hong Kong early 2016.
5:12 - 1600 Health Kit solutions, 50 brands working on it.
5:12 - 50 auto models announced with CarPlay support
5:12 - ResearchKit: nothing new
5:13 - Apple News: in use by 40 million iOS users. News just launched in UK, Australia
5:13 - Enterprise: $25B in annual Apple revenue, up 40% over prior year. "Major growth vector"
5:14 - Luca Maestri on the call now
5:14 - (Reiterating numbers already released)
5:15 - All-time high services revenue, and Mac sales credited to offset negative effects of currency exchange and challenging financial climate
5:15 - Strong emerging market performance, 31% of total quarterly revenue
5:15 - Lower than expected costs this quarter
5:16 - iPhone sales up 22% YOY
5:16 - iPhone sales up 120% in China, up 20% in several markets across the world
5:16 - ASP for iPhone up $67 YOY to $670
5:17 - iPhone inventory below target range of 5-6 weeks
5:17 - Mac growth driven by MacBook, MacBook pro strong, below 4-5 week inventory range
5:18 - 9.9m versus 12.3m YOY iPad sales, customer metrics extremely positive
5:18 - Corporate buyers = 95% satisfaction rate
5:18 - NPD = 73% market share of tablets over $200, 74% share of US commercial tablet market
5:19 - 55 apps in IBM catalog
5:20 - Pushing exciting prospects for iPad Pro
5:20 - Appstore revenue up 25%, customers up 18%.
5:21 - China App Store revenue up 125% YOY
5:21 - 1M members in dev program today in China
5:22 - Retail, 7 new stores opened, 463 retail stores globally. 2016 open or replace 40-50 stores with emphasis in China.
5:22 - iPhone Upgrade Program: customers very interested at retail.
5:23 - (discussion of deferred revenue for iPhone Upgrade Program)
5:23 - $205.7B in CASH on hand. 91% outside US.
5:24 - Fifth accelerated share purchase program completed, $143B of $200B share buybacks completed.
5:25 - Outlook: revenue $75.5B - $77.5B on the next quarter. Dividend $0.52 per share for this quarter.
5:25 - Question and answer time!
5:26 - Question: How do you get comfortable with the lower prognosis for the December quarter.
5:27 - Tim: Growth quite good. Problem is still currency exchange. We believe that iPhone will grow in Q1, based on switcher point of view. Last quarter, 30% of sales were switchers.
5:28 - Emerging Market marketshare low, LTE penetration very low. China: enormous change over next several years.
5:28 - MacNN's take: Apple doesn't operate on a quarterly clock. Be patient is what Tim is saying.
5:29 - Tim: "transitional kind of thing."
5:30 - Question: More that Apple can do in services growth, as Facebook and Google are capitalizing on iOS growth.
5:31 - We think that in the aggregate, that upgrade programs may reduce upgrade cycles. iPhones sold second-hand are sold at a lower price than Apple can hit, which feeds service growth.
5:32 - Gene Muenster: How do you think about the iPhone upgrade cycle compressing over the next few years. When will the iPhone upgrade program see international release.
5:33 - Tim: Upgrade Program: broader program beyond just Apple's. Many carriers offering these plans. Program has positive impact on replacement cycle, repeating different iPhone pricing on resale helping in an "ecosystem point of view."
5:34 - Luca: iPhone Upgrade is a purchase, not a lease from an accounting standpoint. Popular in US, small percentage overall worldwide. Negligible impact on ASP.
5:35 - Tim: begin seeing financial impact a year from now
5:36 - Question: How much benefit from late September iPhone orders. What are the factors affecting growth in December and beyond?
5:37 - Tim: No guidance for January. Reiterates previous points about international trends being long term.
5:37 - Tim: "our forecasting doesn't work like you articulated."
5:38 - Follow-up: What are the effects on currency exchange for the rest of the year. What are your plans to mitigate?
5:39 - Luca: Portfolio of hedge funds that provide some protection, but that diminishes as you go through the year. Protection through 2016 will come off.
5:39 - Luca: "first quarter guidance is an incredible level of guidance given the foreign exchange headwinds."
5:40 - Luca: "we'll see over the course of the year."
5:41 - Question: Enterprise business. Small sales force internally, how do you attack Enterprise going forward? Shift in product matrix?
5:41 - Tim: Apple is changing and improving iOS with more enterprise as we go. "Continuation of that cadence, perhaps with a little more intensity."
5:42 - Tim: "I do not envision Apple having a large enterprise sales force." Apple will add more people on engineering.
5:43 - Followup: More details on China, please.
5:43 - Tim: China growth 87%, market grew 4%. Market minus iPhone contracted slightly.
5:43 - Tim: iPhone 6 was #1 selling phone in China last quarter, 6 plus number 3.
5:44 - Tim: "if I were to shut off my web and shut off my TV and just look at the number of customers in our stores... I wouldn't know there was any economic issue at all in China."
5:44 - Tim: misunderstanding in western world about China's economy.
5:45 - Tim: Apple is investing in China for the decades ahead. Forecasting China to be Apple's biggest market in the world.
5:47 - Question: Two sources of iPhone demand; current versus new customers. Question about 33 percent of user base installed to a iPhone 6.
5:47 - Tim: Android switcher 30% explanation. Customers who purchased an iPhone and had a smartphone, 30 percent were from Android. That number is the largest Apple has recorded since Apple started measuring three years ago.
5:48 - Tim: 2016 versus 2015, new customers: Hard to predict. Happy with how we're doing. Notes fixation on upgrade rate in the industry. Low number means 69% of the people prior to 6s who haven't upgraded yet, seen as opportunity.
5:49 - iPhone upgrade program will accelerate the percentage of users on a 6s versus older phone.
5:50 - Tim: Nobody's asking me about iPad on the call!
5:51 - Question: Roughly what percentage of iPhone shipments come to installed base versus new shipments.
5:51 - Tim: No idea.
5:51 - Question: response in terms of demand because of local prices increasing
5:52 - Luca: iPhone sales very resilient, shown in growth rate. Prices adjusted for launch of 6s, 6s Plus.
5:53 - Tim: in China, over 50 percent of purchasers were buying first iPhone.
5:54 - Question: Gross margin dynamics, headwinds on lower margins in Q1.
5:55 - Luca: positive leverage from seasonal volume, commodity environment favorable at the moment; negatives include new product launches that tend to have higher costs and price structures.
5:56 - Follow up: iPhone growth about sales or revenues, return to inventory range in Q1?
5:56 - Tim: no idea on return to quarterly inventory levels until end of quarter, growth on iPhone on revenue and units.
5:57 - Question: Mix of iPhone 6 and 6s, versus 5 and 5s.
5:57 - Tim: 6s most popular iPhone.
5:58 - Follow up: time where you'd not have to come into an Apple store to take advantage of Apple's upgrade program?
5:58 - Tim: Solved that problem in 2007, but had to change it to scale in a major way. "always in our mind that one day we'd like to make things as easy as possible for the customer."
5:59 - That's all for this call!

Previous Live Event Coverage:

2016 WWDC Keynote, June 13, 2016
Apple second quarter, 2016 earnings report, April 26, 2016
Apple 'Let Us Loop You In" Press Event, March 21, 2016
The Encryption Tightrope; Balancing Americans' Security and Privacy, March 01, 2016
Apple quarterly earnings report, January 26, 2016, January 26, 2016
Apple fourth quarter 2015 earnings call, October 27, 2015
Apple September 9 "Hey Siri" launch event, September 09, 2015
Apple's third quarter 2015 earnings announcement and conference call, July 21, 2015
2015 WWDC Keynote - The Epicenter of Change, August 06, 2015
Apple's September 9 event, September 09, 2014
WWDC 2014 keynote, June 02, 2014
WWDC 2014, June 02, 2014
Apple fiscal Q4 conference call, October 28, 2013
Apple's October 22 media event, October 22, 2013
Apple's September 10 event, September 09, 2013
Samsung Unpacked at IFA, September 04, 2013
Samsung Unpacked 2013 Episode 2, September 04, 2013
Apple fiscal Q3 2013 , July 23, 2013
WWDC 2013 Keynote, June 10, 2013
Apple fiscal Q2 2013 earnings call, April 23, 2013
Apple iPad mini unveiling, October 23, 2012
Apple iPhone 5 launch event, September 12, 2012
Apple Financial Conference Call Q3 2012, July 24, 2012
Live 2012 WWDC Coverage, June 11, 2012
Apple fiscal Q2 2012 results call, April 24, 2012
Apple cash balance call, March 19, 2012
Apple's iPad 3 Event, March 07, 2012
Apple fiscal Q1 2012 results call, January 24, 2012
Apple FYQ4 Quarterly Results, October 18, 2011
Apple - Let's Talk iPhone, October 04, 2011
Apple July Conference Call, July 19, 2011
Live WWDC 2011 Event Coverage, June 06, 2011
Google I/O 2011 day one keynote, May 10, 2011
Apple fiscal Q2 2011 results call, April 20, 2011
March 2 iPad event, March 02, 2011
Intel Thunderbolt Technology, February 24, 2011
HP webOS event, February 09, 2011
Google Android event, February 02, 2011
Apple January January 2011 fiscal results call, January 18, 2011
Verizon NYC Event, January 11, 2011
Google Chrome Event, December 07, 2010
Acer's Interact event, November 23, 2010
Back to the Mac, October 20, 2010
Apple's FYQ4 2010 results, October 18, 2010
Google TV Intro, October 12, 2010
Apple Sept 1 music event, September 01, 2010
BlackBerry August 3 Event, August 03, 2010
Apple iPhone 4 Press Conference, July 16, 2010
Sony E3 Keynote, June 15, 2010
Nintendo E3 Keynote, June 15, 2010
Microsoft E3 Keynote, June 14, 2010
WWDC 2010, June 07, 2010
D8 conference 2010, June 01, 2010
Google I/O Keynote II, May 09, 2010
Google I/O Keynote, May 19, 2010
Apple earnings - 2010, April 20, 2010
iPhone OS 4.0, April 08, 2010

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