World of Apple

Apple yesterday filed a Form-8K with the Securities and Exchange Commission (SEC) in the United States to inform investors that the company’s board had unanimously a one time bonus for Apple COO Tim Cook.

Tim Cook who took the place of Steve Jobs during the first half of 2009 was awarded a discretionary bonus of $5,000,000 and 75,000 stocks “in recognition of his outstanding performance in assuming the day-to-day operations of the Company for the period in fiscal 2009″. The recommendation for compensation was put forward by Steve Jobs.

View entire form 8K (PDF).

Apple HQ, 1 Infinite Loop | Photo by Wysz - Flickr

Yesterday afternoon Apple held its annual shareholder meeting at its Cupertino headquarters. This year discussions focused primarily on the company’s financial situation and environmental issues.

At the meeting the shareholders re-elected Jobs and the Apple board of directors. The topic of previous board member Eric Schimdt came up when one shareholder asked if the Google CEO had conducted properly while serving on Apple’s board. Jobs said that “Eric Schmidt conducted himself appropriately and recused himself on matters that might involve conflict”.

Also approved was Ernst and Young as Apple’s public accounting firm for the year 2010.

During the meeting two shareholder proposals were voted down, in-line with board recommendations. The first proposal read as follows, “Shareholders request that the Board of Directors prepare a sustainability report describing corporate strategies regarding climate change, specifically to reduce greenhouse gas emissions and address other environmental and social impacts such as toxics, recycling and employee and product safety.”

The board rebutted with, Apple “is already substantially fulfilling—and in many respects exceeding—the request for information in Proposal No. 6″.

On the second opposed and denied proposal was for Apple to amend the bylaws to establish a sustainability committee “to ensure our corporation’s sustained viability”…”responding to changing conditions and knowledge of the natural environment, including but not limited to, natural resource limitations, energy use, waste disposal, and climate change.”

The board opposed the proposal with the following, “[Apple] takes environmental sustainability very seriously, and the Company has made significant progress in reducing the environmental impact of the Company’s operations and products, as described in the Company’s statement in opposition to Proposal No. 6, above. However, the Board does not believe a Board committee dedicated to this issue is necessary”.

After all the proposals were out of the way Steve Jobs, Tim Cook and Peter Oppenheimer fielded some questions.

One shareholder asked if Jobs has returned to Apple in a limited capacity, the CEO simply replied with “No” adding that while he was out, “Tim took the helm and Apple didn’t miss a beat.”

Other areas of interest mention include Jobs’ view on Apple’s financial situation. A present shareholder asked if Apple would use it’s current $40 billion cash and short-term investments to pay dividends, Jobs refuted saying that Apple is holding cash to take “big, bold” risks.

Jobs said that China is a market with lots of promise and said that Apple would open 25 retail stores in the near future.

Related: Apple’s 2010 Proxy statement.

Following the release of Apple’s first fiscal quarter results earlier today the company held a conference call for media and analysts. Below is a list of notes from the conference call.

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Apple today announced financial results for its fiscal fourth quarter which ended on December 26, 2009. Apple posted revenue of $15.68 billion and a net quarterly profit of $3.38 billion, or $3.67 per diluted share. These results compare to revenue of $11.88 billion and net quarterly profit of $2.26 billion, or $2.50 per diluted share, in the year-ago quarter. Gross margin rose to 40.9 percent from 37.9 percent in the year-ago quarter.

During the quarter Apple also sold 3.36 million Macs representing a 33 percent unit increase over the year-ago quarter. Apple also sold 8.7 million iPhones in the quarter, representing 100 percent unit growth over the year-ago quarter as well as 21 million iPods during the quarter, representing an eight percent unit decline from the year-ago quarter.

“We are very pleased to have generated $5.8 billion in cash during the quarter,” said Peter Oppenheimer, Apple’s CFO. “Looking ahead to the second fiscal quarter of 2010, we expect revenue in the range of about $11.0 billion to $11.4 billion and we expect diluted earnings per share in the range of about $2.06 to $2.18.”

Apple has also adopted the Financial Accounting Standards Board’s amended accounting standards related to certain revenue recognition. Adoption of the new accounting standards significantly changes how Apple accounts for certain items, particularly sales of iPhone and Apple TV. Apple was required to adopt the new accounting standards no later than the first quarter of fiscal 2011. Apple elected to adopt the new standards during the first quarter of fiscal 2010, as reflected in its Quarterly Report on Form 10-Q for the quarter ended December 26, 2009, which was filed with the SEC on January 25, 2010. The Company also filed a Form 10-K/A to amend its Form 10-K for the year ended September 26, 2009.

Because Apple began selling both iPhone and Apple TV in fiscal 2007, Apple retrospectively adopted the new accounting principles as if the new accounting principles had been applied in all prior periods. Consequently, the financial results of each quarter from fiscal 2007 through fiscal 2009 have been revised.

On Monday Apple will announce its first results for the 2010 fiscal year. The results which will be watched closely by analysts, bloggers and wall street are expected around 4.30PM EST (9.30PM GMT) with a conference call being held at 5PM EST (10PM GMT).

As is always the case before Apple’s fiscal results, analysts have been making their predictions for what Apple will announce.

During the last quarter of 2009 results Apple CFO Peter Oppenheimer said, “Looking ahead to the first fiscal quarter of 2010, we expect revenue in the range of about $11.3 billion to $11.6 billion and we expect diluted earnings per share in the range of about $1.70 to $1.78.”

The street consensus polled by Thomson Financial Network is for Apple to report earnings of $2.07 a share on revenue of $12.05 billion. The street also expects Apple to sell 8.96 million Macs, 20.67 million iPods and 3.09 million Macs.

Over the weekend it was reported that Apple has agreed to purchase Lala a start-up based in Palo Alto, California. Word of the acquisition came from inside the four year old start up late last week.

Lala is a lot like the iTunes store in the way users purchase music, but instead of the tracks being downloaded they are stored on the “cloud” and can be listened to by the purchaser with any Internet accessible device. Users of Lala also have the option of downloading tracks but the price is much higher between 69 and 79 cents compared to just 10 cents streamed from the web.

In a rare comment to The New York Times, Apple spokesman Steve Downling said that “[Apple] buys smaller technology companies all the time, and we generally do not comment on our purpose or plans.”

A person familiar with the deal did not disclose many details of the deal but did offer the opinion that Apple was most likely buying the company for its engineers and co-founder Bill Nguyen.

[Update] A Reuters source over the weekend disclosed that Apple is looking to add some kind of streaming model to the current iTunes store.

“Apple recognizes that the model is going to evolve into a streaming one and this could probably propel iTunes to the next level,”

Following Apple’s announcement of the most profitable quarter yet with sales of more Macs and iPhones than any previous quarter the company held a conference call to discuss the results further. Here are some notes of interest from the conference call:

• Apple began and ended the quarter with between 3-4 weeks of Mac channel inventory
• 50 percent of iPod buyers are buying their first iPod
• iPod touch sales up 100% year over year
• iTunes remains worlds largest music retailer, available in 23 countries
• Apple to expand iPhone carrier relationships in the UK and Canada
• iPhone in China later this quarter
• Sales of iPhones worth $4.5 billion during the quarter
• Apple retail stores had a record quarter, $1.78 billion in revenue
• Fifteen new stores open in quarter, total now 273
• Average stores revenue was $7.1 million, down from $7.6 million last year
• 45.9 million visitors to stores, compared to 42.7 million last year
• Tax rate was 26% during Q4
• $34 billion in cash at the end of the quarter, an increase of $2.9 billion from last quarter
• $3.1 billion in cash flow during quarter
• Looking forward: revenues between $11.3 billion and $11.6 billion, gross margin of 34%, tax rate to be about 30%. EPS between $1.70-$1.78. 18% net income growth expected.
• iPhone in China October 30th with China Unicom
• iPhone channel inventory, 2.1 million in the channel. Would like more.
• iPhone 3GS uptake phenomenal, took Apple by surprise
• 21 million iPhones during the fiscal year
• Portable Mac shipments up 35% year over year
• Snow Leopard sales double those of Leopard in first five weeks
• Air freight costs set to increase, Cook would not mention which product was involved but will be “an abnormal sequential increase”
• Mac sales benefitted from 50,000 unit order in state of Maine
• iPhone ships in 80 countries so far, iPhone 3GS available in 64, should be 80 by quarters end.
• Over 350 education institutions have approved iPhones for staff and students
• iPhone sell-through increased 38% year-over-year
• Conference call over

Apple today announced financial results for its fiscal fourth quarter which ended on September 26, 2009. Apple posted revenue of $9.87 billion with a net quarterly profit of $1.67 billion. These results compare to revenue of $7.9 billion and net quarterly profit of $1.14 billion, or $1.26 per diluted share, in the year-ago quarter. Gross margin was 36.6 percent, up from 34.7 percent in the year-ago quarter. International sales accounted for 46 percent of the quarter’s revenue.

Apple will continue to recognise revenue and cost of goods sold for iPhone and Apple TV over their estimated lives. The corresponding non-GAAP measures for the quarter are $12.25 billion of “Adjusted Sales” and $2.85 billion of “Adjusted Net Income.”

Apple sold 3.03 million Macs in the quarter alongside 10.2 million iPods and 7.4 million iPhones, representing year-over-year gains of 17 percent for Macs and 7 percent for iPhones, iPods sales declined eight percent compared to the year-ago quarter.

“We are thrilled to have sold more Macs and iPhones than in any previous quarter,” said Steve Jobs, Apple’s CEO. “We’ve got a very strong lineup for the holiday season and some really great new products in the pipeline for 2010.”

“We are delighted with our September quarter and fiscal 2009 results,” said Peter Oppenheimer, Apple’s CFO. “For the full year, we grew revenue by 12 percent and net income by 18 percent in extraordinarily challenging times. Looking ahead to the first fiscal quarter of 2010, we expect revenue in the range of about $11.3 billion to $11.6 billion and we expect diluted earnings per share in the range of about $1.70 to $1.78.”

As is routine towards the end of a fiscal quarter Gartner and IDC last week issued numbers estimating Mac sales in the United States.

Gartner estimates that Apple shipped 1.572 million Macs, representing growth of 6.8% year-to-year, giving the company an 8.8% market share amongst computer manufactures in the U.S.

IDC estimated slightly higher numbers, 1.64 million Macs, up 11.8% year-to-year for 9.4% market share.

Later today Apple will announce the true worldwide sales figures for Macs.

Apple will today announce it’s fourth quarter 2009 fiscal results. Wall street and analysts alike are looking for Apple to impress and once again beat expectations.

Apple which is scheduled to announce the results at 2 p.m. pacific, 5 p.m. eastern and 10 p.m. London time will likely also beat its own forecast which it offered during the Q309 conference call.

During the Q309 results announcement Apple CFO Peter Oppenheimer said, “Looking ahead to the fourth fiscal quarter of 2009, we expect revenue in the range of about $8.7 billion to $8.9 billion and we expect diluted earnings per share in the range of about $1.18 to $1.23.”

The Street via Thomson Financial is looking for Apple to report $1.42 a share on revenue of $9.2 billion. On the sales side the street is looking for iPhone sales between 7.5 and 8 million bad Mac sales between 5.2 and 6 million. iPod sales are expected to fall between 9.9 million and 11.2 million.

It should also be noted that the generally accepted accounting principles (GAAP) rules have been redefined allowing Apple to account for iPhone revenue immediately in a quarter not spread over two years. It is not known whether Apple will adopt this model or whether the company will continue to report GAAP and non-GAAP results.

Chart courtesy of Philip Elmer-DeWitt of Apple 2.0