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.

• Quarterly Mac sales grew 33% year over year, 17% growth in market overall.
• 70% year over year growth in desktops.
• Average Selling Prices (ASPs) of Mac units fell on average 6% year-over-year, but iPod ASPs rose 9%. iPhone ASPs were down 5%.
• Portable sales increased 18% year over year.
• iTunes store recorded a record quarter.
• Apple ended quarter with target range of 4-6 weeks of iPod channel inventory.
• Record iPhone sales during the quarter, 100% growth over year-ago quarter.
• Retail store revenue $1.97 billion, 13% year over year increase.
• Half of Macs sold in retail stores sold to those who never owned a Mac before.
• 10 new retail stores opened in quarter, total of 283 stores now open.
• Avenue revenue per store was $7.1 million. Retail margin was $481 million, up from $409 million in year ago quarter. Record 50.9 million visitors in quarter, compared to 46.7 million in year ago.
• Apple expects to open 40 to 50 stores in 2010, half expected to be international.
• Tax rate for quarter was 29%
• Mac sales in Italy, France, Switzerland and Spain all grew at 40% or higher. Australia was up 70%, China was up almost 100%.
• Apple reiterates that AT&T is a great partner. Apple has confidence in AT&T’s plans to improve its network.
• iPod touch sales up 55%.
• We acquired Quattro to give developers a seamless way to make money off their apps, especially free apps.

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.

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.

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,”

• 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 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.”

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 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

The data which is gathered only through “brick-and-mortar” retail channels shows a continuing trend for Apple, during May 2009 Mac sales made up 88 percent of PCs selling for more than $1000. The data also showed that while the average Windows PC sold cost $515 the average Mac came in at $1400.

Overall Apple’s market share is estimated to be 8.7 percent in the US market.

• 4% year-over-year Mac unit growth (4% quarterly decrease)
• Notebooks make up two thirds of all Mac sales
• iPod sales down 4% year-over-year, channel inventory reduced by 400,000 units
• Saw decline in sales of iPod classic
• 50% of recent iPod purchasers are buying their first iPod, including in traditional strong iPod countries
• iPod touch sales grew 134% year-over-year
• Unable to keep up with iPhone 3GS demand
• Last week Apple saw the 8 billionth song puchased and downloaded from iTunes
• Around 50% of Mac sales still to switchers
• Retail stores saw 22% increase in visitors year-over-year
• Stock of low-end MacBook models constrained
• K12 sales weak, expected to be down to low budgets
• $99 iPhone 3G saw sales increase significantly
• iPod touch expected to grow significantly in Q4
• Component pricing rising in many areas but Apple intends to be competitive
• 1.83 million iPhone units in inventory
• Apple remains a debt-free company
• $2.3 billion in cash flow in Q3
• 258 Apple Stores now open; average of 254 stores open during the quarter, $5.9 million per store
• iPhone 3GS currently in 18 countries
• Apple’s goal is to build the best computers in the world
• Apple has pre-paid $500 million to Toshiba to secure NAND flash supplies
• In last quarter Apple shipped a new version of the most advanced mobile operating system (iPhone OS) with an install base of 45 million
• Goal is not to build the most computers but the best computers
• Unable to work out how to build a computer for the netbook market
• Many cheap netbooks are slow, small displays, cramped keyboards and Apple thinks people won’t be happy with such products
• Apple want to build product they’re proud of
• iPhone in China continues to be a priority project and wishes to be in the country within a year

Apple sold 2.6 million Macintosh computers during the quarter, representing a four percent unit increase over the year-ago quarter. The Company sold 10.2 million iPods during the quarter, representing a seven percent unit decline from the year-ago quarter. Quarterly iPhones sold were 5.2 million, representing 626 percent unit growth over the year-ago quarter.

“We’re making our most innovative products ever and our customers are responding,” said Steve Jobs, Apple’s CEO. “We’re thrilled to have sold over 5.2 million iPhones during the quarter and users have downloaded more than 1.5 billion applications from our App Store in its first year.”

“We’re extremely pleased to report record non-holiday quarter revenue and earnings and quarterly cash flow from operations of $2.3 billion,” said Peter Oppenheimer, Apple’s CFO. “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.”

“Mac NPD for the month of June needs to be flat in order for the entire quarter to be tracking in line with Street Mac consensus,”

A few hours after the note NPD released data suggesting that Mac sales were up 16% in the quarter, following this Munster released a second note adjusting his prediction to 2.6 million Mac units during the quarter.

To recap during the 3rd fiscal quarter of 2009 Apple released the new iPhone 3GS slashing the price of the iPhone 3G to $99 and at WWDC Apple refreshed and lowered prices across the entire notebook lineup.

The street is expecting Apple to announce earnings of $1.16 a share on revenue of $8.2 billion, to give some perspective Apple predicted revenue in the range of $7.7 to $7.9 billion on an earnings per share price between $0.95 and $1.00.

Some analysts have concerns over lower than expected Mac and iPod shipments but are overall still expecting between 2.3-2.5 million Mac unit shipments and 10-11 million iPod shipments. iPhone shipments are expected between 4.5 and 5 million.

Apple will announce its third fiscal quarter 2009 results on Tuesday July 21 at 2:00 p.m. PDT/5:00 p.m. EDT. This will be followed by a live conference call. Join World of Apple for live coverage.

In an official announcement it was revealed that Apple had selected North Carolina as the location for a new data centre which will see the company invest $1 billion over a nine-year period.

Gov. Bev Perdue today announced that Apple has selected North Carolina as the location for a new data center. The company is expected to invest more than $1 billion in the project over nine years.

“North Carolina continues to be a prime location for growing and expanding global technology companies,” said Perdue. “We welcome Apple to North Carolina and look forward to working with the company as it begins providing a significant economic boost to local communities and the state.”

It is expected that the data centre will employ 50 full-time employees and the legislation requires that the average wage exceed that of the county.

The bill will now go to Governor Beverly Perdue who is expected to pass it into law with no qualms.

The bill itself names no company as the beneficiary of the tax break but a story last week pinpointed Apple as the company that would be building a data centre in a rural area of the state.

As a result of the corrected vote count, Shareholder Proposal No. 5 Regarding Advisory Vote on Compensation, known as “Say on Pay,” was approved with a majority of votes cast.

Proposed at this years annual shareholder meeting by the AFSCME Employees Pension Plan, a public health union which holds over 21,000 Apple shares, the resolution will give all company shareholders an advisory vote on executive pay packages.

• Apple began and ended the quarter with between 3-4 weeks of inventory.
• Quarter was a tough comparison year over year because of 51% y/y growth during last year’s Q1 because of MacBook Air launch. Positive about Mac sales.
• Over 70% market share in MP3 players says NPD.
• Very excited about iPhone OS 3.0 this coming Summer.
• All iPhones sold on or after March 17th until iPhone 3.0 is released this summer will be recognised over 24 months.
• $1.47 billion in revenue from retail stores, 438,000 Macs sold through stores with “about half” new to Mac.
• Opened one store during the quarter taking the total to 252.
• Retail customers increased 33.7 in the year ago quarter to 39 million.
• Avg revenue store $5.9 million compared to $7.1 million year ago quarter.
• Cash in back is $28.9 billion at the end of March quarter.
• Apple is very excited about their product pipeline
• International sales accounted for 46 percent of the quarter’s revenue
• Company paid about $1.3 billion in taxes in the March quarter
• Tim Cook on netbooks: “For us, it’s about doing great products. When look at netbook, cramped keyboard, terrible software, junky hardware, very small screens, just not a consumer experience. Not something that we would put the Mac brand on, quite frankly. It’s not a space, as it exists today, that we’re interested in or that customers will be interested in long term. But do look at the space and see how customers respond to it. People who want a small computer that does browsing and email might want to buy an iPod touch or an iPhone.”
• Apple has interesting ideas in the netbook space.
• Hours away from sale of billionth app on App Store.
• Platform of iPhone and iPod touch is at 37 million units.
• Cook: Apple views AT&T as a very good partner, very happy with relationship and do not have plans to change it.
• Verizon is CDMA. GSM works for the world. That’s why AT&T works better for Apple right now.
• iPhone in Brazil, India and Russia but not China. Apple “working on it”.
• Peter Oppenheimer: “We look forward to Steve Jobs returning at the end of June.”
• Apple is very focused on the iPhone product plans.
• Apple considers Wal-Mart a key partner for sales of both iPhone and iPod.
• iPhone 1.83 million units in inventory at end of quarter.
• 21 million iPhones sold to date.
• On Palm Pre, “It’s difficult to comment of products that aren’t shipping.”
• No update on new campus construction, Cook: “We’re very busy on constructing new products.”
• Sakes of iLife and iWork exceeded expectations.
• Cook: “We think that Apple’s innovation in iPhone is leading industry by years. We think competition is great – as long as companies invent their own stuff.”
• Conference call ended.

• Q209 revenue: $8.16 billion vs. $7.69 billion market consensus (6% y/y growth)
• Q209 EPS: $1.33 vs. $1.09 consensus
• Q209 Mac shipments: 2.2 million vs. 2.1 million consensus (3% y/y decline)
• Q209 iPod shipments: 11.0 million vs. 10.0 million consensus
• Q209 iPhone shipments: 3.79 million vs. 3.3 million consensus (most later adjusted to 3.7 million)

Apple today announced financial results for its fiscal 2009 second quarter ended March 28, 2009. The Company posted revenue of $8.16 billion and a net quarterly profit of $1.21 billion, or $1.33 per diluted share. These results compare to revenue of $7.51 billion and net quarterly profit of $1.05 billion, or $1.16 per diluted share, in the year-ago quarter. Gross margin was 36.4 percent, up from 32.9 percent in the year-ago quarter. International sales accounted for 46 percent of the quarter’s revenue.

In accordance with the subscription accounting treatment required by GAAP, the Company recognizes revenue and cost of goods sold for iPhone and Apple TV over their estimated economic lives. Adjusting GAAP sales and product costs to eliminate the impact of subscription accounting, the corresponding non-GAAP measures* for the quarter are $9.06 billion of “Adjusted Sales” and $1.66 billion of “Adjusted Net Income.”

Apple sold 2.22 million Macintosh computers during the quarter, representing a three percent unit decline from the year-ago quarter. The Company sold 11.01 million iPods during the quarter, representing three percent unit growth over the year-ago quarter. Quarterly iPhone units sold were 3.79 million representing 123 percent unit growth over the year-ago quarter.

“We are extremely pleased to report the best non-holiday quarter revenue and earnings in our history,” said Peter Oppenheimer, Apple’s CFO. “Apple’s financial condition remains very robust, with almost $29 billion in cash and marketable securities on our balance sheet. Looking ahead to the third fiscal quarter of 2009, we expect revenue in the range of about $7.7 billion to $7.9 billion and we expect diluted earnings per share in the range of about $.95 to $1.00.”

The conference call can be streamed online live at www.apple.com/quicktime/qtv/earningsq209/ and will also be available for replay for approximately two weeks.

Ever accurate “amateur analyst” Andy Zaky has given his usual breakdown of what he believes Apple will reveal for the past financial quarter.

During the Q109 conference call Apple announced that looking forward to the second fiscal quarter results the company would expect “revenue in the range of about $7.6 billion to $8 billion and we expect diluted earnings per share in the range of about $.90 to $1.00.”

Apple is usually very conservative in its predictions but Zaky predicts that Apple will announce “$1.19 in EPS on $8.318 billion in revenue on a GAAP basis” and “On a non-GAAP basis, I expect Apple to earn $1.59 in EPS on $8.798 billion in revenue.”

Zaky also predicts that Apple could have sold about 10.5 million iPods, 2.45 million Macs and 3 million iPhones during the second fiscal quarter of 2009.

In Wu’s report the analyst argues that Apple is bucking the trend, up 45% since November compared to the NASDAQ at 20% and S&P500 up 7%. Additionally Wu gave some reasons for further Apple growth; WWDC is coming up in June where Apple is expected to release iPhone OS 3.0 and unveil new iPhone hardware, Mac sales are improving due to refreshes across the board and finally Wu describes “The potential for a new form factor, perhaps Apple’s answer to the netbook, with a large screen iPod touch-Mac hybrid.”

Apple is set to reveal fiscal Q2 results on Wednesday April 22 and seems to be causing a flurry of changes across analysts. Last week Barclays analyst Ben Reitzes raised his price target for Apple to $143 from $113.

Monday also saw Caris & Co.’s Robert Cihra raise his target to $150 from $120.

According to a detailed account by Prince McLean both a shareholder and blogger for AppleInsider the meeting was dominated by politics but also gave way to a happy birthday rendition and some questions for the executive team.

Both McLean and the Associated Press are reporting that Tim Cook fielded a question on Steve Jobs’ plans in which Cook assured investors, and shareholders that Steve Jobs plans to return to the company in June.

The investor had pressed for details about when the board of directors knew Jobs planned to step away from his daily duties. Apple director Arthur Levinson responded only by saying that since Jobs announced Jan. 14 that he needed to go on leave, “nothing has changed.”

Also despite the ban on communication devices some members of the Investor Village’s AAPL Sanity board posted a live blog from the event.

Here’s what they filed (all times EST):

12:04 Cheddarmuff: Just waiting to go in to the meeting. Hanging out with idannyb in the hall. Another solid apple shareholder.

No sign of Goldman yet… more to come later.

12:21 idannyb: Cheddarmuff and I are in the meeting now … Music playing and shareholders filing in. Reuters cornered us to ask a few questions. Apple rep tried to give the reporter the bums rush.

12:46 Cheddarmuff: They separated the media from the shareholders. Not sure who we will and won’t see at this point.

Agenda

1 welcome and intro’s
2 admin (quorum, etc)
3 present board nominees
4 stmts to shareholders and presentation of shareholder proposals
5 other
6 vote
7 q and a

Mgmt team just came in. Phil, johnny, tim

Gore is here.

12:51 Cheddarmuff: Andrea Jung from Avon is here

Looks like most of the mgmt team is here (no Steve of course).

About to begin.

12:54 idannyb: The BOD have taken seats
Gore and Andre Jung (Avon) + full Apple ex mgmt team (sans SJ) -TC, PO, jonny Ive, Ron J., Phil S.
TC….
Starting intros

12:54 Cheddarmuff: Tim talking

Dan cooperman general counsel.

Whole board is here. Tim said no jobs due to medical leave.

1:05 Cheddarmuff: “I am not a crook ” Shelton is not a fan of al gore. Already some drama and comedy (cracking jokes about this being like the academy awards…board election)

1:08 idannyb: Environmental activist now railing about Apple environmental sustainability. Calling out Gore

1:10 Cheddarmuff: Talking about political spending proposal. UAW rep talking

Hp, dell are better than apple at disclosing information.

1:21 Cheddarmuff: Starting to interesting…I like Sheldon, keeps it interesting. Just called the people proposing socialists.

Now talking about climate change.

There was one attempt to talk about jobs health that was shot down quick. Bet there will be more in the Q&A

1:23 idannyb: AFLCIO made a speech on universal health care … Tried to bring up SJ health. Cooperman cut him off
Another shareholder railed over “socialist” AFLCIO… Used profanity and then left the mtg.

Another environment activist took tv mike blasted Gore… Wants AAPL to get greener

1:32 Cheddarmuff: About to move toward q and a. Should be interesting.

1:40 idannyb: Proxy stuff over
TC PO and DC now on stage
Apple has increase rev 4xs in 4 yrs
$8 billio to $32 billion… Income growth even better
Mac and iPod share growing
iPhone 13.7 million iphone’s in 2008
Macbooks very green
iTunes team sold more of something than Walmart
iPhone in 70 countries
App Store success is staggering
Retail opened a store per week
Best experience
Top notebook provider to education in US
T Cook is on a roll!

1:44 idannyb: AFLCIO hitting hard on SJ health
Art Levenson responding.. Nothing new disclosed
We have met all disclosure

1:46 Cheddarmuff: First question about disclosure of Jobs health quoting 10b-5 rules. Saying company should correct bad data

Arthur levinsom responding…jobs still involved. Succession plan has regularly discussed. No disclosure about health or plan.

Next person is complimenting company for beautiful products. Wishes Steve well. Singing happy birthhday to Steve..EVERYONE singing.

[1:51 Reuters is reporting that the shareholders voted to re-elect the company's slate of directors and voted down several shareholder-sponsored resolutions regarding executive pay, sustainability and healthcare reform. (link)]

1:52 Cheddarmuff: Next person asking why there isn’t more diversity in exec team.

Tim- we take diversity very seriously.

Next person… Long preamble and complaining that apple is getting out of macworld.

Tim- I have very fond memories of Macworld. Where we are now with retail investment blows macworld out of the water. Also we can announce press conferences whenever we want now which is better for the company.

1:57 idannyb: TC responding to “keep macworld” speech… Spoke eloquently about Apple stores, Apple reaching so many customer and platform build of iphone and app store

1:59 idannyb: Far more responses being delivered by BOD members

2:04 idannyb: Too many soap box agenda driven questions this year…
No core shareholder vaule Qs
Tempted to grab a mic but mtg winding down

2:22 Cheddarmuff: Meeting over. I got to talk with Tim Cook after the meeting…a very nice guy. We overheard a discussion with Peter as well.

Got to talk with Jim Goldman on the way out. Nice guy.

# # #

The eight board members include; Al Gore Jr. (chair of Alliance for Climate Protection, Generation Investment Management, and Current TV), Steve Jobs (Apple’s CEO), Andrea Jung (CEO of Avon), Arthur Levinson (CEO of Genentech), Eric Schmidt (CEO of Google), Jerome York (CEO of Harwinton Capital), Bill Campbell (CEO of software maker Intuit), and Millard “Mickey” Drexler (CEO of retailer J. Crew).

In addition shareholders also voted down four proposals put forward by investors who have a large enough share in Apple to suggest major changes in company operation.

The proposals can be seen in the proxy documents starting on page 39 (document page 41).

As Bloomberg reports the meeting will give shareholders a chance to question Apple executives and directors on the state of Apple and most likely Steve Jobs’ health.

Steve Jobs has been on medical leave from Apple since mid-January and is set to return to the company in June.

AT&Ts CEO Randall Stephenson attributed iPhone sales as reason why AT&T fought the economy to report revenues up 2.4% (to $31.1 billion).

“The success of our iPhone 3G launch has driven wireless growth and helped redefine the wireless data space.”

Fortune offers some analysis of Apple’s deal with AT&T and in particular what has caused such growth for AT&T in 2008.

AT&T has activated 4.3 million iPhone 3Gs since its launch, 1.9 million in Q4 alone — more than double its iPhone activations one year earlier.
The average revenue from Phone users is 60% higher than the typical AT&T customer — thanks to that $30 per month data fee. Their heavy use of Web services helped drive AT&T wireless data use up 51.2% year to year, which as reader Jon in Brentwood, Calif., points out is not necessarily a good thing.
About 40% of the iPhone activations this quarter were new AT&T customers, either buying their first cellphone or switching from another carrier.
The churn rate — the percentage of customers who drop AT&T’s service — among iPhone owners is significantly lower than the rest of the network, sharply reducing marketing costs.

“We wanted to give an update on the Mac business from what we are picking up from our latest supply chain checks,” writes Wu in the note released Monday. “While new the iMac appears to be almost ready for primetime, what is holding it up appears to be business reasons and a potential small technical hurdle.”

According to Wu’s supply chain checks Apple is:

• Undecided on whether to use a quad-core processor or new higher powered dual-core processors. Wu noted that “While quad-core would provide a material improvement in performance and potentially jump start sales,” adding, “it could cannibalize the Mac Pro, its high-end tower.”
• Looking into whether the iMac’s cooling systems require redesigning “to deal with higher heat dissipation.”
• Delaying the release of the iMac due to the time of Snow Leopard. “While Leopard would take advantage of multiple cores, Snow Leopard takes it to the next level with better support for multi-core, multi-processors, and OpenCL, with enhanced graphics capability,” Wu wrote.

Wu retain his AAPL price target of $120.

During the call which will be available for replay shortly the two senior executives fielded questions on most subjects.

Netbooks

When asked about a netbook priced at around $500, Cook answered, “We’re watching that space, but right now from our point of view, the products in there are principally based on hardware that’s much less powerful than we think customers want, software technology that is not good, cramped keyboards, small displays.”

Adding, “We don’t think people will be pleased with those products. It’s a category we watch, we’ve got some ideas here, but right now we think the products are inferior and will not provide an experience to customers they’re happy with.”

Apple TV

During the call and in it’s results Apple declined to give specific numbers of how many Apple TV units it had shipped but Tim Cook did disclose that sales were up 300% year-over-year. Apple still considers Apple TV a hobby but Cook said, “We will continue to invest in it because we fundamentally believe there’s something there in the future.”

Steve Jobs

The question was inevitable and Barclays Capital analyst Ben Reitzes couldn’t help himself and asked straight up how Jobs was doing. Naturally Oppenheimer repeated the current Apple mantra, “Steve is the CEO of Apple and intends to be involved in major strategic decisions”.

Cook added that Apple has a strong executive team in charge of 35,000 employees who he described as “wicked smart”. Cook went onto explain that the values of Apple are “extremely well-entrenched,”

“And frankly, we don’t settle for anything less than excellence in every group in the company, and the self-honesty to admit where we’re wrong. And I think regardless of who is in what job, those values are so embedded in this company that Apple will do extremely well. I would just reiterate that Apple is doing the best work in its history,” said Cook.

iPhone nano

In response to a question on iPhone pricing Apple COO Tim Cook replied, “We are now in over 70 countries with the iPhone and you’re correct, some of them are non-subsidized markets. Examples are, the largest is in terms of size of the market, our sales are clearly materially less in those markets than they are in the subsidized markets with contracts. We are constantly evaluating the best way to play in these markets. We know there’s a huge opportunity here, and we will make adjustments in the future there to play in a better way.”

Cook went onto talk about speculation around the iPhone nano saying, “You know us, we’re not going to play in the low-end voice phone business. That’s not who we are. That’s not why we’re here. We’ll let somebody do that, our goal is not to be the unit share leader in the phone industry. It is to build the best phone.”

International sales accounted for 46 percent of the quarter’s revenue.

In accordance with the subscription accounting treatment required by GAAP, the Company recognizes revenue and cost of goods sold for iPhone and Apple TV over their economic lives. Adjusting GAAP sales and product costs to eliminate the impact of subscription accounting, the corresponding non-GAAP measures for the quarter are $11.8 billion of “Adjusted Sales” and $2.3 billion of “Adjusted Net Income.”

Apple sold 2,524,000 Macintosh computers during the quarter, representing nine percent unit growth over the year-ago quarter. The Company sold a record 22,727,000 iPods during the quarter, representing three percent unit growth over the year-ago quarter. Quarterly iPhone units sold were 4,363,000, representing 88 percent unit growth over the year-ago quarter.

“Even in these economically challenging times, we are incredibly pleased to report our best quarterly revenue and earnings in Apple history—surpassing $10 billion in quarterly revenue for the first time ever,” said Steve Jobs, Apple’s CEO.

“Our outstanding results generated over $3.6 billion in cash during the quarter,” said Peter Oppenheimer, Apple’s CFO. “Looking ahead to the second fiscal quarter of 2009, we expect revenue in the range of about $7.6 billion to $8 billion and we expect diluted earnings per share in the range of about $.90 to $1.00.”

Apple will provide live audio streaming of its FY 09 First Quarter Results Conference Call utilising Apple’s QuickTime. The live webcast will begin at 2:00 p.m. PST on January 21, 2009 at www.apple.com/quicktime/qtv/earningsq109/ and will also be available for replay for approximately two weeks thereafter.

Last quarter Apple offered a guidance for the Q109 quarter of $1.06 – $1.35 profit on $9.0 – $10.0 billion of revenue. Compare this to Q108 when Apple reported net earnings of $1.76 per share on revenue of $9.6 billion.

The market analysts have weighed in on what they believe Apple will report with expectations of $9.76 billion in revenue and earnings per share of $1.38.

Last week IDG reported that Mac shipments through the quarter had slowed after the strong pace earlier in 2008. Analysts expect Mac shipments of around 2.5 million units, iPod sales of 18.6 million units and iPhone shipments of 6.4 million with some estimates as low as 3.5 million.

The expectation of slowed iPod sales is accompanied with a silver lining as Apple is said to have shipped far more higher end iPod touch units allowing the company to offset volume with increased revenue.

“Although LG Display already had a relationship with Apple, the deal’s duration and the size of the advance show that the two companies are involved in a long-term, strategic alliance,” said Son Young-jun, a spokesman for LG Display.

LG already supplies displays for 70% of Apple’s desktop and notebook computers.

In line with recent green efforts by Apple the company has decided to not send out paper hard copies to every shareholder instead they can view it online at www.apple.com/investor or in the Notice of Internet Availability of Proxy Materials that will be mailed to Apple’s shareholders as of December 29, 2008. Apple’s 2008 Form 10-K was filed on November 5, 2008 and may also be viewed at www.apple.com/investor.

In his research Munster noted that Apple was offering discounts on seven products and those discounts averaged 8%. Mac Sales averaged 13 sales per hour, up from 2 per hour earlier in November. iPhone sales averaged 3.4 per hour up from 1.3 earlier in the month.

Munster concluded that Macs are selling better than expected and iPhones are in line with expectations.

Also in his report Munster explains how he can maintain a target on AAPL of $250 a share. Munster writes that his target is based on 20 times earnings and is using Apple’s non-GAAP earnings which included revenue from the iPhone.

Zaky writes that this would represent “the largest revenue beat by any company I’ve ever seen”.

When it comes to sales Zaky appears to be ignoring concerns of slowing consumer spending predicting growth in all of Apple’s product lines:

• iPods: 22 million units (up from 11.05 million in Q4)
• Macs: 2.8 million (up from 2.61 million)
• iPhones: 8 million (up from 6.89 million)

Amongst some of these topics includes (as listed by Fortune Apple 2.0 blog):

• The effects of a global financial meltdown
• New lawsuits stemming from the Apple stock option investigation
• Price cutting, piracy and Mac OS clones
• Badly managed product transitions in a particularly volatile environment
• Rapid product obsolescence and unexpected inventory write-downs
• Shortages of NAND flash memory, DRAM and LCDs, and associated price increases
• Disruptions in foreign contracts for manufacturing and logistics
• Deal-breaking demands by digital film and music suppliers
• Getting caught infringing on other people’s patents
• Third-party software developers deciding to abandon ship
• The discovery of serious bugs and manufacturing defects in Apple products
• Late-in-the-quarter events that disrupt the usual seasonal fluctuations in sales and revenue
• Failure of overseas mobile phone carriers to properly support the iPhone
• Changing laws and regulations in overseas mobile phone markets
• System failures, network disruptions, breaches in data security
• Extreme fluctuations in the company’s stock price
• Political events, war, terrorism, natural disasters and public health emergencies
• Difficulty attracting and retaining key personnel given the new option regulations
• Ongoing lawsuits decided against Apple
• Fluctuating foreign currency rates and changes in international tax laws, labor conditions etc.
• Declining sales in stores that have long leases and are particularly expensive to maintain
• Acquisitions and business strategies that go sour
• Distributors, resellers, wholesalers and catalog companies getting squeezed or going bankrupt
• Material losses in the company’s $24.5 billion investment portfolio
• The effect of worsening economic conditions on unsecured non-trade receivables
• New laws and regulations related to health, safety and environmental protection
• Changes in the company’s tax rates
• Insurance problems. “For certain risks, the Company does not maintain insurance coverage because of cost and/or availability”

All Things Digital is also noting that the form 10-K reveals that recently departed senior vice president of the iPod division Tony Fadell will collect an annual salary of $300,000 until March 2010 in his position as an advisor to CEO Steve Jobs.

In addition the filing states that Fadell will also receive health benefits and be expected to keep a distance from Apple competitors. If he doesn’t he will lose 77,500 restricted Apple stocks that will vest in March 2010.

Download Apple’s 2008 form 10-K.

Apple will continue giving out GAAP (Generally Accepted Accounting Principles) results, these will include subscription based accounting for iPhones and the Apple TV. In addition Apple will offer a new set of numbers in the form of non-GAAP results which show Apple’s fiscal figures if they weren’t using subscription based accounting.

In the press release on Tuesday Apple wrote the following:

During fiscal 2007, the Company began selling the iPhone and Apple TV. Because the Company may provide unspecified features and additional software products to iPhone and Apple TV customers in the future free of charge, in accordance with GAAP the Company recognizes revenue and cost of goods sold for these products on a straight-line basis over their economic lives, with any loss recognized at the time of sale. Currently, the economic lives of these products are estimated to be 24 months. This accounting treatment, referred to as subscription accounting, results in the deferral of almost all of the revenue and cost of goods during the quarter in which the products are sold to the customer. Other costs related to these products, including costs for engineering, sales, marketing and warranty, are expensed as incurred. Further, the costs to develop any future unspecified features and additional software products that may eventually be provided to customers also are expensed as incurred. In contrast, the Company generally recognizes revenue and cost of goods sold for its other products, such as Macs and iPods, at the time of sale, as the Company does not provide future unspecified features or additional software products to those customers free of charge.

The biggest issue with subscription accounting is that investors, analysts and shareholders struggle to determine just how much revenue and profit is being generated by the sale of a particular unit until long after that unit has been sold.

Apple is now effectively looking at the iPhone in the same way it looks at the Mac, in that respect the iPhone would have recorded an additional $3.8 billion in revenue and an additional $1.3 billion in net income during the company’s fourth fiscal quarter.

Total iPhone revenue of $4.6 billion would have represented 39 percent of Apple’s adjusted overall revenue of $11.7 billion.

Macs

• Sold 2.61 million Macs, best quarter ever.
• Of those sales 936,000 were desktops and 1,675,000 were notebooks.
• Macs accounted for less than half of Apple’s total revenue at 45.9 percent.
• 90-percent of Apple notebooks feature LED-backlit displays, they’re also the companies greenest products. “You’ll hear more about this in the future,” Jobs said.
• Unibody enclosures are responsible for the low-margin guidance but this will improve.
• Netbooks remain a “nascent category.”
• Apple considers the iPhone a form of netbook. The company has “interesting ideas” if the netbook field evolves.
• 3-4 weeks of channel inventory for Macs.

Apple TV and iPhone

• Sold 6,892,000 iPhones during the quarter and earned about $806M; this is more than all previous quarters combined.
• The iPhone would have represented 39 percent of all of Apple’s revenue, if revenue wasn’t deferred over 24 months.
• A “significant” proportion of iPhone sales were international. Many of these were to first-time iPhone owners.
• iPhone business is too large to ignore, thus the company will reveal its pre-GAAP revenue.
• Apple beat RIM’s BlackBerry shipments last quarter; they shipped 6.1 million handsets.
• Apple is now the third-largest mobile phone supplier in terms of revenue. Nokia and Samsung are first and second respectively while LG and Motorola are fourth and fifth.
• iPhone inventory was less than 6 weeks for the 44 countries launched before August. There are 2 million iPhones listed in inventory around the world.
• Apple TV is still just a “hobby” and will remain that way in 2009.

iPod and iTunes

• Customers will download the 200 millionth app from the App Store tomorrow, with the figure being reached in just 102 days. There are over 5,500 apps in 62 countries. “Competitors are scrambling to copy the App Store, but it’s not easy,” Jobs said.
• Appel sold the most iPods it has ever managed in a non-holiday quarter.
• NPD reports that Apple has 70-percent of MP3 player market in the US.
• 4-6 weeks of iPod channel inventory.

Retail Stores

• Apple retail stores managed to sell 596,000 Mac units and generate $1.718B in revenue.
• Over half of all retail Macs are sold to new customers.
• 31 new stores in the quarter for a total of 247.
• Working on an average of 226 stores open during the quarter, about $7.6M was earned per store.
• 42.7 million visitors to retail stores.

In accordance with the subscription accounting treatment required by GAAP, the Company recognizes revenue and cost of goods sold for iPhone and Apple TV over their economic lives. Adjusting GAAP sales and product costs to eliminate the impact of subscription accounting, the corresponding non-GAAP measures for the quarter are $11.68 billion of “Adjusted Sales” and $2.44 billion of “Adjusted Net Income.”

Apple shipped 2,611,000 Macintosh computers during the quarter, representing 21 percent unit growth and 17 percent revenue growth over the year-ago quarter. The Company sold 11,052,000 iPods during the quarter, representing eight percent unit growth and three percent revenue growth over the year-ago quarter. Quarterly iPhone units sold were 6,892,000 compared to 1,119,000 in the year-ago-quarter.

“Apple just reported one of the best quarters in its history, with a spectacular performance by the iPhone — we sold more phones than RIM,” said Steve Jobs, Apple’s CEO. “We don’t yet know how this economic downturn will affect Apple. But we’re armed with the strongest product line in our history, the most talented employees and the best customers in our industry. And $25 billion of cash safely in the bank with zero debt.”

“We’re very pleased to have grown revenue 35 percent and to have generated $9.1 billion in cash in fiscal 2008,” said Peter Oppenheimer, Apple’s CFO. “Looking ahead, visibility is low and forecasting is challenging, and as a result we are going to be prudent in predicting the December quarter. We are providing a wide range for our guidance, targeting revenue of $9.0 to $10.0 billion and earnings per diluted share between $1.06 and $1.35.”

Analysts across Wall Street have been throwing in there predictions ranging from the company selling somewhere between 3.8 and 6 million iPhones on revenue of anywhere between $7.865b to $8.37b.

Andy Zaky from Bullish Cross is notoriously accurate in his numbers and has published his results earlier today. Last quarter Zaky was incredibly accurate with his predictions, out trumping all of the paid analysts.

Zaky has his money on Apple reporting $8.343 billion in revenue on EPS of $1.25. Gross margin is predicted to be 33.5%. When it comes to sales figures Zaky has Apple down for 7.25 million iPhones, 11 million iPods and 2.9 million Macs.

Zaky has also kindly put together a table (pictured left) of his predictions compared to Apple’s guidance and other analysts predictions.