Apple Inc. (AAPL): Apple FlQO8 (Qtr End 12/29/07) Earnings Call Transcript - Seeking
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`Seeking Alpha“
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`Apple F1Q08 (Qtr End 12/29/07) Earnings Call
`Transcript
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`Executives
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`Nancy Paxton — Investor Relations
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`Peter Oppenheimer — Chief Financial Officer, Senior Vice President
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`Timothy D. Cook — Chief Operating Officer
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`Analysts
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`Katy Huberty — Morgan Stanley
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`Bill Fearnley — FTN Midwest
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`David Bailey — Goldman Sachs
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`Bill Shope — J.P. Morgan
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`Richard Gardner — Citigroup
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`Ben Reitzes — UBS
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`Shannon Cross — Cross Research
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`Keith Bachman — Bank of Montreal
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`Charles Wolf — Needham & Company
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`Gene Munster — Piper Jaffray
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`Andrew Neff — Bear Stearns
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`Toni Sacconaghi — Sanford Bernstein
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`Mike Abramsky — RBC Capital Markets
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`Tavis McCourt — Morgan Keegan
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`Shaw Wu — American Technology Research
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`Chris \I\Ihitmore — Deutsche Bank
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`Andy Hargreaves — Pacific Crest Securities
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`Apple Inc. (M) F1Q08 Earnings Call January 22, 2008 5:00 PM ET
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`Operator
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`Good day and welcome to the Apple Incorporated first quarter 2008 quarterly results conference call. Today’s call is
`being recorded. At this time, for opening remarks and introductions, I would like to turn the conference over to Ms.
`Nancy Paxton, Senior Director of Investor Relations and Corporate Finance. Please go ahead, Madam.
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`Nancy Paxton
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`Thank you. Good afternoon and thanks forjoining us. Speaking today is Apple CFO Peter Oppenheimer and he’ll be
`joined by Apple COO Tim Cook and Treasurer Gary Vlfipfler for the Q&A session with analysts.
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`Apple Inc. (AAPL): Apple F1QO8 (Qtr End 12/29/07) Earnings Call Transcript - Seeking
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`It’s interesting to note that in achieving all three of these, we grew iPod revenue 17% year over year and this growth
`rate is the highest growth rate that we’ve seen in revenue in iPod for a year.
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`Ben Reitzes - UBS
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`Thanks a lot.
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`Timothy D. Cook
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`So that’s kind of how we --
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`Ben Reitzes - UBS
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`I got you. The Touch sacrificed a little unit growth but you are happy overall with your execution.
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`Timothy D. Cook
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`We’re thrilled with it.
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`Ben Reitzes - UBS
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`Okay. Thank you very much.
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`Nancy Paxton
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`Thanks, Ben. Could we have the next question, please?
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`Operator
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`The next question will come from Shannon Cross with Cross Research.
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`Shannon Cross - Cross Research
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`Good afternoon. Could we first get an update on Mac channels, Best Buy, what you are thinking in terms of
`distribution?
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`Timothy D. Cook
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`We ended the quarter with about 286 stores in Best Buy. We are thrilled with the results that we’ve seen. |t’s added
`to the Mac momentum. We have elected to expand that further and have jointly agreed with Best Buy that we’ll
`expand from the 286 to 600 over the next six months, so we’re very, very happy with how that relationship is coming
`out.
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`Shannon Cross - Cross Research
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`Okay, and I don’t know, Tim or Peter, could you give us an idea on your goals for iTunes rentals? How should we
`think about the success of that business and is it more a way to drive incremental Apple TV sales or are you looking
`at it more from a profitability standpoint for that specific unit?
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`Peter Oppenheimer
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`We just introduced it. We think customers are really going to love it but we’ll have to see. Our objective with the
`iTunes store is to run itjust a little above break even and we think that it helps us to sell iPods and Macs and that is
`really our strategy.
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`Shannon Cross - Cross Research
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`Okay, and then sort of shifting over to MacBook Air, I don’t know, Tim, if you could give anymore ideas as to how we
`should think about this fitting from a longer term standpoint into your product roadmap —— how do you think about the
`ultra mobile market? Is this more of a niche product? Should we think technology trickles down over time? Just
`anymore clarity you can give us, because obviously it could be fairly instrumental in terms of driving revenue.
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`Timothy D. Cook
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`We create products that we hope will appeal to all types of people and we think that the MacBook Air will appeal to
`travelers, to professors, to all different kinds of people who want to access the computer very quickly wherever they
`are. We think it’s very leading edge, it’s a superior combination of size, weight and performance and form factor,
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`Timothy D. Cook
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`This is something that we are looking at but have nothing specific to talk about today.
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`Andy Hargreaves - Pacific Crest Securities
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`Okay, and then also just wondering ifthere’s anything you guys are doing actively to try to promote more corporate
`use outside of the traditional customers in either your reseller channel or in education that you are doing, training,
`that kind of thing?
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`Timothy D. Cook
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`The education market had a record Q1 for us. We grew about five times the |DC’s forecasted market rate of growth
`of 6%, and this was led by both K-12 and higher ed, and so we were doing excellent in this business.
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`There are many, many examples of small business using Mac and larger businesses continue to be interested in the
`Macintosh as well.
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`Nancy Paxton
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`Thanks very much, Andy and thanks to everyone. A replay of today’s call will be available for two weeks as a
`podcast on the iTunes store, a webcast on app|e.com/investor and via telephone. And the numbers for the telephone
`replay are 888-203-1112 or 719-457-0820, and the confirmation code for the telephone replays is 4273792. And
`these replays will be available beginning at approximately 5:00 p.m. Pacific Time today.
`
`Members of the press with additional questions can contact Kristin Huguet at 408-974-2414 and financial analysts
`can contact Joan Hoover or me with additional questions. Joan is at 408-974-4570 and I am at 408-974-5420.
`Thanks again forjoining us.
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`Operator
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`Ladies and gentlemen, that does conclude today’s presentation. We do thank everyone for your participation and
`have a wonderful day.
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`Executives
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`Nancy Paxton - Investor Relations
`
`Peter Oppenheimer - Chief Financial Officer, Senior Vice President
`
`Timothy D. Cook - Chief Operating Officer
`
`Analysts
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`Katy Huberty - Morgan Stanley
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