Apple Still Scrambling To Meet iPhone 4 Consumer Demand, COO Says

Apple is making strides in its efforts to ship enough iPhone 4s to satisfy consumer demand, but “it’s not enough” and “we do still have a significant backlog,” Chief Operating Officer Timothy Cook said in a Tuesday earnings call. Apple said it sold 16.24 million iPhones in Q1 ended Dec. 25, an 86 percent increase from a year earlier (CED Jan 19 p5).

The company had said in its previous earnings call that it raised iPhone production capacity for the September quarter to 14 million, Cook recounted Tuesday. Apple sold 14 million iPhones in the quarter, up from about 8 million, he said. “We were able to step that up in this past quarter to over 16” million units, “so we were able to increase” shipments by more than 2 million, he said. “We, obviously, have continued to work on increasing this further. But as with all good things, it takes some time to do that.” Apple is “working around the clock to build more,” said Cook, declining to predict “when supply and demand will meet.” The company also expects that “the reaction and results” from its recent decision to extend the iPhone to Verizon “will be huge, and so I don’t want to give a prediction right now when the supply and demand will cross,” he said.

Quarterly revenue increased to $26.74 billion from $15.68 billion a year earlier, because of “record iPhone, iPad and Mac sales,” said Chief Financial Officer Peter Oppenheimer. Profit increased to $6 billion, $6.43 per share, from $3.38 billion, $3.67.

Apple had Q1 revenue from iPhone handset and accessory sales of $10.47 billion, up from $5.58 billion a year earlier, said Oppenheimer. “The sales value of iPhones alone was over $10.1 billion,” translating to an average selling price of about $625, he said. The company had iPhone distribution through 185 carriers in 90 countries at month’s end, he said.

IPad sales came in at 7.33 million Q1, up from more than 3 million Q4, said Oppenheimer. The device was being distributed in 46 countries by the end of the December quarter, he said. Revenue from sales of iPad and iPad accessories during the quarter was $4.61 billion, and “the sales value of iPads alone was over $4.4 billion, which yields an” average selling price “of about $600,” he said. Apple boosted supplies of iPads in Q1 and “expanded both the number of countries and the number of channel partners carrying iPad,” he said. Channel inventory grew by about 525,000 units “from the beginning to the end of the quarter to support increased sales and channel expansion, and we ended the quarter within our target range of four to six weeks,” he said.

Apple’s 23 percent growth in Mac computer sales in Q1 resulted mainly from “strong demand for the new MacBook Air,” which Apple shipped in October, along with “continued strong sales of MacBook Pro,” Oppenheimer said. The company said it sold 4.13 million Macs in Q1. Apple, meanwhile, was “pleased with customer response” for the recent launch of the Mac App Store, with more than 1 million downloads “on the first day,” Oppenheimer said.

The only product category with a decline in sales was again the iPod, down 7 percent at 19.45 million units. But Oppenheimer said Apple saw “continued strong sales of iPod touch, which grew 27 percent” from a year earlier. The company’s share of the U.S. market for MP3 players, meanwhile, remained at more than 70 percent, he said, citing NPD data. The iPod “continues to be the top-selling MP3 player in most countries,” he said.

The iTunes Store “generated another strong quarter,” with revenue topping $1.1 billion in Q1 on “strong sales of music, video and apps,” Oppenheimer said. Apple has more than 300,000 applications available via its App Store, and there have been “well over 9 billion downloads to date,” he said.

Revenue from Apple’s retail stores nearly doubled in Q1 from a year earlier to $3.85 billion, Oppenheimer said. IPad sales at its stores “were very strong in the first holiday quarter” for that device, he said. “The stores also delivered a record Mac quarter, selling 851,000 Macs compared to 689,000” the prior year, he said. About 50 percent of the Macs sold at Apple stores in Q1 “were to customers who had never owned a Mac,” he said. International retail store sales “were particularly strong” in Q1, the average volume “exceeding our very productive average U.S. store volume,” he said. Apple’s four China stores were, “on average, our highest traffic and our highest revenue stores” globally, he said. Apple opened six stores in Q1, boosting the total to 323 stores worldwide at quarter’s end, 87 outside the U.S., he said.