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Apple: iPad Supplies Loosen, But Not Enough

7/20/2011 09:35:42 AM Eastern
Cupertino, Calif. - Apple's iPad supplies improved dramatically in its fiscal third quarter and into July, but not enough to suit the company.

In an investors' conference call following the release of its record fiscal third quarter results, Apple COO Tim Cook said during the first weeks of July, supply and demand for iPad were in balance only for select SKUs in select countries.

He declined to say when supplies of all SKUs would meet demand in all countries.

Because the supply situation has improved considerably, he said, Apple was able to sell 9.2 million iPads in its fiscal third quarter ending June, up sequentially from the previous quarter's 4.7 million.

Cook said he couldn't pin the backlog on any specific issue involving production and pointed only to what he called "fantastic" demand. Year-over-year iPad sales were up 183 percent to 9.25 million in units and up 179 percent in dollars to $6.05 billion, including service-related revenues and revenues from Apple-brand and third-party-branded iPad accessories.

CFO Peter Oppenheimer said the company had 1.05 million iPads in inventory at the end of June, up 200,000 sequentially from the previous quarter, but the number was still "well below the target range of four to six weeks."

In other comments, Oppenheimer said Apple plans later this year to make a "product transition" that "we won't talk about today" but will lead to softer growth than usual for the company in its fiscal fourth quarter ending September.

The two executives also made these points:

  • Some iPad purchasers during the quarter bought an iPad instead of a Mac, but "even more chose an iPad over a Windows PC," Cook claimed.

  • Retail sales through Apple stores rose 36 percent year over year in the fiscal third quarter to $3.5 billion from $2.6 billion, primarily because of rising iPad and iPhone sales but also because of rising Mac sales, Oppenheimer said. Average revenue per store rose 20 percent to $10.8 million. The number of stores rose to 327 during the quarter with the addition of four stores in Europe.

  • The company plans 30 new stores in its fiscal fourth quarter, bringing the number of new stores in fiscal 2011 to 40, 12 of which are in the U.S., Oppenheimer said.

  • Sales through the iTunes store rose 36 percent year-over-year to $1.4 billion, including app sales.

  • iPod sales were ahead of expectations in the quarter even though unit sales fell 20 percent to 7.54 million and iPod revenues fell 14 percent to $1.33 billion, Oppenheimer said. Revenues excludes downloads from the iTunes store and iPod-related accessories. Unit sales were down 7 percent in the first quarter and 17 percent in the second quarter. More than half of unit iPod sales continue to be touchscreen-equipped iPod Touches, he said.

  •  iPhone sales growth of 142 percent year over year to a record 20.3 million units was driven in large part by the addition of 42 new carriers and sales through 15 new countries during the quarter, Cook said. Such markets as China, Brazil, Mexico and the Middle East -- all areas where Apple hasn't historically been strong -- were "a big part of it," Cook said.

Cook also claimed that the quarter's worldwide iPhone sales grew at twice the rate of the world smartphone market.
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