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Apple: iPad Supplies Loosen, But Not Enough

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

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