Tuesday, July 21, 2009

Apple Conference Call Comments

by Bill McBride on 7/21/2009 06:06:00 PM

Just a couple of comments ... (ht Brian)

Analyst: ... on the commodities [components]. I'm just curious as to which ones you expect to be sort of challenging going forward?

AAPL: In terms of going forward, the market for DRAM and the market for large sized displays has shifted to a constrained environment and the pricing has moved accordingly. The NAND market has now begun to stabilize and we expect it to move towards a supply/demand balance. Hard drives and optical drives are recovering from a constrained supply environment and pricing is declining at less than historical rates as a result.
Interesting that any component is constrained - probably because of inventory cuts by suppliers in Q4 and Q1.
Analyst: When you look at consumer spending and you look at K12 and state and local government, is there any detail you can give on the education or the pro segment?

AAPL: Relative to the market, the consumer market performed relatively better for us. The US K12 institutional business is weak, as you might expect. It is getting hit by budgets short falls. And last quarter we saw very negligible amounts, if any, of the stimulus funds flow all the way to the state and district levels. And so that may or may not occur this quarter. In the pro business, the pro business has also been affected more by the economy than the consumer businesses. And you can see that somewhat in our ASPs as people that were buying those that were in commercial accounts and small business accounts are delaying purchases.
Once again consumer spending is relatively better off than business spending. Business spending on software and equipment was probably off some more in Q2 (after declining 28.1% SAAR in Q4 and 33.7% SAAR in Q1).