Apple to Investors: You’re Welcome

Apple’s first quarter was a blowout, as was the one before it. So too is the company’s latest. Reporting second-quarter earnings after the bell Tuesday, Apple rolled out the big numbers once again. The company posted a profit of $3.07 billion on revenue that rose 49 percent to $13.5 billion. Earnings per share were $3.33, far more than the $2.45 per share analysts had been expecting.

Apple (AAPL) said it sold 8.75 million iPhones for the quarter, up more than 131 percent from the year prior; 2.94 million Macs, up 33 percent; and nearly 10.9 million iPods, down one percent. Strong numbers, all. Even iPod sales beat the Street’s consensus of nine million units shipped.

“We’re thrilled to report our best non-holiday quarter ever, with revenues up 49 percent and profits up 90 percent,” CEO Steve Jobs said in another variation of the statement the company has sent out so many times before. “We’ve launched our revolutionary new iPad and users are loving it, and we have several more extraordinary products in the pipeline for this year.”

At $261.36, Apple shares are up nearly seven percent in after-hours trading.

Apple’s earnings release below as well as notes from the earnings call.

Notes From the Call

• During introductory remarks, Apple CFO Peter Oppenheimer pointed out that sales of Macs outpaced those of PCs. According to IDC, PC sales grew 24 percent during March quarter. Mac sales rose 33 percent.
• iPod touch sales grew 63 percent year-over-year. Apple controls over 70 percent of the U.S. market for digital media players.
• Apple’s iTunes Store generated $1.1 billion in sales (music, video and apps). Some four billion apps have been downloaded to date. There are currently 3,500 apps for iPad.
• Retail store revenue was $1.68 billion, a 22 percent increase. The company sold 606,000 Macs through its retail outlets, an increase of 38 percent. Half of those were sold were to customers who never owned a Mac before. Apple plans to open 40 to 50 new stores in fiscal 2010.
• Didn’t quite catch it, but there was some mention of a “future product transition.” Not sure what this refers to, but certainly interesting.
• This was the best quarter ever for iPhone sales–131 percent year-over-year growth. That’s three times the growth IDC has estimated for the smartphone market as a whole.
• Are folks who would have bought Macs now buying iPads instead? Apple COO Tim Cook said the company hasn’t seen any Mac cannibalization yet. He also said it’s far too early to tell which version of the device–Wi-Fi-only or Wi-Fi plus 3G–is selling better.
• iPhone units shipped in the Asia-Pacific region were up year-over-year more than nine times, Cook said. “Through the first half of the fiscal year, our revenue from greater China was over 1.13 billion,” he added. “That’s up over 200 percent year-over-year.”
• On iAds: “We’re just putting our toes in the water, so don’t expect much from us this calendar year.”
• Remarking on the company’s iPhone exclusivity agreements, Cook said that in those markets where Apple has moved from exclusive to nonexclusive, it has seen its unit share and market share improve. No comment on whether or not the company will end iPhone exclusivity in the U.S.
• Cook: “We think the market size for the iPad is very large.”
• Asked about the delayed international launch of the iPad, Cook said there isn’t “a production problem per se…but the level of demand has shocked us, at least initially.”
• Apple is still happy with AT&T (T) and its network? AT&T has made “big strides,” he noted, adding that “we look forward to continued improvement.”
• Cook on Apple TV: “It’s still a hobby for us.”
• Cook on iPad versus netbook: “I can’t think of a single thing the netbook does well….To me it’s a no-brainer that someone would buy an iPad over a netbook.
• Are consumers buying different kinds of apps for the iPad than for the iPhone? Too early to tell, though app sales and book sales are both quite strong.
• Question about the “extraordinary products” Apple mentioned in its earnings release. No comment. “We’re not going to help our competitors by answering that,” said Oppenheimer.

Apple Reports Second Quarter Results
Record March Quarter Revenue and Profit
iPhone Sales More Than Double
CUPERTINO, California—April 20, 2010—Apple® today announced financial results for its fiscal 2010 second quarter ended March 27, 2010. The Company posted revenue of $13.50 billion and net quarterly profit of $3.07 billion, or $3.33 per diluted share. These results compare to revenue of $9.08 billion and net quarterly profit of $1.62 billion, or $1.79 per diluted share, in the year-ago quarter. Gross margin was 41.7 percent, up from 39.9 percent in the year-ago quarter. International sales accounted for 58 percent of the quarter’s revenue.

Apple sold 2.94 million Macintosh® computers during the quarter, representing a 33 percent unit increase over the year-ago quarter. The Company sold 8.75 million iPhones in the quarter, representing 131 percent unit growth over the year-ago quarter. Apple sold 10.89 million iPods during the quarter, representing a one percent unit decline from the year-ago quarter.

“We’re thrilled to report our best non-holiday quarter ever, with revenues up 49 percent and profits up 90 percent,” said Steve Jobs, Apple’s CEO. “We’ve launched our revolutionary new iPad and users are loving it, and we have several more extraordinary products in the pipeline for this year.”

“Looking ahead to the third fiscal quarter of 2010, we expect revenue in the range of about $13.0 billion to $13.4 billion and we expect diluted earnings per share in the range of about $2.28 to $2.39,” said Peter Oppenheimer, Apple’s CFO.