John Paczkowski

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Apple Blows It Out…Again

Apple’s March quarter saw, among other things, the iPhone’s debut on Verizon, the launch of the iPad 2 and the new Thunderbolt-equipped MacBook Pro line as well.

No wonder it was a blowout.

Posting second-quarter results after the bell Wednesday, the company reported earnings per share of $6.40 on revenues of $24.67 billion–an 83 percent increase over the same period a year ago. The Street had been looking for Apple to report earnings of $5.36 on sales of $23.34 billion, while unaffiliated analysts polled by Apple 2.0 had been looking for earnings of $6.33 on sales of $25.34. Gross margin was 41.4 percent compared to 41.7 percent a year ago.

It was the biggest non-holiday quarterly revenue and earnings in Apple history.

The company sold 3.76 million Macs during the quarter, a 28 percent unit increase over the year-ago quarter. It sold 18.65 million iPhones–113 percent more than it did a year ago. And it sold 2.8 million MacBooks. (see chart below).

But it sold just 4.69 million iPads; the Street had been looking for 6.2 million. Evidently the tsunami disaster in Japan and production shortages hamstrung sales. (Worth noting: the iPad 2 launched on March 10, 2011 in the States and on March 25, 2011 in 25 additional countries. Apple’s second quarter ended on March 26, 2011.)

“With quarterly revenue growth of 83 percent and profit growth of 95 percent, we’re firing on all cylinders,” CEO Steve Jobs said in a statement. “We will continue to innovate on all fronts throughout the remainder of the year.”

Looking ahead to the June quarter, Apple offered its typically conservative guidance: earnings of $5.03 per share on revenue of $23 billion. Analysts had been expecting earnings of $5.25 per share on revenue of $23.8 billion.


  • CFO Peter Oppenheimer: This is the highest March quarter revenue and earnings in Apple’s history. “We’re thrilled with the iPad’s momentum.”
  • Mac sales for the March quarter were up 28 percent year over year, a new record. This was the 20th quarter that the Mac outperformed the broader PC market.
  • Wow. iTunes hit $1.4 billion, another new record.
  • There are now over 100 million books in the iBooks store.
  • iPhone is now on 186 carriers in 90 countries.
  • 18.65 million iPhones sold during the quarter represent 113 percent growth, year over year.
  • 88 percent of the Fortune 500 are testing or deploying the iPhone.
  • “We sold every iPad 2 we made during the quarter.”
  • There have been well over 10 billion app downloads to date and Apple has made some $2 billion in payments to the developers who created them.
  • Apple Stores continue to do very, very well. Retail revenue is up 90 percent. Apple Stores sold 79,000 Macs during the quarter, up 32 percent. A new record.
  • In the next few days, Apple expects the 1 billionth visitor to its retail stores.
  • Tim Cook on Japan/supply constraints: We’re very saddened by the situation in Japan and our hearts go out to everyone there….We source many components from Japan–LCDs, optical drives, NAND flash, resin coatings, foil. The earthquake and tsunami caused disruption to many of these suppliers….But as a result of outstanding teamwork we did not have any supply or cost impact from Japan quake in Q2 and we don’t anticipate any in Q3. We’ve been working around the clock with our supplier partners in Japan to ensure there are no supply chain disruptions….We do need to caution that the situation remains unpredictable, though.
  • Cook on iPad 2: Demand has been staggering. We’re amazed that we are still so heavily backlogged. Really, this is the mother of all backlogs … but we’re pleased with our manufacturing ramp-up and confident we’ll be able to produce a great number of iPad 2s during the quarter.
  • Cook on the prospect of an LTE iPhone: The first generation of LTE chipsets forced a lot of design compromises that we are just not willing to make.
  • Cook on the Mac’s international penetration: The Mac has seen enormous growth in Asia. Sales are 76 percent in Asia-Pacific. Doing very well in Japan as well.
  • Cook on iOS devices creating an opportunity for the Mac in enterprise: The iPhone and the iPad clearly seem to be creating a halo effort for the Mac. In part that’s why we’re seeing such growth in Mac sales.
  • Cook on future CDMA iPhone carriers: I don’t want to get into specifics about CDMA or GSM. But we’re constantly looking to add new carriers where it makes sense.
  • Cook on Android: I read yesterday that the iOS platform outreaches Android by 59 percent in the US….IPhone’s integrated approach is inherently better than Android’s fragmented approach…Android turns users into system integrators…we feel very good about where we are and our future product plans.
  • Cook on Steve Jobs:He’s still on medical leave, but we see him on a regular basis. As we’ve said before, Steve continues to be involved in major strategic decisions. I know he wants to be back full time as soon as he can.
  • Cook on demand for the iPad 2:I wish we could have produced more iPad 2s because there were certainly a lot of people waiting for them.
  • Cook on the Samsung suit: We are Samsung’s largest customer and we value them as a component supplier. I expect the relationship with them to continue. But we felt their mobile communications division crossed the line. We tried to work it out, but ultimately decided we needed to turn to the courts.


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— Ryan Chittum, writing in the Columbia Journalism Review about the promise of Pierre Omidyar’s new media venture with Glenn Greenwald