An expected Apple posted an 18 percent decline in profit and slowing revenue growth for the quarter ended in March, but it also reported earnings of $10.09 per share on revenue of $43.6 billion. That’s above the $9.98 per share on revenue of $42.3 billion analysts had predicted, and at the higher end of Apple’s own range of guidance for the period: Earnings of between $9.23 and $10.23 per share on sales of $41 billion to $43 billion.

Commenting on Apple’s Q2 performance, Ironfire Capital founder Eric Jackson told AllThingsD, “Jiminy.”

And there was plenty more good news where that came from:

• Apple sold a ton of iPhones and iPads. This time last year, the company shipped 35 million iPhones and 11.8 million iPads — double the number it sold the year before. During the quarter reported today, Apple sold 37.4 million iPhones and 19.5 million iPads. Analysts were looking for 36.5 million and 18.3 million, respectively. That’s a nice bump in iPhone sales, but it’s a spectacular leap for the iPad. In the year ago quarter, Apple sold just 11 million. As Ironfire’s Jackson said, “The biggest story here is iPads: 19.5 million up from 11 million a year ago. Apple is going to be a screen and service company from here.”
• Apple authorized a $60 billion share buyback plan, and raised its quarterly dividend to $3.05 per share.
• And it said it would make a “significant increase” in its capital return policy, totaling $100 billion by 2015. That’s a $55 billion increase over the previous plan.

“We are pleased to report record March quarter revenue thanks to continued strong performance of iPhone and iPad,” Apple CEO Tim Cook said in the company’s earnings release, adding that there’s some “amazing new hardware, software, and services” in the pipeline.

The lone speck of disappointing news in an otherwise good report: Apple’s guidance for next quarter, perhaps the most closely watched data point of all today. The company said it expects revenue of between $33.5 billion to $35.5 billion in the June quarter, and gross margins of 36 percent to 37 percent. Analysts had been looking for revenue of $38.6 billion and margins of 38.6 percent.

Still, a good showing overall, and one that the Street seems particularly happy with. Shares of Apple rose 4.6 percent in after-hours trading following the report.

Notes from the call …

• Cook: “In the first half of the year our net income was over $22 billion. During that time, we sold 85 million iPhones and 42 million iPads. These are very, very large numbers.”
• Cook acknowledges that Apple’s growth rate has slowed and margins have decreased.
• Cook: “The decline in Apple stock price has been very frustrating to all of us. … The most important objective will always be creating innovating products.”
• Lots to look forward to later this year: “We are hard at work on some amazing new hardware, software and services we can’t wait to introduce this fall and throughout 2014.”
• Cook on Apple’s plan to return $100 billion to shareholders by the end of 2015, largely via share repurchases: “We concluded that investing in Apple was the best.”
• Oppenheimer on iPad: 65 percent more iPads sold year over year. Sales more than doubled in Greater China and Japan. “We sold significantly more iPad minis in the March quarter than the December launch quarter. The market suggests iPad mini purchasers are first-time iPad customers.”
• Yow. iTunes revenue rose 28 percent year over year.
• More on iTunes: Quarterly billings over $4 billion.
• Cumulative app downloads: More than 45 billion.
• iCloud now boasts 300 million users — up about 20 percent from the 250 million the service had in January.
• Retail revenue $5.2 billion, up 19 percent year over year.
• Oppenheimer says Apple’s cash pile now totals $145 billion, up $7.6 billion sequentially.
• On the share buyback program: “This is the biggest by any company. … We believe in Apple strongly and we think this is a great investment.
• Cook on China: “This was our best quarter ever in China. Revenue came in at $8.8 billion. That’s up 11 percent year over year. … iPad sales in greater China grew 138 percent year over year. … Our Greater China revenue was up approximately 18 percent, so it’s a bit better than it first looks. … we still see a significant opportunity in China, it’s a great market. We expect to double the 11 stores there in less than 2 years. This number is obviously too low, currently. … China has an unusually large number of potential first-time buyers, and that’s not lost on us.”
• Cook on competitive landscape: “We have tough competitors, but we feel we have the best products by far. We continue to invest in innovative products and feel confident about our product pipeline. We have the best ecosystem by far, and we’re just going to keep making it better and better.”
• Cook: “We see an enormous number of first-time smartphone buyers coming to market in certain countries around the world. We started last quarter making the iPhone 4 even more affordable, and that has made it more attractive to first-time buyers.”
• Cook on the five-inch iPhone: “My view continues to be that iPhone 5 has the absolute best display in the industry. … we always strive to create the very best display for our customers. … Our competitors have made some significant trade-offs in many areas in order to ship a larger display. We would not ship a larger display iPhone while these trade-offs exist.”
• Questioned directly about new product categories, Cook said explicitly that Apple is considering them.
• Cook on Mac cannibalization by iPad: “It’s certainly true the iPads cannibalized some Macs. But I don’t think it’s a huge number. … It’s probably extending the upgrade cycle. I don’t think the PC market is a dead market or a bad market by any means, and we’re going to keep innovating.”
• iPad now being tested or deployed in 89 percent of the global 500.

We’ve already written about Tim Cook’s cannibal diet and supply-chain rumor-squashing.

But there was still more of note on the call, some of which we pointed out during our live analysis.

Apple announced plans to enter three dozen new LTE markets, changed the way it provides earnings guidance and rejiggered how it breaks things down by geography and market segment.

Here are several things that stood out to me:

The iPhone 4

It may be the oldest model in Apple’s lineup, but it’s selling better than Apple expected. CEO Tim Cook said on the earnings call that Apple had greater demand for the model than forecast, and was supply-limited during the quarter. Given that Apple also said that the iPhone 5 made up roughly the same proportion of sales that the iPhone 4S did a year ago, it appears that the surprise was the share the iPhone 4 commanded relative to the iPhone 4S in last quarter’s sales.

In the U.S., Apple’s pricing essentially means that the iPhone 4 is free for those willing to sign a new two-year contract, and clearly the prospect of a free iPhone 4 is appealing to budget-conscious shoppers — perhaps even more so than a free iPhone 3GS did a year ago. Cook did say that Apple should be able to catch up to iPhone 4 demand this quarter.

New guidance

Apple isn’t fully admitting its past practice of sandbagging, but it is acknowledging that the numbers it gave out in the past were targets it was pretty confident it could easily reach. Now, instead of providing those type of forecasts, the company said it is providing a range of revenue within which it is likely to be.

“In the past we gave you a single-point estimate of guidance,” said CFO Peter Oppenheimer. “It was conservative. … We’re now providing you a range of guidance that we expect we can … report within.”

The iPhone 5 is the perfect size and price, until we come out with something bigger and/or cheaper

Cook made comments about how Apple isn’t geared toward maximizing revenue, and is focused on making products that meet customer needs rather than hit a specific price point. In the same vein, he talked later about how the iPhone 5 has the best display on the market and is the best possible screen size in order to still be used one-handed.

One could easily take those comments as a sign that Apple isn’t thinking about a larger-screen or cheaper iPhone.

And they could be hints at that. But perhaps as likely is the possibility Cook is pulling a page from the playbook of late CEO Steve Jobs. Jobs was a master at such head fakes, denying that Apple would do something until just before they did. He talked about the foolishness of flash memory-based music players, video-playing iPods and of entering the phone business — all before entering those markets.

Attention, carriers: iMessage is huge

Text messaging has long been a great business for carriers. The short messages generate billions in revenue and take up relatively little bandwidth on crowded networks. The gravy train has been coming to an end for a while now, thanks to over-the-top services such as Apple’s iMessage that treat such messages as just another small piece of data.

In a sign of just how big iMessage has gotten, Oppenheimer said that Apple now handles more than two billion iMessages each day.

“Our customers love our iMessage service,” Cook said.

Carriers, not so much.

The iPhone 5 speed bump is just beginning

Though the iPhone 5 has had the capability to run on high-speed LTE networks since its release, support for those networks has only been trickling out. It began with support in just a few countries and has expanded to about two dozen. However, next week, Cook said, Apple will support about three dozen more countries, including Italy, Denmark, Finland, Switzerland, the Philippines and several Middle Eastern countries.

During the company’s last earnings call, CFO Peter Oppenheimer said Apple’s 372 stores collectively generated $4.1 billion in revenue. That’s a vast sum, and one that might lead you to believe that Apple sells most of its gear through its own stores. But that’s not the case, according to a new study by Consumer Intelligence Research Partners (CIRP).

Between December of 2011 and August of 2012, CIRP surveyed 1,227 U.S. consumers who purchased an iPhone, iPad, or Mac, and found that while Apple Stores sold by far the most Macs and iPads during the period, they didn’t sell nearly as many iPhones as the company’s retail partners.

In the U.S., Apple’s retail stores, along with the company’s online storefront, sold 47 percent of the Macs and 40 percent of the iPads purchased by the survey sample during December 2011 and August 2012. But they only sold 21 percent of the iPhones. AT&T and Verizon stores both sold more than Apple, with 28 percent and 26 percent shares of sales, respectively. And Best Buy and Amazon (via fulfillments) together sold nearly as many iPads as Apple itself.

“Apple has around 250 stores in the U.S., while Best Buy and Best Buy Mobile total 1,300, and AT&T, Sprint, and Verizon have over 5,000 combined,” CIRP partner Mike Levin told AllThingsD. “Clearly, the Apple stores are much more productive on a per-unit basis, but their relatively low store count keeps them reliant on the carriers and Best Buy, not to mention Walmart, Target and others, for the vast majority of their retail sales.”

Ultimately, Apple’s retail partners are as critical to the company’s success as its own stores. Sure, the typical Apple Store might cater to 17,000 visitors per week, but that foot traffic translates to a smaller-than-expected share of the company’s overall business. As CIRP co-founder Josh Lowitz told AllThingsD, “Everyone who lives in an Apple Store city thinks that is where everything happens, but you can’t sell 40 million plus iPhones in a year through just 250 stores.”

Now the conventional wisdom has shifted again: No TV set, and maybe very little else from Apple on the TV front, in the near future.

The newest version of this thought comes from Pacific Crest analyst Andy Hargreaves, who met with Apple CFO Peter Oppenheimer and media boss Eddy Cue on Wednesday. Here’s his takeaway on Apple TV, published in a note yesterday, and first flagged by Fortune’s Philip Elmer-DeWitt:

An Apple Television Appears Extremely Unlikely in the Near-term
Relative to the television market, Eddy Cue, Apple SVP of Internet Software and Services, reiterated the company’s mantra that it will enter markets where it feels it can create great customer experiences and address key problems. The key problems in the television market are the poor quality of the user interface and the forced bundling of pay TV content, in our view. While Apple could almost certainly create a better user interface, Mr. Cue’s commentary suggested that this would be an incomplete solution from Apple’s perspective unless it could deliver content in a way that is different from the current multichannel pay TV model.

Unfortunately for Apple and for consumers, acquiring rights for traditional broadcast and cable network content outside of the current bundled model is virtually impossible because the content is owned by a relatively small group of companies that have little interest in alternative models for their most valuable content. The differences in regional broadcast content and the lack of scale internationally also create significant hurdles that do not seem possible to cross at this point.

Bear in mind that the above is a mashup of Hargreaves’s analysis and guidance from Apple executives. So you’ll have to do some guesswork to figure out exactly what Apple is saying and not saying.

But it makes perfect sense, because it’s what Apple has been saying consistently when asked about Apple TV or any other new product. And it also reflects the truth that anyone who has tried to tackle a TV Of The Future has figured out: Making the tech work better is (relatively) easy. Making the content work better is really hard.

As Business Insider’s Jay Yarow notes, Hargreaves’s takeaway is a bit different from the newest round of Apple TV prognostication, kicked off by reporting in The Wall Street Journal, which posits that Apple is no longer trying to “disrupt” TV, but wants to work with the existing TV Industrial Complex, by making slight tweaks to the model.

But even that reporting suggests that Apple isn’t anywhere close to getting buy-in from cable programmers or providers. And so it can’t bring out new hardware — box, screen or otherwise — until it makes progress there.

That still doesn’t rule out any advances with Apple TV. It would seem totally reasonable for Apple to open its existing Apple TV box to outside developers, which would increase the utility of that hardware significantly without requiring any buy-in from TV Land. Just as Apple TV competitor Roku has already done.

Consider this: Apple’s third quarter was the second consecutive one in which the education market purchased twice as many iPads as Macs. And Mac sales to education for the period were at an all-time high.

Discussing Apple’s third-quarter earnings during a conference call Tuesday, Apple CFO Peter Oppenheimer said that iPad sales in the U.S. education market had set a new quarterly record, nearly doubling year over year to just under one million iPads. A key driver of those sales: The reduced-price iPad 2. Evidently, the device’s $399 price point has really helped to unlock demand in the sector.

“The reason that we [adopted a lower price point for the iPad 2] was because we believed that sales would be incrementally larger if there was price elasticity,” Apple CEO Tim Cook said during the earnings call. “We knew there were buyers that really wanted the best product, but needed it to be a little less expensive. … So I think the lower price did help our sales. And I think it’s particularly helping in K-12. The adoption rate of iPad in education is something I’d never seen from any technology product in history. Usually, education tends to be fairly conservative in terms of buying, or K-12 does, and we’re not seeing that at all on the iPad.”

With the iPhone, for example, Apple was still boosting inventory levels in the March quarter, with that quarter’s sales benefitting from 2.6 million units added to the channel of products yet to be sold. By contrast, the June quarter’s results saw more iPhones sold to customers than were sold into Apple’s distribution channels.

A similar shift with iPad inventories in the current quarter could dent next quarter’s sales, Apple CEO Tim Cook noted on today’s conference call with investors. The company added in a significant number of tablets this quarter after being supply-constrained in the prior quarter.

Of course, there is also an impact from a weak European economy as well as the fact that Apple didn’t have a new iPhone to sell and lots of customers are expected to hold off until there is one.

“I think there is a lot of speculation out there,” Cook said. “I’m fairly convinced based on what I’ve seen that there is incredible anticipation out there for future products.”

Apple executives carefully avoided giving any details on those new products, beyond reiterating that iOS 6 would come sometime this fall. But, the company did express its usual optimism.

“We could not be more confident in our new product pipeline,” CFO Peter Oppenheimer said.

From 16.8 percent to about 4 percent worldwide market share in a single quarter. That is a swift and ugly decline. What’s causing it?

Kindle Fire demand could be dropping off as customers postpone their purchases in anticipation of a new version of the device. Or it could be declining because the Fire was a really well-executed holiday play whose novelty has since worn off.

Or it could be that the iPad 2, which Apple continues to sell alongside the new iPad at a lower price, is winning over some of the same consumers that Amazon has been targeting with the Fire.

Or, because the number of units shipped isn’t the same as units sold, the dropoff in shipments in the Fire’s latest quarter could primarily be the result of a large inventory buildup in the product’s first months on the market.

At $399, the iPad 2 is still twice the price of the Fire. But it’s also $100 cheaper than the new iPad, and comes accompanied by the same vast app and content ecosystem, iCloud, Facetime and other slick features. And that may be discount enough to command the attention of budget-conscious consumers. Indeed, during Apple’s last earnings call, CEO Tim Cook said the iPad 2′s new lower price point was unlocking demand among price-sensitive customers.

If that’s the case, perhaps it’s unlocking demand among potential Kindle Fire buyers as well. It’s worth noting that during the same period, IDC claims that while the Fire’s share of the market fell to 4 percent from nearly 17 percent, the iPad’s share rose to 68 percent from 54.7 percent.

Could there be a correlation there?

Barclays analyst Ben Reitzes thinks there might be.

“The lower priced iPad 2 has seemed to offset some of the original threat of the lower priced Fire,” he says. “Many consumers seem willing to pay $399 for a feature packed tablet with a strong and developed ecosystem rather than $199 for a relatively underpowered tablet.”

Certainly plausible. Anecdotally, I know a few folks who had planned to buy the Fire, only to balk later and cough up the extra money for an iPad 2. Perhaps there are lots more of them out there. Your thoughts?

Details from the press release:

“Subject to declaration by the Board of Directors, the Company plans to initiate a quarterly dividend of $2.65 per share sometime in the fourth quarter of its fiscal 2012, which begins on July 1, 2012.

Additionally, the Company’s Board of Directors has authorized a $10 billion share repurchase program commencing in the Company’s fiscal 2013, which begins on September 30, 2012. The repurchase program is expected to be executed over three years, with the primary objective of neutralizing the impact of dilution from future employee equity grants and employee stock purchase programs.”

The money will come from Apple’s domestic cash pile, which allows the company to avoid the heavy tax hit it would face if it “repatriated” its overseas holdings.

My hunch is that CEO Tim Cook and CFO Peter Oppenheimer won’t have a whole lot more to say during their call, but we’ll check in, anyway. You never know! You can listen for yourself at this link, or follow along here for live coverage:

9:07 am: After some technical difficulties, we’re joining the call in progress. CFO Peter Oppenheimer is speaking.

Apple wants to, among other things, attract new investors. The dividend, as already disclosed, will be $2.65. The main intent is to offset the dilution expected from employee RSU.

We will expect first year’s dividend payments to be $10 billion, Oppenheimer says.

Commencing in fiscal year 2013, Apple will begin repurchasing shares, primarily from employee stock grant. Cash use to consume $4 billion in the first fiscal year.

That will eat up $45 billion in domestic cash over three years.

Now open for Q&A:

Barclays asks about the philosophy on dividend growth. He’s wondering if the $2.65 will get higher.

Oppenheimer: We’ll review the payments periodically with the board. Payments will be more than $2 billion a quarter, making it one of the highest dividend payers in the U.S. Still avoiding the tax hit from repatriating cash held outside the U.S. Sensitive issue there.

Barclays analyst is asking a follow-up. Can you reiterate confidence in future product pipeline?

Tim Cook is speaking. We had an incredible growth last quarter of 73 percent, despite the base on the growth being large. The pipeline is full of stuff. Our customers will be incredibly pleased with what they see.

Morgan Stanley question. She’s asking about international cash, almost $100 billion overseas. How does the board think about putting that to us?

Oppenheimer: Today, we’ve got plenty of U.S. cash to invest, pay dividends and buy back shares. Repatriating cash would incur significant taxes. We have expressed our views to Congress and the White House. We think there’s a significant disincentive. He didn’t answer the question, really.

Gene Munster of Piper asks about potential for stock splits.

Cook: We have looked at it. The current information we have would suggest there’s little support that it helps the stock. We are in a unique position, so this is something we continue to look at, and if we thought it were in the best interest of shareholders, we would do it.

Munster: Any color on iPad?

Cook: Record weekend, and we’re thrilled with it.

Goldman Sachs: How do you think about growth in repurchases versus growth in dividends? Which is more important?

Oppenheimer. We remain very confident in what we’re doing. We are squarely focused on achieving our potential in the business. We will continue to assess our plans periodically. Nothing further to say today.

Cross Research: How did you arrive at the numbers you announced today?

Oppenheimer: We opted to go with a hybrid approach after doing a lot of analysis and listening to input we were getting from the shareholders. Emphasis behind the dividend. Most cash is going there. $10 billion in first year is going out in dividends. He keeps repeating the “neutralize dilution from employee RSU.” We also want to maintain sufficient U.S. cash to take advantage of strategic opportunities from time to time.

I totally missed Shannon Cross’s second question.

Cook is speaking about using domestic cash versus overseas cash. Our emphasis will always be on creating innovative products. He says even with all this cash going out the door, the domestic war chest will be big enough to do whatever they need to do. Plus, they see it as good for shareholders.

Oppenheimer says there are 17.7 million RSU (restricted stock units) outstanding.

That’s it! We’re done.

Update: Apple didn’t wait for the conference call to release its news. It has just announced plans to pay a quarterly dividend of $2.65 a share and buy back $10 billion worth of shares.

The question has lingered for a long time. At last count, when Apple last reported quarterly earnings, the figure was a staggering $97.6 billion. At the close of that period, which happened to coincide with Apple’s all-important holiday season, the company reported that its cash pile grew by $16 billion, in a single quarter.

That is more cash than the $12 billion it had on hand in 2007, which is roughly when the persistent questions about paying a dividend, buying back shares, making large acquisitions, or doing something else with the cash started knocking around in the minds of investors and analysts. At that time, Apple had reached a point where it was growing its cash hoard by a healthy $1 billion per quarter, an amount that seems quaint now.

Apple’s cash-generating power is scarcely imaginable. In the company’s most recent four quarters, analyst Shaw Wu of Sterne Agee estimates that Apple’s free cash flow was $45.3 billion. But as iPhone, iPad and Mac sales grow, it is on track to nearly double that figure in the next four quarters, to somewhere between $75 billion and $80 billion.

The cash — technically the figure most widely used is the sum of Apple’s cash on hand, its short-term investments that can be quickly converted into cash, and its long-term investments — has a lot to do with the reason that Apple’s share price has risen so high so fast. If, hypothetically, Apple were to shut down and liquidate tomorrow, everyone who owns shares would be entitled to about $104 for every share they own, and that would be before accounting for the sale of any assets.

It has always been used as a strategic hedge. Apple has the strongest supply-chain planning in the computer and electronics industry because it can show up, cash in hand, and buy up a fixed percentage of a supplier’s capacity. In 2005, this proved strategically invaluable when it launched the iPod nano. By buying up a large percentage of manufacturing capacity of flash-chip manufacturers, it guaranteed its supply of a critical component known for regular shortages, and forced its competitors to wait in line when the shortages inevitably arrived. Soon, Apple was the only music-player maker worth talking about, as most others faded into market obscurity or ceased to exist. Yet, as of Dec. 31, only $2.7 billion was committed to these “long-term supply agreements” that Apple concludes with companies that supply it with certain strategically important parts.

The consensus appears to be that Apple will pay some sort of dividend. Analysts seem to want a dividend of about 2.5 percent. At that rate, says ISI analyst Brian Marshall in a note to clients issued Sunday, Apple would pay a higher dividend yield than Hewlett-Packard, at 2 percent; Cisco Systems, at 1.6 percent; and even IBM, at 1.5 percent.

At current prices, a 2.5 percent annual dividend would put $14.65 per share in the pockets of Apple shareholders. It would also cost Apple between $12 billion and $14 billion a year, but given its expected free cash flow for the coming year, it can easily afford it.

A dividend would also spur a new round of buying of the stock, and probably have the effect of driving the share price higher, as mutual funds and exchange-traded funds (ETFs) pile in to add to their Apple positions, thus spurring other investors to keep buying as well. One wonders where — if it happens — this all leads. Apple is the largest company in the world, and every day brings some new, uncharted territory.

Already, shareholders are anticipating good news. Apple shares are up by nearly $22 to $606.87 a share in premarket trading this morning, in anticipation of a dividend. The $600 threshold, barely cracked last week with a few trades at $600.01, will in all likelihood be smashed to bits today, once the markets open for regular trading.

A return to paying a dividend would also close the loop on an important thread in the now decades-long epic that has made the Apple story one of the greatest narratives in the history of business. In November of 1995, during its crisis years, when cash was so short that Apple struggled to keep its doors open, it payed its last dividend of 3 cents a share at a time when on a split-adjusted basis, the shares were trading at less than $10.

The story of what has happened since then is well-known. And it’s not over yet.

Wall Street has been asking the company some version of this question for years, and now investors may get some kind of answer. Apple has announced a conference call to discuss its cash position — and only its cash position — tomorrow morning, at 9 am ET.

Here’s the entirety of the release:

“Tim Cook, Apple’s CEO, and Peter Oppenheimer, Apple’s CFO, will host a conference call to announce the outcome of the Company’s discussions concerning its cash balance. Apple® will not be providing an update on the current quarter nor will any topics be discussed other than cash.”

Apple has been hinting for a while that some kind of announcement has been coming. Cook made two public appearances this year — during the company’s earnings call and at a Goldman Sachs-hosted investor conference — and both times he said Apple was debating what to do with its stockpile.

Here’s John Paczkowski’s summary of Cook’s comments at the Goldman event, where Cook spent a lot of time talking about cash:

“We’re in very active discussions at the board level on what we should do,” he said, adding that careful consideration is the guiding principle here. “We are not going to run out and have a toga party.”

“We are judicious in our spending,” Cook said. “We are deliberate. We spend our money like it is our last penny. … I think shareholders want us to do that. They don’t want us to act like we are rich.”

“I’d be the first to admit we have more cash than we need to run the daily business. So we’re actively discussing it. I only ask for a bit of patience, so we can do it in a way that’s best for the shareholders.”

That’s the new theory being put forth by J.P. Morgan analyst Mark Moskowitz, who believes the Fire will end up being a catalyst for additional iPad sales.

Moskowitz met recently with Apple CEO Tim Cook and CFO Peter Oppenheimer, and came away with the impression that Apple isn’t much bothered by Amazon’s new lower-priced entrant in the tablet market.

“If anything, we think that Apple views the Kindle Fire as a device that stands to bring incremental consumers to the tablet market, and here, these consumers could gravitate to more feature-rich experiences,” Moskowitz said in a note to clients. “We think that Apple is not seeing much pressure from lower-priced tablets.”

In other words, the Fire may well expand the iPad’s addressable market by drawing more price-conscious customers into it — customers who might someday upgrade to the more capable and versatile iPad.

“Given all the investor interest in the Kindle Fire, competitive risk in tablets was one focal point of our meeting,” Moskowitz said. “[But there’s] not much concern in tablet town.”

China, which is the company’s second-largest market, accounted for 16 percent of Apple’s sales during the past quarter, with $4.5 billion in revenue, a year-over-year increase of 270 percent.

By comparison, in fiscal 2009 China accounted for only 2 percent of Apple revenue. Now “the sky is the limit,” Cook said.

Meanwhile, Cook said, Brazil was up 118 percent year over year, Russia looks “promising” and the Middle East should be a “significant opportunity.”

Apple is not launching as full an assault in other countries as in China, Cook noted. The company’s approach in China is basically the same as in the U.S., with six retail stores, 200 approved resellers, an online store and advertising. Other countries only have “portions of that” so far, Cook noted.

Around the world, Apple has 40,000 iPad points of sale, 50,000 for the iPod and 120,000 for the iPhone, Cook said.

Apple CFO Peter Oppenheimer said Apple plans to open 40 new stores in fiscal 2012, with three quarters of them outside the United States.

My admittedly imprecise liveblog notes from the conference call are below:

2:01 pm: And so we wait for the start of the earnings call. There’s some nice classical guitar music playing.

2:03 pm: Still waiting for people to dial in. You’re welcome, operator, for my patience.

2:04 pm: And we’re getting under way.

Boilerplate. Forward-looking statements, blah blah blah.

Here’s Tim Cook. This is our first earnings call since the passing of Steve Jobs. Steve was a great leader and mentor and inspired people at Apple to do extraordinary things. Only Apple brings together software hardware and services. As we move forward, we will continue doing that.

And here’s Peter Oppenheimer. Record September quarter revenue and earnings. Record on Mac sales, record September quarter for iPhone sales.

Year-over-year increase in revenue was iPad, Mac and iPhone sales.

Mac sales increased strongly in each of the operating segments, especially Asia. MacBook Pro was especially strong, he says. Portables 74 percent, but desktop sales were strong too. Six million Lion downloads during the quarter.

Some 6.6 million iPods sold, down year over year, but ahead of our expectations, and iPod touch accounted for more than half of iPods sold.

2:09 pm: iPod is still strongest in most of the countries we track.

iTunes: $1.5 billion revenue. 16 billion songs downloaded.

iPhone: 17.1 million iPhones. 21 percent year-over-year growth. Sales in Asia Pacific doubled year over year.

We expected sales to decline as the result of new-product rumors of new iPhones.

Ended the quarter with 5.75 million in channel inventory, which is within the target.

$11 billion recognized revenue from iPhone sales compared to $8 billion previously.

2:11 pm: 93 percent of Fortune 500 are trying iPhones, up from 91 percent last quarter. Citing Lowe’s, rolling out iPhones with a custom application for employees. SAP, Jaguar, LandRover, CSX all named as customers.

Naming enterprise customers as part of an earnings call, if I’m not mistaken, is something new for Apple.

iPad: 11.1 million versus 4.2 million year-ago quarter. We said from the beginning the tablet market is a huge opportunity. (You got that right.)

2:13 pm: $6.9 billion in iPad-related revenue.

And now talking about the airline industry? What? Did Apple just pivot toward showing a new, enterprise-friendly face?

iCloud comments: We believe iCloud is the easiest way for customers to manage their content. The App Store has 500,000 applications, now available in 123 countries.

Retail sales up 1 percent year over year. Strong Mac sales offset by lower iPhone sales. 1.1 million Macs sold during the quarter. Again, about half of these are people who have never owned a Mac. The halo effect is still intact.

2:17 pm: 357 stores open at the quarter. $10.7 million average sales per store. $679 million sales total at retail. 77.5 million visitors.

Now guidance: International expansion. 77 stores (?) will open, about three-quarters of them outside the U.S. (I may have gotten that number wrong.)

Cash: $81.6 billion as of the end of the quarter versus $76.2 billion net of cash paid for Nortel patents. Cash flow from operations 10.4 billion.

2:19 pm: More guidance. This December quarter will have 14 weeks. $37 billion versus 26.7 billion with a gross margin of about 40 percent.

EPS: $9.30 in the quarter expected.

Oppenheimer sums up the year’s unit sales results: 72 million iPhones, 32 million iPads, 17 million Macs.

2:21 pm: And now time for Q&A:

Goldman Sachs’s Bill Shope: Given that 4S was launched close to holiday season, any risk of shortage?

Cook: We’re off to a great start with the 4S. Thrilled with the start. Confident we will have a large supply. Not sure about whether supply and demand will be in balance. Demand high now. Confident we will set all-time record for iPhones this quarter.

2:22 pm: Cook: As we predicted, iPhone sell-through decline did occur among the rumors, but not as much as we thought. The reduction hit extreme highs during the back end of the quarter.

Cook: In our wildest dreams we couldn’t have gotten off to a better start with iPhone 4S.

Katy Huberty from Morgan Stanley, asking about gross margins.

Oppenheimer: We expect gross margins to be relatively flat. We think there’s a favorable component cost environment. And a strong mix of iPhones. We expect these to be offset by higher cost structures and lower price points for the other iPhones. Plus the stronger dollar.

Question for Cook on traction in China. How big could China be for Apple over time? Could it be as big as the U.S.?

Cook: China progress has been amazing. It was just 2 percent in fiscal 2009. Now it’s 12 percent. It is our fastest-growing major region by far. $4.5 billion of revenue in the quarter, and that’s four times or up 270 percent year over year.

A year ago, in fiscal 2010, we were just above $3 billion in China sales. We have placed new stores there, six in greater China. Online store hasn’t been open a year yet. We are now up to 7,000 points of sales on the iPhone in China. How far can it go? Certainly in my lifetime I’ve never seen a country with as many people rising into the middle class, with people wanting to buy Apple products. It has quickly become No. 2 of top revenue countries, and we’re placing additional investment and stores there as well as doing quite a few other things to continue to deliver our products to China. Also placing additional focus on areas that have shown great promise. Brazil was up 118 percent year over year. Russia is looking more promising. The Middle East has significant opportunity. Several of these markets Apple has not been strong in are being introduced to the iPhone and then getting excited about other products that we have. In China, the sky is the limit. I wouldn’t discount some of the other places. (Wow, that was a long answer!)

2:30 pm: Question about supply chain for Tim. Didn’t get it.

Cook: We have an outstanding team in this area. We keep trying to improve all the time. We have used our balance sheet to do strategic deals to get parts that were important. (Like flash memory, for one thing.) Our approach has been, and I think will always be, to do business with as few people as we can, to go very deep with them. You can’t do that when you go out to many, many different people. They give us great quality and reasonable prices.

Now a question about the competitive market for tablets. Asking about Amazon Fire.

Cook: We had an outstanding quarter. At the same time, we were setting a Mac record. But we’ve seen several competitors come to market to try and compete. They have had different form factors and price points. I think it’s reasonable to say that none have gained any traction thus far. As they were coming to market, our share went up. We were responsible for three out of every four tablets sold.

Question from Gene Munster at Piper Jaffray: Asking about deferred revenue from carriers because of the launch of the iPhone 4S.

Oppenheimer: We waited. The biggest impact was the rumors late in the quarter. We have just started selling the iPhone 4S, and it’s off to a fantastic start with Sprint and KDDI.

2:34 pm: Gene now asks about size of the tablet market. How do you think about the market?

Cook: We thought from the beginning it would be huge, but it has been even greater than we thought. We’ve sold 40 million on a cumulative basis. If you forecast out in time, the tablet market will be larger than the PC market. That is not a guidance number, it’s just something I believe. There will be many more people that can access it. I think it’s a huge opportunity for Apple across time.

Barclay: Ben Reitzes: Do you have any idea of how many units were pushed out and deferred into the next quarter? And in general, what do you think, how should we be thinking about pent-up demand relating to the iPhone 4S launch?

Cook: You can’t run the experiment twice. We won’t know how many we would have sold. I believe it was substantial. That is the reason we called it out. Anyone monitoring the press (especially AllThingsD) would have known about it. When we launched iPhone 4 we did 1.7 million, and when we launched 4S we did 4 million in the first weekend.

Question about iPad category: In Macs, you’re up sequentially. Any thoughts on iPad seasonality?

Oppenheimer: We would expect to establish new records for both iPhone and iPad in the December quarter. On Mac, we will continue to outgrow the market.

Shannon Cross: Can you talk a little more about Siri in the future? Is it a feature or is there a more fundamental way to interact with devices?

Cook: The number of people interacting with it is amazing. We see this as a profound innovation. Over time, many, many people will use it in a substantial way. What percentage of their input will be by that? Our guts have been telling us that it is substantial and that it’s an incredible innovation.

Cross: Comment on supply chain on hard-drive issues in Thailand?

Cook: Hearts go out to people of Thailand. We have lots of factories that supply them. There are several factories that are not operable, and recovery time is not known. As you can appreciate, weather has not allowed the ability to assess. Our primary exposure is on the Mac. The number of drives and drive components that come from Thailand is high. There will be a shortage of disk drives. How it affects Apple, we placed our assessment in the guidance we’ve given.

2:41 pm: Tony Sacconaghi. Asking Cook to comment on ongoing patent fight with Samung. What are your ultimate objectives on litigation? Injunction or royalties?

Cook: No comment on litigation. We spend a lot of time and money and resources in coming up with incredible innovations. We don’t like it when someone else takes those. That is why we, unfortunately, have been pushed into the court system as a result.

Toni: What kind of remedies do you see?

Cook: No comment.

Toni: Price reductions on the 3G offering. You’ve gone to free, and cut prices dramatically. How are you thinking about this price reduction? New segments of consumers?

Cook: We did it because we wanted to make the iPhone more accessible to a broader market. We took 3GS to free in the U.S. and other markets. We also lowered the price on the iPhone 4 to $99. We’ve done both of those.

2:44 pm: Uh-oh. My audio just went dead.

Okay, it’s back.

Question about issues relating to unibody casings.

Cook: We treat every concern about a supplier very seriously. We’re investigating the situation. Factored the supply outlook as we see it into numbers supplied earlier.

NAND Flash and DRAM really declined in price last quarter. LCD displays, too, will continue in favorable levels. Most of the other components we expect to fall at or above normal trends. That is with the asterisk concerning hard drives and Thailand.

2:47 pm: We could be moving to a new phase for the company where some of the fastest-growing products in the product line, that could see some price elasticity, could be fastest-growing products next year. Could that put pressure on gross margins? Can you still expand operating margins next year?

Oppenheimer: December quarter we expect gross margin on 40 percent. We have nice leverage on operating margin, just over 30 percent. We are going to just continue to offer the best products we can. You’ll see us be aggressive, and where customers want to buy, that’s fine. We just want them to buy our products.

2:49 pm: Credit Suisse: On the iPad side, could you speak about distribution rollout in that product? Was there any pause rolling out to other countries? Then another question about BRIC countries. What do you need to do in those countries?

Cook: We are in 90 countries on iPad. We have about 40,000 points of sale around the world. To put that in some context, we have 50,000 on iPod and 120,000 on iPhone. There are still countries left to do.

With iPhone, it’s crystal clear there was slowdown. That was not the case with iPad. On the last call I said we were coming into supply-demand balance in some countries with iPad. Then we got into balance around the world. We couldn’t feel better, honestly. The extent of the usage: Comscore 97 percent of Web usage on tablets is from iPad.

In terms of other countries, we have started placing efforts in them. We wouldn’t have done $900 million in Brazil without any effort. There are a few countries with protectionist measures, where the prices are high, where there’s no local content. The basic approach with all the countries are the same with the game plan in China. It’s the rate and pace of the rollout, whether to involve everything we did in China. In China we did everything we know how to do. Everything we do in the U.S., we do in China. We would not do all that in the other countries I mentioned.

2:54 pm: Bank of America question. Any thoughts on cash allocation? Dividend? Buyback? (Yeah, no.) Also a question on cannibalization of Macs via iPad.

Cook: Some are deciding to buying an iPad instead of a Mac, but most are deciding to buy an iPad instead of a Windows-based PC. So we come out very well in that situation. Even so, Mac had its best quarter ever.

Cash: To date, we want to maintain flexibility. The cash isn’t burning a hole in the pocket. We invest the cash conservatively. We won’t do something silly with it. We’ve taken money and done things with it. We’ve acquired several companies and some IP. We’ve invested in the supply chain, and we build out our stores and provided for product tooling and the like. The cash we do spend we do a good job of it and we use it in the right places.

I’m not religious about holding cash or not holding it. We will continually ask ourselves what’s in Apple’s best interests. It’s a topic for the board.

Oppenheimer: Of the $81 billion we have in cash, $54 billion of it is offshore.

2:57 pm: Question: Is buying back shares, is that perhaps kind of a philosophical white flag that you’re not able to produce value through innovation?

Cook: No one would say we’re waving the white flag on innovation. We’ve got a pipeline that is unbelievable.

Q: Would that hold you back from buying back?

Cook: No, they are distinct things. The cash is always a topic, and we’ll always conclude to do what’s in Apple’s best interest. And if you look at what we’ve done with it, you’ll agree.

Cook: We think the smartphone market will absorb the handset market. Handset market is 1.5 billion units and handset is 400 million so far. The big win is to eat into the 1.5 billion, not just for us but for others.

Now a question about the extra week in the December quarter.

Oppenheimer: The extra week will conclude on New Year’s Eve. Usually a good day for us, sales-wise.

A question on Japan: Disparity on units versus revenues in Japan.

Cook: A huge percentage of Japan was from iPhone 4 launch. Year-over-year compare was tough. Mac had a great quarter in Japan, however. The iPhone was a negative year-over-year compare, but we have a strong start in Japan. It was one of the first seven countries.

Chris Whitmore: Asks about medium- to longer-term iPad opportunity. Do you see an opportunity to move it upmarket?

Cook: I don’t want to get into what we might do. We see the tablet market as a huge market. We could not be happier with our position in it. We have some fantastic things in the pipeline. After selling 40 million, we have a good handle on what to do next.

Aaaaand my audio went dead again.

Aaaaand now it’s back again.

And that’s it for the conference call. A very interesting call, overall. Some intriguing variations from the usual script.

The last time Apple sold so few iPods was in the third quarter of 2005, when it sold 6.16 million. Quarterly iPod sales peaked in the first quarter of 2009 at 22.7 million.

Apple CFO Peter Oppenheimer said that the iPod Touch accounted for more than half of iPods sold in the quarter.

The company did, however, see year-over-year increases in sales of iPhones, iPads and Macs.

Sales were $28.27 billion and per-share profits were $7.05, falling short of Wall Street consensus estimates of $29.45 billion and $7.28 per share.

Apple sold 17.07 million iPhones during the quarter, which is okay when you consider that the rumor mill about a new iPhone was seriously buzzing but good during the summer months, and yet didn’t seem to dampen demand entirely, but given the Street expected at least 20 million units sold, it’s a miss, though not an unprecedented one. That makes it 72.3 million sold during the fiscal year.

IPad sales hit 11.12 million, amounting to growth of 21 percent. Apple finished the year having sold 32.4 million iPads. That’s a solid beat on expectations.

Mac sales continued their their steady climb upward. Apple sold 4.9 million Macs during the quarter, bringing the fiscal year’s total sold to 16.8 million. This is yet another record quarter for Mac sales.

Apple exits the year with $81.5 billion in combined cash, short-term and long-term investments. Certainly, calls for Apple to do something with this enormous pile of wealth besides “preserving,” as it has been for a decade or more, will intensify.

Apple shares finished the day up $2.25, or less than 1 percent, and closed at $422.24 during the regular trading session.

Here’s Apple’s statement in full:

CUPERTINO, Calif.–(BUSINESS WIRE)– Apple® today announced financial results for its fiscal 2011 fourth quarter ended September 24, 2011. The Company posted quarterly revenue of $28.27 billion and quarterly net profit of $6.62 billion, or $7.05 per diluted share. These results compare to revenue of $20.34 billion and net quarterly profit of $4.31 billion, or $4.64 per diluted share, in the year-ago quarter. Gross margin was 40.3 percent compared to 36.9 percent in the year-ago quarter. International sales accounted for 63 percent of the quarter’s revenue.

The Company sold 17.07 million iPhones in the quarter, representing 21 percent unit growth over the year-ago quarter. Apple sold 11.12 million iPads during the quarter, a 166 percent unit increase over the year-ago quarter. The Company sold 4.89 million Macs during the quarter, a 26 percent unit increase over the year-ago quarter. Apple sold 6.62 million iPods, a 27 percent unit decline from the year-ago quarter.

“We are thrilled with the very strong finish of an outstanding fiscal 2011, growing annual revenue to $108 billion and growing earnings to $26 billion,” said Tim Cook, Apple’s CEO. “Customer response to iPhone 4S has been fantastic, we have strong momentum going into the holiday season, and we remain really enthusiastic about our product pipeline.”

“We are extremely pleased with our record September quarter revenue and earnings and with cash generation of $5.4 billion during the quarter,” said Peter Oppenheimer, Apple’s CFO. “Looking ahead to the first fiscal quarter of 2012, which will span 14 weeks rather than 13, we expect revenue of about $37 billion and we expect diluted earnings per share of about $9.30.”

Apple will provide live streaming of its Q4 2011 financial results conference call beginning at 2:00 p.m. PDT on October 18, 2011 at www.apple.com/quicktime/qtv/earningsq411. This webcast will also be available for replay for approximately two weeks thereafter.

This press release contains forward-looking statements including without limitation those about the Company’s estimated revenue and earnings per share. These statements involve risks and uncertainties, and actual results may differ. Risks and uncertainties include without limitation the effect of competitive and economic factors, and the Company’s reaction to those factors, on consumer and business buying decisions with respect to the Company’s products; continued competitive pressures in the marketplace; the ability of the Company to deliver to the marketplace and stimulate customer demand for new programs, products, and technological innovations on a timely basis; the effect that product introductions and transitions, changes in product pricing or mix, and/or increases in component costs could have on the Company’s gross margin; the inventory risk associated with the Company’s need to order or commit to order product components in advance of customer orders; the continued availability on acceptable terms, or at all, of certain components and services essential to the Company’s business currently obtained by the Company from sole or limited sources; the effect that the Company’s dependency on manufacturing and logistics services provided by third parties may have on the quality, quantity or cost of products manufactured or services rendered; risks associated with the Company’s international operations; the Company’s reliance on third-party intellectual property and digital content; the potential impact of a finding that the Company has infringed on the intellectual property rights of others; the Company’s dependency on the performance of distributors, carriers and other resellers of the Company’s products; the effect that product and service quality problems could have on the Company’s sales and operating profits; the continued service and availability of key executives and employees; war, terrorism, public health issues, natural disasters, and other circumstances that could disrupt supply, delivery, or demand of products; and unfavorable results of other legal proceedings. More information on potential factors that could affect the Company’s financial results is included from time to time in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of the Company’s public reports filed with the SEC, including the Company’s Form 10-K for the fiscal year ended September 25, 2010, its Forms 10-Q for the quarters ended December 25, 2010; March 26, 2011; and June 25, 2011; and its Form 10-K for the fiscal year ended September 24, 2011 to be filed with the SEC. The Company assumes no obligation to update any forward-looking statements or information, which speak as of their respective dates.

Apple designs Macs, the best personal computers in the world, along with OS X, iLife, iWork and professional software. Apple leads the digital music revolution with its iPods and iTunes online store. Apple has reinvented the mobile phone with its revolutionary iPhone and App Store, and has recently introduced iPad 2 which is defining the future of mobile media and computing devices.

It will, of course, be Tim Cook’s first earnings call as CEO since taking over the job on a permanent basis this summer. There will naturally be questions from analysts about any changes in direction, however slight, that may result following the death of founder and Chairman Steve Jobs. Don’t expect much in the way of changes, nor in meaningful answers to questions about them. As much as Jobs is missed, Apple is in the strongest business shape it has ever been in, and shows no sign of slowing down.

Today’s earnings report, which will also be the final report of Apple’s 2011 fiscal year, will only make that fact more plain. Unless something went terribly wrong — and there is no sign that anything did — it will be Apple’s first year with sales north of $100 billion.

The consensus of Wall Street analysts says that Apple will report sales of $29.45 billion, which would be an improvement of more than $9 billion and 45 percent over the same quarter last year, and profits of $7.28 per share, which would be a 57 percent jump.

But as is always the case with Apple, the consensus has a way of being conservative. Sales of the iPhone 4, despite the buzz leading up to the release of the iPhone 4S, remained strong, said Gene Munster, analyst with Piper Jaffray, in a note to clients yesterday.

Munster expects Apple to report sales of 22 million iPhones in the quarter, slightly more aggressive than some estimates, by buyside analysts, of 20 million. “We believe sales of earlier iPhone models, like the iPhone 3GS, held up through the September quarter, which suggests global customers also remained interested in the iPhone 4 head of the anticipated update,” Munster wrote. The iPhone accounts for 46 percent of Apple’s sales.

That means good things for Apple’s gross profit margin, as components used in the older models became cheaper. Munster expects a gross margin of 39 percent, beating Apple’s previous guidance of 38 percent. However, if Apple maintains the gross margin it reported last quarter — 41.7 percent — it implies a much higher overall profit of $7.68 a share, Munster said.

On the iPad front, which accounts for 20 percent of Apple’s business, Munster expects Apple to report sales of 10 million units, which he admits may not seem like meaningful growth versus the year-ago quarter. But remember that last year’s September quarter came right on the heels of the launch of the iPad 1 2. The comparisons will be tough.

And don’t forget the Mac, another 20 percent of revenue. Market research firm NPD reported Mac sales up 20 percent in each of the three months of the quarter. Munster says the street consensus implies Mac unit sales growth of 16 percent, but the NPD numbers imply growth closer to 20 percent.

Finally, all eyes will be on Apple’s guidance for the holiday quarter just ahead. Apple will likely give its usual conservative guidance, which has averaged about 2 percent below the Street on revenue and 10 percent below the street on per-share earnings. But it typically beats the Street’s estimates by an average of 9 percent and 28 percent, respectively. Right now, the consensus view on the December quarter calls for sales of $36.6 billion and profits of $8.98. Plan accordingly.

Munster rates Apple shares “overweight” — the equivalent of “buy” — with a price target of $607. Yesterday, Apple shares hit another lifetime high of $426.70, and closed at $419.99. The shares are up about 27 percent this year.

Update: I corrected my reference above to the timing of the iPad 2 release.

Speaking on a conference call with analysts on Tuesday, CFO Peter Oppenheimer confirmed the launch date. The company had previously said it would launch this month and it had been widely expected to go on sale this week.

Lion, which will be sold via the Mac App Store, rather than through retail or other channels, includes more than 250 new features, including a number designed to bring to the Mac some features popular on the iPad.

Earlier on Tuesday, the company reported blowout earnings paced by far stronger than expected sales of the iPhone and iPad.

Also on the conference call, Oppenheimer confirmed the company sold all the iPads it could make during the quarter, with 1.05 million iPads in channel inventory, up slightly from the prior quarter, but below the company’s intended target of having 4-6 weeks’ worth of channel inventory.

The company also again said that it is seeing far greater than expected iPad adoption by businesses, including for sales, in retail and in hospitals.

On the retail front, the company plans to open 30 new stores before the end of September, including its first store in Hong Kong.

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.

NOTES FROM THE EARNINGS CALL

• 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.

PREVIOUSLY

• iPad Will Rule Tablet Market For Years, Says Goldman
• Second-Quarter Mac Sales Likely to Be Magical, Revolutionary
• Apple Earnings: Expect Another Barn Burner
• Steve Jobs’s Finest Product–Apple–Won’t Break Down

According to Taiwanese trade mag DigiTimes, Apple has locked up nearly 60 percent of the world’s touch-panel capacity, leaving behind a very tight supply for its rivals to scrap over.

“Touch panels are currently suffering the most serious shortage due to Apple holding control over the capacity of major touch panel makers such as Wintek and TPK, and with US-based RIM, Motorola and Hewlett-Packard also competing for related components,” says DigiTimes. “Second-tier players are already out of the game.”

So Apple ends up with a double advantage–not only has it secured supply enough for its own needs, but it has also caused scarcity in the market and disadvantaged its rivals. It’s impossible to say definitively, but my guess is this is the result of that mysterious $3.9 billion component supply investment COO Tim Cook mentioned during Apple’s first-quarter earnings call.

“We’ve historically entered into certain agreements with different people to secure supply and other benefits. And the largest one in the recent past has been we signed a deal with several flash suppliers back at the end of 2005 that totaled over $1 billion because we anticipated that flash would become increasingly important across our entire product line and increasingly important to the industry. And so we wanted to secure supply for the company, and we think that, that was an absolutely fantastic use of Apple’s cash. And we constantly look for more of these. And so in the past several quarters we’ve identified another area and come to some recent agreements that [CFO Peter Oppenheimer] talked about in his opening comments, in that these payments consist of prepayments and capital for process equipment and tooling. And similar to the flash agreements, they’re focused in that area we feel is very strategic.”

Indeed. Funny how Apple now controls–largely—both the demand and supply sides of the touch panel business.

Worth about $7.8 billion, the deal is believed to include liquid-crystal display panels for the next iteration of the iPad, as well as mobile application processors and NAND flash memory chips used for the U.S. company’s iPhones and iPads.

One unknown: Whether the displays reportedly included in this deal are the rumored Super PLS panels that offer not just a wider viewing angle, but superior visibility outdoors. Another: Whether this deal is somehow related to the $3.9 billion component supplies and capacity contract Apple COO Tim Cook mentioned during Apple’s first-quarter earnings call.

“In the past several quarters we’ve identified another area and come to some recent agreements that [CFO Peter Oppenheimer] talked about in his opening comments, in that these payments consist of prepayments and capital for process equipment and tooling,” Cook said back in January. “And similar to the flash agreements, they’re focused in that area we feel is very strategic. And so I’d prefer not to go into more detail about what specific area it’s in, but it’s the same kind of thinking that led us to those deals that led us to the flash deal.”

PREVIOUSLY: Apple Using Cash to Secure Cache of Components

That’s an astonishing jump, and it speaks volumes about the growth, and usage, of Apple’s iTunes/iPhone/iPad/iPod ecosystem.

It’s harder to figure out what it means for Apple’s financials, but we can guess: Not nearly as much.

App downloads increased 233 percent in the last year. But revenue growth at the iTunes store, which distributes them, is much more modest.

In Apple’s last fiscal year, which ran up to Sept. 25, 2010, iTunes revenue grew roughly 23 percent. During Apple’s most recent quarter, iTunes revenue grew at the same rate.

Apple also sells music and videos, and now books via iTunes as well, but doesn’t provide any breakdown by category, so anything beyond those stats is guesswork. (And even getting to iTunes revenue numbers requires a small leap of faith*.)

But for what it’s worth, I’m assuming that revenue from apps is increasing at a faster clip than the numbers above suggest. Because digital music sales, which used to power iTunes sales, are slowing.

In any case, it shouldn’t be a huge shock to see that big app-download numbers don’t translate into big dollars for Apple, since the majority of app downloads are free.

Still, it’s a good reminder that Apple has always maintained it’s not trying to make money with the iTunes store–it’s a “bit over break-even,” CFO Peter Oppenheimer said last year.

iTunes’ real job is to give people more reasons to buy Apple’s hardware. And that’s working out very well indeed.

*iTunes revenue requires a bit of guesswork, because Apple doesn’t usually break out the store’s numbers, but lumps them into a “music related products and services” category, which includes accessories, etc. But the vast majority of that total comes from iTunes. And in the last quarter, Apple gave us something much closer to a real iTunes number: “revenue exceeding $1.1 billion.” FYI: That works out to about 77 percent of Apple’s “music-related products” number for that quarter.

The company says it’s not, but “people familiar with the matter” tell Bloomberg otherwise. They claim Apple approached Blackstone CFO Laurence Tosi about taking on the role, which has been held by Peter Oppenheimer since 2004, and he turned it down. Good thing for Oppenheimer since, according to Apple spokesman Steve Dowling, he “loves the company and is extremely happy in his role.”

And apparently it’s a mutual affection. The response from the company is straightforward: “Peter is not leaving Apple. We are not conducting a CFO search.”

Of course that doesn’t mean it didn’t approach Tosi, nor does it kick the legs totally out from under Bloomberg’s narrative. Apple’s statement says only that it’s not currently conducting a search. It says nothing about searches it might have conducted in the recent past or any discussion it may or may not have had with Tosi.

Great fun to listen to for Apple watchers. But not that meaningful, really–mostly positioning and spin. There was at least one important nugget, though: Apple has a specific shopping list, with some very big-ticket items on it.

Jobs wouldn’t lay those out, of course. But when asked if he planned on spending any of Apple’s $51 billion (!) in cash via a dividend or stock buyback, he explained that he had something else in mind. From my notes, a combination of direct quotes and paraphrase:

“We strongly believe that one or more very strategic opportunities may come along that we’re in unique opportunity to take advantage of because of our cash,” and we want to keep our powder dry “because we feel that there are one or more” opportunities in the future.

M&A guys, start your engines!

The “what will Apple do with all its cash” speculation story is a time-honored tradition–I seem to remember writing one four or five years ago, when Apple had $6 billion or so lying around, and discussing whether it made sense for Jobs to buy a music company like Universal.

But I don’t remember Jobs every signaling his desire to go shopping quite as openly as this before (feel free to correct me in comments if I have this one wrong). Two caveats:

• Jobs is famous for saying one thing and doing…something else. So don’t get too riled up about this.
• Just because Jobs is talking about spending money on “opportunities” doesn’t mean he’s talking about buying a company. He could be talking about big, hairy capital expenditures, like the billion-dollar server farm Apple is finishing up in North Carolina.

Still. It’s hard not to read or hear that quote and not think that he’s thinking about some very big buys. Like what?

A lot of folks will assume that Jobs is talking about buying a big content producer. Music doesn’t make any sense, because there’s little value left in that business. But if Jobs wants to make headway in the TV business, perhaps it makes sense for him to snag a big broadcaster or programmer to give him the leverage he needs with the Comcasts, Viacoms and Time Warners of the world.

Or you could make the same argument for other content makers, like game studios. The biggest one, Electronic Arts, has a market cap of a mere $5.21 billion. Jobs could give ERTS shareholders a hefty premium and still have plenty of walking-around money.

Or perhaps it makes zero sense for Apple to be in the content business, because it’s done just fine not being in the content business to date.

So then what?

Feel free to throw your own guesses in, but I’ll kick off with my own: It’s a company that has yet to compete with or brush up against Apple in any significant way. And it’s one that Apple seems unlikely to be able to move aside, even if it wanted to. And it’s one that’s already competing directly with Google, which has to make Jobs like it even more.

And, if you believe this L.A. Times report, Jobs is already strolling around Palo Alto with its CEO: What do you think of Apple buying Facebook? Discuss….

Earlier

Apple investors who got their first look at the company’s earnings numbers don’t like them–AAPL is trading down seven percent after hours. Let’s see if Apple executives can soothe their concerns during the earnings call.

You can listen in for yourself via this link, or follow along in my liveblog below:

Live Blog

Apple or Apple’s IR company trying some very, very mellow string and piano stuff while we wait.

CFO Peter Oppenheimer kicks off. “Outstanding results” for September quarter. Highest quarterly revenue, earnings.

Mac products and services: 3.9 mm Macs. Record quarter. 27% y/y growth. Double market growth for Q.

IMac, Macbook, Macbook Pro all good. Asia/Pacific performing best.

IPods: 9.1 million.

ITunes revenue more than $1 billion.

IPhone. “Extremely pleased” with 14.4 million unit sales; basically doubled y/y.

$8.6 billion in sales value of iPhones alone.

Heaping praise on iPhone 4 (justified) and stressing iPhone’s move into corporate market, rattling off blue-chip customers.

IPad. “Thrilled” with momentum. “Great enthusiasm” from customers.

65% of Fortune 100 deploying or piloting iPad. Lists some of them.

125 million iOS device sales last month.

200,000 registered iOS developers.

“Very happy” with results of iAd so far.

On to Apple stores. More records here.

Expects to open 40-50 stores next year, 50% of them outside U.S.

IPhone sales mix “better than expected”–boosted overall margin.

$51 billion cash hoard. [Deep, longing sigh from everyone in media, tech business.]

For the year: 5x revenue and 10x earnings compared with five years ago.

“Very enthusiastic” about lineup, “extremely confident” in new product pipeline.

Rare appearance from Steve Jobs!

Had to drop by for first $20 billion quarter.

“We’ve now passed RIM, and I don’t see them catching up to us in the foreseeable future.”

They have to move into software/platform development, and I don’t think they can.

So what about Google?

Apple is activating 275,000 iOS devices per day on average over the past 30 days; peaked at 300k iOS devices some days. 300,000 apps in app store.

Unfortunately, there is no solid data on how many Android handsets sold each quarter.

Google loves to characterize Android as open, Apple as closed. “We find this a bit disingenuous.”

Windows is “open.” But Android is “very fragmented.” OEMs like Motorola install own stuff to make their phones stand out. We don’t do that.

Shout out to “Twitterdeck” ( I think he means Tweetdeck) and their challenges running 100 versions of Android client. “Compare this to iPhone, where there are two versions of the software…to test against.”

Meanwhile, at least four app stores on Android. “This is going to be a mess for both users and developers.”

Apple’s app store has 3x apps compared with Google marketplace.

“Even if Google were right, and the real issue was closed vs. open, it’s important to remember that open systems don’t always win.”

For instance: Microsoft’s [miserable] “PlaysForSure” strategy, RIP.

Google’s “open” argument is a “smokescreen.” Real issue is what’s best for customer–”fragmented vs. integrated.”

Integrated is a huge advantage for us, because it’s better for customers, and better for developers. “We are very committed to the integrated approach no matter how many times Google tries to characterize it as closed.”

Now! On to our tablet competitors:

First of all, only a few credible competitors.

Second, most of them are pushing 7.5″ screen. That means they are just at 45% size of our 10″ screen. “You heard that right….This size isn’t sufficient to create great tablet apps.”

Extolling features of iPad size vs. teeny tiny tablet competitors: They’re “tweeners”–too small to compete with iPad, too big to compete with smartphones.

IPad has 35,000 apps. New crop of tablets will have “near zero.”

Competitors having a hard time coming close to iPad pricing, even with their puny screens. We make our own everything, and this results in an “incredible product, at a great price.” Our competitors will “likely offer less, for more.” They’ll be “DOA. Dead on arrival.”

Questions and Answers

Supply constraints on iPad?

COO Tim Cook: We’ve got a handle on it. And note that we’re expanding distribution in the U.S. and internationally, with more countries to come.

Question about margins I didn’t quite catch.

Oppenheimer: Sold more iPhones than planned, and commodity prices came down, so that helped.

Q for Steve. Please talk about “iPad opportunity.” Size of business, etc., two years or more down the road?

Jobs: “The iPad is clearly going to affect notebook computers. The iPad proves it’s not a question of if, it’s a question of when.” Already seeing “tremendous” interest from education and “much to my surprise, from business.”

“The more time that passes, the more I am convinced that we’ve got a tiger by the tail here.” We’ve trained tens of millions of people on this OS via the iPhone. “I see it as really general purpose, and I see it as very big.”

Could it be the second biggest business after the iPhone?

“I try not to predict, I try to report.” We’re selling more iPads than Macs.

What about Flash? Any update?

“Flash memory? We love flash memory” [hohoho]

A question on iPhone demand, which I missed.

Q: Steve, “You are the tablet market.” Do you see tablet competitors cutting into your market in the same way you cut into RIM’s market? Won’t that fragment the market?

“I have a hard time imagining what those strategies…are.” Pricing won’t work. “Flash hasn’t presented any problem at all; as you know, most video on the Web is now presented in HTML5.” The iTunes store is dominant and “we’re not done” working on stuff for the future.

Q: Smartphones–”Do you see that as a zero-sum game?”

Jobs: As you know, most phones in the world aren’t smartphones. They’ll convert over time, so there will be room for multiple competitors, but “eventually it will turn into a zero-sum game, or close to that.”

Q: For Oppenheimer: Another margins question.

A: We do see a small sequential decline. Higher-than-expected mix of new iPods and new iPads. We’ve been very aggressive on pricing there, and that’s what’s pushing down margins.

Q: Steve, how’s your Apple TV “hobby” coming? And what’s up with streaming media?

Jobs: We don’t talk about unannounced products, but I’m happy to tell you what we know about Apple TV. We have moved to streaming. It’s all streaming. Everything is rented, and/or soon to be streamed from iPad or iPhone.

So far we’ve sold 250,000 new Apple TVs. “I’m thrilled with that.” And with Airplay set up, “it will give people another big reason to buy it.”

Another margin/guidance question. Seems to be the same one repeated each time, with the same answer.

Q for Steve: Key risks for company?

The goal is to make the best devices in the world. “It’s not to be the biggest. As you know, Nokia’s the biggest… but we don’t aspire to be like them.”

Android is the biggest competitor. Outshipped us in June quarter as we transitioned. We’re waiting to find out what happened in this quarter. “I don’t know how we’ll find out” though.

Our approach is to create products that “just work” and “their approach is very different from that.”

Questions for Steve and Tim: Aspirations for iPhone and iPad. In Mac, you didn’t aspire to high market share; in iPod, it was the opposite–you own that market. In the past, Tim you’ve described iPhone business as closer to the iPod model. Steve, you sort of said something different. Please resolve that difference: Biggest, or best?

Jobs: “Nokia makes $50 handsets. We don’t know how to make a great handset for $50.” We want to make “breakthrough, best products,” and “drive costs down” while making them better through “relentless improvement.”

We have a very low share in the phone market. Single digits. And a very high share in tablets. But we don’t think about it that way.

The reason we won’t make a seven-inch tablet isn’t because of price point, “it’s because we don’t think you can make a great tablet with a seven-inch screen.” And as a software company, we think of software first. Developers don’t want to build for all these different platforms and devices, and on this small screen. “It’s not about cost, it’s about value, when you factor in the software.”

Q: Okay, but if the market moves toward lower-functionality smartphones and “dramatically lower price points,” then you’ll cede share, right?

Jobs: “You’re looking at it wrong.” You’re looking at it as a hardware guy who doesn’t really know about software. You assume that software “can come alive on this product that you’re dreaming of. But it won’t” because developers want to build for better products, with faster processors and better screens.

Q: You have about $50 billion in cash. What are you going to do with that? Why not return it to shareholders?

Jobs: “We strongly believe that one or more very strategic opportunities may come along that we’re in unique opportunity to take advantage of because of our cash” and want to keep our powder dry “because we feel that there are one or more” opportunities in the future.

Missing next question about iPhone and iPad penetration into corporate market.

[Market not sold on Apple's story yet, btw: Stock still down 5.84%.]

Question for Oppenheimer. Guess what? It’s about gross margins. Any change in manufacturing, etc? Any color at all?

Oppenheimer: Don’t provide product-specific gross margins. Always trying to lower costs, though. “We were happy” with gross margins for quarter. Down slightly because of product mix, as I’ve said over and over.

Q: Talk about demand from carriers to pick up iPhone 4.

Cook: The pressure I’m feeling is about supply. That’s the problem. At the country level, we have 166 relationships in 89 countries. In many countries, we went to more than one carrier. Latest one of those is Germany.

IPhone 4 in 85 of 89 countries. Will be in all 89 by end of year.

What happens to margins and subsidy when you go nonexclusive?

We don’t give information out on specific markets, but you can see that our ASPs have stayed above $600.

For Steve: Why do you have advantage in price on iPad, as opposed to PC?

Jobs: We engineer so much of it ourselves. Everything from chip to battery to enclosures. We’ve learned so much. We’ve learned a lot, developed a lot of our own components, where competitors have to go through middlemen. “This is a product we’ve been training for for the last decade.”

Call is over. You can hear the whole thing on a podcast later this evening.

A fair bit of time has passed since “antennagate” and Apple’s (AAPL) unprecedented response to it. So how’s the iPhone 4 been selling after all that criticism?

As well as ever, says Deutsche Bank analyst Chris Whitmore.

In other words, damn well.

“iPhone 4 demand remains very robust and despite efforts to close the supply-demand imbalance and the continued supply ramp, Apple still cannot meet iPhone demand (3 week lead times persist),” Whitmore said in a note detailing his recent meeting with Apple CFO Peter Oppenheimer and Ron Johnson, the company’s SVP of retail.

Which is pretty much what COO Tim Cook said during Apple’s last earnings call when the antennagate drama was still fresh. “The demand for iPhone 4 is absolutely stunning,” he said. “We’re working hard to catch up with demand. I can’t tell you when that will occur but everyone’s working hard to do it.”

Evidently that’s proving a Sisyphean task.

PREVIOUSLY

• iPhone 4 Full Coverage on AllThingsD.com
• Apple’s “Just Encase” Answer to iPhone 4 Complaints [Live Blog]
• What Will Apple Say Tomorrow? Your Guess Is as Good as My Analyst’s.
• Apple Releases iOS 4.0.1 for iPhone, iOS 3.2.1 for iPad
• The Reality Distortion Field Appears to Be Suffering Attenuation Issues as Well
• Analyst: “Highly Unlikely” iPhone 4 Recall Could Cost Apple $1.5 Billion
• Apple Snips Needling Threads From iPhone 4 Forums
• IPhone 4 Recall? Get a Grip!
• Consumer Reports: By the Way, the iPhone 4 is Also the Best Smartphone on the Market
• Duct-Tape Makers Look for Boost From Consumer Reports iPhone Verdict
• Consumer Reports: We Can’t Recommend the iPhone 4
• Apple: Your iPhone 4 Antenna Is Fine, and So Is Your Reception–But We’re Fixing Our Software Anyway
• Grip Different: Apple, AT&T Sued Over iPhone 4 Antenna Issue
• Gripping Antenna Drama Won’t Hold iPhone 4 Back, Says Analyst
• Apple on iPhone 4 Reception Problems: Grip Different

Nor did he really need one. Because Apple has once again obliterated investor expectations. Posting third-quarter results after the bell Tuesday, the company reported earnings per share of $3.51 on revenues of $15.7 billion–a record 78 percent increase over the same period a year ago. The Street had been looking for EPS of $3.11 on revenues of $14.75 billion. Gross margin was 39.1 percent, compared to 40.9 percent in the year-ago quarter. And 52 percent of the quarter’s revenue came from international sales.

Apple (AAPL) sold 3.47 million Macs during the quarter (no cannibalization by the iPad here), a 33 percent unit increase over the year-ago quarter and a new quarterly record. It sold 8.4 million iPhones–61 percent more than it did a year ago. And it sold 3.27 million iPads in the device’s first quarter at market.

The only product to see a sales decline was the iPod. Apple sold 9.41 million of them during the quarter, eight percent fewer than it did last year.

“It was a phenomenal quarter that exceeded our expectations all around, including the most successful product launch in Apple’s history with iPhone 4,” Jobs said in a statement. “IPad is off to a terrific start, more people are buying Macs than ever before, and we have amazing new products still to come this year.”

We have amazing new products still to come this year.

This year’s already seen the introduction of the iPad and the iPhone 4. What could he possible be referring to? That all-in-one connected Apple Television we keep hearing about?

Apple’s shares are spiking on the company’s latest financials. They’re up nearly four percent in after-hours trading as I write this. You can almost see concerns over antennagate sublimating before your very eyes.

NOTES FROM THE EARNINGS CALL

• Apple CFO Peter Oppenheimer and COO Tim Cook will be presiding over today’s call.
• Oppenheimer notes that the “tremendous growth” the company saw during the quarter was driven by the launch of the iPad in addition to strong iPhone and Mac sales.
• Apple sold 3.47 million Macs during the quarter–a record. That’s 33 percent year-over-year growth, far better than that of the overall market’s 22 percent. Record Mac sales in the education market despite budget cutbacks.
• ITunes revenue was $1 billion. More than 225,000 apps in App Store, including more than 11,000 for the iPad. Over five billion apps downloaded to date.
• According to IDC, the smartphone market grew 38 percent during the June quarter. The market for the iPhone grew almost twice as fast, says Oppenheimer.
• Cumulative sales of “iOS devices”: More than 100 million
• IPod sales are down, but this was expected as people move to the iPhone. The iPod’s share of the U.S. market for MP3 players is still 70 percent.
• IPod touch sales are up 48 percent year-over-year.
• Apple’s retail stores generated about $2.58 billion in revenue, up 73 percent year-over-year. About 677,000 Macs sold, a nice jump from the 492,000 sold a year ago. Fifty percent of Macs sold were to customers who had never owned one before. Apple plans to open 24 stores this quarter, among them outlets in Paris, Shanghai, London, Barcelona and Madrid.
• Apple is deferring revenue for the value of the iPhone 4 cases it said last Friday that it would give away–about $175 million worth. This will be recognized in the December quarter.
• ”We’re very confident in our new product pipeline,” says Oppenheimer.
• Tim Cook says 80 percent of the Fortune 100 are either deploying or piloting the iPhone. Fifty percent are doing the same with iPad. “It’s incredible,” he adds.
• The company is working hard to deal with supply constraints for some products. “We’re selling iPads and iPhones as fast as we can make them…we’re working around the clock to try to get supply and demand in balance….High demand is a good problem to have,” says Cook.
• Here’s an interesting question: Why do you run out of products all the time? Cook: “We do not create product shortages to create buzz….I’m not sure where that idea is coming from. We’d like to put our products in the hands of everyone who wants them….Demand for the iPhone 4 has been incredible and we’re doing our best to catch up.”
• Any changes in demand since antennagate?

  Cook: “Let me be perfectly clear: We are selling every unit we can make, currently.”

  Follow up: So you haven’t seen any slowdown in order rates, or any increase in returns?

  Cook: “My phone is ringing off the hook with calls from people who want more supply.”

• Cook on iPad sales: “It is not following a typical early-adopter curve and then taking a long time to cross into the mainstream….Our guts tell us that this market is very large, and we believe that iPad is really defining it. We want to take full advantage of this momentum so we’re investing in it quite a bit.
• Any signs of cannibalization? Too early to tell, says Cook, who notes that the company just reported its best Mac quarter ever at the same time it sold 3.3 million iPads. “For us, that’s a jaw-dropper.”
• What’s the mix of 3G versus Wi-Fi iPads? Won’t say, but average sale price for iPads this quarter was about $640. Any mathletes out there willing to extrapolate from that?
• North Carolina data center should be completed by the end of the calendar year.
• How long will the current demand for the iPad persist given the rival devices now coming to the market? Cook: “On the iPad we are absolutely selling every unit that we can make….It’s no secret that everybody is trying to work on something…but we’re extremely happy with our competitive position.”
• Worried about all the press Android devices have been getting? Cook dodges, says iPhone sales were up 61 percent this quarter, growing faster than the overall smartphone market, as gauged by IDC.
• Macs are selling really well. “In Asia Pacific, Macs grew 73 percent year-over-year,” Cook says. “In China, we grew 144 percent, Korea, 184 percent. In Hong Kong we almost doubled. Even in Spain, with difficult economy, Mac grew 59 percent.”
• IPhone doing well in all of the key markets. In Spain, will go from a single carrier to three carriers.