That the question needed to be asked at all is indicative of how confused Wall Street is with Apple. And Cook’s follow-up remarks probably didn’t help at all.

The analyst said that the smartphone market was growing at 30 percent annually and that based on Apple’s guidance for the coming quarter, it seemed extremely unlikely that Apple would be growing anywhere near that fast. And while Apple owns a higher percentage of the tablet market, Android is starting to take a bigger bite there as well.

“Your point is not lost, and we do want to grow faster,” Cook said in response to the analyst after cautioning him to look at sell-through to consumers, not just sell-in to channel inventory. “We don’t view it however as the only measure of our health.”

The first part of the answer is exactly what Wall Street wanted to hear. The second part, not so much.

Source: MarketWatch

AAPL gains $20, then gives it right back.

Cook then talked about what really matters to Apple, including customer satisfaction scores, which the company typically leads in, customer loyalty rates — another bright spot for Apple — and the amount of ecosystem commerce that takes place within iOS when apps are purchased or items are purchased with apps.

Most of that was good, particularly when Cook said that “three out of four dollars spent on apps are spent on our ecosystem.”

But then he summed it up with a typically Apple-ish Kumbaya moment:

“Market share is important and unit share is important,” Cook said. “But we’re all about customer experience and enriching lives.”

Enriching lives is not at the top of a Wall Street analyst’s list of priorities. Nor does it make the daily agenda of a typical wealthy investor. Increasing market share and making money, however, rank high on both.

Which is one of the reasons why Apple’s stock gained $20 after its earning release hit the wires … and gave it all back by the end of the earnings conference call.

Apple and Wall Street, it would seem, are oil and water.

Image credit: Dean Takahashi/VentureBeat

Apple investors did not get the shot in the arm they were hoping for this afternoon as the company released its second quarter numbers. At least, not from Apple’s actual sales results.

They did, however, receive a boost from Tim Cook’s other announcements.

While revenue grew 11 percent to $43.6 billion, above Apple’s guidance of $41 billion to $43 billion, its earnings were down 18 percent to $9.5 billion from $11.6 billion in the second quarter of last year.

The clear culprit?

Also see …

• Apple retail still growing: 402 stores, revenue up 19%
• Apple has $8.8 billion in China revenue
• Apple boost share buyback by a massive $50 billion
• No new products until this fall, Apple CEO Tim Cook says
• iTunes revenue hits record high
• Apple now has more than 300M iCloud users
• Apple’s Q2 2013 in 30 seconds or less

Apple’s gross margin for the quarter was only 37.5 percent, at the very bottom of the range previously forecast by the company in January. That’s an inevitable result of the iPad Mini’s introduction, as the Mini has apparently proved more popular than the maxi, and margins are much tighter on the smaller tablet. In addition, of course, it’s lower price doesn’t help top-line revenue, either.

Still, for a March quarter, revenue was strong:

“We are pleased to report record March quarter revenue thanks to continued strong performance of iPhone and iPad,” said Tim Cook, Apple’s CEO. “Our teams are hard at work on some amazing new hardware, software, and services, and we are very excited about the products in our pipeline.”

Competition with cheaper Android tablets and smartphones is clearly starting to erode Apple’s long-time industry-leading margins, which a year ago were in the 40 percent range. But chief financial officer Peter Oppenheimer highlighted the positive, saying that Apple’s “cash generation remains very strong, with $12.5 billion in cash flow from operations during the quarter and an ending cash balance of $145 billion.”

For the next quarter, Apple projects revenue of between $33.5 billion and $35.5 billion — and an even lower gross margin of between 36 percent and 37 percent.

Apple shares did jump to $420 in after-hours trading, however, as Apple threw investors a major goodie, promising a $50 billion hike to its share repurchase program. That will drive up share value. Plus, Apple is adding 15 percent hike to its quarterly dividend, raising that to $3.05 per share.

Apple stock trading was halted prior to the earnings release, something the company has not done for several quarters.

photo credit: sonofabike via photopin cc

Despite record revenue and iOS sales disclosed in today’s earnings report, Apple’s stock has sunk a staggering 10 percent in after-hours trading.

Apple’s once mighty stock has fallen quickly in recent weeks, dropping below $500. Its current price is a far cry from Apple’s 52-week high of $705.07.

As noted by my colleague John Koetsier, Wall Street’s consensus numbers were $54.58 billion (Apple beat that), 50 million iPhones (Apple sold 47.8 million), 23 million iPads (Apple almost made it, selling 22.9 million), 12 million iPods (under Wall Street estimates), and 5 million Macs (well under Street estimates).

By not meeting those sky-high expectations, investors clearly showed their disappointment. As of this writing, Apple’s stock price is down nearly $51, a drop of about 9.9 percent.

Check out Apple’s stock performance from the last year in the chart below:

AAPL data by YCharts

Rotten apple photo via Lara604/Flickr

Apple CEO Tim Cook said his company has sold half a billion iOS devices to date and “sold 10 iOS devices per second” last quarter during Apple’s quarterly earnings conference call today.

While Apple had record revenue, profit, and iOS device sales in Q1 2013, the company did not meet sky-high Wall Street expectations. Apple’s stock is trading down about 10 percent as of this writing.

By the numbers, Apple sold 47.8 million iPhones, 22.9 million iPads, and 12.7 million iPods in the last quarter.

With those kind of numbers, how soon before Apple has sold a billion iOS devices?

Tim Cook photo via VentureBeat

July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

Despite reports of slowing iPhone demand, Apple ended up selling 47.8 million iPhones during the first quarter of 2013 – and still missing analyst expectations.

Piper Jaffray’s Gene Munster expected Apple to ship 50 million iPhones, while KGI Securities analyst Ming-Chi Kuo expected 52 million. The figures may be disappointment to investors, but they still set a new record for Apple, and it was a healthy bump from last year’s 37 million units.

The iPhone accounted for $30.6 billion of Apple’s $54.5 billion revenue during the quarter, up from almost $24 billion in revenue last year. Apple sold 22.9 million iPads during the quarter, just about meeting Wall Street expectations.

At this point, it’s tough to tell who we should be disappointed at: Apple for missing the Street’s expectations, or the analysts for expecting too much. For now, we can expect Apple’s stock to take more of a clobbering. It fell below $500 earlier this month after reaching a high of $700 last September.

During Apple’s earnings call today, chief executive Tim Cook revealed that the company sold 10 iOS devices per second lasat quarter and more than 500 million iOS devices to date. Cook noted that iPhone sales grew the most in China, where they doubled year over year.

Photo: Devindra Hardawar/VentureBeat

Apple reports its third quarter 2012 earnings Tuesday, but according to Reuters, analysts are playing it safe in anticipation of the rumored iPhone 5. Apple often releases its iPhones in October, which causes a slow-down in the market as people stop putting down cash for a model they expect to be outdated soon. We haven’t heard anything concrete about the iPhone 5 yet (though we’ve heard a ton of rumors), but we do know that the operating system it will likely run, iOS 6, is slated for a fall launch.

“Of all the quarters, this is the one that seems to have widest range of opinion,” said Tim Lesko, portfolio manager at Granite Investment Advisors told Reuters.

Thomson Reuters I/B/E/S expects Apple to bring in $37.2 billion in revenue and $10.35 a share. Apple, on the other hand, provided a conservative guidance of $34 billion in revenue and earnings per share of $8.68. The company is also expected to sell only 29 million iPhones.

Apple does have a couple of things going for it this quarter, though, including the 15″ Macbook Pro with Retina screen it launched this June. The computer got an upgrade at Apple’s World Wide Developer Conference with the same display that made the latest iPad so popular. Sales from this probably won’t boost Apple’s bottom line too much, but the company does make a significant portion of its revenue from overall Mac sales. It sold 4 million units in the last quarter.

Despite hesitation from analysts this quarter, Apple beat market expectations in a big way in its last two earnings calls. It blew estimates out of the water with $39.2 billion in revenue last quarter and profits of $11.6 billion. The company sold 35.1 million iPhones, which was 88 percent more than the same quarter in 2011, but 1.9 million units less than Apple’s first quarter.

Check back with VentureBeat Tuesday for full coverage of Apple’s earnings.

via Reuters; Apple with money phone via Shutterstock

July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

Apple posted another record-breaking quarter by making $7.3 billion — or $7.79 in earnings per share — in income off $28.6 billion in revenue.

That’s up 82 percent from $15.7 billion in revenue in the same quarter one year earlier. Income was up 140 percent from $3.25 billion in the third quarter last year.

The company sold more than 20 million iPhones and more than 9 million iPad tablet computers in the third quarter this year. It sold 8.4 million iPhones in the third quarter last year and 3.3 million iPads in the same quarter.

The company also sold nearly 4 million Mac computers, up from around 3.5 million Macs in the same quarter one year earlier. iPod sales were up 20 percent to 7.5 million iPods in the third quarter this year, up from 6.25 million iPods in the same quarter a year earlier.

Wall Street analysts expected the company to bring in around $25 billion in revenue, with earnings per share of $5.42. Apple projected fourth-quarter revenue of $25 billion and $5.50 in earnings per share, below Wall Street analyst expectations of $27.7 billion in revenue and $6.42 in earnings per share.

Here are the highlights from the company’s earnings conference call today.

2:01 p.m.: Apple COO Tim Cook and CFO Peter Oppenheimer are on the call this afternoon — CEO Steve Jobs is absent as usual.

2:03 p.m.: “We set a new all-time quarterly record for iPad and iPhone sales and a new June quarter record for Mac sales,” Oppenheimer said.

2:04 p.m.: Mac sales were particularly strong in the Asia-Pacific segment, where the company experienced a 57 percent increase in year-over-year models sold, Oppenheimer said.

2:05 p.m.: Mac OS X Lion (pictured above) is launching tomorrow, Oppenheimer said.

2:06 p.m.: iTunes generated $4.4 billion in revenue, up 36 percent from the third quarter last year. Customers have downloaded more than 15 billion songs.

2:07 p.m.: Revenue from iPhone sales this year was $13.3 billion, up from $8.5 billion in the same quarter a year earlier, Oppenheimer said. The company has around 5.9 million iPhones in channel inventory. The company is expected to begin selling the next version of its iPhone soon.

2:08 p.m.: 91 percent of Fortune 500 companies have deployed the iPhone as the company’s primary smartphone, Oppenheimer said.

2:09 p.m.: “We sold every iPad we could make,” Oppenheimer said. The company has around 1.05 million iPads in channel inventory, well below the company’s target range of having enough iPads to last 4 to 6 weeks.

2:10 p.m.: 86 percent of the Fortune 500 companies are deploying iPads, up from 75 percent of companies on the Fortune 500 list in the last quarter.

2:11 p.m.: Apple has sold 220 cumulative iOS devices as of the end of the third quarter this year. That includes iPod Touches, iPhones and iPads.

2:11 p.m.: No new release date for iOS 5, the company’s next mobile operating system unveiled at WWDC this year. “It will come out later this Fall,” Oppenheimer said. Same for iCloud, the company’s cloud storage program.

2:13 p.m.: Revenue from Apple’s retail stores rose to $3.5 billion across the company’s 327 retail stores internationally. Each store brings in around $10.8 million in revenue. The company plans to open 30 new stores in the fourth quarter this year. Apple opened 4 new stores in the third quarter this year, and expects to open 40 stores in the 2011 fiscal year.

2:14 p.m.: Stronger mix of iPhones and lower commodity costs attributed to higher profit and revenue for Apple, Oppenheimer said.

2:14 p.m.: Apple has $76.2 billion in cash.

2:18 p.m.: The question and answer session is starting now.

2:19 p.m.: For the education buying season, September has been more weighted to higher education. Apple expects this to be the same this year and the company expects year over year increases in iPhone and Mac sales, along with iPad. The company expects to see a sequential year-over-year decline in sales for the iPod.

2:20 p.m.: The company has a future product transition that “it will not talk about today” that will affect the performance of its September quarter. This could be the next version fo the company’s iPhone, which is expected to come out sometime in the fourth quarter this year.

2:21 p.m.: Some customers purchased an iPad instead of a Mac in the third quarter, which cannibalized Mac sales. But there’s a large portion of the Windows PC market that the iPad will cannibalize, Cook said.

2:23 p.m.: “Sales of iPad 2 have absolutely been a frenzy,” Cook said.

2:23 p.m.: “China was very key to our results, revenue year over year, it was up over 6 times and the revenue was approximately $3.8 billion during the quarter. That makes the year-to-date numbers for the three quarters we’ve had thus far around $8.8 billion,” Cook said. “This has been a substantial opportunity for Apple and I firmly believe we are just scratching the surface right now.”

2:25 p.m.: “Most components (like NAND memory and DRAM) are generally in a very positive supply position currently, and pricing is expected to sell at or above historical demand,” Cook said. “Hard drive demand is constrained.”

2:26 p.m.: “We love competition, we think it’s great, but we want people to invent their own stuff,” Cook said. “We’re going to make sure we defend our portfolio appropriately.” He’s referring to the company’s patent victory over HTC, a manufacturer of Android phones.

2:27 p.m.: Apple added 42 new carriers in 15 new countries in the third quarter this year, which contributed to iPhone sales. Those occurred throughout the quarter, and the real sequential improvement in iPhone sales was due to emerging and developing markets like China, Latin America and Brazil — as well as the Middle East.

2:30 p.m.: “You can kind of go to our data sheet and add the iPhone and iPad and make a reasonable approximation, you can quickly see in the June quarter that we sold more than 33 million iOS devices,” Oppenheimer said. “Our numbers are straightforward and transparent and are reported quarterly.” He said it in response to a question of how iOS activations are comparing to Android activations. Analysts estimated that iOS activations were up 20 percent quarter-over-quarter, while Android activations were up 50 percent.

2:31 p.m.: Oppenheimer is giving a schpiel about how huge iOS is becoming in response to the analyst’s question. “We don’t see any other tablets like Android getting any traction right now,” he said.

2:33 p.m.: Apple TV continues to do well, Oppenheimer said. “But I don’t want to mislead, we still call it a hobby here and we do that because we don’t want anyone to conclude that it’s another leg of the stool because it’s not in the size market that the iPhone or iPad is in.”

2:36 p.m.: When asked about diversifying manufacturers for its devices, Cook said the supply chain a part of the magic and a part of the things that the company feels it has some “secret sauce.” “I prefer not to share it,” Cook said.

2:43 p.m.: iPads cannibalized new Mac sales in the third quarter this year, Cook said. Some customers have also decided to delay Mac purchases until the company’s next operating system, OS X Lion, comes out — which is tomorrow. In the same quarter last year, the company launched new Macbook Pros, compared to new iMacs launched this year. The Macbook Pro makes up a majority of new units sold in the Mac area, Cook said. All three factors contributed to weaker Mac sales, he said, “but I don’t want to lose sight that sales are 5 times that of the industry.”

2:47 p.m.: Concerning ravenous iPad demand and shortages, “This is a good problem to have,” Cook said. In the first three weeks of the fourth fiscal quarter this year starting in June, supply has improved, Cook said.

2:49 p.m.: Last quarter, Apple sold more iPads to K-12 enterprises than Macs for the first time. “We would have never predicted this,” Cook said. “It’s clear it has a universal appeal in any market from consumer to business to government.”

2:51 p.m.: “We can’t wait to get iCloud into the hands of customers in the fall, we really think we’ve done it right with iCloud,” Oppenheimer said. One of the reasons cited why iOS devices are number one in terms of intent to buy is the iCloud, he said.

2:53 p.m.: Prepaid or unlocked phones are key in China and a number of emerging markets, Cook said, where the credit systems are not as well established as they are in the U.S., Japan, western Europe and Australia. “We haven’t figured out how precisely to play perfectly in the environment and we have more to learn, but I feel very, very good about our progress,” he said.

2:56 p.m.: “In terms of playing at different price points, we do offer the 3GS as an example today at $49,” Cook said. “We will only make products we are proud of, and if we can do that and the price is lower, then we’ll do that.” Cook refers to the iPod shuffle, the company’s low-cost music player that has seen some success.

2:57 p.m.: “It’s up to us to convince people to maybe spend a little more for a materially better product,” Cook said. “We’ve seen that people will do that if the product is messaged properly.”

2:59 p.m.: “Look for some more content (videos for rent) on the iTunes store later this year,” Oppenheimer said. “We think you’ll be pretty pleased.”

July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

Apple has shipped 7.5 million iPads since it launched in April, turning it into the largest player in the tablet computer market. The company grabbed that position in just six months thanks to its focus on a single device and surprising contributions from enterprise sales, Apple executives said on its quarterly conference call to discuss earnings.

Apple sold 4.19 million iPads in its most recent quarter, and 3.27 million iPads in the quarter before that. About two-thirds of the 100 largest companies in the world on the Fortune 100 list have begun deploying iPads for enterprise use, leading to a lot of growth in the corporate sector that has helped drive iPad sales, said Tim Cook, chief operating officer of Apple. Nearly 85 percent of those companies have also deployed the iPhone for enterprise use, he said.

“I’ve never seen an adoption rate on the enterprise side like this in my life. Enterprise is historically much slower moving on adoption,” he said. “We have built and are building additional capacity to call on businesses, and we’re putting a lot of energy into that — we aren’t treating this lightly or as a hobby.”

More than 10 percent of all mobile devices activated for enterprise purposes, outside of Research in Motion’s BlackBerry devices, were iPads, according to a recent report by Good Technology. The iPhone 4 accounted for about 30 percent of all enterprise devices activated as well, according to the same report.

Jobs also told analysts on the call that Apple has no plans to develop a 7-inch version of the iPad, because it would lead to the same kind of fragmentation that Android app developers are facing. Rumors had earlier surfaced that Apple would begin working on a 7-inch tablet with a lower price point than its current 10-inch offering.

“We don’t think about it that way, the reason we wouldn’t make a 7-inch tablet isn’t because we don’t want to hit a price point,” said Apple CEO Steve Jobs said. “It’s because we don’t think you can make a great tablet with a 7-inch screen.”

Apple has still struggled a bit to meet the ravenous demand for the device. It isn’t clear when the supply of iPads will finally meet the demand for Apple’s tablet, Cook said. Despite that, Apple is going to sell the device in Wal-mart and Verizon stores.

“I feel great to bring the supply and sales up from an 8 million number and expect it to reach 14 million,” Cook said. “Obviously working on that, but it will take some time to increase further.”

[Front page photo: Yutaka Tsutano]

Jobs was referring to the iPhone’s sales win over RIM this past quarter. He went on to say that it will be a challenge for RIM to create a competitive platform, and even more so for RIM to convince developers to create apps for the revamped BlackBerry OS 6.

Jobs made the comments during the company’s fourth quarter earnings call. Even with the somewhat murky call quality of Apple’s earnings live stream, it wasn’t hard to tell that Jobs didn’t have much confidence in RIM’s ability to make a comeback.

Jobs saved most of his criticism for Google. He said that even though Google CEO Eric Schmidt says that tons of Android phones are being activated, there’s no clear data on how many Android phones are being shipped. “We await to see if iPhone or Android was the winner in the most recent quarter,” Jobs said.

He went on to say that Google often characterizes Android as open and iOS as closed, but he feels that is “disingenuous and clouds the real difference between our two approaches.” The first thing that comes to mind to him when he thinks “open” is Windows, but when it comes to Android, “open” appears to lead to fragmentation. Jobs pointed out that both HTC and Motorola install proprietary user interfaces on Android and that the recently released Twitter client TweetDeck had to compensate for “more than 100 different versions of Android.”

Jobs then moved on to apps. He mentioned that some Android apps only work on select Android handsets, whereas developers only have to worry about two versions of the iPhone OS — the current one, and the previous release. Not surprisingly, Jobs says that Apple offers “the easiest to use app store in the world” — something that is indeed true for now, even if he does sound a bit smug saying it.

Android being open is a “smokescreen” Jobs said. “It’s really about fragmented versus integrated. We believe integrated will trump fragmented every time.” He once again used Microsoft as a positive example by pointing out that it abandoned its fragmented PlayForSure portable media player pursuit and instead “copied Apple” with the more integrated Zune platform.

When it came to tablets, he was careful to point out that there are “just a handful of credible entrants” coming to the tablet space, and that most of them were relying on 7-inch screens compared to the iPad’s 10-inch display. Since screen measurements are diagonal, a 7-inch screen “is only 45 percent as large as a 10-inch screen.”

Jobs doesn’t believe seven inches is enough space to create good tablet apps. “One could increase the resolution to make up for the difference, but it’s meaningless unless the thing also includes sandpaper so users can sand down their fingers.” Ouch.

Jobs went on to point out that Google is telling developers not to use Android 2.2 (codenamed “Froyo”) in their tablets — something that likely led LG to delay its Android tablet. “What does it say when your software supplier says not to use their software in your tablet?” Jobs surely knows how to twist the knife.

At this point, Jobs gets even more ranty. He says that new tablets will have “near zero” applications when they launch, compared to the iPad’s 35,000 native apps. “Our potential competitors can’t even come close to our pricing,” he continued. “Manufacturers will learn the painful lesson that their tablets are too small.”

Jobs rarely shows up for earnings calls, so his presence was a surprise. But even more surprising was how spirited he was in defense of Apple’s platforms. What’s funny is that he didn’t spend much time on Microsoft’s upcoming Windows Phone 7 platform — which means he either doesn’t consider it a threat, or he’s avoiding Microsoft criticisms for some reason.

July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

Apple says it generated more than $20 billion in revenue this quarter after selling nearly twice as many iPhones as it did during the same quarter last year.

The iPhone manufacturer brought in $4.31 billion in net income, up about 70 percent from $2.53 billion a year ago. Its quarterly revenue jumped 67 percent to $20.34 billion, compared to $12.21 billion the same quarter one year ago.

The lion’s share of Apple’s revenue came from iPhone sales. The company shipped 14.1 million iPhone units, up from 8.4 million the last quarter and nearly double what it shipped in the same quarter last year. This was the first full quarter that Apple has shipped its newest model of the iPhone. Sales of the iPhone accounted for $8.6 billion of its revenue this quarter.

iPad sales were up 28 percent 4.19 million units shipped, compared to 3.27 million iPads shipped in its last quarter. Apple sold 3.89 million Mac computers, up 28 percent compared to 3.05 million Macs a year ago. And it sold 125 million devices that run its iPhone operating system, iOS, just last month.

iPod sales continued to fall as the iPad and iPhone have gained momentum. iPod sales were down 11 percent to about 9.1 million units shipped, compared to 10.2 million iPods sold in the same quarter last year. Apple recently refreshed its line of iPods this quarter, so it hasn’t had a full quarter with its new lineup of iPods — much like the iPhone had last quarter with the launch of its iPhone 4.

The company made the figures public today in an earnings call with analysts.

It said it has adjusted its estimates for the next holiday sales quarter ending in December and expects about $23 billion in revenue and $4.80 per share profits. Estimates from a number of analysts and financial firms estimated around $22.2 billion in revenue and $5.02 per share profits.

What this means is that Apple, a notoriously hard negotiator when it comes to suppliers, might be expecting a jump in the manufacturing price of its consumer gadgets. That could have implications for the entire consumer tech sector. Research in Motion is planning to release a tablet itself to compete with the iPad. Investors didn’t appreciate the news, sending shares down 4.7 percent to $302.96 in extended trading today.

July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

In its fourth quarter earning results today, Apple announced that iPhone sales rose 91 percent year-over-year to 14.1 million units sold.

The iPhone’s strong sales led Apple to beat out Research in Motion’s 12.1 million BlackBerry phones sold in its most recent quarter.

So what does this tell us? For one, despite the fact that the “antennagate” scandal forced Apple to give away free cases to iPhone 4 owners, consumers still wanted to get their hands on the phone — antenna issues be damned.

It’s also clear that demand for the iPhone 4 far exceeded anything in RIM’s stable — which isn’t a huge surprise. RIM’s only major hardware release in the last quarter was its BlackBerry Torch, which was received with lukewarm enthusiasm.