Apple reported $8.16 billion in revenue vs. $7.96 billion estimate and $1.33 EPS vs. $1.09 estimate. Gross margin was 36.4% and international sales were 46% of revenue. Non-GAAP adjusted numbers were $9.06 billion in revenue and $1.84 in EPS. Q3 guidance, June quarter, $7.7-7.9 billion in revenue vs. $8.28 billion estimate and 95c-$1.00 EPS vs. $1.12 estimate
Apple sold 2.22 million (-3% y/y units) Macs, 11.01 million (+3% y/y units) iPods, and 3.79 million (+123% y/y units) iPhones. (On March 17th, I twittered my iPhone estimate of 124% unit growth) The company has $28.9 billion in cash which comes out to about $31.98 net cash/share.
The iPhone is now available in 81 countries. Gross margin was 290bps better than expected due to commodity prices being significantly lower than expected, better sales of higher margin products like software and accessories, and lower freight costs. The component environment is still expected to be favorable in the June quarter with the only exception being NAND flash, which will be up sequentially due to lower supplies. (Sandisk said same thing)
iPod linearity was similar to last year. iPhone was reasonably linear after the first week or two. Desktop PCs accelerated on the launch of their new line-up. U.S. education market is weak at -11% y/y due to the fact states are feeling the pinch from lower tax revenue. Generally consumer is holding up better than the professional and education markets. Professionals are cutting back and delaying spending.
Regarding net-books, if they “find a way to deliver an innovative product, we’ll do that.” They gave gross margin guidance of 33% for June quarter and 30% for September quarter. If I had to read between the lines, I’d say the internet tablet is coming in the September quarter as he said they are “very focused on delivering extraordinary product and value” when pressed on why September was lower.
ATT&T is a “very good partner” and they are “very happy” with the relationship. They “do not plan to change it.” Apple even talked about Verizon un-asked saying CDMA is a long-term dead-end technology. They wanted one phone to work in the whole word, which leaves only GSM. They are in 3 out of 4 of the BRIC countries (Brazil, Russia, India). They would like to be in China within the next year.
Regarding Steve Jobs, they look forward to his return to Apple at the end of June. Macs were -3% units y/y, but flat in terms of sell-through. U.S. education market is the big negative driver. They are hours away from the 1 billionth iPhone app download. iPhone has now sold 21 million units.
Net-net: Killer iPhone number at +123% y/y unit growth, still the best growth product cycle in technology. Steve Jobs is still slated to be back at the end of June. If I read between the lines with gross margin guidance and wink-wink about new products, I’d say the internet tablet is coming in the September quarter.