World of Apple

It has been revealed in an SEC Form 8K filing that Apple will not receive follow-on revenue from most of its new carriers that it has signed agreements with to distribute the iPhone.

Item 8.01. Other Events

Apple assumes no obligation to update any of the statements in this Form 8-K regarding the iPhone, iPhone 3G and iPhone 2.0 software.

SeekingAlpha.com reports on a slight slump in AAPL shares on Thursday afternoon after a rumour began circulating that the 3G iPhone would be delayed.

On Thursday AAPL closed $2 down from its opening and has since recovered in Friday trading.

Apple today filed it’s quarterly 10Q (Download PDF) with the SEC, within the filing the company revealed some key details of the past quarter in particular the companies growth factors and rising costs of retail space and R&D.

During Apple’s second fiscal quarter which ended March 29th the company experienced a 51-percent rise in Mac unit sales compared to the same quarter in the previous year. According to todays filing this steep increase was mainly thanks to sales of the MacBook Air which was announced in January and the iMac which was refreshed in August 2007.

Apple also attributed a $228 million net sales rise on “music related products and services” at its iTunes Store to “heightened consumer interest in downloading third-party digital content, as well as the expansion of third-party audio and video content.”

As of the end of September 2007 the company’s total future minimum lease payments under noncancelable operating leases were $1.4 billion, of which $1.1 billion related to leases for retail space. As of March 29th 2008 this increased $192 million to $1.3 billion, and Apple Retail as a whole employed approximately 12,000 full-time equivalent employees.

In the quarterly filing Apple also noted that Research and Development increased by 59-percent or $90 million to $273 million in its second fiscal quarter, and increased 41 percent or $152 million to $519 million during the first six months of 2008 compared to the same period in 2007.

The company attributed the rise to an increase in R&D headcount for the current year to support expanded R&D activities and higher stock-based compensation expenses.

“Although total R&D expense increased 49 percent, it remained relatively flat as a percentage of net sales given the 43 percent and 38 percent increases in revenue in the second quarter and first six months of 2008 compared to the same periods in 2007,” Apple noted. “[Apple] continues to believe that focused investments in R&D are critical to its future growth and competitive position in the marketplace and are directly related to timely development of new and enhanced products that are central to the Company’s core business strategy. As such, the Company expects to make further investments in R&D to remain competitive.”

Apple’s live conference call is due to begin at 5pm ET/2pm PT/10pm BST.

World of Apple will offer highlights from the call in this story.

• Call starting, speaking today Peter Oppeinheimer and Tim Cook.
• Higher revenue from iPod, iTunes and iPhone
• Apple performed “exceptionally well”
• 40% US growth, 47% intl, 74% in retail stores
• 50% of CPUs sold in retail stores are to new Mac users
• Ended quarter with 3 to 4 weeks of Mac channel inventory
• Good customer response on iPod touch
• iPod shuffle sales down, Feb. 19th price drop caused acceleration
• iPods have 73% of MP3 player market in US
• iTunes Store largest music retailer in US, 85% of legal music downloads
• Movie rental service well received by customers
• 200,000 downloads of iPhone SDK, 1/3rd of Fortune 500 companies have contacted Apple about iPhone development
• Looking to open new retail stores in Australia, China and Swizterland in “coming months”

Following much speculation Apple has officially announced financial results for its fiscal 2008 second quarter ended March 29, 2008.

The Company posted revenue of $7.51 billion and net quarterly profit of $1.05 billion, or $1.16 per diluted share. These results compare to revenue of $5.26 billion and net quarterly profit of $770 million, or $.87 per diluted share, in the year-ago quarter. Gross margin was 32.9 percent, down from 35.1 percent in the year-ago quarter. International sales accounted for 44 percent of the quarter’s revenue.

Apple shipped 2,289,000 Macintosh computers during the quarter, representing 51 percent unit growth and 54 percent revenue growth over the year-ago quarter. The Company sold 10,644,000 iPods during the quarter, representing one percent unit growth and eight percent revenue growth over the year-ago quarter. Quarterly iPhone sales were 1,703,000.

“We’re delighted to report 43 percent revenue growth and the strongest March quarter revenue and earnings in Apple’s history,” said Steve Jobs, Apple’s CEO. “With over $17 billion in revenue for the first half of our fiscal year, we have strong momentum to launch some terrific new products in the coming quarters.”

“We’re thrilled to have generated $4 billion in cash flow from operations in the first half of fiscal 2008, yielding an ending cash balance of $19.4 billion,” said Peter Oppenheimer, Apple’s CFO. “Looking ahead to the third quarter of fiscal 2008, we expect revenue of about $7.2 billion and earnings per diluted share of about $1.00.”

Forbes.com is reporting that Apple has acquired a microprocessor design company called PA Semi. The 150-person company is well known for its design of low-power microprcoessors, like those used in the iPod and iPhone.

“Apple buys smaller technology companies from time to time, and we generally do not comment on our purposes and plans,” said Apple spokesman Steve Dowling. Although Apple refused to state the cost of the purchase it is estimated by those familiar with the deal that Apple bought the company for $278 million.

The decision to center the iPhone design around a chip that Apple could own marks a significant strategic choice by Apple Chief Executive Steve Jobs, and is aimed at ensuring Apple can continue to differentiate its flagship phone as a raft of competitors flood the market. According to a source affiliated with the chip company, Jobs and Senior Vice President Tony Fadell led the tiny group of executives who spearheaded the acquisition, which included negotiations that took place in Jobs’ home.

Rumours have previously circulated that Apple would use Intel’s Atom platform for future iPhones but the acquisition of PA Semi suggests otherwise.

Tomorrow Apple will announce its second quarter of fiscal 2008 earnings during a conference call. The webcast conference call will begin at 2:00pm PDT/5:00pm EDT/10.00pm BST on Wednesday April 22nd.

Apple is expected to outperform the Street’s expectations and is also expected to severely outperform its guidance that it offered during the Q108 conference call in January.

Apple shocked the Street somewhat by offering very conservative figures for Q208 predicting 94 cents per share, nearly 15% below the Street’s average estimate of $1.09.

The average street consensus is that Apple is set to announce results of $1.07 per share on $6.95 billion in sales. Mac sales of 2.1 million, 10 million iPods and 1.5 million iPhones.

Analysts are positive that Apple will report a reasonable Q208 and have the following targets:

• AmTech - $175 (Neutral)
• Piper Jaffray - $250 (Buy)
• Needham - $235 (Strong Buy)
• Lehman Bros. - $195 (Overweight)
• CitiGroup - $212 (Buy)
• RBC Capital - $190 (Outperform)
• Merrill Lynch - $180 (Buy)
• Morgan Stanley - $185 (Overweight)
• Goldman Sachs - $185 (Buy)
• Caris & Co. - $170 (Above Average)

Senior Vice President of Retail Ron Johnson, Senior Vice President of Worldwide Product Marketing Phil Schiller, Senior Vice President of Software Engineering Bertrand Serlet, and Senior Vice President of Applications Sina Tamaddon all converted 250,000 restricted stock units into shares this week.

The executives were forced to address the restricted stock units that had recently vested and were set to expire according to SEC documents.

Each executive decided to surrender 113,659 shares at $139.53 each, they all retained the remaining 136,341 shares.

Apple’s Senior Vice President of the iPod Division, Tony Fadell also converted some 100,000 restricted stock units to shares. The executive then disposed of 45,750 at $139.53 for tax payments and kept the remaining 54,250.

Apple Chief Operating Officer Tim Cook converted 300,000 restricted stock units to shares and sold all of them on the open market for prices between $133.79 and $140.76 per share.

Chief Financial Officer Peter Oppenheimer and Senior Vice President of Industrial Design Jonathan Ive converted 250,000 and 200,000 restricted stock units to shares, respectively. Both used a portion to pay tax charges and then opted to sell the remaining shares on the open market.

Ive sold 109,216 shares at prices between $138 and $140 for a profit of $15.2 million.

Oppenheimer also sold his shares on the open market, the exec shifted 136,341 at prices between $138.74 and $139.79 for a profit of $19 million.

iPod Air Domain Leads to Apple

The domain http://www.ipodair.com current points to http://www.apple.com/itunes.

The WHOIS information on the the domain shows that a one Arthur Mitchell registered the domain with GoDaddy on the 15th of January this year.

WHOIS details attached to www.ipodair.com:

Registrant:
Arthur Mitchell
3613 W 85th Ave
Westminster, Colorado 80031
United States

Administrative Contact:
Mitchell, Arthur artmeusmaxim@yahoo.com
3613 W 85th Ave
Westminster, Colorado 80031
United States
(303) 744-9483

Al Gore Gains 10,000 Options

Former US Vice President and Apple board member Al Gore has been granted an option to buy 10,000 Apple shares.

The opportunity to purchase shares expires in 10 years and allows the board member to purchase shares at $129.67, Apple’s closing price on March 19.

Gore, who joined Apple’s board in 2003 also advises Google Inc. and venture capital- firm Kleiner Perkins Caufield & Byers. He also co-founded Current Media Inc., a San Francisco-based cable channel that plans to raise $100 million in an initial public offering this year.

Today Apple held its annual shareholder meeting at its Cupertino campus.

During the meeting CEO Steve Jobs field questions on buy back shares, dividends and a successor to his position.

Since the beginning of 2008 Apple’s share price has plummeted 37 percent but Jobs said that the company has no plans to buy back shares or introduce a dividend.

“At this time, we have no plans to do either,” said Jobs.

The company CEO also reiterated Apple’s plan to sell 10 million iPhones during 2008 also repeating that the iPhone will find its way to Asia later this year.

Chief Operating Officer Tim Cook declined to comment when asked what date the iPhone would go on sale in China and India except to say that it will be in those Countries “one day.”

Jobs also spoke about successors to his CEO position; “We’ve got great talent, and I think the board would have a few really good choices.”

“We talk about that a lot.” Candidates include Cook and Chief Financial Officer Peter Oppenheimer, he said.

Shareholders also re-elected the entire board of directors.

When questioned about a pay proposal that was approved Jobs jokingly said “I’m hoping the say on pay proposal will help with my $1 a year,”