Updated: Why does the Fred Anderson vs. Apple and Steve Jobs war of words amount to nothing more than a sideshow? It's the earnings--and strong Mac sales.
Apple reported fiscal second quarter earnings of $770 million, or 87 cents a share, on revenue of $5.26 billion. Wall Street was expecting earnings of 64 cents a share on sales of $5.17 billion, according to Thomson Financial.
In the same period a year ago, Apple reported earnings of 47 cents a share on revenue of $4.36 billion.
Mac and iPod shipments were both strong. Apple shipped, 1.52 million Macintosh computers and 10.5 million iPods, up 36 percent and 24 percent, respectively. Soleil Equities Group was expecting 1.46 million Mac shipments and 10.5 million iPod shipments.
In a statement Jobs said:
"The Mac is clearly gaining market share, with sales growing 36 percent -- more than three times the industry growth rate. We're very excited about the upcoming launch of iPhone in late June, and are also hard at work on some other amazing new products in our pipeline."
Apple's third quarter outlook was light. The company expects earnings of 66 cents a share on revenue of $5.1 billion, but Wall Street is expecting earnings of 67 cents a share on revenue of $5.45 billion. But with the iPhone scheduled to launch at the end of June traders aren't worried about the outlook.
Apple conference call update:
CFO Peter Oppenheimer said quarter was driven by Mac sales (56 percent of total revenue) and margins improved due to lower commodity costs. MacBook and MacBook Pro sales were very strong and iPod sales were moved by new color Shuffles. Other music sales (iTunes) was up 35 percent from a year ago.
Oppenheimer also said Apple will open its third store in Manhattan, this time in the Meat Packing District.
Outlining the iPhone strategy, Oppenheimer said Apple plans to add new software features and applications and build them into the device on an ongoing basis. Apple said it will use subscription accounting for the iPhone since it will continuously update software. iPhone financials will be outlined each quarter and the launch is on target for the end of June.
AppleTV will also have a similar subscription setup for accounting purposes, said Oppenheimer. Apple didn't provide specific figures on sales since it just started shipping.
When asked about the board's statement about Anderson, Oppenheimer said it was to show support for Jobs.
On the Leopard delay, COO Tim Cook said the plan was to always use Mac OS resources for the iPhone. As the two products moved ahead, Cook noted "we had to make a choice."
And a final thought: Oppenheimer was asked why Apple doesn't pass on its commodity savings to customers. The answer was that commodity prices are volatile more or less. Now that's pricing power. Apple can stick it to the suppliers due to scale and it can reap all the benefits because its customers don't demand better pricing. What a model.