MacDailyNews presents live notes from Apple’s Q110 Conference Call

MacDailyNews presents live notes from Apple’s conference call discussing Q110 financial results.

Live notes in reverse-chronological order:

• 6:02pm ET: End of conference call
• Apple’s K-12 and higher education Mac sales up 16% YOY; best growth rate since recession began
• Apple saw a small YOY increase in pro software sales; Apple feels the pro arena is “economically challenged” right now
• Apple will work hard to provide developers a “great opportunity” in mobile advertising
• Apple sees mobile advertising as being in its infancy
• Oppenheimer: Apple works with Google in some areas and competes with them in others
• Asia/Pacific: Mac grew 54% YOY; iPhone up over 500% YOY
• Japan: iPhone is a runaway hit. Up over 400% YOY in quarter; Mac growth is above market
• Oppenheimer declined to say Q2 guidance reflects unannounced products
• Apple runs iTunes Store and App Store at a bit over break even
• Apple has no change of philosophy of keeping cash on hand (i.e. dividends)
• Apple acquired Quattro to allow devs, especially free app devs, to achieve greater revenue on in-app advertising
• Apple had lower tax rate than anticipated in Q1. Apple expects tax rate of about 29% in fiscal 2010 due to higher mix of non-U.S. earnings
• Apple selects markets for multiple iPhone carriers that they believe will increase sales; Apple does not want to imply that they will open up every market to multiple carriers.
��� Apple is way ahead of their competitors with well over 100,000 apps on App Store
• Cook: Most of App Store rejections concern code errors. Over 90% of apps are approved within 14 days
• Cook: Apple iPhone inventory increased 230,000 units over quarter to 2.7 million unit level. Apple very conformable with inventory level.
• Expect sequential seasonal declines in Macs, iPods, and iPhones (typical).
• iPhone: 2.7 million units in channel which includes demos and in-transit inventories
• Cook: DRAM market very constrained in upcoming quarter.
• Apple expects gross margins of about 39% due to higher component environment, very typical seasonal decline in revenue, and the U.S dollar has strengthen which will impact as well.
• Cook: Apple has high confidence that AT&T plans will fix issues in certain cities and areas.
• Cook: AT&T is a great partner. They had more mobile broadband usage than any other carrier in the world.
• China Mac sales up 100%
• Australia Mac sales up 70%
• Italy, France, Switzerland Spain Mac sales up 40% or higher
• Tim Cook: Apple thrilled to se Mac at 33% growth rate which is about 2X the PC market as a whole.
• Subscription accounting ended this quarter.
• 29% tax rate during quarter; better than expected due to higher than anticipated international sales
• 40-50 more stores will open in fiscal 2010 with half of those outside U.S.
• 586,00 personal training sessions conducted
• Average of 278 stores open during quarter. 100 retails stores have been remodeled through end of quarter
• Apple Store sold 689,00 Macs. Half of those Macs sold to customers who had never owned a Mac before.
• iPhone now have over 70% of Fortune 200 deploying or testing iPhone.
• iPhone now in 86 countries.
• Apple added 17 new carriers arounf the world during Q1 2010.
• App Store in 77 countries with over 3 billion downloads.
• iTunes Store delivered record-breaking quarter.
• As expected sales of traditional iPods declined. 55% growth in YOY iPod touch sales.
• Portables up 18% YOY on strong MacBook and MacBook Pro sales.
• Oppenheimer: iMac response very strong. 70% YOY growth in desktop Macs.
• Apple CFO Oppenheimer guidance: Expect revenue in the range of about $11.0 billion to $11.4 billion and we expect diluted earnings per share in the range of about $2.06 to $2.18
• “If you annualize our quarterly revenue, it’s surprising that Apple is now a $50+ billion company,” said Steve Jobs, Apple’s CEO, in the press release. “The new products we are planning to release this year are very strong, starting this week with a major new product that we’re really excited about.”
• During the quarter Apple elected retrospective adoption of the Financial Accounting Standards Board’s amended accounting standards* related to certain revenue recognition. Adoption of the new accounting standards significantly changes how the Company accounts for certain items, particularly sales of iPhone and Apple TV.
• Apple sold 21 million iPods during the quarter, representing an eight percent unit decline from the year-ago quarter
• Apple sold 8.7 million iPhones in the quarter, representing 100 percent unit growth over the year-ago quarter
• Apple sold 3.36 million Macintosh computers during the quarter, representing a 33 percent unit increase over the year-ago quarter
• International sales accounted for 58 percent of the quarter’s revenue
• Gross margin was 40.9 percent, up from 37.9 percent in the year-ago quarter
• Apple posted revenue of $15.68 billion and a net quarterly profit of $3.38 billion, or $3.67 per diluted share vs. revenue of $11.88 billion and net quarterly profit of $2.26 billion, or $2.50 per diluted share, in the year-ago quarter
• Analysts’ consensus estimates called for earnings per share (EPS) of $2.07 on $12.06 billion in revenue vs. Apple’s Q110 guidance of “revenue in the range of about $11.3 billion to $11.6 billion and diluted earnings per share in the range of about $1.70 to $1.78.”