Apple Q2 2010 by the numbers: Best non-holiday quarter ever

Can nothing stop Apple?

The Cupertino, Calif.-based company's quarterly earnings again rose high above Wall Street consensus, which already was $600 million to $1 billion above guidance. Today, after the bell, Apple reported $13.5 billion revenue and net profits of $3.07 billion, or $3.33 a share, under the new reporting method implemented last quarter. A year earlier, Apple reported revenue of $9.08 billion and $1.62 billion net quarterly profit, or $1.79 per share. Fiscal 2010 second quarter ended March 27, 2010.

Three months ago, Apple forecast revenue between $11 billion and $11.4 billion, with earnings per share ranging between $2.06 and $2.18. Analyst estimates were much higher than Apple guidance: $12.04 billion average revenue consensus and $2.45 earnings per share. Apple blew past the Street. Again.

In a statement, Apple CEO Steve Jobs said: "We're thrilled to report our best non-holiday quarter ever, with revenues up 49 percent and profits up 90 percent."

For fiscal 2010 third quarter, Apple forecasts between $13 billion and $13.4 billion in revenue, with earnings per share ranging between $2.28 and $2.39. Gross margins are projected to be 36 percent, a substantial decline. Apple expects sales of iPad to account for about 25 percent of the gross margins decline. "Customers are loving the iPad," Apple CFO Peter Oppenheimer said during a conference call late this afternoon. Apple expects to have iPad in nine countries by end of May.

Tim Cook, Apple's COO, responded to analyst concerns that either iPad volumes would be higher than expected or margins substantially less than projected. "We priced it very aggressively," he said. "We think the market size of the iPad is very large, and we want to capitalize on our first-mover advantage."

My interpretation: Apple could be anticipating that iPad will cannibalize some Mac sales and/or high iPad sales volume during the back-to-school buying season. "There was nothing obvious in the iPod numbers or the Mac numbers to suggest cannibalization," Cook said. However, he observed that iPad's announcement in January may not have affected sales the way the released product might. "That part of the equation, we don't know yet."

Q2 2010 Revenue by Product

• Desktop: $1.53 billion, up 45 percent from $1.06 billion a year earlier.
• Portables: $2.23 billion, up 17 percent from $1.8 billion a year earlier.
• iPod: $1.86 billion, up 12 percent from $1.67 billion a year earlier.
• Music: $1.33 billion, up 27 percent from $1.05 billion a year earlier.
• iPhone: $5.5 billion, up 124 percent from $2.43 billion a year earlier.
• Peripherals: $472 million, up 32 percent from $357 million a year earlier.
• Software & Services: $634 million, up 1 percent from $626 million a year earlier.

Apple shipped 2.94 million Macs during the quarter, for 33 percent year-over-year growth. Wall Street consensus was around 2.7 million.

While Apple posted strong year-over-year results, units and revenue sequentially declined in nearly every segment -- not surprising given the holiday quarter's strong sales. However, Oppenheimer said sequential declines were smaller than is typical.

Apple's gross margin was 41.7 percent, up from 39.9 percent a year earlier. International sales accounted for a stunning 58 percent of revenue. Apple ended the quarter with $41.7 billion in cash, up from $39.8 billion three months earlier. Priority for cash is "preservation of capital," Oppenheimer told financial analysts today.

Q2 2010 Unit Shipments by Product

• Desktop: 1.15 million units, up 40 percent from 818,000 units a year earlier.
• Portables: 1.8 million units, up 28 percent from 1.4 million units a year earlier.
• iPod: 10.9 million units, down 1 percent from 11 million units a year earlier.
• iPhone: 8.75 million units, up 131 percent from 3.8 million units a year earlier.

iPhone. Apple shipped -- what company executives really mean by sold -- 8.75 million iPhones worldwide during fiscal second quarter. A year earlier, Apple shipped 3.8 million iPhones. Apple shipments into the channel are usually several million units higher than numbers released by Gartner, which measures actual sales. During the quarter, iPhone was available from 151 carriers in 88 countries.

Wall Street analyst estimates ranged from about 6 million to nearly 9 million units. Revenue rose 124 percent year over year, giving the biggest boost to Apple's quarter. The smartphone and supporting services accounted for about 41 percent of total Apple revenue.

Computers. Apple shipped 2.94 million Macs during the quarter, up from 2.6 million units a year earlier. Wall Street consensus ranged from about 2.78 million to 3.4 million shipments worldwide, with consensus around 2.7 million. Oppenheimer said Apple ended the quarter with about three-to-four weeks of inventory in the channel.

Last week, Gartner and IDC released preliminary first calendar quarter PC shipment data. In the United States, Apple shipped 1.4 million computers, for 34 percent year-over-year growth, according to Gartner. However, IDC put Apple shipments lower, at 1.1 million, with growth a much lower 8.3 percent.

Q2 2010 Revenue by Geography

• Americas: $5 billion, up 26 percent from $3.9 billion a year earlier.
• Europe: $4.05 billion, up 63 percent from $2.5 billion a year earlier.
• Japan: $887 million, up 51 percent from $587 million a year earlier.
• Asia Pacific: $1.89 billion, up 184 percent from $665 million a year earlier.
• Retail: $1.7 billion, up 22 percent from $1.4 billion a year earlier.

Apple ranked fifth in the United States, falling yet another place, with 8 percent market share, down 7.2 percent year over year, according to Gartner. But IDC reported that Apple's market share declined to 6.4 percent, from 7.2 percent. Just two years ago, Apple had risen to third place in US PC shipments. However, despite all the hoopla about increasing Mac sales, Apple US ranking declined, with risk the company might fall back out of the top five in some future quarter.

Gartner and IDC won't tabulate Apple's worldwide ranking until the final figures are released, and generally the information is not publicly available. But the last time I could get data, Q3 2009, Apple ranked No. 7 in worldwide PC market share, according to IDC.

iPod. Apple shipped 10.9 million iPods during fiscal second quarter, down from 11 million a year earlier. Analyst consensus for Q2 was around 9.4 million units. While units declined, revenue rose 12 percent from a year earlier.  Oppenheimer described iPod growth as the strongest in two years.  Apple ended the quarter with about four-to-six weeks of inventory, on par with projections. The iTunes Store ended the quarter with a library of 12 million songs.

Q2 2010 Unit Shipments by Geography

• Americas: 971,000 units, up 20 percent from 809,000 units a year earlier.
• Europe: 899,000 units, up 37 percent from 658,000 units a year earlier.
• Japan: 129,000 units, up 18 percent from 109,000 units a year earlier.
• Asia Pacific: 338,000 units, up 67 percent from 202,000 units a year earlier.
• Retail: 606,000 units, up 38 percent from 438,000 units a year earlier.

Retail. Revenue rose 22 percent year over year, with Apple retail stores selling 606,000 units, compared to 434,000 a year earlier. Apple opened three new stores in the quarter, for a total of 286 retail outlets worldwide. There was an average 284 stores open in the quarter, with average revenue of $5.9 million compared to $5.5 million a year earlier. Sales rose by average 8 percent per store. Apple retail stores had 47 million visitors during the quarter up 20 percent from 39.1 million a year earlier. Apple expects to open 40-50 new stores during fiscal 2010.