Wednesday, April 23, 2008

Apple's Second Quarter 2008 Earnings Conference Call

Apple reported their second quarter 2008 earnings today. The conference call took place at 3:00 PST. Apple shares were trading around $157-$160 when the call started and moved up during the call to about $163 as the call ended. Some of the highlights that Apple's CFO Peter Oppenheimer mentioned at the beginning of the call were the growth rate of Mac sales compared to the rest of the industry and the highest year-over-year growth rate of Mac sales in twenty years. Tim Cook also notably said that NAND and DRAM pricing was at a "record low" during the March quarter and expects that to continue in the current quarter as well as that Apple is dealing with large amounts of iPhones being sold with, Apple believes, the intent of unlocking them which Tim said they view "as a proxy for international demand of the iPhone" and they will continue to roll out the iPhone in as many places internationally as they can. Also, apparently analysts still don't understand that they are not going to be given information about future products by asking Tim or Peter during the conference calls. Tim probably mumbles "(analyst name) we don't comment on unannounced products" in his sleep. Gross margin was an area of concern for many of the analysts in the Q & A session. Shaw Wu asked about Apple's acquisition of PA Semiconductor which Tim Cook did not comment on but seemed to reaffirm Apple's strategy of acquiring small companies as opposed to making large acquisitions- he said (approximately): "we, from time-to-time, like to acquire small companies and we do not comment on these acquisitions..." The fact that Apple plans to defer revenue for iPhones sold after March 6 until after the 2.0 software update is released also garnered many questions. There were definitely fewer questions this quarter with strong earnings about a poor economic environment in the United States negatively affecting Apple's earnings. The call ended at about 3:00 PST.

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