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Apple just posted up its third quarter earnings -- its first full quarter selling the iPad -- and, well, it's raining cash in Cupertino. The company posted a record profit of $3.25b on record revenues of $15.7b, which is up from $1.83b and $9.73b from a year ago. The big stat? Apple sold 3.27 million iPads, nearly matching the 3.47 million Macs sold -- and Mac sales were up 33 percent from a year ago to set a new quarterly record. Yeah, damn. iPhone sales -- including the first few weeks of the iPhone 4 -- were up 61 percent from a year ago to 8.4 million, and the iPod continued its slow decline, down eight percent to 9.41 million units sold. Over half of the Apple's sales -- 52 percent -- were international, and Jobs is quoted saying "we have amazing new products still to come this year." Not a bad way to head into back-to-school and the holidays, we suppose -- we've got a feeling those iPad numbers are just going to go up. The conference call to discuss all this is at 5pm ET, we'll be covering it live right here.

Update: The call is all done -- the full liveblog is after the break. We didn't learn too much apart from the fact that Apple's selling every iPhone and iPad it can make (Tim Cook repeated this over and over), and that Apple's setting aside $175 million in revenue to cover the free iPhone 4 cases. Of course, given that Apple added an additional $4.1 billion in cash to its warchest this quarter for a total of $45.8 billion, that's pretty much pocket change, but there's the number.
6:02PM And with one more extremely boring question, we're all done here!

6:00PM Q: It seems like iPhone margins will be down 10 to 15 percent next quarter based on third party parts breakdowns, what up with that?
Peter: Don't put a lot into these third party cost breakdowns. It's amazing the cost categories and components that they miss.

5:59PM Q: Do you need to expand your US carrier relationships, or is there enough headroom with AT&T?
Tim: I'm not answering this question. AT&T is our best friend forever.

5:58PM Q: Will wage hikes at contractors impact Apple?
Tim: We don't want to get into the terms of our commercial agreements, so I'm not answering that.

5:58PM Q: Coming back to the iPad for a second -- there's a lot of speculation about cannibalization, but is there a halo effect on Mac sales?
Tim: That's a very good question. Most people focus on cannibalization as a negative, but internally we focus on synergy effect between products. As iPod sales took off, we saw an increase in Mac sales. Could that happen with iPhone and iPad? We'll see -- I don't want to predict it. The Mac has outgrown the market 17 straight quarters, but share is still low, so there's still enormous room to grow as we sell more iPhone and iPads. This is where it's great to have a lower share -- if the iPad cannibalizes PCs, there's a lot of PCs to cannibalize.

5:55PM Tim: I see an enormous amount of opportunity out there, and our biggest challenge is deciding where to focus resources.

5:54PM Q: Thoughts on prepaid markets and whatnot?
Tim: There's still extraordinary opportunity left for all of our products. The Mac grew 70-some percent in Asia. 174 percent growth in China, almost double in Hong Kong. Even in a country like Spain where the economy is difficult, the Mac grew 53 percent.

5:52PM Q: Are you hitting the right numbers of iPhones sold?
Tim: The entire phone market will eventually be a smartphone market -- Steve said that a long time ago. Our growth as a company -- whether you look at Mac, iPod, or iPhone -- we're growing faster internationally than domestically, but we're growing quickly in the US as well. It's just that the international numbers are absolutely killer.

5:51PM Q: What about FaceTime? Is it coming to Windows, the Mac?
Tim: I want to make sure we talk about the financials, so I'm punting that for another day (He really said this.)

5:50PM Q: (Shaw Wu up in the heezy!) Is the Mac business awesome? What about laptops?
Tim: We have a little ying and yang when we announce new portables without new desktops -- but I think we'll see a shift to more mobility and portables over time.

5:49PM Q: Do you think the concern of developers is really misplaced?
Tim: We value the input of every developer, so we're not going to say every concern is misplaced. We value every kind of feedback.

5:48PM Q: In the past, iPhone devs have complained that the App Store rules are arbitrary. What's the deal?
Peter: (Loooooooong pause.) We're thrilled with the App Store. Here are some statistics and boiler you already know. Did you know we care deeply about our developers? That should distract from your question.
Tim: The vast majority of apps are approved within seven days. The others are all buggy, and we hate porn.

5:47PM Q: Do you think there are questions of sustainability with iPad demand in the international market and with the possibility of competitive subsidized tablets in the fall?
Tim: We're selling every iPad we can make, and it looks good in every country we've launched in so far. (He's been saying this a lot, no?) It looks like to me that it's more than an early-adopter phenomenon. It's the fastest of any product that I know of or have been involved with. It's special. It's not secret that the competition is working on things, but we're happy with what we have. In the US, we have a very competitive data rate and a competitive device price, that seems to be what people what. Yes, someone could jack the price rates up, but I'm not sure anyone wants another contract. We'll see -- we could both learn something.

5:44PM Q: Android shipments are certainly increasing and gaining press -- how do you see that competition with the iPhone?
Tim: I haven't seen the Android results for June, but iPhone sales were up 61 percent despite the drawdown of the previous unit and the transition to the new model. We're growing faster than the market.

5:43PM Q: Any way to quantify the impact of the free bumpers on next quarter?
Peter: Two impacts. We will need to defer revenue for the iPhone 4s that we've sold where we've not delivered the bumpers and we haven't heard from the customers. Our estimate is $175 million. We will expense the cost of the bumpers when we ship them to customers -- our most important objective is to take care of every customer and delight them.

5:42PM Q: Something about margins on the iPhone and iPad.
Peter: We were aggressive on the iPad, we're selling them as quick as we can make them. We are always working to become more efficient and ride down the cost curves. I don't see that being any different on the iPad as it is on the other products.

5:41PM Q: You talked about the iPad cannibalizing the Mac, and the iPod and the iPod touch year-over-year -- do you think the iPad will cannibalize the iPod touch, and was the touch a higher percentage of units sold in Q3?
Peter: iPod selling prices were down about $7, due to the back to school promotion and the stronger dollar. We were up on touch sales in the mix, but I don't have the exact numbers in front of me.

5:39PM Q: Have you had any progress in managing your channel inventory, or do you feel like you're fighting a losing battle?
Tim: I never feel like I'm fighting a losing battle. We're selling every iPhone 4 that we make.

5:38PM Q: You had talked a little about channel inventory -- do you still have older 3GS models in the channel, and where are they being sold?
Tim: We have fewer 3GS's than before, and they're still being sold in most of the countries we sell the 3GS in.

5:36PM Q: Is this question extremely boring?
A: Yes, it is extremely boring.

5:36PM Q: Let's revisit the gross margin question. (In other words: let's get boring in here.)
Peter: The factors that we cited last quarter on a collective basis were as we thought. The biggest difference was that we sold more iPhones and more accessories.

5:34PM Q: How's that data center you're building in North Carolina?
Peter: It's on schedule, we expect to have it done by the end of the calendar year.

5:34PM Q: How's iAd doing?
Peter: We just launched iAd in the early part of July, and we're going to learn a lot this year and build. Nothing else to share.

5:33PM Q: Any thoughts longer term on how the iPad will affect the rest of the product line -- like Macs?
Tim: That's a good question and one that we talk about. It's too early to tell, but we're thrilled that we set a record in Mac sales. For us, it's a jaw dropper.

5:32PM Q: Are you surprised at how many people want the 3G iPad, and what's the split between 3G WiFi models?
Peter: We're not going to disclose that, but all the models are selling well, and the average selling price of the iPad was $624.

5:31PM Q: When do you think iPad supply and demand will be in balance?
Tim: We honestly don't know is the answer. We've been pleasantly surprised at how fast this product has gotten out of the shoot. Compared to how fast the iPod sold a million, it's a big difference. The iPad isn't following a typical early adopter curve, it's already mainstream. Our gut tells us this is a huge market and the iPad is defining it.

5:30PM Q: What about returns?
Tim: As Steve said, the return rate for iPhone 4 is less than that of the iPhone 3GS.

5:29PM Q: You haven't seen any slowdown in order rates or any increase in returns on the iPhone 4?
Tim: My phone is ringing off the hook from people who want more supply. It's hard to test the real effect of what you're asking, because we're selling every unit we can make.

5:29PM Q: Is the antenna an issue?
Tim: Let me be very clear on this -- we are selling every unit we can make.

5:28PM Tim: Let me answer that in two different ways. We decide how many of the old products we can sell many weeks beforehand and when we run out we run out -- we're pretty aggressive. We do NOT plan shortages of new products to build buzz -- I'm not sure where that comes from.

5:27PM A philosophical question from Gene Munster -- do you guys have purposeful shortages of products at launch just to build buzz?

5:26PM Tim's talking about how many iPhones are in the channel. It is extremely soothing.

5:25PM We greatly reduced shipments of the previous iPhone around WWDC and the announcement of the iPhone 4, but we didn't launch the iPhone 4 until June 24, so sales were down between June 7 and June 24. It was a channel adjustment. Our growth rate was 90 percent before June 7, and iPhone sales were up 61 percent.

5:23PM Q: iPhone has typically had margins that were higher than your average, what might affect that margin?
Peter Oppenheimer: We did have some adjustments that occurred in our supply chain and product costs that benefited us in June. As for the September quarter, we just delivered the iPhone 4 and iPad, and these products have a higher cost structure than previous products. While the margin is attractive, things are going to have to play out.

5:21PM Is it a supply problem or a demand problem?
Tim Cook: High demand is never a problem! We thought one million iPads was a pretty bold move. Basically what we're doing is increasing capacity as fast as we can -- I'm fairly confident we'll be able to increase capacity. It's not something profound we won't be able to do.

5:20PM Second Q: Can you give us a supply / demand breakdown and talk about supply constraints?
Tim Cook: Nothing significant on the Mac or the iPod, but the iPad and the iPhone are significantly different. We're selling both of those products as fast as we can make them. We're working around the clock to get supply and demand in balance -- it's a good problem to have.

5:18PM Higher iPhone sales and higher accessory sales really helped this quarter.

5:18PM Question time!

First Q: What are you hearing from corporations in terms of enterprise adoption?
Tim Cook: 80 percent of the Fortune 100 is adopting the iPhone, and we're doing well with the Fortune 500 and education as well. In terms of the Mac, we're still selling principally to consumers and education, but we're doing okay in enterprise. 50 percent of the Fortune 100 is deploying or testing the iPad.

5:14PM Talking about free cases for iPhone 4 customers -- Apple is deferring some $175 million of revenue based on the case offer to the next quarter.

5:13PM Apple now has $45.8 billion dollars in cash. That's a lot of cash -- up $4.1 billion from last quarter.

5:12PM Going over some of the drier details here -- tax rates, operating expenses, that sort of thing.

5:11PM Retail revenue was $2.58b on 57 percent increase store traffic -- that's a record number of visitors.

5:10PM Catching up here -- $5.33 billion in iPhone revenue, which is a 74 percent increase, with $2.17 billion in iPad revenue. $2.1b of that was iPad, the rest was accessories.

5:07PM 225,000 apps and 11,000 iPad apps sold.

5:06PM Mac Pro sales and education sales were also very high. iPod sales were down, but revenue was up four percent as the sales mix shifted toward the iPod touch.


5:05PM Revenue was driven by the iPad, followed by the iPhone and Macs.

5:04PM Peter Oppenheimer, Apple's CFO is speaking now, running down the highlights. This is Apple's highest quarterly revenue ever, surpassing the previous holiday quarter.

5:04PM The call is live -- Apple is just reading off the major numbers here.

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Apple posts record $3.25b profit in first full quarter of iPad sales, says more 'amazing products' coming this year