Apple Financials Q1 2007 Liveblog

Welcome to the TUAW liveblog for Q1 2007 Apple Financial Results. Here's where you'll find all our updates, so open a window with this post and keep refreshing as needed. There is no "auto update" on TUAW so unless you refresh (please be gentle!) the page will not change. The conference call is due to start at 2PM PT/5PM ET.

The conference call is over, and this quarter was good for Apple. Read on for all the details.

3:00 PT. That's all she wrote, folks.

2:58 PT. Retail News: Ended '06 with 6600 retail employees (21,500 Apple employees over all) Opened 5 stores in Dec Quarter 7 in March, 35 to 40 in Fiscal '07

2:57 PT. Bootcamp: No virtualization in Leopard? Well Apple support 3rd party apps like Parallels? Apple answer, clearly.

2:55 PT. iLife refresh? "Stay tuned!"

2:55 PT. Cap Ex? 142 million. Retail 36 million.

2:55 PT. Japan? Market is overall weakest in world. MP3 maintained 50% of market, no growth.

2:50 PT. More aggressive on iPod pricing? We don't disclose pricing plans. Point out that they've sold billions. No problem in selling iPods. (i.e. "No drop in price.")

2:50 PT. iPhone name "Cisco's trademark registration is tenuous at best...If Cisco wants to challenge us, we're confident we'll prevail."

2:45 PT. 1.5 million bootcamp downloads Will be part of Leopard.

2:45 PT. Mac Pro performance? Total pro market met expectations internally, tempered by some customers still waiting for Adobe Creative Suite. Release in coming 2nd calendar quarter this year. Next quarter. Hope to see customers who have been delaying purchases.

2:45 PT. iPods factors? Favorable commodity pricing environment. Pleased with all elements of the iPod performance. Cash? Buy backs? Stock buybacks are reviewed with sr. management. Maintain strong balance sheets for strategic investments/acquisitions.

2:40 PT. 50% of Macs sold to new users? Best line of Macs ever shipped before.

2:40 PT. iPod/iPhone cannibalization? Too soon to tell. Hard to predict. Believe that iPod line shipping today is great with all its form factors. 2 markets converge? We'll see. iPod has a significant line of difference price points and capabilities.

2:40 PT. Halo effect? Intent to buy Mac Portable 17 to 28% in a year. Mac has outgrown market again, higher than what we projected.

2:40 PT. How think about AppleTV opportunity? Only a few shipping weeks for this quarter. Included as part of guidance. Too niche market? Broader platform? From a demand point of view, it's really too early to tell. How positioning, see it as the DVD player of the 21st century.

2:40 PT. iPhone question. 10 million units over calendar year is 1% of market. Enough capacity? Will share more details closer to launch.

2:35 PT. 200,000 increase in channel inventory? Includes all iPods at 40,000 distribution points.

2:35 PT. Number of distribution locations? iPod 40,000. Mac 7,500 retail locations.

2:35 PT. Pausing on Mac purchases due to Leopard? Selectively expanding Mac channel. 7500 outlets, increased by 1500. 50 stores increase over holiday quarter. Do not see a Leopard-related pause. Looking back to Tiger, did not see a pause then. Average store revenue 6.7Million.

2:35 PT. Leopard? We continue to plan to ship in Spring as announced at WWDC. Lots of people working on it.

2:35 PT. Product mix? What demand? Shuffles? Do not release specific units within iPod family. All three models did exceptionally well.

2:30 PT. iPhone announced. Gross margin? Not shipped until June. No product level gross margins per policy. June quarter do include anticipated iPhone shipments.

2:30 PT. International Sales? iPods vs CPUs? Europe Mac unit growth is 28%. Market growth was 9%. 3x market. Exceptional (over 50%) in UK, Switz, Canada, Australia and Japan. Other countries of interest: France, Germany, Italy, Spain, Belgium, Austria, Denmark: between 10-20 points per share.

2:30 PT. How much of growth margin leverage is sustainable?

2:25 PT. Declines? Declines are seasonal in nature. Happy with overall Mac sales.

2:25 PT. More aggressive Mac pricing? Grew at 3x margin, at 31% market growth (versus 3% for PCs). The Mac continues to outgrow the market. Competitive product offerings delivering above market growth.

2:25 PT. Cingular. It has widespread coverage.

2:20 PT. Operating Leverage. Thrilled by operating margin, 18.6%, especially high, 31% gross margins. Positively influenced by revenue. Guided to slightly over 12% for March quarter. Will not project to continue long term (for presumably legal reasons).

2:20 PT. iPod inventory question. 4-6 weeks of inventory.

2:20 PT. Stores were outperformed by your overall sales? Only 6% store growth? Retail store revenue grew 6% year over year, total Mac sales by 60%. Because of lower iPod revenue (price reductions) and better distribution channels. Pleased with stores' performance, bringing new customers to Apple. Come June, will sell a lot of iPhones.

2:20 PT. Which commodities more favorable? Last quarter was a great time to be a buyer. LCDs and Flash memory and DRAM will be a good buy as well.

2:15 PT. What about the Feds? They've provided all the details to the SCC and the other feds. Internal review no misconduct. Voluntarily and proactively inform them of their findings.

2:15 PT. What factors for guidance? Great iPod product offerings, range of prices, form factors, to meet many customer's needs and uses. Can share more observations next quarter iPod wise. MP3 market seasonality depends on holiday season buying and innovative product launches. Always a drop between December quarter to March quarter. Mac-wise, education buying starts in the Spring.

2:15 PT. Opening to questions.

2:10 PT. FY2007 off to a "tremendous start". Net income $1 Billion.

2:10 PT. Looking forward to the March Quarter 4.8-4.9 Billion revenue expected.

2:10 PT. Gross Margin is 31.2% Nice!

2:10 PT. $6.7 million in sales per Apple store 13,000 customers per store per week. 170 retail stores. No wonder there's always a wait for a genius. 28 million visitors to the Apple Stores in the quarter.

2:10 PT. Paramount 250 movies in iTunes (of which, a couple of dozen are watchable.)

2:10 PT. Macbook and Macbook Pro both refreshed. Portable Macs are particularly in demand. 65% portable growth year/year. 60% of all Macs sold were portable. Of course, some of this was probably due in part to the lag on the Mac Pro release.

2:05 PT. Peter Oppenheimer. Record breaking quarter for Apple. 24% growth over December 2006. Driven by iPod sales, and also Macs. Margins were high 18.6%. Net income: $1 billion. Up 78% over last year's. $1.14 per share.

2:05 PT. Apple shares rise. "Apple shares rose more than 4% in after-hours trading." (Marketwatch)

2:00 PT. Waiting... Mike notes: "The analyst consensus was 0.78 per share and they actually made 1.14 a share." (cite).

1:55 PT. 1.6 million Macs. 26 million iPods Apple shipped 1,606,000 Macintosh® computers and 21,066,000 iPods during the quarter, representing 28 percent growth in Macs and 50 percent growth in iPods over the year-ago quarter. "We are incredibly pleased to report record quarterly revenue of over $7 billion and record earnings of $1 billion," said Steve Jobs, Apple's CEO. "We've just kicked off what is going to be a very strong new product year for Apple by launching Apple TV and the revolutionary iPhone."

1:55 PT. $1.75 Billion "We generated over $1.75 billion in cash during the quarter to end with $11.9 billion," said Peter Oppenheimer, Apple's CFO. "Looking ahead to the second fiscal quarter of 2007, we expect revenue of $4.8 to $4.9 billion and earnings per diluted share of $.54 to $.56."

1:50 PT. Results posted. http://www.apple.com/pr/library/2007/01/17results.html