MacDailyNews presents live notes from Apple’s Q314 Conference Call with analysts starting at 5pm EDT/2pm PDT today.

For its fiscal 2014 third quarter ended June 28, 2014, Apple today announced Q314 financial results with quarterly revenue of $37.4 billion (vs. $35.3 billion YOY) and quarterly net profit of $7.7 billion (vs. $6.9 billion YOY), or $1.07 per diluted share.

“Our record June quarter revenue was fueled by strong sales of iPhone and Mac and the continued growth of revenue from the Apple ecosystem, driving our highest EPS growth rate in seven quarters,” said Tim Cook, Apple’s CEO, in a statement. “We are incredibly excited about the upcoming releases of iOS 8 and OS X Yosemite, as well as other new products and services that we can’t wait to introduce.”

- iPhone: 35.203M units, $19.751B revenue (vs. 31.241M units, $18.154B revenue YOY)
– iPad: 13.276M units, $5.889B revenue (vs. 14.617M units, $6.374B revenue YOY)
– Mac: 4.413M units, $5.540B revenue (vs. 3.754M units, $4.893B revenue YOY)
– iPod: $2.926M units, $442M revenue (vs. 4.569M units, $733M revenue YOY)
– iTunes/Software/Services: $4.485B revenue (vs. $3.990 B revenue YOY)
– Accessories: $1.325B (vs. $1.179B revenue YOY)

Live notes from Apple’s Q413 Conference Call in reverse chronological order:

• AAPL: 94.01 Down 0.71 (0.75%) 5:56PM EDT

• End of conference call.

• Cook: Increasing enterprise penetration for iPhone, iPad, and Mac is our goal and we look at it as a huge opportunity.

• Cook: “The walls would shake” here at Apple if, with IBM, we can take the enterprise iPad penetration from 20% to 60%.
• Cook: We have a very, very strong executive team and we can manage certain acquisitions and partnerships
• Cook: With Beats we felt we were getting an incredible subscription service, access to a fast-growing headphone business, and access to incredible people.
• Cook: You can only do so many partnerships well. In the case of IBM, we feel that mobile and enterprise is an enormous opportunity.

• There are a lot of different smartphone sales models being tried by carriers. Less than 1 in 4 iPhones were sold in a traditional subsidy plan. Ability for customers to upgrade quicker than the traditional 2 year cycle makes Apple extremely bullish on iPhone sales going forward.
• If you look at YOY iPhone growth rate, mid-range iPhone 5c was the highest growth of the three tiers of iPhone in Q314.

• iPhone in Japan: VAT upped from 5% to 8% in Japan. This is part of Japan’s tax reform program. This contributed to dampening smartphone market. iPhone share should be similar to previous levels. Signs that the market will recover following these tax changes. Rush to buy before tax increase, then pause after, then some stabilzations after – not necessarily where it was previously.

• Cook: iPhone trade-ins are actually hugely beneficial for Apple’s ecosystem because more people can “join the party.” More price-sensitive people can get iPhones this way. My gut is that the cannibalization factor (vs. new iPhones) is low because you are attracting a much more price-sensitive customer. Once they try an Apple product, the likelihood that the buy more Apple products in the future is high.

• Cook: As TD-LTE rolls out in China (just started in January), this is another opportunity for iPhone sales.

• Cook: China exceeded our expectations significantly. iPhone 48% growth. iPad grew. Mac up 39% vs. a contracting non-Mac PC market (-5%).

• Cook: In BRIC, iPad did extremely well. In developed countries, the tablet market is clearly weaker. In the U.S., we had “a very, very strong Macintosh market.” Higher ed is still very much notebook oriented, but in K-12, we sell 2.5 iPads for every Mac notebook.
• Cook: We still believe that the tablet market will eventually surpass the PC market. We just need to get the enterprise side up to speed.
• Cook: The share of tablets in business is good (74% IDC), but the penetration in business is low, it’s only 20%. We think there’s a substantial upside in business. This is one of the reasons for the IBM partnership announced last week. Business apps for iPad will be key.
• iPad has over 70% profit share in tablet market
• Cook: we can bring further innovation to the iPad. More than 50% of iPads sold are going to first-time tablet buyers.
• Cook: We created the tablet category. We’ve sold over 225 million iPads in some 4 years.

• Our guidance is based on all the information available to us. It is realistic guidance. We expect to land within the ranges provided.
• Maestri: “We’re expecting a very busy fall. We are very exciting by what we’ve got in the pipeline.”
• Maestri: Unexpected cost improvements. “A very nice surprise for us.”
• Katy Huberty: Gross margin above guidance for 3rd quarter in row?

• Apple is providing the following guidance for its fiscal 2014 fourth quarter:
– revenue between $37 billion and $40 billion
– gross margin between 37 percent and 38 percent
– operating expenses between $4.75 billion and $4.85 billion
– other income/(expense) of $250 million
– tax rate of 26.1 percent

• The dividend is payable on August 14, 2014, to shareholders of record as of the close of business on August 11, 2014.
• Apple’s board of directors has declared a cash dividend of $.47 per share of the Company’s common stock.

• $164.5 billion in cash and marketable securities on hand. Domestic cash: $26.8 billion, +$8.3 billion in quarter. 84% of Apple’s total cash is offshore.

• 75 billion downloads from Apple’s App Store to date
• Mac has gained global market share for 32 of the last 33 quarters.
• Mac: 18% YOY growth, a new June quarter record. Strong sales of MacBook Air.
• iPad has 85% share of U.S. education tablet market
• iPad: Sales up 51% in China. iPad channel inventory in target range of 4-6 weeks
• iPhone channel inventory in target range of 4-6 weeks
• iPhone product rumors resulted in iPhone sales delay this quarter
• iPhone: 13% growth YOY. ChangeWave: iPhone – 97% customer satisfaction rate.

• Luca Maestri: Q314 a new June quarter record for revenue. Driven by strong sales of iPhone and Mac.

• Cook: Not counting Beats, Apple has made 29 acquisitions since beginning fiscal year 2013
• Cook: Apple very excited about iPad. IBM enterprise partnership will be boon to iPad growth
• iPad accounts for 80% of U.S. tablet-based online purchases
• Cook: ChangeWave: iPad Air registered 98% customer satisfaction. iPad mini Retina hit a 100% customer satisfaction rate
• iPad sales met Apple’s expectations. IDC: 5% decline in tablet market in Jun quarter.
Mac growth of 18% YOY vs. a shrinking PC market overall
• Q314: Apple’s highest growth rate in seven quarters
• Cook: Apple has a “very large vision of what iOS can be.”
• Apple’s iOS CarPlay being integrated by 29 major car makers
• New OSes and Swift programming languages will be a huge leap forward for Apple’s ecosystem
• OS X Yosemite + iOS 8 Continuity are “features that only Apple can deliver.”
• Tim Cook: Over 20 million people around the world watched WWDC14 keynote – a new record
• Tim Cook: Good afternoon.

• AAPL: 94.38 Down 0.34 (0.36%) 5:00PM EDT

• International sales accounted for 59% of the quarter’s revenue.
• Gross margin was 39.4% compared to 36.9% in the year-ago quarter
• Apple has now taken action on over $74 billion of their $130 billion capital return program with 6 quarters remaining to its completion
• Apple returned over $8 billion in cash to shareholders through dividends and share repurchases during the June quarter
• $10.3 billion in cash flow from operations

• AAPL: 93.91 Down 0.81 (0.86%) 4:53PM EDT
• AAPL: 93.82 Down 0.90 (0.95%) 4:49PM EDT