MacDailyNews’ live coverage of Apple Q3 2005 earnings conference call

Apple Computer today announced a per-share profit of 37 cents on revenues of $3.52 billion for its 2005 third quarter, the highest revenue and earnings in the Company’s history.

Apple was expected to report a per-share profit of 31 cents on revenues of $3.34 billion for its 2005 third quarter according to analysts polled by Thomson First Call. In April, Apple officials forecast the company would earn 28 cents a share in the quarter on $3.25 billion in sales. Apple’s FY 05 Third Quarter Results Conference Call is scheduled to begin Wednesday, July 13 at 2:00pm PDT / 5:00pm EDT.

Apple will provide live audio streaming of its FY 05 Third Quarter Results Conference Call utilizing QuickTime 7. The live audio webcast will be accessible through Apple’s web site here.

MacDailyNews will be covering the conference call live and notes will be added to this page as the event unfolds.

Notes from Apple’s Q3 2005 Conference Call will be updated live in reverse chronological order:

– End of Conference Call.
– Apple feels they are “being prudent” with revenue projections due to Intel switch announcement.
– Apple closing in on 500 million iTunes Music Store track sales.
– Music subscription model? Now with over 80% market share, Apple doesn’t think many customers are interested in renting music, most customers want to own their music.
– Apple took “adequate reserve” for iPod battery settlement.
– Share count increasing based mostly on employee option exercises.
– Apple iPods by HP sales? HP represented less than 8% of total iPod sales for quarter. 2-3% last quarter.
– Apple believes that the iPod Halo Effect and iPod ads help Mac sales.
– Analyst Munster: Have you seen impact since Intel announcement? Apple: we saw “no obvious reduction in sales based on limited data available so far.”
– Higher ed. market is relatively stronger in this new quarter historically. K-12 historically stronger in just finished quarter.
– Increase from 21,000 iPod storefronts to 25,000 this quarter due to primarily to U.S. Wal-Mart addition.
– Apple plans more PowerPC Macs during upcoming quarters. Apple will not predict if buyers or how many will delay purchases due to Intel switch.
– iPods: approximately 25,000 worldwide storefronts. 6.2 million iPods sold during quarter “representative of end user demand.”
– Both Mac and iPod ended quarter on target with inventory. Good supply.
– Apple continues to maintain cash pile for possible acquisitions.
– Pro video sales “extremely impressive.” Pro audio sales “very good.”
– Intel-based Macs will be on the market by this time next year. No other comment on that.
– Analyst: What’s going on with Motorola Apple iTunes phone? Apple refuses to answer.
– Mac OS X Tiger: over 2 million shipped in the quarter.
– New to Mac buyers in retail stores: low to mid 40%.
– Q3 direct business was 48%, year ago quarter was 51%.
– Mac mini “continues to be an important product in Mac unit growth.”
– Apple “hard at work” on next generation of music products.
– Music business up 317% year to date.
– Apple “really happy” with Retail Stores. Revenue and foot traffic up significantly
– “Close to 16 million” Mac OS X users (all versions).
– Mac OS X Tiger revenue the best selling release in Apple history: $100 million.
– Apple iPod gross margin close to 20%.
– Oppenehimer “unhappy with performance in Japan.”
– DRAM and Display component costs will increase in next quarter due to seasonal pressures.
– Margins will be pushed down due to decline in software (Tiger’s and Final Cut Studio’s second quarters).
– Over 100 applications already recompiled as “Universal Binaries” for Intel-based Macs.
– Oppenheimer: Mac mini is “expanding our Mac user base.” Appeals to “price conscious” buyers.
– Apple will not break out Mac or iPod models, but report only on “desktops,” “portables,” and “iPods.”
– Apple will not discuss unannounced products. The projection for Q4 calls for 50% year-over-year increase.
– Conservative flat projection of $3.5 billion in Q4 2005 revenue due to June quarter significantly exceeding Apple’s projections. Apple is being “prudent” in Q4 2005 projections due to Intel transition and Mac OS Tiger market penetration.
– Mac unit growth significantly exceeded overall PC market as a whole over last three quarters.
– Outlook for Q4 = $3.5 billion, $0.33 per share. Sequentially-flat projection based on Intel transistion.
– Cash on hand is now $7.526 billion. Apple is a debt-free company.
– Educational increase of 16% year-over-year. Mac units up 35% year-over-year.
– 125 stores by end of fiscal 2005.
– Apple Retail Store revenue up 56% year-over-year.
– iTunes Music Store has increased over 80% of legal online downloads according to Nielsen/SoundScan.
– iPod have about 75% of total U.S market. Next closest competitor has about 5% according to NPD.
– 6.155 million iPods shipped = new record.
– Music business generated 38% of total revenue.
– Tiger garnered $100 million in revenue.
– Mac OS X Tiger operating system sales are strong.
– Highest Mac sales in over four years. 52% of total revenue. 1.182 million units shipped.
– Apple please to report the highest revenue and earnings in Apple’s history.
– Apple CFO Peter Oppenheimer introduced.
– Welcome to the Conference Call.
– Apple spokesperson thanks us for our patience…
– The Apple Financial Results Conference Call Q3 2005 is scheduled to begin shortly.