Live notes taken during Apple���s conference call discussing Q2 06 financial results in reverse chronological order.
– End of Q2 2006 Conference Call
– Apple will acquire approximately 50 acres about 10 minutes from Apple campus for second campus
– Cost of second Apple campus? $120 million to acquire new data center and first of several properties for second Apple campus – not further comment on that at this time
– Apple Retail Stores’ “new to Mac customers” percentage rose to 50% for the quarter
– 7,000 Macintosh retail storefronts worldwide
– Apple believes there are more opportunities for iPod channel partners worldwide
– Over 35,000 storefronts across the world carry iPod models
– Apple continuing “to be conservative with cash” looking forward
– “There is nothing holding us back – we are on target to complete Intel transition by end of year”
– iTunes Music Store operated “above break-even” for the quarter
– France DRM proposed law: Apple believes it will result in “state-sponsored piracy.” Apple doesn’t think that the proposed law will benefit anybody.
– No significant constraints on components on upcoming quarter
– No significant discounting of PowerPC G4 Mac models during the quarter
– Apple looking for feedback by releasing Boot Camp as Public Beta
– Apple thinks Boot Camp makes the Mac attractive to Windows users thinking about switching to Mac
– Apple has no desire or plan to sell or support Windows
– Apple’s NAND flash advantage one main reason for higher gross margin
– Apple will not disclose gross margins for iPod due to competitive reasons
– 1,500 apps are now Universal
– Apple working closely with Adobe on Universal version of Photoshop, other Adobe apps
– Heavy users of Photoshop likely not satisfied with Rosetta performance
– Casual users of Photoshop may be satisfied with Rosetta performance
– iMac Core Duo did “very well” in quarter
– Intel-based Mac mini only shipped for last 4 weeks of quarter
– “High level of interest in Boot Camp Public Beta – Apple will not release download numbers for the beta product
– Will Apple add virtualization into Leopard? Apple will not speculate about that at this time
– Apple is “seeing a high level of interest in” Boot Camp
– Apple thinks Boot Camp makes the Mac more appealing
– Intel-based Macs outsold PowerPC Macs in month of March
– Customer response to Intel-based Macs in “enormous”
– Apple believes iTunes Music Store continues to gain momentum
– iTunes Music Store music sales higher in March than December quarter
– Apple ended the quarter with 4-5 weeks of inventory in channel
– Apple pleased with sales of all iPod models
– iPod gross margins were above 20% in March quarter
– 30 of the 40 Apple Retail Stores planned in 2006 will be in the U.S.A.
– MacBook Pro supply was severely constrained during Q2
– Supply constraints in the past for iPod mini do not give a good basis for Apple to predict Q3 iPod seasonal sales
– Apple has no comment on iBook successor
– Apple traditionally starts to see Education sales in late June, but main buying in in July and August
– Apple views Mac mini as an incredible value – the lowest-priced way to get into the iLife suite
– Germany up 10% to 21%, France up to 11% in Feb. iPod market share
– iPod market share in February: UK 40%, Japan 54%, Canada 45%, Australian 64%
– Customers were not discouraged to wait for Intel-based Macs in Apple Retail Stores
– Retail stores very focused on Intel transition
– Apple very excited about what’s in the iPod pipeline going forward
– iPod sales less than previous quarter due to seasonality (holiday quarter vs. post-holiday quarter)
– Apple very pleased with iPod sales in Q2
– Component pricing on LCD, flash memory and software sales of iLife and iWork helped increase gross margin for the quarter.
– Apple outlook for Q3 06: $4.2-4.4 billion.
– Apple spent about $120 million for new data center and start of second Apple Campus in Cupertino, CA
– Gross margin was 28.9-percent for quarter
– Apple plans to open about 40 new stores in fiscal 2006
– 10,000 visitors per Apple Retail Store per week
– NPD shows Apple’s share of U.S. MP3 player market up from 71% in December to 78% in March
– Over 70 TV Shows now available via iTunes Store.
– $485 million music revenue – strong iTunes Music Store sales, iPod Hi-Fi sales, and iPod accessories sales
– Intel pause was observed during the quarter due to Mac Book Pro ramp up, customers waiting for announcements, Universal app availability
– Apple on track to have entire Mac line transitioned to Intel by end of calendar year
– Q2 06 was a 13 week quarter vs. a 14-week quarter for Q1 06
– Apple said that it sold 1.11 million Mac computers, almost 4% higher over the 1.07 million units it shipped a year ago
– Apple reported total iPod sales of 8.5 million units, up from 5.3 million in last year’s second quarter; the company now gets 39% of its revenue from iPod
– Revenue climbed almost 35% to $4.36 billion, up from $3.24 billion
– Apple earned $410 million, or 47 cents a share for the quarter ended April 1, up from $290 million or 34 cents a share a year earlier
– Waiting for start of conference call
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