“The Apple iPhone 3G is a dramatic example of this transformation. In the days following our exclusive U.S. launch of this new device, powered by the nation’s fastest 3G wireless network, customer response has been everything we had anticipated and more. This strengthens our wireless business, and it reinforces our positive view of the opportunities ahead for AT&T and the industry.” Stepheson stated.

12 days have passed since the iPhone 3G began selling. The phones have been in limited supply do to amazing damand. Apple announced that on August 22nd, the iPhone 3G will be launching in 20 additional contries.

WHAT? Is he really implying that the company hasn’t been trying to compete with Apple the last 5-10 years? It may seem funny to but take a look at the Zune, a complete rip off of the iPod. Or take a look at Vista, a windows attempt to steal features from Mac OS X. And now, Microsoft is announcing they plan to rip-off the iPhone by producing their own mobile phone with an “end-to-end experience.”

Microsoft might have the current corporate market cornered… with Windows and Office. But the thing they are forgetting is the current generation in school: be it elementary, high school, college or grad school. These students will become the new wave of employees that know and love Apple. It won’t take more than 5-10 years for Mac OS to become a mainstay in the corporate center as these grads bring new ideas to the workforce.

Microsoft, may not fell like they are behind… but they are quickly about to realize that they lost the game before they began playing!

Below are a few specific comments by Ballmer:

Apple: In the competition between PCs and Macs, we outsell Apple 30-to-1. But there is no doubt that Apple is thriving. Why? Because they are good at providing an experience that is narrow but complete, while our commitment to choice often comes with some compromises to the end-to-end experience. Today, we’re changing the way we work with hardware vendors to ensure that we can provide complete experiences with absolutely no compromises. We’ll do the same with phones—providing choice as we work to create great end-to-end experiences.

Remember, Apple (AAPL) is a $130Bn for a company making $5Bn a year, growing at better than 30% even in a poor economy. They have 2 of the hottest consumer products (iPhone/iPod & Mac Computer) in America and is rolling out new retail stores on a weekly basis… While this might look bad today, keep a long term focus and make smart adjustments.

AppleOption member-only discussion of all three portfolios and post-earnings adjustments.

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Earnings

- Revenue of $7.46 billion (last year $5.41 billion)
- Net quarterly profit of $1.07 billion or $1.19 per diluted share (last year $818 million or $0.92 per share)
- Shipped 2,496,000 Macintosh computers
- Shipped 11,011,000 iPods
- Shipped 717,000 IPhones (and that was with people waiting for the 3G)
- Apple did not recognize ANY iPhone revenue sold after March 6th till July 11th
- Steve Jobs “We’re proud to report the best June quarter for both revenue and earnings in Apple’s history. We set a new record for Mac sales, we think we have a real winner with our new iPhone 3G, and we’re busy finishing several more wonderful new products to launch in the coming months.”
- Mac sales numbers represent 41% unit growth over last year’s quarter
- iPod sales represent 12% unit growth over last year’s numbers
- Q4 2008 expectations: revenue of $7.8 billion and earnings per diluted share of about $1.00.
- AAPL did not recognize ANY IPhone revenue sold after March 6th until 2.0 software came out on 7/11 so they sandbagged Apr, May and June’s IPhone sales!

Conference Call Highlights

- Very pleased to report highest June quarter earnings and revenue.
- 38% growth in revenue over previous year-ago quarter
- Highest quarterly Mac shipments ever
- Continues to see healthy growth in all regions, sales in retail stores very strong
- Mac: 2.5 million Macs shipped. Most in any quarter in Apple’s history.
- Apple’s share of total personal computers up to 19.5% in June
- Best Mac quarter ever in U.S. education
- Sold 11 million iPods. Up 12% from year ago.
- Great start with iPhone 3G. 22 Countries. 1 millionth iPhone 3G just 3 days after its launch.
- Customer reaction to iPhone 3G overwhelmingly positive.
- App Store: offers more than 900 applications, with 20% free. 90% less than $10.
- Customers loving the App Store. Over 25 million Apps downloaded so far.
- Retail Stores. 476,000 Macs sold. 1/2 were sold to customers new to Mac.
- 216 Stores Worldwide by end of Quarter. Extending international stores. Switzerland and Germany coming.
- Looking forward to 4th Quarter: Great start with iPhone 3G. Expect to sell more iPhones in Q4 than any previous quarter. Due to subscription recording, much of the revenue will be deferred to future quarters. “Future product transition“. Can’t discuss today.
- More great new products later this year.
- Apple reiterates they will be delivering state of the art new products at prices their competitors can’t match. Very excited about what they have in their new product pipeline.