MacRumors

Apple today announced financial results for the first calendar quarter and second fiscal quarter of 2010. For the quarter, Apple posted revenue of $13.50 billion and net quarterly profit of $3.07 billion, or $3.33 per diluted share, compared to revenue of $9.08 billion and net quarterly profit of $1.62 billion, or $1.79 per diluted share, in the year-ago quarter. Gross margin was 41.7 percent, compared to 39.9 percent in the year-ago quarter, and international sales accounted for 58 percent of the quarter's revenue. The numbers represent the best non-holiday quarterly revenue and earnings in Apple history.

Apple shipped 2.94 million Macintosh computers during the quarter, a unit increase of 33 percent over the year-ago quarter. Quarterly iPhone unit sales reached 8.75 million, up 131 percent from the year-ago quarter, and the company also sold 10.89 million iPods during the quarter, representing 1 percent unit decline over the year-ago quarter.

"We're thrilled to report our best non-holiday quarter ever, with revenues up 49 percent and profits up 90 percent," said Steve Jobs, Apple's CEO. "We've launched our revolutionary new iPad and users are loving it, and we have several more extraordinary products in the pipeline for this year."

Apple's guidance for the third quarter of fiscal 2010 includes expected revenue of $13.0 billion to $13.4 billion and earnings per diluted share of $2.28 to $2.39.

Apple will provide live streaming of its Q2 2010 financial results conference call at 2:00 PM Pacific, and MacRumors will update this story with coverage of the conference call highlights.

Update: Apple's stock, trading of which was temporarily halted for the earnings release, immediately leapt by over $19.00 (~8%) per share upon the resumption of trading, and is currently up approximately $17.00 (7%).

Conference Call Highlights:
- CFO Peter Oppenheimer giving overview of quarterly results, notes that PC industry grew 24% year-over-year, while Mac grew 33%.
- Breaking out iPod results, iPod touch grew 63% year-over-year, with iPod revenue up 12%. Apple maintains over 70% share of MP3 player market.
- iTunes Store brought in $1.1 billion, with over 4 billion App Store downloads so far.
- Thrilled with iPhone sales, 8.75 million is most ever. Growing at three times the overall market rate.
- Very happy with iPad sales so far. 3G on track for April 30th in U.S. Nine more countries coming in late May.
- Retail store sales up 22%, and 50% of retail store Mac purchasers continue to be new to Mac.
- Apple on track to open 40-50 new stores this fiscal year.

Q&A
Q: What insights have you gained in the U.S. market in terms of iPad cannibalization of Mac sales.
A: In our view, for last quarter, there was no obvious impact on the iPod or Mac sales from the iPad. We're thrilled with the sales of the iPad. An overall great start.

Q: iPad 3G vs Wi-Fi breakdown?
A: Too early to tell, since they haven't both been available.

Q: Why were the iPhone sales so good?
A: We had staggering growth rates in some areas. Asia, Japan, Europe growth rates were enormous. Some of this was adding additional carriers in some key countries. Also some other carries in key countries in Asia. But also had strong performance with existing carriers.

Q: Production problems with iPad?
A: No production issues. Demand simply much larger in U.S. than expected. We're adding capability, and we'll see where this thing goes.

Q: Thoughts on potential for iAd profitability?
A: Don't expect much from us this calendar year. We're building a foundation for the future.

Q: Thoughts about iPhone distribution?
A: Three main markets where still exclusive: U.S., Germany, Spain. We've moved a number of markets to non-exclusive and seen unit sales and market share improve. Can't say that will work everywhere though.

Q: iPad's effect on gross margin?
A: We priced it very aggressively at first to appeal to what is expected to be a huge market. Costs will come down over time.

Q: Plans for retail stores in China?
A: Very excited about China. Planning 25 stores there by end of 2011, starting with two in Shanghai this summer.

Q: Legal costs seem to be escalating with patent disputes. Any effect on bottom line?
A: We've taken it into account.

Q: Any plans for Apple TV?
A: Units were up 34%, but absolute number of units still small. Still a hobby. Comparing the Apple TV's small market to that of Mac, iPhone, iPod.

Q: Does the iPad compete with netbooks?
A: It's a no-brainer that someone would opt for the iPad over the netbook. The netbook doesn't do anything well.

Q: Any planned drop in iPhone service plan prices?
A: Apple always works to get the best deal for consumers, but price isn't everything. When we dropped iPhone 3G to $99, we still saw demand skewing toward iPhone 3GS starting at $199.

Q: How about accessories and their effect on gross margin?
A: Our portfolio of accessories is good and more coming for iPad. Devs are rallying around them, and more good stuff will probably be coming.

Q: Retail growth driven by new store openings?
A: Revenue per store up 8%. Same-store Mac sales up 20%. We think iPad is great opportunity for retail store sales.

Q: How will iPad be reflected in financial reports?
A: Will be a separate line item like the iPhone.

Q: How many iPad customers are new to Apple?
A: It's still early, and we don't really trust the data yet.

Q: Education sales outlook?
A: We're holding up in market share and ready to compete, but budgets are difficult right now.

-End of call

Apple announced that the 3G version of the iPad will be delivered to pre-order customers in the U.S. on Friday, April 30th and in retail stores starting at 5 p.m. the same day. The Wi-Fi version of the iPad became available on April 3rd, while the 3G version has lagged behind.

Meanwhile, Apple has begun shipping the iPad Camera Connection Kit to customers. The kit allows iPad owners to download digital photos to their iPad using a USB or SD Card interface. There have been reports that the USB interface may also support USB audio, opening the door for 3rd party audio devices to connect.

After all the drama behind the leaked next generation iPhone, it's interesting to note that there still appears to be at least one more next-generation iPhone still in the wild. When the story first broke over the weekend, there was another set of images that depicted a very similarly designed phone:

These images were posted by a Chinese user's twitter account back in February. The design of this phone and the leaked prototype iPhone are practically identical -- but not entirely so. A close look at the bottom of the phones show some clear differences:

The left image reflects the original Twitter leak while the right shows the Gizmodo leak. The first image has no visible screws on the bottom of the device. The original images also don't seem to have the Apple logo on the back of the device, or even the iPhone name printed on it. We're not sure the significance of this, or who might have possession of this other device, but it seems more of these unreleased iPhones are out there in unauthorized hands.

If there were any remaining doubters about the authenticity of the prototype iPhone that was leaked earlier today, Gizmodo has posted a letter from Apple demanding the device back. The letter may seem like an odd admission by Apple, but apparently was required by Gizmodo to return the device.

Apple reportedly called Gizmodo earlier today after the images of the unreleased device were posted to the internet. The prototype iPhone was reportedly left at a bar by an Apple employee. The letter reads:

It has come to our attention that GIZMODO is currently in possession of a device that belongs to Apple. This letter constitutes a formal request that you return the device to Apple. Please let us know where to pick up the unit.

The letter is signed by Apple's Senior Vice President & General Counsel Bruce Sewell.

Gizmodo, of course, will be returning the phone.

Gizmodo describes the circumstances surrounding how the next generation iPhone was lost and even names the Apple employee that lost the device. Gray Powell an Apple Software Engineer is said to have left the pre-release iPhone at Gourmet Haus Staudt, a bar in Redwood City on March 18th.

Gizmodo's source was said to be sitting next to Powell and picked up the prototype iPhone after it was left on his bar stool.

The person who ended up with the iPhone asked around, but nobody claimed it. He thought about that young guy sitting next to him, so he and his friend stayed there for some time, waiting. Powell never came back.

The lost iPhone reportedly booted up and "seemed like a normal iPhone". It wasn't until the following morning that it had been remote wiped by Apple.

The Associated Press reveals that Gawker (Gizmodo's parent company) paid $5000 to obtain the device.

Apple today launched a new replacement program for users experiencing problems with the headphones that shipped with Apple's third-generation iPod shuffle that launched in March 2009 and was updated last September.

Apple has determined that the Apple Headphones with Remote included with the iPod shuffle (3rd gen) may fail under certain conditions. A very small percentage of iPod shuffle owners have experienced this issue. These headphones were included with the iPod shuffle (3rd generation) made between approximately February 2009 and February 2010.

Users experiencing non-responsive or intermittently-responsive controls on the integrated remote or unexpected volume changes or voice feedback should check to see whether their iPod shuffles fall into the range of affected serial numbers.

Serial number ranges of the iPod shuffle with the covered headphones:
xx909xxxxxx to xx952xxxxxx
xx001xxxxxx to xx004xxxxxx

Apple's accessory headphone systems, Apple In-Ear Headphones with Remote and Mic and Apple Earphones with Remote and Mic, experiencing similar symptoms are also covered by the replacement program.

Affected users in the U.S. should use Apple's online support system to request replacement headphones. Along with the replacement headphones, Apple will provide a pre-paid return envelope to provide for the return of the defective headphones. Users may also visit an Apple Retail Store (or Apple Authorized Service Provider outside the U.S.) for replacement.

The big news this past weekend was the leak of several photos of what appeared to be the next-generation iPhone. The early photos were a bit blurry and elicited a range of responses -- many negative. Opinions seemed to turn somewhat when high-quality images of the next-generation iPhone were revealed by Gizmodo this morning.

If you haven't seen the device in detail yet, check out this nice hands-on video from Gizmodo showing it at all angles.

The unreleased device seems to carry a number of features that have been requested by users in the past, including a front-facing camera, camera flash and higher-resolution screen. But the design of the phone itself seems to be producing the most vocal reactions, so we thought we'd conduct a poll to see where the sentiment falls:

The next-generation iPhone is expected to be released sometime this summer/fall. Apple has yet to announce the dates for its Worldwide Developers Conference where it has traditionally been announcing its iPhone hardware updates. Other rumors have suggested the iPhone may also be expanding to other carriers such as Verizon.

Over the weekend, the Apple web was abuzz after Engadget offered images of what appeared to be a possible next-generation iPhone that had reportedly been lost in a bar in the general vicinity of Apple's headquarters. Further evidence of their authenticity then surfaced when it was noticed that a similar device appeared in a legitimate leaked iPad photo just before its January introduction.

And today, Gizmodo drops the biggest bombshell: They got their hands on the device and have examined it and torn it apart for all to see.

What's new
- Front-facing video chat camera
- Improved regular back-camera (the lens is quite noticeably larger than the iPhone 3GS)
- Camera flash
- Micro-SIM instead of standard SIM (like the iPad)
- Improved display. It's unclear if it's the 960x460 display thrown around before -- it certainly looks like it, with the "Connect to iTunes" screen displaying much higher resolution than on a 3GS.
- What looks to be a secondary mic for noise cancellation, at the top, next to the headphone jack
- Split buttons for volume
- Power, mute, and volume buttons are all metallic

Other changes observed in the device compared to the current iPhone include a glass or shiny plastic back, 16% larger battery, and a slightly smaller but apparently higher resolution screen.

Unfortunately, Gizmodo was not able to see the phone in action, as it appears to have been remotely disabled by Apple. The report does, however, lay out a through description of the device and a number of arguments as to why this almost certainly is a legitimate next-generation iPhone. While certain aspects may be tweaked prior to launch, the overall feature set of the next-generation iPhone certainly appears to be included in this device.

With the launch of new MacBook Pros last week, some observers immediately questioned Apple's decision to continue using Intel Core 2 Duo processors in its 13-inch models while bumping up to Core i5 and i7 chips in the larger form factors. At the time, Apple CEO Steve Jobs noted that the company had opted for "killer graphics" and the extended battery life versus what would have been a very small bump in CPU speed. Ars Technica now provides a thorough look at the factors that played into Apple's decision, showing how space constraints and other issues made the Core 2 Duo processors the only real option.

Much of the issue stems from a licensing dispute that has prevented NVIDIA from offering its integrated graphics packages alongside Intel's new family of Arrandale processors that includes the Core i5 and i7 chips used in the larger MacBook Pros, as well as the Core i3 chips that are a step below those adopted by Apple. The dispute left Apple with only two options if it wanted to use Arrandale processors in the 13-inch model, using Intel's "HD" integrated graphics or offering a separate discrete graphics chip from the likes of NVIDIA.

With Intel HD Graphics proving inferior for more demanding tasks to even the NVIDIA GeForce 9400M used in the previous-generation MacBook Pro, the former was not an option. And the latter meant that Apple would need to find room in an already-cramped 13-inch MacBook Pro body for a discrete graphics chip, a feat that was simply not possible, especially given the effect it would have had on battery life both from increased power consumption and from having to reduce the size of the battery to fit the expanded logic board.

Graphics performance would have taken a significant step backwards if Apple opted to rely solely on the Intel HD IGP that comes with Core i3 or i5, so Apple would have also had to include a discrete GPU like that used on the 15" and 17" models. Besides the added cost, there's simply no room on the 13" MacBook Pro logic board to include an additional discrete GPU.

Together, those factors mean that Core i5 and i7, and even the Core i3, were not feasible options for Apple in the 13-inch MacBook Pro, leaving Core 2 Duo as the fallback processor option where Apple could use NVIDIA's graphics technology. While Apple was able to use a slightly bumped CPU speed for the new models, it recognized that it needed to do more on the graphics front to improve performance, and so it engaged NVIDIA to create the GeForce 320M, a beefed-up, custom version of the company's GeForce 310M. The 320M offers tremendously superior performance over the Intel HD Graphics that would have been implemented with Arrandale processors in the 13-inch model had Apple gone that route, as well as offering more efficient power usage.

Clearly, Apple wasn't actively trying to cripple the 13" MacBook Pro by leaving it "stuck" with yesterday's Core 2 Duo technology. Instead, an Apple spokesperson told Ars that the company wanted to maintain the 13" MacBook Pro's unique combination of performance, portability, and extended battery life, as well as its $1,200 starting price. The combination of a faster Core 2 Duo processor and the NVIDIA 320M allowed Apple to do that.

The Intel-NVIDIA dispute that in large part forced Apple's hand with regard to the 13-inch MacBook Pro component choices has been cited as one of the major factors for Apple's rumored consideration of AMD processors over Intel's offerings for future Macs.

Apple has updated their online store to reveal that the 3G version of the iPad will begin shipping by May 7th. Apple launched the Wi-Fi version of the iPad on April 3th in the U.S. The company has reported that they have sold over 500,000 iPads since that time and have subsequently delayed the international iPad launch until the end of May.

The May 7th date appears to be for new iPad 3G orders as those who have pre-ordered the 3G model were promised delivery by late April. Several readers who pre-ordered the 3G iPads note that their order statuses still indicate a "late April" delivery.

Update: Apple has also sent out emails to those who pre-ordered 3G models, reassuring them that their orders will ship in late April.

Thank you for your recent order of the magical and revolutionary iPad 3G.

We would like to confirm that your order will be shipped in late April as communicated at the time you placed your order. You will receive a confirmation notice when your order has shipped.

You can get up-to-date information about your order, including shipping status and tracking number, at http://www.apple.com/orderstatus

Seems more people are becoming convinced that the iPhone 4G images leaked by Engadget over the weekend are indeed legitimate. In fact, the report that the pictured product is actually a Japanese counterfeit has been retracted and was itself a false claim.

Daring Fireball's John Gruber now believes the images are real and that the next generation iPhone looks like the images depicted. Gruber also adds a detail that he has heard that the new iPhones will have a "fancy glass" back.

Multiple sources familiar with the next iPhone have confirmed to me that the back is made out of some sort of fancy glass -- and looks pretty much exactly what's pictured at Engadget. That's not the only reason I believe Engadget's unit is legit, but it's one.

He points to a 2006 Apple patent application which describes the use of Zirconia as a durable and radio-transparent material that might be used.

A portable computing device capable of wireless communications, the portable computing device comprising: an enclosure that surrounds and protects the internal operational components of the portable computing device, the enclosure including a structural wall formed from a ceramic material that permits wireless communications through.

Now, if you do believe that these images do represent the next generation iPhone, one interesting detail noted by an Engadget commenter is that it appears to allow for a user removable battery.

This annotated image shows break points in the casing that suggests the side compartment might be removable to allow the user to replace the battery. The iPhone, of course, has never allowed for a user removable battery in the past.

Engadget keeps the dream alive with evidence that the iPhone 4G photos they posted are indeed authentic. They point to this legitimately leaked iPad image which apparently included a shot of the new device in the top right corner (see arrows above). Besides this photo evidence, they claim that they have a source which does claim that this is the next generation iPhone with higher resolution screen, front-facing camera, higher resolution camera with flash and takes MicroSIM cards.

If you accept this as true, then it casts doubt on Applesfera's claims and photos that this same iPhone was identified as a Japanese counterfeit. (Update: Applesfera's claims have been retracted, so the pictured phone is not a known counterfeit device.)

More photos of the internals of the device have been posted to our forums. The original images came from Chinese forum Weiphone.

Engadget posts a couple of images purportedly of a prototype iPhone 4G. The backstory is quite sketchy, though the site does believe it may actually get some hands on time with the device.

Apparently the phone was found on the floor of a San Jose bar inside of an iPhone 3G case. Right now we don't have a ton of info on the device in question, but we can tell you that it apparently has a front facing camera (!), 80GB of storage (weird, right?), and isn't booting at this point (though it was previously, and running an OS that was decidedly new).

Perhaps adding credence to the images, however, are a similar but separate series of images posted to TwitPic last month. The original source of those images appear to have been a Chinese twitter user.

Another image of the back of the device. It is clearly labeled as an iPhone though many of the details are simply X-ed out.

One possibility that several forum members have mentioned is that it could be a Chinese knock-off phone designed to look similar to the iPhone.