On July 20th Apple reported its results for the three-month period ended June 26, 2010. During the fiscal quarter the company had revenue of $15.7 billion and earnings of $3.25 billion or  $3.51 per diluted share. Apple’s revenue for the quarter set a new company record and earnings were only $.16 per share below the record set in the three-month period ended in December.

Apple’s record revenue was due in part to the release of the Apple iPad which contributed materially to the quarter’s results. At a revenue contribution of $2.166 billion, the iPad represented just under 14% of Apple’s reported revenue, assisting in Apple’s more than 61% growth in revenue year-over-year. Earnings per share for the quarter grew almost 75%.

While these numbers sound impressive, there’s a different and easier way to look at Apple’s results. This weekend on my personal blog, Posts At Eventide, I’ve posted an entry called Understanding Apple’s Success Made Easy.

In seeking to understand Apple’s success only simple math need be applied. In the June quarter Apple retained roughly 40% of each revenue dollar after covering the costs of products and services sold. Of that amount roughly 50% or 20% of each revenue dollar flows to the company’s bottom line. As Apple’s revenue grows due to strong sales of products and services across multiple product lines, earnings will rise at least proportionally with revenue growth.

Looking ahead to the results for the fourth fiscal quarter that ends in September, Apple will mostly likely report revenue at or above $20 billion and earnings per share of at least $4.30. Due to the popularity of the Apple iPad and anticipated strong demand for the iPhone 4, the June quarter results foreshadow another record breaking quarter for revenue and earnings results at a level not seen before.

In the June quarter Apple drew down the global channel inventory of iPhones. In order to meet global demand for the new iPhone and resupply the global channel with product, Apple will sell virtually all iPhones made during the September-ending fiscal period. In other words, revenue growth for the current fiscal quarter may surpass the nearly 75% revenue growth experienced in the three-month period ended in June.

I reiterate my forecast Apple’s share price (Ticker Symbol: AAPL) will move above $400 per share by early May 2011 and should surpass $300 per share within the next several weeks.

Robert Paul Leitao

Standing in line for my iPhone 4 as the black curtains fell and the front of the store was revealed Apple’s slogan for the iPhone 4, “This Changes Everything. Again” was displayed prominently.

I could not help but think of the email exchange between Gawker writer Ryan Tate and Steve Jobs in which the two sparred over a number of things but it all began over the iPad being deemed as “Revolutionary”. I could not help but wonder if their might be another email exchange about if the iPhone 4 really changed everything, Again.

After using the iPhone 4 for the past few days I have been attempting to determine if the iPhone 4 lives up to its slogan or if I should be ready to pen an angry email to sjobs@apple.com in Ryan Tate fashion.

Design & Hardware

If Jonny Ive’s pontificating doesn’t convince you that the iPhone 4’s design is revolutionary there are a few other factors that will. The iPhone 4 doesn’t have the same feel that the 3G or the 3Gs had with its contoured back that fit neatly into your hand. It does feel like you are holding a piece of technology. The slim design fits nicely into your pocket and the buttons are extremely more responsive. The design takes after the rest Apple’s product line with a unibody style design. This streamlined look with the two glass faces makes the iPhone a truly beautiful device that all other smartphone’s will surly attempt to mimic.

Turning your attention to the hardware the Retina Display really does live up to its hype. If you own an iPhone 4 just point your browser to theNYTIMES.COM and zoom in on The New York TImes. It is truly the best looking typeface I have ever seen on a mobile device. As for the camera the 5 megapixel and 720p Video rise above the quality on the spec sheet. Apple has proven with this design that the marrying of multiple device (digital pocket camera, flip cam, iPod, and cellphone) is truly possible and are not simply random specs to be added as extra selling points.

Software

iOS 4 is now an OS that has matured to both provide users and developers with an array of API’s that lead to great Apps. It has come under scrutiny for not being open. The “multi-tasking” has been attacked for not being true multi-tasking. Withstanding all of that though it still delvers a great experience for consumers which is the goal of the device. Jobs has answered the attack on “multi-tasking” seen in a a MacDaily News article, “”People shouldn’t have to understand multitasking. Just use is [sic] as designed, and you’ll be happy. No need to ever quit apps.” That is the philosophy that makes iOS so easy to use, you don’t need to understand how it works, just use the device.That is what allows for iOS to change everything it is designed with the consumers’ best interests you just have to drink a bit of the Apple Koo- Aid to realize it.

Culture Impact

The reason the first iPhone changed everything was because it was the first smart phone for consumers that was designed for a consumer not a business man. It was a cell phone that was easy to understand and had some cool features. As iOS evolved so did the iPhone. However, iPhone 4 is the first time that the OS and the hardware have evolved to create something new.

Design, hardware and software are only part of the equation in changing everything. The question becomes is the iPhone 4 with FaceTime, 5 megapixel camera, video in 720p, a retina display and iOS 4 really change everything? My answer is yes it does.  It is not because it can video call or it has a high quality display. It is all of things combined. The iPhone 4 will change everything because it has the ability to once again change not only how we communicate but how we interact with our mobile device. It is no longer a mobile-phone it has become the first device to truly transcend the concept of phone and that is why it changes everything, Again.

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Every now and then a feature which comes along that causes the question of “How Did I Live Without That Before?” to be asked. iOS4 is sure to bring about a few of those questions such as digital zoom, multi-tasking, and folders.

Pandora playing in the background, navigation giving directions while checking email, switching between my favorite apps with in seconds without using the home screen are all amazing additions to the iPhone. However, I am still enamored with the addition of folders for apps. A feature that every iOS 4 ready device is receiving.

Luckily, it is not the fact that I can now access 2,160 from my home screen.  The fact that has me singing Apple’s praises is I can access all of my Apps I need on a daily basis from one page on the home screen. No more swiping back and forth between multiple pages. Using the iPhone’s search to find Shazam buried on home screen page 8. Apple has truly elevated efficiency and productivity with this one feature.

I will be the first to admit that maybe having four folders on my iPhones dock is a bit much as it has added an additional selection to emailing, texting, phone calls, and iPod. But to the same point with the multitasking dock they really haven’t lost that quick access they had before when residing on my dock.

This latest iOS proves Apple’s belief that they might not be the first but the will be the best mantra leads to the creation of a great  and easy to use user-interface. This does require a slight drinking of the Apple koolade however one can’t argue with the ease of the new features iOS4 boasts.

I am sure that the iPhone 4 will bring about many more “How Did I Live With Out This?” Questions but until Thursday morning I can only comment the amazing features iOS4 has provided iPhone users with.

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I have sadly neglected my beloved blog since the 31st of May. This has been an unacceptable hiatus that shall not happen again. The Other Mac Blog wishes to strive to be a top-notch blog in which their can be original discussions on Apple Inc. in the technical, educational, and financial realms. I apologies to those who have followed the blog and been let down by the lack of updates over the past month.

On Friday Apple (Ticker Symbol: AAPL) ended trading at $253.51 per share, giving the company a market value of bit over $230 billion. Earlier this week Apple debuted its 4th generation iPhone and announced the release of the latest update to its handheld digital device operating system now called iOS4.

But for Apple enthusiasts who take an interest in the company’s share price, the sales performance of the Apple iPad remains the news of the day. Apple’s tablet-sized digital device will sell over 3 million units in the June quarter, assisting the company in delivering record earnings for any fiscal quarter in the company’s history. At the company’s current pace of revenue and earnings growth the share price could double from Friday’s closing price within the next three years.

Apple’s impressive rates  of revenue and earnings growth is fueled by mobile products and in particular the iPhone and now the iPad. The global market for handheld digital devices dwarfs the market for traditional personal computers. In evaluating Apple’s growth prospects and in forecasting the future value of the company’s shares, Apple must be viewed as the world’s revenue leader in mobile device sales, not as a personal computer maker that also sells smartphones, digital tablets and music players. Apple’s iOS products including the iPhone, iPad and iPod touch are now the drivers of the company’s revenue and earnings growth. While the Macintosh line of personal computers continues are becoming increasingly popular and both domestic and international market share is on the rise, it’s the frenetic growth in unit sales of Apple’s handheld digital devices that will catapult the share price significantly higher in the months to come.

I maintain a 12-month price range forecast of between $405 and $440 for the shares.

Robert Paul Leitao

Jony Ive, Senior Vice President of Industial Design says in Apple’s iPad video, “There isn’t even a single orientation, there is no up, no down. There is not right or wrong way of holding it.” But what he forgot to say is as long as you don’t have to dock it.

On iPad launch day I purchased an Apple iPad Case, an iPad dock, and an Apple Bluetooth Wireless Keyboard. When I use that keyboard I typically use the Apple case to prop the iPad up in landscape mode and type away.

After the launch Apple began to ship the iPad Keyboard Dock. I was perfectly content with my bluetooth keyboard and in fact believed it was a much better option for users of the iPad due to the freedom it provided. On my last visit to the Apple Store I was picking up an iPad Keyboard Dock for a friend and I decided I would give it a try before bringing it to them. I enjoyed the special function keys at the top of the keyboard. It gives the user access to the home button, search, show/hide keyboard and lock. It also contains controls for brightness and volume that a standard bluetooth keyboard has (Eject key allows you to show/hides the keyboard). I found it a cool accessory for the iPad but I decided I am still happy, it was for a friend and not me. I believe the the flexibility of a bluetooth keyboard for both freedom to place the keyboard where ever and use with different devices out weighs any benefits that the Keyboard Dock has. It is well worth paying an extra $29 for separate iPad Dock.

However, my qualms with the iPad Dock does not end with the Keyboard Dock or Bluetooth Keyboard debate but rests with the fact that I can’t dock landscape.

I very seldom complain about an Apple design however, I believe that this is a flaw with the iPad. So I now find myself blaming Jony Ive for my disappointment with the iPad’s one design flaw. Like he said, “There is not a right or wrong way of holding it.” But when it comes to docking it is a different story and I find myself having to fit the product.

I am constantly annoyed every time I open up Words With Friends HD and have to rotate my iPad 90 degrees, to portrait. When an App makes me reorient the device to portrait I might be annoyed however, when I can’t dock the device and utilize it in the position I want I am very annoyed – especially when I would like to use Apps like Calendar, IM+ or News Rack which show more information in landscape then portrait.

I really hope that the next iPad can truly live up to Jony Ive’s belief that with the iPad, “I don’t have to change myself to fit the product. It fits me.” I’m not saying two dock connectors on the device for portrait and landscape but if that was the solution I would not complain. I just wish that I could use a keyboard and dock in the way that I want. (With all of that said I still love my iPad and would not get rid of it no matter what.)

Earlier today Apple announced the sales of two million iPads since the product’s April release. To put the the magnitude of this sales achievement in perspective, the Apple iPad, at the current pace of sales, will deliver in the June quarter $2 billion or more in revenue and may catapult the company to record revenue and earnings this quarter.

Further, the success of the iPad positions Apple for three consecutive quarters of record revenue and earnings. In addition to the revenue and earnings generated by iPad hardware sales, revenue activity for Apple’s operating segment inclusive of iTunes should experience yet another significant boost. In the March quarter this operating segment experienced a revenue increase of 27% over the prior-year period and represented almost 10% of Apple’s reported revenue of $13.5 billion.

While there’s much discussion the gross margin on iPad sales will be lower than the average for other Apple products (six-quarter average of 40.5%), the significant rise in revenue activity generated by the Apple iPad should reduce the percentage of revenue consumed by research and development and selling, general and administrative expenses. For a detailed look at the anticipated relative decline in these expense ratios, please read this recent entry on my personal blog at Posts At Eventide.

Since the debut of the Other Mac Blog in January, we have been tracking the growth in Apple’s revenue and earnings this fiscal year. The current rates of revenue and earnings growth puts the company on track for $65 billion in revenue this fiscal year, $15 (or more) in earnings per share and raises the prospect of the company reaching one-half trillion dollars in market cap within three years.

Robert Paul Leitao