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Apple, Inc. (NASDAQ:AAPL) is announcing its earnings for Q1 2007 today at 5:00p.m. Eastern time. I'm going to be right here to go ahead and blog that live for all you bloggingstocks.com readers.

With Apple stock hovering just under hundred dollars a share, it should be interesting to see what effect this current earnings report will have on the stock's price. Analysts, as well as Apple's enthusiasts, seem to be betting that Apple will outperform analyst expectations this quarter. In a previous post about Apple's upcoming earnings, 86% of you voted that Apple would beat earnings. If this happens, will the stock price jump up, or has what ever news that's coming out already been factored in?

4:33: If you'd like to listen along with us, the webcast link is up at Apple here.

4:45: Cheerful muzak on my computer speakers makes the day brighter... or not. I guess it beats silence.

4:57: Close to launch time. You might be wondering how Apple did this year. If so Switch to a Mac has some pretty graphs on unit sales that might interest you as you wait. They bear out the buzz about Apple performaning better than expected. We'll start finding out in a few minutes, however.

5:05: An operator just told us all to standby, but that we were still on hold.

5:05: Nancy, head of financial relations is on introducing Peter Oppenheimer. The summary of results is up already here.

It's another stellar quarter, a record quarter, says Peter Oppenheimer. Strong iPod sales and robust demand for Macs, up year over year. Record net quarterly profit of $1 billion. Revenue of 7.1 billion.

Mac products and services were 33% of total revenue. Apple shipped 1.6 million Macs.


5:10: Music services rocked the house. 22.1 million iPods sold. Share of US market for mp3 players was 73%. iPods everywhere are up. Music sales via iTunes are up. Sold over 2 billion songs, as noted earlier this week. iTunes is 85% of US market of paid downloads. iTunes gift cards sold doubled year over year.

Apple stores sold 6.7 million average revenue per store. 28 million people visited the stores over the quarter. Be a great place to buy an iPhone starting in June.

Favorable commodity pricing gave a good margin.

Apple ended with $11.9 billion in their cash balance, up over a billion added.

5:13: Forward looking statements: expect $4.8 billion revenue for next quarter.
gross margins to be 29.5%

In closing, fiscal year 2007 is off to a great start. Over $7 billion in revenue and $1 billion in profit.

Questions are open now:

UBN asks if Apple is factoring in customer demand going soft for iPods right before the iPhone goes on sale. Peter thinks that with so many iPods around they should be okay. Apple has learned that what drives the mp3 device market are new launches and holiday sales. They will expect a serious slump from this quarter to next in terms of quantity.

Any comments on the stock options investigation? Peter: look, we've proactively provided all details on both our internal and outside investigation, no misconduct of any current execs has been found, the board is fully supportive of the current team.

Citigroup asks about the favorable commodity market: last quarter Apple says it saw good pricing across the board, a good time to buy stuff that they make computers out of. LCD screens and DRAM are going to be good (so mac units will have a continuing nice margin for the company -Tobias)

Merrill Lynch: points out margins are higher than expected, are they going to remain sustainable? Apple was thrilled with 18.6 operating margin, but it's exceptionally high thanks to a gross margin of over 30%. But don't get used to 18% operating margin. For next quarter Apple thinks just over 12%. We're in a favorable cycle, but won't project that to continue.

On the iPhone, doesn't support 3G, can you talk about that? Apple: we're very sold on the Edge network with Cingular because it's more deployed in the US. They won't comment on roadmaps, but they'll check in on the technology over time.

David Beck asks if Macs will get priced more aggresively? Tim Cook notes Apple grew at 3X the market. Portables grew really well, 10% above IDC's expectation. Mac has 8 of the 9 last quarters outdone market growth.

David Back asks about iPod growth. Apple won't release specific iPod gross margins, and iPod was key in achieving that.

Morgan Stanley asks about Mac retail units being down slightly from last quarter. Apple points out that it does the same thing year over year, the sequential decline is seasonal in nature, and 'frankly' Apple is happy to have the same unit numbers, and they actually predicted mac sales to be down from Q4, but were happily surprised by heavy institutional gains.

Morgan Stanley asks about gross margins again. Taking away commodity environment, is the strong leverage a year from now still going to be strong on the long term? Is is sustainable? Over the long term Apple is guiding for a 28% range in gross margins.

Bank of America asks about international sales, Europe, and in the mix between iPod vs Macs and if Apple can provide some light there. Apple: Mac unit growth in Europe was 28%, 3X market. iPod sales were grown faster outside the US, which was an Apple goal. Several countries did well. Some countries are above 50%: Japan, Canada, UK, Australia. Some other countries saw 10-20% gains.

Will the iPhone's gross margin be worse than the corporate average? Apple doesn't plan to ship until June, they won't provide product level margins.

A product mix question from another analyst: Apple won't talk about differences in sales about the units, but all 3 models did really well.

Leapord question. Apple still plans to ship in the 'spring.'

Stock split question! A tight lipped 'nothing to share.'

JP Morgan asks about Best Buy sales and whether customers are waiting to buy Macs when Leapord OS launches. 7500 store fronts are around the world, Best Buy is increased 50, will evaluate this quarter how that program is doing. Apple doesn't see any computer pauses, just like Tiger had no pauses.

Give a read on same store sales growth? Average store revenue in the quarter was $6.7 million.

Lehman Brothers asks about the number of distribution points for ipods and macs. 40,000 for iPods, and 7500 for Macs.

If retail is up 11%, how can they not conclude that the gross margins are not as good on the iPod compared to the mac units. Apple says no comment on specific gross margins, but iPods helped out a lot.

Bear Stearns gets an answer about sealed batteries: you'll get to know all about the iPhone in that kind of detail right before launch it.

Piper Jaffrey: will iPhone be in full production in June? Still a few months from June, will share more details closer to launch.

Apple TV. Projected units? Apple just started taking orders, plan to ship in February, so just a few shipping weeks, but are in the guidance. Is Apple TV niche like airstream? Apple thinks it's too early to tell. Positioning it as the DVD player of the 21st century, not a niche!

How does Apple think about the 'halo effect.' Apple thinks there is a halo effect, they've grown 3x market, with 30% higher in the US, and the 'intent to buy a mac' surveys are up, from 17-28%. Apple is thrilled with their numbers, they're higher than Apple projected.

Of the 21 million iPods sold, how many went into new iPod owners hands. Apple doesn't know.

New analyst question: iPhone cannibalization thoughts? Apple thinks the line of iPods has such a wide range it meets a lot of different needs. Does Apple think the markets will converge? Apple thinks we'll see and talk more as time goes on.

50% of all macs were sold to new users. Where does that number come from? Apple says retail stores have seen that number, but this has expanded to all the channels in the US.

Prudential asks where the gross margin upside on the iPod came from. Apple says the product mix and favorable commodities market is where that came from.

FTM Midwest: how is the mac pro doing? The total pro market sales met expectations, tempered by fact that some customers are still waiting for Adobe to realize Creative Suite. Hope to see customers start buying again next quarter.

Bootcamp downloads are up to 1.5 million, intention is to include it in Leopard.

Kevin Hunt wants info about the Cisco lawsuit and if it impacts shipping in June. Apple says they think it's silly. There are several other companies using the trademark, Cisco's claim is tenous at best. It's the first cellphone to use the name.

Chris Wittmore wonders if the iPod pricing will get more aggressive. Oppenheimer points out they sold 22 million ipods (taps the desk for emphasis), pricing is not a problem in consumer's minds.

They're expecting higher sales of gift cards, more shuffle goodness, and lower software sales as Leopard gets closer.

What happened in Japan? Tim Cook: the pc market in Japan is the weakest in the world. Apple held a dominant mp3 player share, pc units disappointed them, although they remained in line with any other group duking it out in Japan.

iLife was supposed to be a January refresh timeline, didn't happen? Apple says 'stay tuned.'

Another analyst (missed who it was), asked about the 45,000 ipod retail channels. Apple says more than 50% of them are outside the US.

Needham: Apple won't be releasing virtualization software, will VMWare and Parallels be supported? Peter says they clearly support Parallels.

In response to another analyst Peter points out that retail stores have 6600 employees, opened 5 last quarter, expect to open 7 stores next quarter, 35-40 over the next year.

And it's over. An audio capture of this is available here for anyone to listen to after the fact at their investor area.