Notes of interest from Apple's Q1 2010 conference call

On Monday, Apple revealed the results of its fiscal 2010 first quarter, which ended Dec. 26, 2009. The company posted revenue of $15.68 billion and a net quarterly profit of $3.38 billion, or $3.67 per diluted share. That's an increase from revenue of $11.88 billion and net quarterly profit of $2.26 billion, or $2.50 per diluted share, in the year-ago frame.

Apple's blowout quarter surpassed its previous quarterly record by almost $3.5 billion.

Participating on Monday's call were Apple Chief Financial Officer Peter Oppenheimer and Chief Operating Officer Tim Cook.

Apple's regional business segments

The real standout in Apple's worldwide business breakdown was the fact that international sales accounted for 58 percent of the company's revenue. The largest overseas slice came from Europe, which accounted for $5.024 billion in revenue, partially from sales of 1.068 million Macs.

Mac sales in Italy, France, Switzerland and Spain all grew more than 40 percent. Australia up over 70 percent, China up almost 100 percent.

Apple Americas garnered $6.092 billion in total from the U.S., including sales of 1.187 million Macs. In all, 3.362 million Macs were sold in the quarter.

Asia Pacific accounted for $1.183 billion, including sales of 313,000 Macs. And Japan was $783 million, selling 105,000 computers.

Apple's "Other Music Related Products and Services" segment was responsible for $1.164 billion in revenue. Apple's "Peripherals and Other Hardware" added $469 million in revenue.

The company's "iPhone and related products and services" accounted for $5.578 billion in revenue, based on sales of 8.737 million units. Apple's "Software, Service and Other Sales" segment produced $631 million.

$39.8B in cash at the end of the Dec. quarter, an increase of 5 billion from the previous quarter.

Apple's Mac business

Mac sales were broken down into 2.128 million portables, and 1.234 million desktops. Desktop sales were up 70 percent year-over-year, and saw a 60 percent increase in revenue. They also spiked 57 percent in sales from the previous quarter. Customers are thrilled with the new iMacs, officials said.

Portable sales were also up 18 percent in sales year over year, and 9 percent in revenue. However, the notebook market was down 6 percent in units and 5 percent in revenue from the previous quarter. Mac and MacBook sales were up 16 percent year over year in education. New December records for K-12 and high-ed channels.

Cook said that represented the best growth rate for education since before the recession began.

"Our whole education business is based on we really understand teaching and learning and student achievement at a deep level, we think we're the only company that really gets it, we do more than sell boxes like other companies do," he said. "I think we can continue to do well and was thrilled to see the results from last quarter."

Previous Mac record was set in September quarter, Apple beat it this quarter by almost 300K. Grew more than 30 percent year over year.

"We are extremely proud of this result and believe our Mac hardware and software are providing outstanding software and innovation that our customers really love," Oppenheimer said.

Apple's iPhone and Apple TV businesses

Record 8.7 million iPhones sold Revenue for iPhone handset sales, accessories, and carrier payments was $5.58 billion.

Average Selling Price of about $620 for the iPhone during the quarter. Added 17 new carriers during the quarter. iPhone distribution now in 86 countries.

Business carriers ranked the iPhone No. 1 in JD Power's customer satisfaction survey in the second year in a row. Business adoption is strong.

Over 70 percent of the Fortune 100 deploying iPhone. Penetration doubled since the iPhone 3GS first shipped this last summer. However, Cook declined to comment on whether the "halo" effect applied to iPod use in the consumer markets could lead to Mac adoption in the corporate world.

More than 200,000 iPhones have been sold in China with carrier China Unicom. Cook said Apple is concentrating now on the customer experience and point of sales.

"We would prefer to move slow because we're building the brand for the long term and we're very much focused on the long-term of the market, because we think there is significant potential there," Cook said. He declined to forecast where sales could go.

Cook also defended the company's approval process for the App Store, noting that more than 90 percent of software submitted is approved within 14 days of submission. He said some rejections are to prevent inappropriate content, like pornography.

"Most of the rejections, however, are actually bugs in the code itself," Cook said. "This is protecting the customer and the developer to a great extent, because they don't want customers who are unhappy with the app."

Apple's iPod business

Sold almost 21 million iPods. iPod average selling price increased 9 percent, revenue increased 1 percent. Share remains at almost 70 percent. iPod is the top-selling MP3 player, and gains share internationally. Year to year sales dropped, as expected, and the iPhone continues to cannibalize that market.

iPod touch sales in particular were strong, up 55 percent.

iTunes store had a record breaking quarter with strong sales of music, video and apps. iTunes has 8,000 Hollywood films, 10,000 music videos, and 50,000 TV episodes.

Apple's retail business

Apple's retail locations accounted for 689,000 Mac sales, and produced $1.971 billion in revenue. About half of sales during the December quarter were to customers who never owned a Mac before. About 10 new stores opened during the quarter.

There are 62 stores outside of the U.S., and the company is on track to open between 40 and 50 stores in its 2010 fiscal year, half of which will be international. Ten new stores opened last quarter, including one at the Louvre in Paris, France, and one on New York's Upper West Side.

Apple ended the quarter with 283 stores in 10 countries.

Average revenue per store was $7.1 million, compared to $7 million a year ago.

Stores saw a record 50.9 million visitors in the quarter.

Apple added 280,000 One to One membership subscriptions during the quarter.

Apple's next (Q2 2010) fiscal quarter

Officials provided a range of guidance under the new accounting principals. Apple has forecast revenues between $11 billion and $11.4 billion compared to $9.1 billion in the March quarter last year under old principles.

Expect gross margin to be about 39 percent, and operating expenditures about $1.64 billion, including $190 million related to stock-based compensation. Expect the tax rate to be about 29 percent. EPS of about $2.06 to $2.18, compared to $1.79 in the year ago quarter.

"We are incredibly excited about our new product pipeline," Oppenheimer said.