Karl
You are absolutely right.

Just like always when hardware outruns the software, people are looking for the killer app to force an upgrade cycle. The iPhone did it with marketing and ease of use. The cycle before that was driven by texting and the need for more efficient alpha interface. Notice how neither of these is a bandwidth-intensive application?

I keep hearing "pundits" talking about HQ wireless video as the next big thing. But of course many of the networks are already straining their data capacity and the carriers are charging accordingly. Anbody counting on apps that consume multiples of current bandwidth is whistling past the graveyard.

As for the unit numbers:
I smell channel stuffing. And the weak outlook for next Q matches that.

Apple sees 3Q EPS $8.68 vs est.
$9.96
• AAPL sees 3Q rev. $34b vs est. $37.49b
• Apple 2Q EPS $12.30 vs est. $10.02
• 2Q rev. $39.19b vs est. $36.87b
• AAPL shrs up 4.3%
Interesting, lowering 3rd quarter guidance...

Music, you may be right. I gotta go through the report.

If it's front-loaded then this ramp is a delicious price-improve opportunity.

Doesn't Apple *ALWAYS* guide down?

Yes. What I don't buy is the iPhone number.

I think the guidance makes any pop a great short. But you might have to hold into some serious pain.

Very very tricky situation but their Q3 is usually stellar with back to school and what not. They will beat their estimate of course but the trend is still toppy to me and AAPL is priced for endless growth.

ZH says rev beat was due to strong iPhone sales in China. Might have room to run a tiny bit if that is the case. Might not. Very tricky!

Note that their y/o/y revenue in their 'asia pacific' segment was up 114% , and up 32% q/o/q.

I'd love to have their internal iphone/ipod/ipad numbers broken out by region, but sadly they only provide their mac units by region.

Deja vu all over again.

So the process should flow like this:

1) Carrier buys a boat load of devices from apple. Apple shows an immediate gain to revenue and the carrier shows a hit to margin as they have yet to recover the outlay for the device in the monthly contract revenue.

2) An equilibrium is reached where the number of new devices needed for new subscriber’s levels off, apple sales soften, and carrier margins improve.

3) Then you go through an upgrade cycle and if folks stay on the IOS devices and the price stays the same, the process repeats.

It seems with ATT you're in stage 2 now but let's not forget they had a year run on anyone else on this device. Also, the ipad is clouding the numbers as are new markets going through this same ramp. My guess is we're about 2 more qtr's away from apple showing a deceleration in revenue growth and that's when the **** would hit the fan.

You pull a rim or nokia and miss the upgrade cycle, you’re destroyed.

My feeling is TF is 6-12 months early …as usual.

If it is China though the question is can they sustain growth there? I have no idea. I don't buy the endless booming middle class theory over there one bit and cycles tend to burn out super quickly.

OTOH- They have hundreds of millions of potential iCustomers over there so...

BTW - Margins were pretty rich right?

Oh and I think the iphone 5 upgrade cycle which should come around the second half of this year and into x-mas will be massive based on my prior comments. So maybe I'll revise and say it's all the way out until late 2013 before they have revenue growth rate issues.

Hmm.. Something doesn't make sense here. How could Verizon be reporting that activation number yet sale up? Foreign sales maybe?

Exactly. The US is a mature iPhone market. The rest of the world not so much. Rim road this for 2 ****ing years covering up declining US sales. I called this one dead on...growth from new carriers more than covered a weak US. We have a few more qtrs of this IMHO.

>My feeling is TF is 6-12 months early …as usual.

My feeling too; there is a big fall coming, but it will be from even greater heights.

Anecdote: we've all heard about the Chinese guy who allegedly sold a kidney to get an iPhone and iPad. I have a niece, 24 years old but looks about 14, pretty technical by our standards, who just arrived in the US after a 12 year family immigration process. The very first thing she did was get her hands on an iPhone, by rather extreme means. She didn't sell or rent any body parts, but damn near. The single-mindedness with which she pursued that phone was impressive (also insane, but hey). And she already had an iPad and lots of other non-Apple toys. If there are unknowable millions of girls just like her in China...well, this could go on a while.

Only 13% of their revenue is coming from Macs? Time to start licensing the OS to third-party clone manufacturers again.

And what do Apple's sales look like when the iPhone 5 arrives, or when the Apple Television arrives?

Perhaps they'd do well to maybe lock up Nintendo in with that Apple TV. Nintendo is in a world of hurt unless they release a new platform this year, and even that may not save them if the ability of America to buy it dissolves. But put the Nintendo product catalog in Apples hands (much as Sega did to Nintendo/Sony when they got out of hardware)...

Apple tv is about content distribution and hardware. They plan on replicating the iTunes/iPod and app store/iPhone-iPad model with video distribution so apple will own app, music, and video content, licensing, distribution and the hardware on the endpoints. Once the big cable and media outlets understand this they will stop this in the courts and force the breakup of apple before they get that far.

Hahaha, that's a good one, 86. The same companies that have been locking up content and distribution for the past 30 years? Big breakups only happen on college campuses nowadays.

Where did the other 27 million iPhones come from? Outside of the US. Why is that so hard to believe?
Based on the results from companies like HTC (profits -70%) it would appear that Apple is eating others' lunches.

So, yeah, saturation is coming. When it's coming is anyones' guess.

Rumor has it that Jobs built his own holographic tech company and he comes back at AAPL 1000 for the next line of products. They say Siri is supposed to make an appearance sometime in the near future.

If you bought calls today raise your hand.

For Those About to Rock We Salute You

http://www.youtube.com/watch?v=fKhTk0Iyn....

'If you bought calls today raise your hand.

For Those About to Rock We Salute You'

"Big Balls" just as fitting.

Tchoup
Apple has historically been coservative in their guidance. But during their current run over the last 2-3 years, they have never guided to a sequentially down quarter. This tells you they feel confident they can beat their new guidance but unless they beat it massively the growth rate is slowing.

That should be no surprise. The law of large numbers is not on their side at this point.