Apple reported most profitable Q2, Earnings beat Analysts Estimate by 36 percent

Compared with last year's second quarter (Q2 2006), Q2 2007 is up 88 per cent in net profit, up 21 per cent in revenue, up 79 percent in earnings per share and up 18 per cent in gross margin.

This terrific financial performance was driven largely by increased sales of Macs by 36 percent and increased sales of iPods by 24 percent over Q2 2006). The growth rate in Macs sales was three times the industry average resulting in an increase in market share.

Sales of Apple notebooks, the MacBook and MacBook Pro, were 891,000 out of a total Mac sales of 1,517,000. The notebook sales were up 79 percent from Q2 2006.

Desktop (iMac, Mac mini, Mac Pro and Xserve) sales at 626,000 were up slightly by 2 percent from Q2 2006. Apple executives still reported positive acceptance of the new Intel-based Mac Pro but also still expected delayed purchases due to the lack of Intel-based Adobe applications now shipping in Q3 2007.

iPod sales reached 10,549,000, up 24 percent from Q2 2006, but revenues were down by 1 percent due to increased popularity of the less expensive iPod shuffle II.

Sales revenue was up over Q2 2006 in two geographical areas (Americas and Europe) by 15 and 29 percent but down in Japan by 8 percent.

The Apple retail stores are still doing well. Sales revenue increased 34 percent over Q2 2006. New-to-Mac sales continue to be over 50 percent of their sales.

A few other interesting tidbits from Apple's late afternoon analysts' conference call (replay it here) with Apple CFO Peter Openheimer and COO Tim Cook answering questions, include:

• Apple's future earned revenue from the iPhone will include shared revenue from AT&T plus additional Apple accessories.
• Gross margins are expected to still be higher than normal but decline some to 32 percent in the third quarter and then to 27-28 percent thereafter. This is due to parts prices generally trending upward.
• There are no detectable effects of the iPhone on iPod sales so far.
• Still no iPhone order date announced.
• iPhone and Apple TV revenue would also be booked on a subscription basis due to adding features through software updates after purchase at no cost to the purchaser.
• iTunes music sales have an 85 percent market share in the U.S.
• Capital expenditures were $105 million during the quarter.
• Depreciation was $69 million.

The second quarter is traditionally Apple's lowest but Apple expects its third 2007 quarter results to decline slightly from the second quarter to $5.1 billion in revenue and to 66 cents in earnings per share. Here is Apple's press release. [Bill Fox]