This summary is based on the second quarter fiscal 2007 earnings call conducted by Apple, Inc. (AAPL: chart) on April 25, 2007.

Key Investors Issues:

- Earnings for the quarter came in at $770 million, or 87 cents a share, compared to earnings of $410 million, or 47 cents a share, for the same period last year.
- Sales for the quarter grew more than 20% to hit $5.26 billion for the period ended March 31.
- The company shipped more than 10.5 million iPods, its popular digital music player.
- More than 1.5 million units of its Macintosh computer line were also shipped during the period.
- Gross margin for the period came in at 35.1% compared to 29.8% in the year-ago period.

The second quarter was the best March quarter in Apple’s history.

- The quarter’s revenue was $5.26 billion, up 21% over the prior March quarter’s results. The revenue growth was driven by very strong demand for Mac and another great quarter for iPod sales.
- Operating margin for the quarter was strong at 18.7%, resulting from stronger than expected revenue and extremely favorable commodity cost environment.
- The company generated net income of $770 million, which was up 88% over the prior March quarter’s results and translated to earnings per share of 87 cents.

Mac products and services represented 56% of total quarterly revenue.

The company shipped a total of 1.52 million Macs, representing 36% growth over the year ago quarter. The management is pleased with iMac sales growth, which was ahead of expectations and represented more than three times IDC’s latest published industry growth rate estimate for the March quarter.

Demand for MacBook and MacBook Pro continues to be strong.

Sales of Mac notebook grew 79% year-over-year during the quarter and accounted for 59% of total Mac sale. The company began and ended the quarter with between three and four weeks of Mac channel inventory.

Music products and services accounted for 44% of total revenue during the quarter.

The company sold 10.55 million iPods, representing 24% growth over the year ago quarter. The iPod Shuffle was especially popular with the addition of four brilliant new colors beginning in late January. The number of iPods in the channel at quarter end was essentially flat sequentially and Apple ended the quarter comfortably within its target range of four to six weeks of iPod channel inventory.

Other music revenue grew 35% year-over-year fueled by very strong sales through the iTunes store.

This stores growing catalog now includes over 5 million songs, 350 television shows and 500 movies. The company is pleased to have added titles from Paramount Pictures, Lions Gate, and MGM to its movie library.

iTunes continues to lead the market with songs purchased and downloaded accounting for over 85% of the U.S. market based on the latest data from Nielsen SoundScan.

- Sales from Apple stores were $855 million representing 34% year-over-year growth.
- The stores generated $32 million in segment margin in addition to $174 million of associated manufacturing profit.
- The company opened seven new stores during the quarter, ending with 177 stores.

With an average of 172 stores opened during the quarter, average revenue per store was $5 million.

- Apple now has 21 stores outside U.S., including the new store in Rome that opened last month.
- As previously announced, Apple plans to open high-profile stores in Sidney Australia and Glasgow Scotland later this calendar year.

The company is also pleased to announce plans for third store in Manhattan at 14th Street and 9th Avenue in the Meat Packing district.

- The store sold 275,000 Macs during the quarter, representing 79% year-over-year growth.
- Over 50% of the customers buying Macs in Apple’s stores were new to the Mac.
- Over 21.5 million people visited the company’s stores during the quarter, representing almost 10,000 customers per store per week.

Gross margin was 35.1%, higher than the company’s guidance primarily due to the favorable commodity pricing environment, better product mix, lower service cost and leverage on higher revenue.

- Operating expenses were $863 million including $54 million in expense related to stock-based compensation.
- Apple capitalized $27 million of software development expense during the quarter.
- OI&E were $148 million and the tax rate for the quarter was 32%.
- The company had strong cash generation during the quarter increasing its cash balance by over $700 million to end with $12.6 billion.

In the first half of fiscal 2007, the company generated $12.4 billion in revenue and $1.8 billion in earnings.