The iPhone single-handedly brought 860,000 new customers last quarter to wireless provider AT&T, the exclusive carrier of Apple’s handset in the U.S.

AT&T announced its quarterly earnings Thursday morning, and revealed that it had earned $30.8 billion in revenue in its second fiscal quarter, amounting to $0.61 earnings per share. Helping the company to those numbers was Apple’s iPhone, of which the carrier activated a record 3.2 million in the three-month period.

AT&T said that 27 percent of those 3.2 million iPhone activations were from new customers, which means the device brought 860,000 new subscribers to the carrier. Last quarter was bolstered by the launch of the iPhone 4, of which Apple sold 1.7 million in the first three days internationally.

The ratio of new customers is lower than the previous quarter, when AT&T activated 2.7 million iPhones, of which more than a third were new subscribers.

AT&T again noted that iPhone 4 preorder rates were 10 times higher than the first day of preordering for the iPhone 3GS in 2009.

AT&T’s earnings per share were up 25.9 percent from the same period in 2009, and revenue increased $194 million, or 0.6 percent. The earnings per share beat Wall Street expectations, while revenue was lower than anticipated.

The iPhone helped AT&T reach 1.6 million net adds in total wireless subscribers, which was the company’s best-ever second quarter. AT&T now has 90.1 million customers in service.

Wireless revenues increased 10.3 percent, and postpaid average monthly revenues per subscriber were up 3.4 percent. Wireless data revenues grew even greater, up $936 million over 2009, for 27.2 percent year-over-year growth.

“We delivered another strong quarter, with improved revenue trends, double-digit earnings growth and solid cash flow. These results add to our confidence going into the second half of the year,” said Randall Stephenson, AT&T chairman and chief executive officer. “We continue to see positive signs of growth in almost every customer segment of our business, especially wireless, which speaks to the quality of our execution and our leadership in the industry’s most powerful growth driver — mobile broadband. I am excited by the opportunities ahead.”

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Today Apple will hold a press conference to explain the whole issue of iPhone in April, its problems and possibly the distribution among the other countries. You are the time in different parts of the world:

7:00 a.m. – Hawaii
10:00 AM – Pacific (Cupertino)
12:00 PM – Central
01:00 PM – This
06:00 PM – London
7:00 PM – Madrid
09:00 PM – Moscow
2:00 a.m. – Tokyo (July 17)

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If Apple were to issue a recall for the iPhone 4 it could cost the company up to $1.5 billion, according to Bernstein Research analyst Toni Sacconaghi.

Barrons reports that the Sacconaghi believes the time has come for Apple to “explicitly and constructively address the iPhone 4’s reception problems – ideally with an explanation for the root cause of the antenna issue, and a solution(s) for addressing it.”

An in-store fix would cost Apple approximately $75 a piece, or $450 million assuming 6 million units. A full recall could run $250 a phone, or an estimated $1.5 billion.

Sacconaghi thinks a more likely solution will be the issuance of free bumpers costing the company about a dollar each.

He says the bigger problem is “the emerging pattern of hubris that the company has displayed,” for example:
● Refusal to fully discuss Steve Jobs‘ health.
● Refusal to discuss plans for large cash position.
● Attack on Adobe Flash.
● Probe of lost iPhone, resulting in raid on a reporter’s home.
● Restrictions on app development.
● Dismissive stance on iPhone 4 reception problems to date.

“The worry is that collectively these issues may over time begin to impact consumer’s perceptions of Apple, undermining its enormous prevailing commercial success.”

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A recall of the iPhone 4 could cost Apple as much as $1.5 billion, according to one investment research firm.

Toni Sacconaghi, an analyst for Bernstein Research, said in a note to clients on Tuesday that while a full product recall is “highly unlikely,” it could theoretically cost the company up to $250 per phone. Sacconaghi estimates 6 million units sold or in transit, resulting in a recall price tag as high as $1.5 billion.

Another option is for Apple to offer an in-store hardware fix, which could cost $75 per phone. Giving away a free bumper case, which currently retail for $29, would be a much cheaper alternative for the Cupertino, Calif., company. Sacconaghi estimates this approach would cost just $1 per unit.

Examining the longer-term consequences for Apple, Sacconaghi turned to “the emerging pattern of hubris that the company has displayed, which has increasingly pitted competitors (and regulators) against the company, and risks alienating customers over time.”

Apple stock was down $5.49 (2.13%) at the market’s close on Tuesday.

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t’s now the second-largest company in the U.S., and it still manages to grow its earnings by more than 50% a year.

by Andy M. Zaky, contributor

In the four years I’ve followed Apple (AAPL) as it’s grown from a mere mid-sized tech stock to becoming the second largest corporation in the United States in terms of market capitalization, I never imagined that it or any other company of its size would be able to consistently grow its earnings by well over 50% a year.

While Apple is now larger than Microsoft (MSFT), Google (GOOG), Cisco (CSCO), and Intel (INTC), it still enjoys the growth rate of small cap tech stocks. A few weeks ago I wrote an article entitled Apple’s $63.5 Billion Revenue Year where I offer comprehensive revenue estimates for Apple’s fiscal Q3 and Q4 of 2010. Picking up where that report left off, I’ll take a look at Apple’s potential 2010 earnings.

To get an idea of how deeply Apple continues to penetrate the market, Apple will likely produce 50% more in sales and 71% more in earnings in 2010 than it did last year. If this growth continues into 2011, Apple will surpass Exxon (XOM) to become the largest corporation in America. Not to mention that it already has more cash than any other company in the United States: $41 billion.

That is absolutely stunning when one considers that Apple recorded a whopping $43 billion in revenue during the 2009 reporting period – almost double the $24 billion it recorded in 2007. While the market continues to generally slobber over the financial prospects of the iPhone and Apple’s business, it’s important to step back and examine exactly where Apple’s business stands. We often hear about the strength of Apple’s stock in very general terms. Yet we rarely get a broad picture of Apple’s past, present and future growth rates.

Apple’s gross margin: Click to enlarge

Not only is Apple accelerating its revenue, the growth in the cost to run the entire Apple operation is barely climbing. This means Apple is becoming increasingly efficient at printing money as it makes more revenue per dollar spent to run the operation. This is something that every company, big or small, could only wish to achieve. It is very difficult to accelerate sales as a large cap tech stock while tempering costs. There will be a day within the next few years when investors will be insulted at even the slightest insinuation that Apple should only be worth $350 a share.

To get an idea of just how efficient Apple’s management has become at generating revenue while containing operational expenses, consider this:

In 2008, while revenue grew by 52.5%, Apple’s operating expenses only grew by 30%. This means that each dollar spent to run the company generated nearly 60% more revenue in 2008 than it did in 2007. In 2009, though the financial crisis had a sizable impact on Apple’s revenue and earnings, Apple still managed to grow its revenue by 14.5% — operating expenses only grew 12.6%.

Yet in 2010, though Apple’s business is almost double what it was in 2007, Apple has been able to maintain its old ways. In 2010, while Apple looks to grow its revenue by 47.8%, even aggressive estimates for operating expenses put it in the rage of only 31% growth. This ability to manage expenses is a major contributing factor leading to the projected 75% growth in net income for 2010.

Apple’s earnings growth: Click to enlarge

And what’s more, Apple is not only doing a bang-up job managing its operational expenses, but it is also achieving the far more difficult task of increasing its gross margin. Gross margin is the amount of money Apple makes on each of its products less the cost it takes to make those products. Operating expenses asks the question: How much money did Apple spend hiring employees, renting property for its retail chain, paying upper management, research & development, and all other costs to run the company? Gross margin asks the question: How much did it cost to make an iPhone, an iPod, or a Macintosh Computer?

Apple has clearly demonstrated an ability to generate massive amounts of revenue while containing its operational expenses, and it has more impressively figured out a way to make more money on each product it sells. Apple’s quarterly gross margin has been on a consistent, stable and explosive up-trend. For example, in the first quarter of 2006, Apple reported an overall gross margin of 27.2%. By the second quarter of 2010, Apple’s gross margin had climbed to 41.67%. That means Apple is making almost double the amount of profit on each of the products it sold in 2010 than it did in 2006. It is precisely Apple’s ability to accelerate sales while managing expenses that has led to this new Golden Age in earnings. There isn’t a single identifiable blemish in Apple’s income statement.

Apple’s revenue growth: Click to enlarge

Based on a more comprehensive and detailed analysis I’ve published at Bullish Cross, I’m expecting Apple to report $15.51 in earnings per share on an explosive $63.409 billion in revenue in fiscal 2010. That compares with $9.08 in EPS on $42.9 billion in revenue in the fiscal year ended 2009. For those who would like to see my track record on Apple, you can find that record at Philip Elmer-DeWitt’s quarterly analyst review published in his Fortune column, Apple 2.0.  The two charts to the right outline Apple’s revenue and EPS growth from 2006 to 2010. Please note that Q3 and Q4 of 2010 are merely estimates, and that actual results may vary.

Andy Zaky is a graduate from the UCLA School of Law, and editor of Bullish Cross. His main area of emphasis is in global macro-economics, fundamental analysis and technical analysis. Andy also regularly follows and conducts financial statement analysis and quarterly earnings projections for Apple, Inc. and other high-profile tech stocks.

thanks [tech.fortune.cnn.com]

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Apple’s new ads campaign for iPhone 4 have shifted from “there’s an app for that,” to a message targeting a specific new app: FaceTime.

A series of four new spots present family members using FaceTime to interact in series of warmly sentimental circumstances reminiscent of the oriental tearjerker spot Apple created and debuted at WWDC.

The new ads present a daughter shy about her braces being coaxed into a smile by her father, a son showing his father his new granddaughter, a girl showing off her new haircut to her boyfriend, and a woman breaking the news to her husband that she’s pregnant.

The new spots demonstrate Apple’s marketing savvy, as each spot tugs a customers’ heartstrings, rather than simply bragging about hardware specs by comparing smartphones to some kind of an alien invasion (as Verizon’s odd Droid ads), or presenting a creepy woman muttering about esoteric features (as Palm did with its bizarre Pre commercials).

[via appleinsider.com]

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Apple has responded to an incident last weekend which saw a developer use hacked iTunes accounts to make fraudulent App Store purchases.

The developer Thuat Nguyen and his apps were removed from the App Store for violating the developer Program License Agreement, including fraudulent purchase patterns.

Developers do not receive any iTunes confidential customer data when an app is downloaded.

If your credit card or iTunes password is stolen and used on iTunes we recommend that you contact your financial institution and inquire about canceling the card and issuing a chargeback for any unauthorized transactions. We also recommend that you change your iTunes account password immediately. For more information on best practices for password security visit http://www.apple.com/support/itunes.

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