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iPhone - Apple Briefly Turned to Pulp Then Restored to Glory

AT&T, the iPhone's sole carrier, reported that only 146,000 of the gadgets were activated in the first 30 hours of sales

Wall Street got vicious and took nigh on to a $9 bite out of Apple on Tuesday, the stock's worse day in seven years, after AT&T, the iPhone's sole carrier, reported that only 146,000 of the gadgets were activated in the first 30 hours of sales.

That was the 30 hours before the second quarter closed shut, and the number was far below the market's opium eaters-like expectations of hundreds of thousands moving.

The news hit a day before Apple reported its own quarter and was aggravated by a report from CIBC World Markets saying iPhone demand had been in "significant decline" for 10 days in part because of AT&T's slow Internet speed. CIBC is betting a new iPhone model comes out in November that can use AT&T's faster network. Apple seems not to agree.

Anyway, by the time Apple's numbers were out and its conference call finished on Wednesday, the stock after-hours had hit an all-time high of over $148 though darned if we know why. It had seesawed up and down through the call like a teeter-totter and Apple didn't say anything all that encouraging.

There are times Wall Street seems like a bunch of high-strung little old ladies having hot flashes.

All told, between Apple and AT&T 270,000 iPhones were sold those first crucial 30 hours - still not the home run Wall Street expected - and Apple is only - only being a relative term - expecting to sell a million of the things, it said, by the end of September - again a relative disappointment - though Apple reminded people that it took two years to sell a million iPods.

Apple suggested there were initial iPhone activation problems that have since been remedied.

Otherwise, Apple sold a record number of Macs, again a relative number, this one being 1.76 million units, 64% of them laptops, and altogether accounting for 60% of Apple's revenues of $5.41 billion, up 24% year-over-year.

The number of Mac units was up 33% year-over-year and exceeds IDC's estimates of Apple market share, Apple said. iPod sales were up 21% to 9.8 million units worth $1.57 billion in revenue.

International sales accounted for 40% of the business.

Apple earned a blow-away $818 million, or 92 cents a share, up 73%. It was only expected to return 72 cents.

The iPhone contributed little to nothing to Q3 sales. The company said it will account for it as a two-year subscription and it's unclear how much AT&T is kicking back.

With no revenue from AT&T in the June quarter, Apple sold $5 million in iPhones and iPhone accessories, it said, mostly accessories. It reiterated that it expects to sell 10 million by the end of 2008.

Expectations for this quarter are $5.7 billion in revenues, 65 cents in earnings and a depressed 29.5% gross margin, down from 36.9% in the June quarter, given reportedly costly back-to-school promotions, higher component costs and undetailed product transitions.

Wall Street was expecting Apple to earn 83 cents on revenues of $6.05 billion.

Apple said it would start selling iPhone in a few unidentified European counties this quarter.

More Stories By iPhone News Desk

iPhone News Desk monitors the new world of the iPhone to present software developers and IT professionals with immediate updates on related technology advances, software and business trends, new products and standards in the iPhone and i-technology space.

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