VERIZON WORKERS CONTINUE STRIKE

45,000 Verizon employees, or about 25% of the company’s workforce, continued their strike on Monday after the company failed to reach an agreement with labor unions, Bloomberg reported. It is the first strike in 11 years at Verizon and it could end up affecting customers waiting for new phone and web installations or phone support, though Verizon has 40,000 other employees on hand.

The Communications Workers of America and the International Brotherhood of Electrical Workers don’t want to pay monthly premiums on health benefits, but Verizon isn’t quite willing to spend more money on the unions as customers continue to opt for wireless service and internet entertainment in place of phone lines and cable TV. “It is clear that some of the existing contract provisions, negotiated initially when Verizon was under far less competitive pressure, are not in line with the economic realities of business today,” Verizon CEO Lowell McAdam said Sunday. “In fact, under these contracts, benefit costs have risen consistently even as the wireline business has shrunk.” “We’re looking to bring our union more in line with what the rest of the workers pay,” Verizon spokesperson Rich Young said, noting that a majority of Verizon’s employees pay part of their health insurance premiums. International Brotherhood of Electrical Workers manager Bill Huber sees it differently. “These aren’t negotiations, they’re an insult,” he said. “This is a clear attack on our unions.”

It should be noted that Verizon reported revenues of over $27.5 billion last quarter, with a majority of that revenue coming from the wireless division.

APPLE HAS RECORD QUARTER FOR REVENUE AND PROFITS

Apple today announced financial results for its fiscal 2011 third quarter ended June 25, 2011. The Company posted record quarterly revenue of $28.57 billion and record quarterly net profit of $7.31 billion, or $7.79 per diluted share. These results compare to revenue of $15.70 billion and net quarterly profit of $3.25 billion, or $3.51 per diluted share, in the year-ago quarter. Gross margin was 41.7 percent compared to 39.1 percent in the year-ago quarter. International sales accounted for 62 percent of the quarter’s revenue.

The Company sold 20.34 million iPhones in the quarter, representing 142 percent unit growth over the year-ago quarter. Apple sold 9.25 million iPads during the quarter, a 183 percent unit increase over the year-ago quarter. The Company sold 3.95 million Macs during the quarter, a 14 percent unit increase over the year-ago quarter. Apple sold 7.54 million iPods, a 20 percent unit decline from the year-ago quarter.

“We’re thrilled to deliver our best quarter ever, with revenue up 82 percent and profits up 125 percent,” said Steve Jobs, Apple’s CEO. “Right now, we’re very focused and excited about bringing iOS 5 and iCloud to our users this fall.”

GOOGLE REPORTS RECORD BREAKING REVENUE FOR Q2

Shares of Google stock jumped more than 10% in after-hours trading following the Internet giant’s second-quarter earnings report. “We had a great quarter, with revenue up 32% year on year for a record breaking over $9 billion of revenue,” said Google CEO Larry Page in a statement. “I’m super excited about the amazing response to Google+ which lets you share just like in real life.” Google reported revenue of $9.03 billion in its June quarter, up 32% over the same quarter last year and well above the Street’s $6.5 billion consensus. EPS came in at $8.76, also well above Wall Street’s consensus of $7.86, and Google’s net income for the quarter totalled#2.85 billion, up from $2.08 billion in the second quarter last hear. Google also noted that Android activations are currently up to 550,000 devices per day, and its invite-only Google+ social network now has more than 10 million members. Full press release is below.

Google Announces Second Quarter 2011 Financial Results

MOUNTAIN VIEW, Calif. – July 14, 2011 – Google Inc. (NASDAQ: GOOG) today announced financial results for the quarter ended June 30, 2011.

“We had a great quarter, with revenue up 32% year on year for a record breaking over $9 billion of revenue,” said Larry Page, CEO of Google. “I’m super excited about the amazing response to Google+ which lets you share just like in real life.”

Q2 Financial Summary

Google reported revenues of $9.03 billion for the quarter ended June 30, 2011, an increase of 32% compared to the second quarter of 2010. Google reports its revenues, consistent with GAAP, on a gross basis without deducting traffic acquisition costs (TAC). In the second quarter of 2011, TAC totaled $2.11 billion, or 24% of advertising revenues.

Google reports operating income, operating margin, net income, and earnings per share (EPS) on a GAAP and non-GAAP basis. The non-GAAP measures, as well as free cash flow, an alternative non-GAAP measure of liquidity, are described below and are reconciled to the corresponding GAAP measures in the accompanying financial tables.

GAAP operating income in the second quarter of 2011 was $2.88 billion, or 32% of revenues. This compares to GAAP operating income of $2.37 billion, or 35% of revenues, in the second quarter of 2010. Non-GAAP operating income in the second quarter of 2011 was $3.32 billion, or 37% of revenues. This compares to non-GAAP operating income of $2.67 billion, or 39% of revenues, in the second quarter of 2010.
GAAP net income in the second quarter of 2011 was $2.51 billion, compared to $1.84 billion in the second quarter of 2010. Non-GAAP net income in the second quarter of 2011 was $2.85 billion, compared to $2.08 billion in the second quarter of 2010.
GAAP EPS in the second quarter of 2011 was $7.68 on 326 million diluted shares outstanding, compared to $5.71 in the second quarter of 2010 on 322 million diluted shares outstanding. Non-GAAP EPS in the second quarter of 2011 was $8.74, compared to $6.45 in the second quarter of 2010.
Non-GAAP operating income and non-GAAP operating margin exclude the expenses related to stock-based compensation (SBC). Non-GAAP net income and non-GAAP EPS exclude the expenses related to SBC and the related tax benefits. In the second quarter of 2011, the charge related to SBC was $435 million, compared to $309 million in the second quarter of 2010. The tax benefit related to SBC was $91 million in the second quarter of 2011 and $70 million in the second quarter of 2010.
Q2 Financial Highlights

Revenues – Google reported revenues of $9.03 billion in the second quarter of 2011, representing a 32% increase over second quarter 2010 revenues of $6.82 billion. Google reports its revenues, consistent with GAAP, on a gross basis without deducting TAC.

Google Sites Revenues – Google-owned sites generated revenues of $6.23 billion, or 69% of total revenues, in the second quarter of 2011. This represents a 39% increase over second quarter 2010 revenues of $4.50 billion.

Google Network Revenues – Google’s partner sites generated revenues, through AdSense programs, of $2.48 billion, or 28% of total revenues, in the second quarter of 2011. This represents a 20% increase from second quarter 2010 network revenues of $2.06 billion.

International Revenues – Revenues from outside of the United States totaled $4.87 billion, representing 54% of total revenues in the second quarter of 2011, compared to 53% in the first quarter of 2011 and 52% in the second quarter of 2010. Excluding gains related to our foreign exchange risk management program, had foreign exchange rates remained constant from the first quarter of 2011 through the second quarter of 2011, our revenues in the second quarter of 2011 would have been $167 million lower. Excluding gains related to our foreign exchange risk management program, had foreign exchange rates remained constant from the second quarter of 2010 through the second quarter of 2011, our revenues in the second quarter of 2011 would have been $417 million lower.

Revenues from the United Kingdom totaled $976 million, representing 11% of revenues in the second quarter of 2011, compared to 11% in the second quarter of 2010.
In the second quarter of 2011, we recognized a benefit of $4 million to revenues through our foreign exchange risk management program, compared to $79 million in the second quarter of 2010.
A reconciliation of our non-GAAP international revenues excluding the impact of foreign exchange and hedging to GAAP international revenues is included in the accompanying financial tables.

Paid Clicks – Aggregate paid clicks, which include clicks related to ads served on Google sites and the sites of our AdSense partners, increased approximately 18% over the second quarter of 2010 and decreased approximately 2% over the first quarter of 2011.

Cost-Per-Click – Average cost-per-click, which includes clicks related to ads served on Google sites and the sites of our AdSense partners, increased approximately 12% over the second quarter of 2010 and increased approximately 6% over the first quarter of 2011.

TAC – Traffic Acquisition Costs, the portion of revenues shared with Google’s partners, increased to $2.11 billion in the second quarter of 2011, compared to TAC of $1.73 billion in the second quarter of 2010. TAC as a percentage of advertising revenues was 24% in the second quarter of 2011, compared to 26% in the second quarter of 2010.

The majority of TAC is related to amounts ultimately paid to our AdSense partners, which totaled $1.75 billion in the second quarter of 2011. TAC also includes amounts ultimately paid to certain distribution partners and others who direct traffic to our website, which totaled $355 million in the second quarter of 2011.

Other Cost of Revenues – Other cost of revenues, which is comprised primarily of data center operational expenses, amortization of intangible assets, content acquisition costs as well as credit card processing charges, increased to $1.06 billion, or 12% of revenues, in the second quarter of 2011, compared to $735 million, or 11% of revenues, in the second quarter of 2010.

Operating Expenses – Operating expenses, other than cost of revenues, were $2.97 billion in the second quarter of 2011, or 33% of revenues, compared to $1.99 billion in the second quarter of 2010, or 29% of revenues.

SBC – In the second quarter of 2011, the total charge related to SBC was $435 million, compared to $309 million in the second quarter of 2010.

We currently estimate SBC charges for grants to employees prior to July 1, 2011 to be approximately $1.9 billion for 2011. This estimate does not include expenses to be recognized related to employee stock awards that are granted after June 30, 2011 or non-employee stock awards that have been or may be granted.

Operating Income – GAAP operating income in the second quarter of 2011 was $2.88 billion, or 32% of revenues. This compares to GAAP operating income of $2.37 billion, or 35% of revenues, in the second quarter of 2010. Non-GAAP operating income in the second quarter of 2011 was $3.32 billion, or 37% of revenues. This compares to non-GAAP operating income of $2.67 billion, or 39% of revenues, in the second quarter of 2010.

Interest and Other Income, Net – Interest and other income, net increased to $204 million in the second quarter of 2011, compared to $69 million in the second quarter of 2010.

Income Taxes – Our effective tax rate was 19% for the second quarter of 2011.

Net Income – GAAP net income in the second quarter of 2011 was $2.51 billion, compared to $1.84 billion in the second quarter of 2010. Non-GAAP net income was $2.85 billion in the second quarter of 2011, compared to $2.08 billion in the second quarter of 2010. GAAP EPS in the second quarter of 2011 was $7.68 on 326 million diluted shares outstanding, compared to $5.71 in the second quarter of 2010 on 322 million diluted shares outstanding. Non-GAAP EPS in the second quarter of 2011 was $8.74, compared to $6.45 in the second quarter of 2010.

Cash Flow and Capital Expenditures – Net cash provided by operating activities in the second quarter of 2011 totaled $3.52 billion, compared to $2.09 billion in the second quarter of 2010. In the second quarter of 2011, capital expenditures were $917 million, the majority of which was related to land and building purchases, and IT infrastructure investments, including data centers, servers, and networking equipment. Free cash flow, an alternative non-GAAP measure of liquidity, is defined as net cash provided by operating activities less capital expenditures. In the second quarter of 2011, free cash flow was $2.60 billion.

We expect to continue to make significant capital expenditures.

A reconciliation of free cash flow to net cash provided by operating activities, the GAAP measure of liquidity, is included in the accompanying financial tables.

Cash – As of June 30, 2011, cash, cash equivalents, and marketable securities were $39.1 billion.

Headcount – On a worldwide basis, Google employed 28,768 full-time employees as of June 30, 2011, up from 26,316 full-time employees as of March 31, 2011. Net headcount growth (excluding approximately 450 employees hired as part of the acquisition of ITA Software) was similar to the first quarter of 2011.

APPLE SURPASSES MICROSOFT IN MARKET CAP, REVENUE AND NOW PROFIT

Just about a year ago, when Apple passed Microsoft in market cap, the Redmond loyalists were out in full force: that means nothing — look at the revenues! When Apple passed Microsoft in revenues last October, it was: who cares — look at the profits! We were looking, and we projected that this quarter just ended would be the one in which Apple passed Microsoft in that regard too.

Sure enough, they have. Easily.

Microsoft has just announced their Q3 2011 results. The numbers appear to be good, beating analysts’ expectations. But with net income now at $5.23 billion, Microsoft now comes in well behind Apple, which had a net income of $5.99 billion last quarter.

Last October, despite Apple pulling ahead in revenue, the profit gap was about $1.1 billion in Microsoft’s favor. Last quarter, that gap was down to roughly a $600 million. And now, rather remarkable, it’s over $700 million in the other direction — a $1.3 billion swing in just one quarter. And you can probably expect that trend to continue.

Meanwhile, on the revenue side of things, Apple now holds a roughly $8 billion advantage — $24.6 billion to $16.43 billion. And in market cap, Apple’s advantage is just about $100 billion — $318.45 billion to $224.43 billion.

SKYPE TO BECOME AD-SUPPORTED

Skype has always had an issue with becoming and staying profitable. Because of that, it has been sold and bought many times over. Things have only gotten worse as companies like Google have entered the VoIP fray with products like Google Voice.

Skype has just announced that it will begin showing advertisements as part of the Skype for Windows home tab starting later this week, which will be the first time that advertising has been promoted within the app. Ads will start rolling out in the US, UK and Germany first, with other countries to follow, while some of the first advertisers will include Groupon, Nokia, Universal Pictures and Visa, who have opted to buy daily ad campaigns.

Skype’s approach to ubiquitous ads in the desktop app isn’t entirely noxious: there’ll be a “hide ad” button for users fed up with seeing ads on a daily basis. Skype is also making it easier for people to reach out to the buyers of an ad space with a “Click & Call” button that makes ordering a proffered deal just a click away. They will also add a new “share” button that will hook into social networks like Facebook and Twitter.

AT&T POSTS Q4 RESULTS; REVENUE UP 2.1%

AT&T's numbers are up, and they're good: $31.4 billion in the fourth quarter of 2010, $653 million more than Q4 the previous year. 4.1 million iPhones and 442,000 tablets were put online by the company that quarter, helping to drive 2.8 million new wireless subscribers, 95.5 million total, and a boost in revenue per subscriber of 2.2 percent. That's $62.88 average per month per subscriber -- maybe ditching unlimited data is paying off. Additionally, the company posted its best ever Q4 wireless churn (subscribers switching carriers) of just 1.32 percent.

APPLE POSTS RECORD $26.74 BILLION IN REVENUE

As expected Apple released its fiscal first quarter results and the news was very good. The financial results cover the fiscal first quarter of 2011 which ended on December 25th last year. Revenue was at an all time high with Apple’s highly popular devices and associated App Stores making up the bulk of the $26.74 billion generated. Net quarterly profit was $6 billion.

Compared to the same quarter last year it’s a massive gain. Revenue has increased over $11 billion ($15.68 billion in the year-ago quarter), and profit has increased by $2.62 billion ($3.38 billion in the year-ago quarter).

Steve Jobs is always looking to the future, and simply commented:

We had a phenomenal holiday quarter with record Mac, iPhone and iPad sales. We are firing on all cylinders and we’ve got some exciting things in the pipeline for this year including iPhone 4 on Verizon which customers can’t wait to get their hands on.

Here’s a breakdown of the devices Apple sold during the quarter (percentage gains are on the year-ago quarter):

• Mac: 4.13 million (23% increase)
• iPhone: 16.24 million (86% increase)
• iPod: 19.45 million (7% decline)
• iPad: 7.33 million

We also can’t forget the 30% cut Apple takes on every app sale in the App Store, as well as the profit generated from sales of content on iTunes away from apps. With the Mac App Store recently coming online that area of revenue stream will only grow in the future.

VERIZON WIRELESS RELEASES Q3 REPORT

Verizon Wireless, the joint venture of Vodafone and Verizon, has released its Q3 report.  They reported 997,000 net additions for the quarter, bringing the total customer base to 93.2 million, and a minuscule churn of 1.07%.  Total revenue increased by 6% over Q3 2009.  Also of note; data revenue increased 5.2% over Q3 2009; cash expense per customer dropped from $27.59 to $26.88; 183 billion text messages, 3.8 billion picture messages were sent and customers completed 22 million music/video downloads. [BGR]

APPLE POSTS RECORD PROFITS

Apple announced today their fiscal year Q4 results.  The company posted record revenue of $20.34 billion and revenue of $4.31 billion.  In comparison Apple had $12.21 billion in revenue and $2.53 billion profit Q4 2009.

Boosting revenue was the popularity of the iPad selling 4.19 million in the quarter.  Other sales were impressive as well with Apple selling 3.89 million iMacs (+27%) and 14.1 million iPhones(+91%).  iPod's were not a bright spot for the company losing 11% at only 9.05 million sold.  The press release announcing Q4 results is below. [Gizmodo]

Apple Reports Fourth Quarter Results
Record Mac, iPhone and iPad Sales
Highest Revenue and Earnings Ever
CUPERTINO, Calif.—(BUSINESS WIRE)—Apple® today announced financial results for its fiscal 2010 fourth quarter ended September 25, 2010. The Company posted record revenue of $20.34 billion and net quarterly profit of $4.31 billion, or $4.64 per diluted share. These results compare to revenue of $12.21 billion and net quarterly profit of $2.53 billion, or $2.77 per diluted share, in the year-ago quarter. Gross margin was 36.9 percent compared to 41.8 percent in the year-ago quarter. International sales accounted for 57 percent of the quarter's revenue.
"We are blown away to report over $20 billion in revenue and over $4 billion in after-tax earnings-both all-time records for Apple"
Apple sold 3.89 million Macs during the quarter, a 27 percent unit increase over the year-ago quarter. The Company sold 14.1 million iPhones in the quarter, representing 91 percent unit growth over the year-ago quarter. Apple sold 9.05 million iPods during the quarter, representing an 11 percent unit decline from the year-ago quarter. The Company also sold 4.19 million iPads during the quarter.
"We are blown away to report over $20 billion in revenue and over $4 billion in after-tax earnings-both all-time records for Apple," said Steve Jobs, Apple's CEO. "iPhone sales of 14.1 million were up 91 percent year-over-year, handily beating the 12.1 million phones RIM sold in their most recent quarter. We still have a few surprises left for the remainder of this calendar year."
"We're thrilled with the performance and strength of our business, generating almost $5.7 billion in cash flow from operations during the quarter," said Peter Oppenheimer, Apple's CFO. "Looking ahead to the first fiscal quarter of 2011, we expect revenue of about $23 billion and we expect diluted earnings per share of about $4.80."
Apple will provide live streaming of its Q4 2010 financial results conference call beginning at 2:00 p.m. PDT on October 18, 2010 at www.apple.com/quicktime/qtv/earningsq410/. This webcast will also be available for replay for approximately two weeks thereafter.
This press release contains forward-looking statements including without limitation those about the Company's estimated revenue and earnings per share. These statements involve risks and uncertainties, and actual results may differ. Risks and uncertainties include without limitation the effect of competitive and economic factors, and the Company's reaction to those factors, on consumer and business buying decisions with respect to the Company's products; continued competitive pressures in the marketplace; the ability of the Company to deliver to the marketplace and stimulate customer demand for new programs, products, and technological innovations on a timely basis; the effect that product introductions and transitions, changes in product pricing or mix, and/or increases in component costs could have on the Company's gross margin; the inventory risk associated with the Company's need to order or commit to order product components in advance of customer orders; the continued availability on acceptable terms, or at all, of certain components and services essential to the Company's business currently obtained by the Company from sole or limited sources; the effect that the Company's dependency on manufacturing and logistics services provided by third parties may have on the quality, quantity or cost of products manufactured or services rendered; the Company's reliance on the availability of third-party digital content; the potential impact of a finding that the Company has infringed on the intellectual property rights of others; the Company's dependency on the performance of distributors, carriers and other resellers of the Company's products; the effect that product and service quality problems could have on the Company's sales and operating profits; the Company's reliance on sole service providers for iPhone® in certain countries; the continued service and availability of key executives and employees; war, terrorism, public health issues, natural disasters, and other circumstances that could disrupt supply, delivery, or demand of products; potential litigation from the matters investigated by the special committee of the board of directors and the restatement of the Company's consolidated financial statements; and unfavorable results of other legal proceedings. More information on potential factors that could affect the Company's financial results is included from time to time in the Company's public reports filed with the SEC, including the Company's Form 10-K, as amended, for the fiscal year ended September 26, 2009, its Forms 10-Q for the quarters ended December 26, 2009; March 27, 2010; and June 26, 2010; and its Form 10-K for the fiscal year ended September 25, 2010 to be filed with the SEC. The Company assumes no obligation to update any forward-looking statements or information, which speak as of their respective dates.
Apple designs Macs, the best personal computers in the world, along with OS X, iLife, iWork, and professional software. Apple leads the digital music revolution with its iPods and iTunes online store. Apple is reinventing the mobile phone with its revolutionary iPhone and App Store, and has recently introduced its magical iPad which is defining the future of mobile media and computing devices.

GOOGLE POSTS VERY STRONG Q3 REVENUE

Yesterday, Google announced its Q3 results and they were impressive.  Revenues jumped 23% to $7.29 billion with a net income of $2.17 billion.  The giant G also reported cash of $33.4 billion.  Employees also increased approximately 1,500 from the previous year to 23,331 full timers.  Google's stock price was down 0.44% at end of trading on Thursday, but rebounded 8.9% in after hours trading, about $49 per share. [BGR]