During his quarterly financial results call, Apple’s chief financial officer Peter Oppenheimer and Tim Cooke (COO) revealed that the company will make a key “product transition” that cuts back on its profit margins to help shut out rivals.

A frequent point of discussion during the hour-long call, the mystery transition will drop Apple’s gross margins from 34.8 percent in the spring quarter to just 31.5 percent in the July-to-September window in which the update takes place, ultimately settling at about 30 percent during Apple’s fiscal 2009.

Oppenheimer is deliberately short on details, not wanting to pre-announce the product or allude to its nature, but explains that cost will be a driving factor.

The new, unnamed product will continue to have “technologies and features that others can’t match,” according to the CFO.

So what does this mean? Obviously lower margin products are coming, but will they be entirely new products or lower prices on existing products? There’s a big chance Apple will introduce redesigned MacBooks and MacBook Pros at a lower price and slightly redesigned iPods.

Apple on Wednesday announced a profit of $818 million for its fiscal third quarter, which ended June 30, 2007. The company reported earnings of $5.41 billion for the quarter, with record-high Mac sales for the quarter.

Apple handily beat analyst predictions for the quarter. Analysts polled by Thomson First Call expected Apple to report $0.72 per share of $5.28 billion in revenue; instead, the company reported $0.92 per share.

iPhone sales

Apple only sold iPhones during the final 30 hours of the quarter, as they went on sale on June 29th. Despite AT&T’s recent news that it only activated 146,000 iPhones for the quarter, but Apple CFO Peter Oppenheimer revealed that the company sold 270,000 iPhones through its stores and AT&T stores during those 30 hours.

Apple CEO Steve Jobs also revealed that he anticipates Apple will sell its one-millionth iPhone by the end of its fourth quarter - the first full quarter of iPhone sales. Apple COO Tim Cook said that based on the demand the company has seen thus far, Apple is confident it will sell 10 million iPhones by the end of 2008. Oppenheimer noted during his preamble that it took Apple seven quarters to sell its first million iPods.

Apple will reveal who its international partners are for iPhone sales later this quarter, said Oppenheimer. Apple will expand iPhone sales first to Europe in the fourth calendar quarter, with Asia to follow in 2008.
Cook noted that Apple “saw absolutely no evidence” of iPod cannibalization during the quarter -no indication that users purchasing iPhones might otherwise buy an iPod.

iPod sales

Music products and services represented 40 percent of Apple’s total quarterly revenue, said Oppenheimer. The company shipped 9.8 million iPods for the quarter, up 33 percent year over year.

Mac sales

Oppenheimer said that Mac shipments in the U.S. grew 32 percent year over year — 2.5 times what IDC’s predicted industry growth rate for the quarter. Mac product sales represented 60 percent of Apple’s total quarterly revenue for the year — 1.76 million Macs were sold.

Sales of Mac notebooks - MacBook Pros and MacBooks, combined - accounted for 64 percent of all Macs sold, said Oppenheimer.

Store sales versus direct sales

Apple retail store sales saw 33 percent year over year growth for the quarter, said Oppenheimer. The company has remodeled 15 of its store and eight new stores -185 in total, worldwide. Apple expects to open 12 new stores for the current quarter -197 all told. Direct sales revenue represented 53 percent of Apple’s annual sales, versus 49 percent for the same quarter a year ago.

Rumors have circulated over the last couple days that Google may be interested in buying Apple.

Is this just speculation or is there more? however, you must have noticed how Apple and Google have been teaming recently. We just note the following:

• Google CEO Eric Schmidt sits on Apple’s Board of Directors;
• They have a same enemy (Microsoft);
• The companies have a similar culture;
• Apple produces great looking hardware which is easy to use and appealed to the mass and Google has the data to fuel these innovative applications;
• The new Apple TV software enables users to navigate YouTube to look for videos;
• The iPhone got an integrated Google search, Google Mapsa and Google mail.
• And Google’s popular video-sharing Web site YouTube will be accessible for the upcoming iPhone.

For sure, it would be a great victory for Apple and Steve Jobs; they’d get great partners, lots of money, and skilled engineers.

For now, we see a merger or an Acquisitionthis as improbable. But who knows.

The Wall Street Journal is hosting a complete video archive of the historic onstage meeting between Apple CEO Steve Jobs and Microsoft founder Bill Gates. The pair met at the D: All Things Digital Conference late last night.

The meeting showed a real sense of warmth between the two tech giants, according to multiple reports.

In general, both men had good things to say about each other, and expressed mutual admiration for the other’s contrasting style.

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Apple’s user-friendly retail stores have finally lost patience with MySpace users, who park themselves at the demo units and spend hours updating their pages. So, Apple finally blocked the popular social networking site from its systems.

Apple yesterday opened it’s latest store at Fifth Avenue, New York. The store in it self is all underground except for the entrance, a 32-foot glass cube right in front of the General Motors building opposite the Plaza Hotel on 767 Fifth Avenue.

With this incredible entrance Apple has created what could be a new New York Landmark located at a very prominent location on Manhattan.

Five year ago, everyone thought Steve Jobs was crazy to open Apple-branded retail stores. I’m sure those people are ‘thinking different’ today.