This summary is based on the third quarter fiscal 2006 earnings call conducted by Apple Inc. (AAPL: chart) on July 19, 2006.

Management:

- Chief Financial Officer, Senior Vice President: Peter Oppenheimer
- Chief Operating Officer: Tim Cook
- Treasurer: Gary Whistler
- Senior Director, Investor Relations and Corporate Finance: Nancy Paxton

Key Investors Issues

- Revenues increased 24% to $4.37 billion from $3.5 billion in the prior year.
- Net income rose 47.5% to $472 million or 54 cents a share.
- Apple shipped 1,327,000 Macintosh® computers and 8,111,000 iPods, representing 12% growth in Macs and 32% growth in iPods over the year-ago quarter.

Year to Date Highlights:

- Revenues increased 40.7% to $14.5 billion from $10.3 billion in the prior year.
- Net income was $1.4 billion or $1.72 a share, up 54.7% from $905 million or $1.13 a share in 2005.
- Gross margin decreased to 28.9% from 29.3% in the prior year.

Third Quarter Highlights

Revenue was $4.37 billion, representing 24% year-over-year growth from $3.5 billion in 2005 fueled by the best Mac unit sales in any 13-week quarter in Apple''s history and continued healthy demand for music products.

- Net income was $472 million, or 54 cents a share, up 47.5% from $320 million or 39 cents a share in the prior year due to growth in Mac unit sales.
- Operating margin was 13%, attributable to the revenue growth, a very favorable component environment and solid expense management.
- Mac products, which represented 55% of revenue, had revenue increasing 11% year over year, fueled by Mac unit shipment growth of 12% year over year, to $1.327 million.
- The firm has now introduced the iMac, MacBook, MacBook Pro and Mac Mini with Intel processors and is solidly on track to transition the Power Mac and Xserve.

It has released universal versions of Apple''s consumer and professional software applications and third-party developers have released over 2,900 universal applications.

- The firm expects that over 70% of the 500 applications considered most critical to customers will be available in universal versions by the end of September.
- Intel-based Macs accounted for over 75% of the quarter''s Mac shipments.
- The MacBook, which was introduced in mid-May, has been extremely well-received and, coupled with the very popular MacBook Pro, has contributed to Apple''s increased unit market share of portables in U.S. retail from 6% in January to 12% in June, according to NPD.
- The firm believes that many of the creative professional customers have delayed purchases as they await new Intel-based Mac desktops, universal applications, or both.

Music products posted another quarter of strong results, representing 45% of total company revenue and increasing 45% year-over-year.

- iPod shipments grew 32% year over year, consistent with expectations, and Apple exited the quarter within the target range of four to six weeks of iPod channel inventory.
- Based on the latest data published by NPD, iPod accounts for over 75% of the U.S. market for MP3 players.
- iPod is also the top-selling MP3 player in many large markets, such as Canada, Australia, the U.K., France, Spain, Italy and Japan, according to the latest data published from NPD, GFK and BCN.
- Other music product revenue was $457 million, up 90% year over year, a function of continued strong sales from the iTunes Music Store and very solid performance for iPod accessories.

The iTunes Music Store continues to lead the industry, accounting for 85% share of the market for legally purchased and downloaded music in the U.S., based on the latest data available from Nielsen SoundScan.

- The firm has continued to enhance and expand the iTunes Music Store, now offering over 3 million songs, 9,000 music videos and over 150 television programs to the U.S. market.
- It is investing heavily in iPod and iTunes engineering and are very enthusiastic about the products in the pipeline.
- The iPod ecosystem continues to thrive with innovative new products, such as the Nike + iPod Sport Kit, which allows runners to get real-time feedback on their performance through their iPod Nanos.

Fueled by strong sales of MacBooks and MacBook Pros, the retail stores generated revenue of $715 million, representing 29% year-over-year growth.

- The stores generated $29 million in segment profit, excluding $148 million in associated manufacturing profit.
- Apple opened 14 stores, ending with 155 and with an average of 146 stores open during the quarter, average quarterly revenue per store was $4.9 million.
- Store traffic continued to be very strong, with over 17 million customers visiting stores during the quarter.
- The recently opened Fifth Avenue store in Manhattan has quickly become the highest volume store, and the firm recently welcomed the store''s 500,000th visitor.

In terms of geographic results, including sales from retail stores, revenue in the Americas, Europe and Japan was up 27%, 22% and 13% respectively.