This summary is based on the third quarter fiscal 2008 earnings call conducted by Apple Inc. (AAPL: chart) on July 21, 2008.

Management:

Senior Director, Investor Relations and Corporate Finance: Nancy Paxton
Chief Financial Officer, Senior Vice President: Peter Oppenheimer
Chief Operating Officer: Timothy D. Cook
Treasurer: Gary Wipfler

Key Investors Issues

- EPS were $1.19 a share compared to 92 cents a share last year.
- Profit was $1.07 billion, up from $818 million during the same period a year ago.
- Revenue rose 38% to $7.46 billion from last year''s sales of $5.41 billion.

Third Quarter Highlights

Revenue was $7.46 billion, representing 38% growth and an increase of more than $2 billion over the previous June quarter’s revenue of $5.41 billion.

The strong year-over-year growth was driven by the highest quarterly Mac shipments ever and higher revenue from iPod, iTunes, and iPhone, which celebrated its first anniversary on June 29th.

- Operating margin was better than expected at 18.6%, due primarily to higher-than-anticipated revenue and gross margin.
- Net income was $1.07 billion, which was up 31% over the prior June quarter’s results, and translated to earnings per share of $1.19.
- The current June quarter’s revenue growth of 38% was above the 24% growth rate achieved in last year’s June quarter and the company continued to see healthy growth in all regions. Sales in retail stores, most of which are in the U.S., were strong, growing 58% year over year and store traffic was about 32 million, up 10 million from the year-ago quarter.

Mac products and services represented 61% of total revenue in the June quarter.

- The company has shipped 2.5 million Macs. This translates into 41% year-over-year growth and is nearly three times the overall PC market rate of growth for the June quarter based on the latest estimate published by IDC.
- Mac desktop sales grew sharply at 49% year over year, driven by strong demand for iMac updated in April. Sales of portables were up 37% year over year, driven by continued growth in demand for Macbooks and Macbook Pros, and the addition of Macbook Air to the portable lineup in January.
- In the U.S. channels tracked and reported by NPD, Apple''s share of total personal computers sold in the month of June increased to 19.5% this year from 15.4% last year, and it was the best Mac quarter ever for U.S. education business, with unit growth of 25% year over year.

Music products and services accounted for 33% of total revenue growth.

- The company sold 11 million iPods, an increase of 12% from the year-ago quarter, with the growth being driven by Shuffle as well as the introduction of the iPod Touch last September.
- The iPod sales growth was10% in the United States and 15% internationally. iPod revenue grew 7% year over year, less than the unit rate of growth, due to lower ASPs driven largely by the Shuffle price reduction taken in February.
- The company was successful in maintaining high MP3 market share in the U.S. and gaining share internationally. Share is now over 70% in both the United States and Australia, over 60% in Canada, and over 50% in the U.K., Japan, and Switzerland, based on the latest published data from NPD, GFK, and BCN.

The company has sold over 5 billion songs through iTunes and continues to build on industry-leading catalog of content, which features over 8 million songs, 20,000 TV episodes, and 2,200 films, including over 450 in HD.

- The company introduced new content from HBO to iTunes in the U.S., premiered movies in Canada and the U.K., and introduced television programming in Germany, France, and Australia. iTunes also began offering new movies from major studios and premier independent studios on the same dates as they became available on DVD.
- The company shipped 717,000 first generation iPhones, and recognized revenue from iPhone handset sales, accessories, and carrier payments of $419 million. Because the company announced the iPhone 2.0 software and its many new features on March 6th but did not make it available until this month, the company did not begin recognizing handset revenue for any iPhones sold on or after March 6th until made the iPhone 2.0 software available.

- The company launched the App Store on July 11th with a tremendous selection of innovative applications, such as games, advanced medical solutions, and robust productivity tools for the enterprise. The App Store currently offers more than 900 applications, with more than 20% that are free and more than 90% priced at less than $10.

The Apple retail stores delivered strong results with revenue growing 58% year over year to $1.44 billion.

- The store sold 476,000 Macs, an increase of 44% year over year, and over half were sold to customers who have never owned a Mac before.
- The company opened eight stores, including store on Boylston Street in Boston and first store in Australia to end the quarter with 216 stores. With an average of 211 stores open, average revenue per store was $6.8 million compared to $5.1 million in the year-ago quarter, an increase of 33%. Retail segment margin was $297 million, compared to $184 million in the year-ago quarter, an increase of 61%.
- The company opened first store in Beijing.

- Total company gross margin was 34.8%, which exceeded guidance by about 180 basis points as a result of several factors. First, the company realized a net benefit to gross margin of about 70 basis points, primarily related to a one-time true-up of contractor or contract manufacturer deferred margin. Second, the remaining 110 basis points resulted primarily from a better commodity environment, a richer product mix, and leverage from higher-than-expected revenue.
- Operating expenses were $1.21 billion, including $112 million in stock-based compensation expense. OI&E was $118 million. The tax rate was 29%, below guidance of 31% due to a higher-than-anticipated mix of foreign earnings.
- The company generated $1.33 billion in cash, ending with $20.8 billion. Cash flow from operations was $1.32 billion.