Apple Inc. (
AAPL)
Q1 2010 Earnings Call Transcript
January 25, 2010 5:00 p.m. ET
Executives
Nancy Paxton – Senior Director of Investor Relations
Peter Oppenheimer – Vice President of Finance and Chief Financial Officer
Timothy D. Cook – Chief Operating Officer
Analysts
Gene Munster - Piper Jaffray
Richard Gardner - Citigroup
Bill Shope - Credit Suisse
Benjamin Reitzes - Barclays Capital
Toni Sacconaghi - Sanford Bernstein
Charles Wolf - Needham & Company
Michael Abramsky - RBC Capital Markets
Kathryn Huberty - Morgan Stanley
Shannon Cross - Cross Research
David Bailey - Goldman Sachs
Mark Moskowitz – J.P. Morgan
Maynard Um - UBS
Keith Bachman - Bank of Montreal
Chris Whitmore - Deutsche Bank
Bill Fearnley - FTN Equity Capital Markets
Presentation
Operator
Good morning and welcome to the Apple Incorporated First Quarter Fiscal Year 2010 Earnings Release Conference Call. Today’s call is being recorded. At this time for opening remarks and introductions, I would like to turn the call over to Ms. Nancy Paxton, Senior Director of Investor Relations. Please go ahead, ma’am.
Nancy Paxton
Thank you. Good afternoon and thanks to everyone for joining us. Speaking today is Apple CFO, Peter Oppenheimer and he’ll be joined by Apple’s COO, Timothy D. Cook and Treasurer, Gary Wipfler, for the Q&A session with Alex.
Please note some of the information you will hear during our discussion today will consist of forward-looking statements including, without limitation, those regarding revenue, gross margins, operating expenses, other income and expense, stock based compensation expense, taxes, earnings per share and future products.
Actual results and trends could differ materially from our forecast. For more information please refer to the risk factors discussed in Apple’s Form 10-K for 2009 and the Form 10-Q for the first quarter of fiscal 2010 filed earlier today. Apple assumes no obligation to update any forward-looking statements or information which speak as of their respective dates.
And with that, I’d like to turn the call over to Peter Oppenheimer for introductory remarks.
Peter Oppenheimer
Thank you, Nancy. Thank you for joining us. We are thrilled to report our best quarter ever. We posted Apple’s highest quarter revenue and earnings and set new records with sales of Macs and iPhones. We’re shipping the best products in our history and customers love them.
Today, we are recording our current results as well as all historical comparisons under the new accounting principles we discussed with you on our last earnings conference call, which I will explain in detail after going through the highlights of our record-breaking December quarter. Revenue for the quarter was $15.68 billion growing 32% from prior’s quarter results and surpassing our previous quarterly record by almost $3.5 billion.
Operating margin was Apple’s highest ever at $3.73 billion representing 30.1% of revenue. Net income was $3.38 billion, up 50% over the year ago quarter and was almost $850 million higher than our previous quarterly record. Earnings per share were $3.67.
Turning to the details of our results, I’d like to begin with our Mac products and services. We generated record Mac sales of 3.36 million beating our previous record set in the September quarter by over 300,000. Quarterly Mac sales grew 33% year over year and this compares extremely favorably to IDC’s latest published estimate of 17% growth for the market overall in the December quarter.
We are extremely proud of this result and believe our Mac hardware and software are providing outstanding innovation and value that our customers really love. Response to the new iMacs introduced in October was very strong, contributing to 70% year-over-year growth in desktop sales. Customers are thrilled with the iMac’s tremendous new features including enhanced performance, wide screen LED display, wireless keyboard and new Magic mouse.
Portable sales were also robust during the quarter, increasing 18% year over year based on strong sales of both MacBook and MacBook Pro. We experienced very strong demand following the October launch of the new MacBook, which features a durable unibody design, brilliant LED display, glass multi-task track pad and enhanced performance.
