Apple Inc. (AAPL)
Q3 2011 Earnings Call Transcript
July 19, 2011 5:00 p.m. ET

Executives

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

Analysts

Kathryn Huberty – Morgan Stanley
Shannon Cross – Cross Research
Benjamin Reitzes – Barclays Capital
Bill Shoppe – Goldman Sachs
Richard Gardner – Citigroup
Gene Munster – Piper Jaffray
Mark Moskowitz – JPMorgan Chase
Michael Abramsky – RBC Capital Markets
Keith Bachman – BMO Capital Markets
Scott Craig – Bank of America/Merrill Lynch
Brian Blair – Wedge Partners
Toni Sacconaghi – Sanford C. Bernstein
Brian Marshall – Gleacher & Company

Presentation

Operator

Good day everyone, and welcome to this Apple, Inc. Third Quarter Fiscal Year 2011 Earnings Release Conference Call. Today’s call is being recorded. At this time for opening remarks and introductions, I would now 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’s CFO, Peter Oppenheimer and he will be joined by Apple’s COO, Tim Cook, and Treasurer, Gary Wipfler for the Q&A session with analysts.

Please note that some of the information you will hear during our discussion today will consist of forward-looking statements, including without limitation, those regarding revenues, gross margins, operating expenses, other income and expense, stock-based compensation expense, taxes, earnings per share and future products. Actual results or trends could differ materially from our forecast. For more information please refer to the risk factors discussed in Apple’s Form 10-K for 2010, the Form 10-Q for the first two quarters of fiscal 2011 and the Form 8-K filed with the SEC today, along with the attached press release.

Apple assumes no obligation to update any forward-looking statements or information, which speak as of their respective dates.

With that, I would 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 the highest quarterly revenue and earnings in Apple’s history. We also set a new all-time quarterly record for iPhone and iPad sales and a new June quarter record for Mac sales and we are extremely pleased with the momentum of our business.

Revenue for the quarter was 28.6 billion, representing year-over-year growth of 82%. This record quarterly revenue tops the previous record established in the most recent December quarter by 1.8 billion and was almost 13 billion over the year-ago quarter’s results.

The tremendous year-over-year increase was fueled primarily by dramatic growth in iPhone and iPad sales, in addition to strong growth in Mac sales. Operating margin was a record high of 9.4 billion, representing 32.8% of revenue. Net income was 7.3 billion, topping the previous quarterly record set in the December quarter by 1.3 billion. Net income grew even faster than revenue, increasing 125% year-over-year and translated to earnings per share of $7.79.

Turning to the details of the quarter, I would like to begin with our Mac products and services. We established a new June quarter record with sales of 3.95 million Macs, representing a 14% increase over the year-ago quarter’s results. This growth is more than four times IDC’s most recently published forecast of 3% growth for the PC market overall.

Mac sales were particularly strong in our Asia-Pacific segment, where we experienced a 57% year-over-year increase in total Macs sold. We generated healthy Mac growth in both desktop and portable categories.

In May, we updated the iMac with a next-generation quad-core processors, powerful new graphics, high-speed Thunderbolt I/O technology and a new FactTime HD camera. The growth in Mac Portable sales was driven by strong sales at MacBook Pro as well as MacBook Air. We began and ended the quarter with between three and four weeks of Mac channel inventory.