Apple Earnings Released

Chris CrumBusiness

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Apple has just released its earnings report for its fiscal year third quarter, beating most estimates.

Apple posted revenue of $28.57 billion for the quarter with a net profit of $7.31 billion. For perspective, for the same quarter last year, they had $15.70 billion revenue with $3.25 billion in net profit, so yeah, they're doing alright.

Apple sold 20.34 million iPhones, 9.25 million iPads, 3.95 million Macs, and 7.54 million iPods during the quarter.

iPhone sales are up 142% for the quarter (YoY). iPad sales are up 183% and Mac sales are up 14%. iPod sales are down 20%. I would guess this is due to a combination of music being available on these other devices, the fact that so many people already have iPods, and the growing popularity of online streaming music services. Mac sales were particularly strong in the Asia-Pacific region. Mac sales were driven by Macbook Pro and Macbook Air.

Mac OS X Lion will be released tomorrow.

The ITunes store generated revenue of 1.4 billion - up year over year. Customers have downloaded over 15 billion songs to date.

It was the highest quarterly revenue and earnings in Apple's history. Also record for iPhone and iPad sales. 86% of Fortune 500 are deploying or testing iPad, CFO Peter Oppenheimer said.

Apple plans to open 30 new stores in the September quarter.

Steve Jobs didn't get on the conference call.

Here is the release in its entirety.

Release begins:

CUPERTINO, Calif.--(BUSINESS WIRE)--Apple® today announced financial results for its fiscal 2011 third quarter ended June 25, 2011. The Company posted record quarterly revenue of $28.57 billion and record quarterly net profit of $7.31 billion, or $7.79 per diluted share. These results compare to revenue of $15.70 billion and net quarterly profit of $3.25 billion, or $3.51 per diluted share, in the year-ago quarter. Gross margin was 41.7 percent compared to 39.1 percent in the year-ago quarter. International sales accounted for 62 percent of the quarter’s revenue.

“Management’s Discussion and Analysis of Financial Condition and Results of Operations”

The Company sold 20.34 million iPhones in the quarter, representing 142 percent unit growth over the year-ago quarter. Apple sold 9.25 million iPads during the quarter, a 183 percent unit increase over the year-ago quarter. The Company sold 3.95 million Macs during the quarter, a 14 percent unit increase over the year-ago quarter. Apple sold 7.54 million iPods, a 20 percent unit decline from the year-ago quarter.

“We’re thrilled to deliver our best quarter ever, with revenue up 82 percent and profits up 125 percent,” said Steve Jobs, Apple’s CEO. “Right now, we’re very focused and excited about bringing iOS 5 and iCloud to our users this fall.”

“We are extremely pleased with our performance which drove quarterly cash flow from operations of $11.1 billion, an increase of 131 percent year-over-year,” said Peter Oppenheimer, Apple’s CFO. “Looking ahead to the fourth fiscal quarter of 2011, we expect revenue of about $25 billion and we expect diluted earnings per share of about $5.50.”

Apple will provide live streaming of its Q3 2011 financial results conference call beginning at 2:00 p.m. PDT on July 19, 2011 at www.apple.com/quicktime/qtv/earningsq311. This webcast will also be available for replay for approximately two weeks thereafter.

This press release contains forward-looking statements including without limitation those about the Company’s estimated revenue and earnings per share. These statements involve risks and uncertainties, and actual results may differ. Risks and uncertainties include without limitation the effect of competitive and economic factors, and the Company’s reaction to those factors, on consumer and business buying decisions with respect to the Company’s products; continued competitive pressures in the marketplace; the ability of the Company to deliver to the marketplace and stimulate customer demand for new programs, products, and technological innovations on a timely basis; the effect that product introductions and transitions, changes in product pricing or mix, and/or increases in component costs could have on the Company’s gross margin; the inventory risk associated with the Company’s need to order or commit to order product components in advance of customer orders; the continued availability on acceptable terms, or at all, of certain components and services essential to the Company’s business currently obtained by the Company from sole or limited sources; the effect that the Company’s dependency on manufacturing and logistics services provided by third parties may have on the quality, quantity or cost of products manufactured or services rendered; risks associated with the Company’s international operations; the Company’s reliance on third-party intellectual property and digital content; the potential impact of a finding that the Company has infringed on the intellectual property rights of others; the Company’s dependency on the performance of distributors, carriers and other resellers of the Company’s products; the effect that product and service quality problems could have on the Company’s sales and operating profits; the continued service and availability of key executives and employees; war, terrorism, public health issues, natural disasters, and other circumstances that could disrupt supply, delivery, or demand of products; and unfavorable results of other legal proceedings. More information on potential factors that could affect the Company’s financial results is included from time to time in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of the Company’s public reports filed with the SEC, including the Company’s Form 10-K for the fiscal year ended September 25, 2010, its Forms 10-Q for the quarters ended December 25, 2010 and March 26, 2011, and its Form 10-Q for the quarter ended June 25, 2011 to be filed with the SEC. The Company assumes no obligation to update any forward-looking statements or information, which speak as of their respective dates.

Apple designs Macs, the best personal computers in the world, along with OS X, iLife, iWork and professional software. Apple leads the digital music revolution with its iPods and iTunes online store. Apple has reinvented the mobile phone with its revolutionary iPhone and App Store, and has recently introduced iPad 2 which is defining the future of mobile media and computing devices.

NOTE TO EDITORS: For additional information visit Apple’s PR website (www.apple.com/pr), or call Apple’s Media Helpline at (408) 974-2042.

© 2011 Apple Inc. All rights reserved. Apple, the Apple logo, Mac, Mac OS and Macintosh are trademarks of Apple. Other company and product names may be trademarks of their respective owners.

Apple Inc. 

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except share amounts which are reflected in thousands and per share amounts)

Three Months EndedNine Months Ended
June 25,
2011
June 26, 

2010

June 25,
2011
June 26, 

2010

Net sales$28,571$15,700$79,979$44,882
Cost of sales (1)16,6499,56447,54126,710
Gross margin11,9226,13632,43818,172
Operating expenses:
Research and development (1)6284641,7841,288
Selling, general and administrative (1)1,9151,4385,5743,946
Total operating expenses2,5431,9027,3585,234
Operating income9,3794,23425,08012,938
Other income and expense17258334141
Income before provision for income taxes9,5514,29225,41413,079
Provision for income taxes2,2431,0396,1153,374
Net income$7,308$3,253$19,299$9,705
Earnings per common share:
Basic$7.89$3.57$20.91$10.69
Diluted$7.79$3.51$20.63$10.51
Shares used in computing earnings per share:
Basic926,108912,197922,917907,762
Diluted937,810927,361935,688923,341
(1) Includes stock-based compensation expense as follows:
Cost of sales$52$38$155$112
Research and development$119$80$336$240
Selling, general and administrative$113$101$379$303
Apple Inc. 

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions, except share amounts)

June 25, 2011September 25, 2010
ASSETS:
Current assets:
Cash and cash equivalents$12,091$11,261
Short-term marketable securities16,30414,359
Accounts receivable, less allowances of $55 in each period6,1025,510
Inventories8891,051
Deferred tax assets1,8921,636
Vendor non-trade receivables5,3694,414
Other current assets4,2513,447
Total current assets46,89841,678
Long-term marketable securities47,76125,391
Property, plant and equipment, net6,7494,768
Goodwill741741
Acquired intangible assets, net1,169342
Other assets3,4402,263
Total assets$106,758$75,183
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Current liabilities:
Accounts payable$15,270$12,015
Accrued expenses7,5975,723
Deferred revenue3,9922,984
Total current liabilities26,85920,722
Deferred revenue – non-current1,4071,139
Other non-current liabilities9,1495,531
Total liabilities37,41527,392
Commitments and contingencies
Shareholders' equity:
Common stock, no par value; 1,800,000,000 shares authorized;
926,903,779 and 915,970,050 shares issued and outstanding,
respectively
12,71510,668
Retained earnings56,23937,169
Accumulated other comprehensive income/(loss)389(46)
Total shareholders' equity69,34347,791
Total liabilities and shareholders' equity$106,758$75,183
Apple Inc. 

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

Nine Months Ended
June 25, 2011June 26, 2010
Cash and cash equivalents, beginning of the period$11,261$5,263
Operating activities:
Net income19,2999,705
Adjustments to reconcile net income to cash generated by operating activities:
Depreciation, amortization and accretion1,271698
Stock-based compensation expense870655
Deferred income tax expense2,2321,298
Changes in operating assets and liabilities:
Accounts receivable, net(592)(79)
Inventories162(487)
Vendor non-trade receivables(955)(1,256)
Other current and non-current assets(1,551)(1,001)
Accounts payable2,4802,812
Deferred revenue1,276806
Other current and non-current liabilities2,608(239)
Cash generated by operating activities27,10012,912
Investing activities:
Purchases of marketable securities(75,133)(41,318)
Proceeds from maturities of marketable securities16,39619,758
Proceeds from sales of marketable securities34,30114,048
Payments made in connection with business acquisitions, net of cash acquired0(615)
Payments for acquisition of property, plant and equipment(2,615)(1,245)
Payments for acquisition of intangible assets(266)(63)
Other34(36)
Cash used in investing activities(27,283)(9,471)
Financing activities:
Proceeds from issuance of common stock577733
Excess tax benefits from equity awards915652
Taxes paid related to net share settlement of equity awards(479)(384)
Cash generated by financing activities1,0131,001
Increase in cash and cash equivalents8304,442
Cash and cash equivalents, end of the period$12,091$9,705
Supplemental cash flow disclosure:
Cash paid for income taxes, net$2,563$2,657
Apple Inc.
Q3 2011 Unaudited Summary Data
Q2 2011Q3 2010Q3 2011
Sequential ChangeYear/Year Change
Operating SegmentsCPUUnits KRevenue$MCPUUnits KRevenue$MCPUUnits KRevenue$MCPU UnitsRevenueCPU UnitsRevenue
Americas1,217$9,3231,358$6,2271,487$10,12622%9%9%63%
Europe9956,0279144,1609227,098- 7%18%1%71%
Japan1551,3831299101501,510- 3%9%16%66%
Asia Pacific5964,7433941,8256206,3324%34%57%247%
Retail7973,1916772,5787683,505- 4%10%13%36%
Total Operating Segments3,760$24,6673,472$15,7003,947$28,5715%16%14%82%
Sequential ChangeYear/Year Change
Product SummaryUnits KRevenue$MUnits KRevenue$MUnits KRevenue$MUnitsRevenueUnitsRevenue
Desktops (1)1,009$1,4411,004$1,3011,155$1,58014%10%15%21%
Portables (2)2,7513,5352,4683,0982,7923,5251%0%13%14%
Subtotal CPUs3,7604,9763,4724,3993,9475,1055%3%14%16%
iPod9,0171,6009,4061,5457,5351,325- 16%- 17%- 20%- 14%
Other Music Related Products and Services (3)1,6341,2141,571- 4%29%
iPhone and Related Products and Services (4)18,64712,2988,3985,33420,33813,3119%8%142%150%
iPad and Related Products and Services (5)4,6942,8363,2702,1669,2466,04697%113%183%179%
Peripherals and Other Hardware (6)580396517- 11%31%
Software, Service and Other Sales (7)743646696- 6%8%
Total Apple$24,667$15,700$28,57116%82%
(1)Includes iMac, Mac mini, Mac Pro and Xserve product lines.
(2)Includes MacBook, MacBook Air and MacBook Pro product lines.
(3)Includes sales from the iTunes Store, App Store, and iBookstore in addition to sales of iPod services and Apple-branded and third-party iPod accessories.
(4)Includes revenue recognized from iPhone sales, carrier agreements, services, and Apple-branded and third-party iPhone accessories.
(5)Includes revenue recognized from iPad sales, services, and Apple-branded and third-party iPad accessories.
(6)Includes sales of displays, wireless connectivity and networking solutions, and other hardware accessories.
(7)Includes sales from the Mac App Store in addition to sales of other Apple-branded and third-party Mac software and Mac and Internet services.
K = Units in thousands $M = Amounts in millions

 

Chris Crum

Chris Crum has been a part of the WebProNews team and the iEntry Network of B2B Publications since 2003. Follow Chris on Twitter, on StumbleUpon, on Pinterest and/or on Google: +Chris Crum.