Apple Q1 Earnings Released, Biggest Quarter Ever

Chris CrumBusiness

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Apple just posted its earnings for its fiscal year 2012 first quarter.

Last quarter, Apple didn't live up to analysts' expectations, but the company still had a record September quarter. This quarter, they had the holidays, and this quarter, they blew estimates out of the water.

The Company posted record quarterly revenue of $46.33 billion and record quarterly net profit of $13.06 billion. Expectations were closer to $38 billion in the revenue category.

37.04 million iPhones sold in the quarter (up 128% from last year).

15.43 million iPads sold in the quarter (up 111%).

5.2 million Macs (up 26%).

iPod sales declined again, but they still sold 15.4 million iPods during the quarter (down 21%).

“We’re thrilled with our outstanding results and record-breaking sales of iPhones, iPads and Macs,” said Tim Cook, Apple’s CEO. “Apple’s momentum is incredibly strong, and we have some amazing new products in the pipeline.”

“We are very happy to have generated over $17.5 billion in cash flow from operations during the December quarter,” said Peter Oppenheimer, Apple’s CFO. “Looking ahead to the second fiscal quarter of 2012, which will span 13 weeks, we expect revenue of about $32.5 billion and we expect diluted earnings per share of about $8.50.”

Stay tuned for more from the conference call.

Here's the release in its entirety:

Apple® today announced financial results for its fiscal 2012 first quarter which spanned 14 weeks and ended December 31, 2011. The Company posted record quarterly revenue of $46.33 billion and record quarterly net profit of $13.06 billion, or $13.87 per diluted share. These results compare to revenue of $26.74 billion and net quarterly profit of $6 billion, or $6.43 per diluted share, in the year-ago quarter. Gross margin was 44.7 percent compared to 38.5 percent in the year-ago quarter. International sales accounted for 58 percent of the quarter’s revenue.

“Apple’s momentum is incredibly strong, and we have some amazing new products in the pipeline.”

The Company sold 37.04 million iPhones in the quarter, representing 128 percent unit growth over the year-ago quarter. Apple sold 15.43 million iPads during the quarter, a 111 percent unit increase over the year-ago quarter. The Company sold 5.2 million Macs during the quarter, a 26 percent unit increase over the year-ago quarter. Apple sold 15.4 million iPods, a 21 percent unit decline from the year-ago quarter.

“We’re thrilled with our outstanding results and record-breaking sales of iPhones, iPads and Macs,” said Tim Cook, Apple’s CEO. “Apple’s momentum is incredibly strong, and we have some amazing new products in the pipeline.”

“We are very happy to have generated over $17.5 billion in cash flow from operations during the December quarter,” said Peter Oppenheimer, Apple’s CFO. “Looking ahead to the second fiscal quarter of 2012, which will span 13 weeks, we expect revenue of about $32.5 billion and we expect diluted earnings per share of about $8.50.”

Apple will provide live streaming of its Q1 2012 financial results conference call beginning at 2:00 p.m. PST on January 24, 2012 atwww.apple.com/quicktime/qtv/earningsq112. 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 24, 2011 and its Form 10-Q for the fiscal quarter ended December 31, 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 is defining the future of mobile media and computing devices with iPad.

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.

© 2012 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 number of shares which are reflected in thousands and per share amounts)

Three Months Ended
December 31, 2011December 25, 2010
Net sales$46,333$26,741
Cost of sales (1)25,63016,443
Gross margin20,70310,298
Operating expenses:
Research and development (1)758575
Selling, general and administrative (1)2,6051,896
Total operating expenses3,3632,471
Operating income17,3407,827
Other income and expense137136
Income before provision for income taxes17,4777,963
Provision for income taxes4,4131,959
Net income$13,064 $6,004
Earnings per common share:
Basic$14.03$6.53
Diluted$13.87$6.43
Shares used in computing earnings per share:
Basic931,041919,294
Diluted941,572933,154
(1) Includes share-based compensation expense as follows:
Cost of sales$63$52
Research and development$160$113
Selling, general and administrative$197$134
Apple Inc.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions, except number of shares which are reflected in thousands)

December 31, 2011September 24, 2011
ASSETS:
Current assets:
Cash and cash equivalents$10,310$9,815
Short-term marketable securities19,84616,137
Accounts receivable, less allowances of $78 and $53, respectively8,9305,369
Inventories1,236776
Deferred tax assets1,9372,014
Vendor non-trade receivables7,5546,348
Other current assets4,9584,529
Total current assets54,77144,988
Long-term marketable securities67,44555,618
Property, plant and equipment, net7,8167,777
Goodwill896896
Acquired intangible assets, net3,4723,536
Other assets4,2813,556
Total assets$138,681$116,371
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Current liabilities:
Accounts payable$18,221$14,632
Accrued expenses11,5009,247
Deferred revenue4,8864,091
Total current liabilities34,60727,970
Deferred revenue – non-current2,1871,686
Other non-current liabilities11,83310,100
Total liabilities48,62739,756
Commitments and contingencies
Shareholders' equity:
Common stock, no par value; 1,800,000 shares authorized; 932,214 and 929,277 shares issued and outstanding, respectively13,96113,331
Retained earnings75,70962,841
Accumulated other comprehensive income384443
Total shareholders' equity90,05476,615
Total liabilities and shareholders' equity $138,681 $116,371
Apple Inc.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

Three Months Ended
December 31, 2011December 25, 2010
Cash and cash equivalents, beginning of the period$9,815$11,261
Operating activities:
Net income13,0646,004
Adjustments to reconcile net income to cash generated by operating activities:
Depreciation, amortization and accretion721356
Share-based compensation expense420299
Deferred income tax expense1,456823
Changes in operating assets and liabilities:
Accounts receivable, net(3,561)(517)
Inventories(460)166
Vendor non-trade receivables(1,206)(433)
Other current and non-current assets(962)(558)
Accounts payable4,3142,346
Deferred revenue1,296634
Other current and non-current liabilities2,472653
Cash generated by operating activities17,5549,773
Investing activities:
Purchases of marketable securities(40,175)(19,575)
Proceeds from maturities of marketable securities3,0383,279
Proceeds from sales of marketable securities21,4726,853
Payments for acquisition of property, plant and equipment(1,321)(1,214)
Payments for acquisition of intangible assets(108)(49)
Other(34)(23)
Cash used in investing activities(17,128)(10,729)
Financing activities:
Proceeds from issuance of common stock91208
Excess tax benefits from equity awards333454
Taxes paid related to net share settlement of equity awards(355)(233)
Cash generated by financing activities69429
Increase/(decrease) in cash and cash equivalents495(527)
Cash and cash equivalents, end of the period$10,310$10,734
Supplemental cash flow disclosure:
Cash paid for income taxes, net$1,474$826
Apple Inc.
Q1 2012 Unaudited Summary Data
(Units in thousands, Revenue in millions)
Q4 2011Q1 2011Q1 2012
Sequential ChangeYear/Year Change
Operating SegmentsMac

Units

RevenueMac

Units

RevenueMac

Units

RevenueMac UnitsRevenueMac UnitsRevenue
Americas1,716$9,6481,360$9,2181,612$17,714- 6%84%19%92%
Europe1,1767,3971,2457,2561,48211,25626%52%19%55%
Japan1751,1111621,4331843,5505%220%14%148%
Asia Pacific7316,5305164,9878147,69711%18%58%54%
Retail1,0963,5848513,8471,1066,1161%71%30%59%
Total Operating Segments4,894$28,2704,134$26,7415,198$46,3336%64%26%73%
Sequential ChangeYear/Year Change
Product SummaryUnitsRevenueUnitsRevenueUnitsRevenueUnitsRevenueUnitsRevenue
Mac Desktops (1)(9)1,278$1,6871,227$1,7311,479$1,93616%15%21%12%
Mac Portables (2)(9)3,6164,5852,9073,6993,7194,6623%2%28%26%
Subtotal Mac4,8946,2724,1345,4305,1986,5986%5%26%22%
iPod (3)(9)6,6221,10319,4463,42515,3972,528133%129%- 21%- 26%
Other Music Related Products and Services (4)1,6781,4312,02721%42%
iPhone and Related Products and Services (5)(9)17,07310,98016,23510,46837,04424,417117%122%128%133%
iPad and Related Products and Services (6)(9)11,1236,8687,3314,60815,4349,15339%33%111%99%
Peripherals and Other Hardware (7)64059376620%29%
Software, Service and Other Sales (8)72978684416%7%
Total Apple$28,270$26,741$46,33364%73%
(1)Includes revenue from iMac, Mac mini and Mac Pro sales.
(2)Includes revenue from MacBook, MacBook Air and MacBook Pro sales.
(3)Includes revenue from iPod sales.
(4)Includes revenue from sales from the iTunes Store, App Store, and iBookstore in addition to sales of iPod services and Apple-branded and third-party iPod accessories.
(5)Includes revenue from sales of iPhone, iPhone services, and Apple-branded and third-party iPhone accessories.
(6)Includes revenue from sales of iPad, iPad services, and Apple-branded and third-party iPad accessories.
(7)Includes revenue from sales of displays, networking products, and other hardware.
(8)Includes revenue from sales of Apple-branded and third-party Mac software, and services.
(9)Includes amortization of related revenue deferred for non-software services and embedded software upgrade rights.

 

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.