Apple Inc AAPL
Q3 2010 Earnings Call Transcript

Transcript Call Date 07/20/2010

Operator: Good day, ladies and gentlemen, and welcome to today’s Apple Inc. Third 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 conference over to Ms. Nancy Paxton, Senior Director of Investor Relations. Please go ahead, ma’am.

Nancy Paxton - IR: Thank you. Good afternoon and thanks to everyone for joining us. Speaking today is Apple's CFO, Peter Oppenheimer. 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’ll 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 forecasts.

For more information, please refer to the risk factors discussed in Apple's Form 10-K for 2009 as amended, the Form 10-Q for the first two quarters of fiscal 2010 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 the respective dates.

With that, I’d like to turn the call over to Peter Oppenheimer for introductory remarks.

Peter Oppenheimer - SVP and CFO: Thank you, Nancy. Thank you for joining us. We are extremely pleased to report outstanding results for the June quarter. During the quarter, we began shipping iPad to millions of delighted customers in 10 countries. We launched the very popular iPhone 4. We shipped iOS 4 with many great new features and we set a new all time record for quarterly Mac sales. We're shipping the best products in Apple's history and the response from our customers has been terrific and as a result, we're thrilled to announce today our highest quarterly revenue ever surpassing the previous record set in the most recent holiday quarter.

Revenue was $15.7 billion, an increase of $6 billion or 61% over the prior June quarter's result. The tremendous revenue growth was driven primarily by the very successful launch of iPad in addition to strong sales of iPhone and Mac. Operating margin was $4.23 billion, representing 27% of revenue. Net income was $3.25 billion, up 78% over the year ago quarter, and earnings per share were $3.51.

Turning to the details of our results, I'd like to begin with our Mac products and services. We generated record quarterly sales of 3.47 million Macs exceeding the previous record established in the most recent December quarter by over 100,000. This represents 33% year-over-year growth compared to IDC's latest published estimate of 22% growth for the market overall in the June quarter.

We are pleased to have outgrown the global market in both the desktop and portable categories. We experienced strong double digit Mac growth in each of our geographies led by both the continued momentum of iMac in the very popular MacBook Pro family which was updated in April with faster processors, more powerful graphics, and even longer battery life.

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