http://www.morningstar.com/earnings/41404458-apple-inc-aapl-q3-2012.aspx

Apple Inc AAPL
Q3 2012 Earnings Call Transcript

Transcript Call Date 07/24/2012

Operator: Good day, everyone and welcome to the Apple Incorporated Third Quarter Fiscal Year 2012 Earnings Release Call.

Today's call is being recorded. At this time, for opening remarks and introductions, I would like to turn the call over to Nancy Paxton, Senior Director of Investor Relations. Please go ahead.

Nancy Paxton - IR: Thank you. Good afternoon, and thanks to everyone for joining us. Speaking today is Apple's CFO, Peter Oppenheimer; and he'll be joined by Apple's CEO, 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 revenue, gross margin, 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 2011, the Form 10-Q for the first and second quarters of fiscal 2012 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 speaks as of their respective dates.

I'd now like to turn the call over to Peter Oppenheimer for introductory remarks.

Peter Oppenheimer - SVP and CFO: Thank you, Nancy. We are pleased to report the results of our third fiscal quarter. We established new all-time quarterly record for iPad unit sales and new June quarter records for iPhone and Mac unit sales, leading to our highest June quarter revenue and earnings ever. Revenue for the quarter was $35 billion, representing year-over-year growth of 23%. The $6.5 billion increase over the prior June quarter's result was driven primarily by strong growth in iPad and iPhone sales.

Operating margin was $11.6 billion, representing 33% of revenue. Net income was $8.8 billion increasing 21% over the prior June quarter's result. The quarter's net income translated to diluted earnings per share of $9.32.

Turning to the details of the quarter, I'd like to begin with our Mac products and services. We sold $4 million Macs establishing a new June quarter record. This represents 2% growth year-over-year, compared to IDC's latest published estimate of a 1% contraction of the global personal computer market in the June quarter.

Last month, we updated the entire MacBook line with faster processors, graphics, memory, flash storage and USB 3 connectivity. We also introduce the all new 15-inch MacBook Pro with Retina display, all-flash architecture and quad-core processors, and customer response has been excellent. While we are seeing tremendous momentum for the iPad in education, which I'll discuss later, we also experienced our best quarter ever for U.S. education institution Mac sales with portables representing nearly three-quarters of total Mac sales.

Notable large education transactions closed during the June quarter, include Rutherford County, North Carolina, which has purchased 6,000 MacBook Airs to support its 21st Century Digital Learning Environment, and Pueblo Colorado School District 70 were all high school students in K-12 staff, and the 22 school district will convert to MacBook Air.

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