Why Apple’s Earnings Reports Matter

by Ben Bajarin   |   July 19th, 2011

Today Apple released their earnings report for the third quarter of 2011. As was expected there was much anticipation regarding the earnings, not only from Wall St but also from media outlets. Apple did not disappoint having their best non-holiday quarter ever as well as selling more iPads and iPhones than any other quarter. Outside of continually delivering reports that shock people there is a more significant point about Apple and their earnings progress that i’d like to highlight.

Namely that Apple’s earnings are one of the biggest indicators that not only show the healthy life of the technology economy but they should also give other companies hope. That hope is that if a company truly delivers value to the market place it will be rewarded. They should find hope that consumers aren’t just after the cheapest thing on the market but that consumers truly desire products that add value to their lives and they are willing to pay for it.

It’s not a race to the bottom its a race to provide value. Apple’s earnings continually re-enforce this point.

Below are the key points from the earnings.

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.

- 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.

Overall:
- Apple reported quarterly revenue of $28.57 billion, and profit of $7.31 billion, representing year-over-year growth of 82% and 125%, respectively
- We’ve now sold 222 million iOS devices to date
- International sales made up 62% of the quarter’s revenue, compared with 59% in FYQ2
- Gross margin was 41.7%, above our guidance for the quarter
- Apple closed the quarter with $76.2 billion in cash, compared with $65.8 billion at the end of the previous quarter
Mac:
- 3.95 million Macs were sold, a record for the June quarter
- Mac sales grew 14% year-over-year, four times the global PC market growth, according to IDC
- The Mac has outgrown the PC market for 21 straight quarters – more than five years
- International Mac sales continue to be strong, growing 57% year-over-year in Asia Pacific
- Peter Oppenheimer shared that Lion, the new version of OS X, will be available tomorrow
iPhone:
- Apple sold an all-time record of 20.3 million iPhones during the quarter, compared with 8.4 million in the year-ago quarter, 2X IDC’s growth estimate for the smartphone market
- iPhone is being deployed or piloted by more than 95% of Fortune 500 companies, and by 57% of the Global 500
- iPhone is now available in 105 countries through 228 carriers, and year-over-year sales quadrupled in Asia Pacific
iPad:
- Apple sold 9.2 million iPads in the quarter, up from 3.3 million in the year-ago quarter
- Supply improved and we’re still selling every iPad we can make – iPad is now available in 64 countries
- iPad is now being deployed or piloted in 86% of Fortune 500 companies and 47% of the Global 500
- There are more than 100,000 apps designed for iPad in the App Store
Music:
- Apple sold 7.54 million iPods, with iPod touch continuing to make-up over half of the iPods sold
- iPod maintained over 70% marketshare in the US, according to NPD, and is the top-selling MP3 player in most countries for which we have data
- iTunes Store revenue was up 36% year-over-year, reaching $1.4 billion
- We have paid over $2.5 billion out to developers, as the 425,000+ apps in the App Store have been downloaded more than 15 billion times
Retail:
- Apple plans to open 30 new stores this quarter, for a total of 40 new stores this fiscal year
- Mac sales in our retail stores totaled 768,000, up 13% from the year ago quarter, and 50% were to people new to the Mac
- Apple’s retail stores brought in $3.5 billion in the quarter, up from $2.6 billion in the year ago quarter

Ben Bajarin

Ben Bajarin is a Principal Analyst at Creative Strategies, Inc - An industry analysis, market intelligence and research firm located in Silicon Valley. His primary focus is consumer technology and market trend research. He is a husband, father, gadget enthusiast, trend spotter, early adopter and hobby farmer. Full Bio