Apple crushes estimates in Q2, reports profit of $11.6 billion on $39.2 billion in revenue

After a rough month that saw Apple’s stock tumble nearly $90 from a high of $644 earlier this month to as low as $555.18 on Tuesday, Apple reported its earnings for the second fiscal quarter on Tuesday after the market closed. Following a last-minute round of panic that swept Wall Street, Apple posted a net profit of $11.6 billion, or$12.30 per share — up 94% year-over-year — on revenue of $39.2 billion, crushing the Street’s consensus. Analysts were expecting earnings of $10.06 per share on $36.81 billion in sales. Read on for more.

IPhone channel sales were the focus of the Street’s worries earlier on Tuesday, as a number of analysts lowered expectations following AT&T’s first-quarter earnings report. Wall Street was looking for Apple to move 30.5 million smartphones during the second fiscal quarter and the company beat expectations, selling 35.1 million iPhones into channels last quarter, up 88% from 18.65 million units in the second quarter a year earlier.

Outside of the iPhone, which has quickly become Apple’s biggest money-maker by a substantial margin, analysts were expecting Apple to sell between 12 million and 13 million iPads along with 4.4 million Macs. Actual iPad sales came in at 11.8 million units, and Apple sold 4 million Mac computers in the second fiscal quarter. Apple sold 4.69 million iPads and 3.6 million Macs in the same quarter in 2011.

Shares of Apple stock are up more than 6% in after-hours trading, and the company’s full press release follows below.

Apple Reports Second Quarter Results

Record March Quarter Sales of iPhones, iPads and Macs

Net Profit Increases 94% Year-over-Year

CUPERTINO, Calif.–(BUSINESS WIRE)–Apple® today announced financial results for its fiscal 2012 second quarter ended March 31, 2012. The Company posted quarterly revenue of $39.2 billion and quarterly net profit of $11.6 billion, or $12.30 per diluted share. These results compare to revenue of $24.7 billion and net profit of $6.0 billion, or $6.40 per diluted share, in the year-ago quarter. Gross margin was 47.4 percent compared to 41.4 percent in the year-ago quarter. International sales accounted for 64 percent of the quarter’s revenue.

“Looking ahead to the third fiscal quarter, we expect revenue of about $34 billion and diluted earnings per share of about $8.68.”

The Company sold 35.1 million iPhones in the quarter, representing 88 percent unit growth over the year-ago quarter. Apple sold 11.8 million iPads during the quarter, a 151 percent unit increase over the year-ago quarter. The Company sold 4 million Macs during the quarter, a 7 percent unit increase over the year-ago quarter. Apple sold 7.7 million iPods, a 15 percent unit decline from the year-ago quarter.

“We’re thrilled with sales of over 35 million iPhones and almost 12 million iPads in the March quarter,” said Tim Cook, Apple’s CEO. “The new iPad is off to a great start, and across the year you’re going to see a lot more of the kind of innovation that only Apple can deliver.”

“Our record March quarter results drove $14 billion in cash flow from operations,” said Peter Oppenheimer, Apple’s CFO. “Looking ahead to the third fiscal quarter, we expect revenue of about $34 billion and diluted earnings per share of about $8.68.”

Apple will provide live streaming of its Q2 2012 financial results conference call beginning at 2:00 p.m. PDT on April 24, 2012 at www.apple.com/quicktime/qtv/earningsq212. 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 diluted 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, its Form 10-Q for the fiscal quarter ended December 31, 2011, and its Form 10-Q for the fiscal quarter ended March 31, 2012 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 Six Months Ended
March 31,2012 March 26,2011 March 31,2012 March 26,2011
Net sales $ 39,186 $ 24,667 $ 85,519 $ 51,408
Cost of sales (1) 20,622 14,449 46,252 30,892
Gross margin 18,564 10,218 39,267 20,516
Operating expenses:
Research and development (1) 841 581 1,599 1,156
Selling, general and administrative (1) 2,339 1,763 4,944 3,659
Total operating expenses 3,180 2,344 6,543 4,815
Operating income 15,384 7,874 32,724 15,701
Other income and expense 148 26 285 162
Income before provision for income taxes 15,532 7,900 33,009 15,863
Provision for income taxes 3,910 1,913 8,323 3,872
Net income $ 11,622 $ 5,987 $ 24,686 $ 11,991
Earnings per common share:
Basic $ 12.45 $ 6.49 $ 26.48 $ 13.02
Diluted $ 12.30 $ 6.40 $ 26.17 $ 12.83
Shares used in computing earnings per share:
Basic 933,582 923,196 932,265 921,245
Diluted 944,893 935,944 943,185 934,549
(1) Includes stock-based compensation expense as follows:
Cost of sales $ 63 $ 51 $ 126 $ 103
Research and development $ 168 $ 104 $ 328 $ 217
Selling, general and administrative $ 193 $ 132 $ 390 $ 266
Apple Inc.UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS(In millions, except number of shares which are reflected in thousands)
March 31, 2012 September 24, 2011
ASSETS:
Current assets:
Cash and cash equivalents $ 10,121 $ 9,815
Short-term marketable securities 18,417 16,137
Accounts receivable, less allowances of $83 and $53, respectively 7,042 5,369
Inventories 1,102 776
Deferred tax assets 2,253 2,014
Vendor non-trade receivables 6,727 6,348
Other current assets 5,050 4,529
Total current assets 50,712 44,988
Long-term marketable securities 81,638 55,618
Property, plant and equipment, net 8,847 7,777
Goodwill 1,141 896
Acquired intangible assets, net 3,604 3,536
Other assets 4,992 3,556
Total assets $ 150,934 $ 116,371
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Current liabilities:
Accounts payable $ 17,011 $ 14,632
Accrued expenses 9,778 9,247
Deferred revenue 5,247 4,091
Total current liabilities 32,036 27,970
Deferred revenue – non-current 2,446 1,686
Other non-current liabilities 13,954 10,100
Total liabilities 48,436 39,756
Commitments and contingencies
Shareholders’ equity:
Common stock, no par value; 1,800,000 shares authorized; 934,982 and 929,277 shares issued and outstanding, respectively 14,850 13,331
Retained earnings 87,124 62,841
Accumulated other comprehensive income 524 443
Total shareholders’ equity 102,498 76,615
Total liabilities and shareholders’ equity $ 150,934 $ 116,371
Apple Inc.UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(In millions)
Six Months Ended
March 31, 2012 March 26, 2011
Cash and cash equivalents, beginning of the period $ 9,815 $ 11,261
Operating activities:
Net income 24,686 11,991
Adjustments to reconcile net income to cash generated by operating activities:
Depreciation, amortization and accretion 1,461 790
Share-based compensation expense 844 586
Deferred income tax expense 2,915 1,563
Changes in operating assets and liabilities:
Accounts receivable, net (1,663 ) (288 )
Inventories (326 ) 121
Vendor non-trade receivables (379 ) (883 )
Other current and non-current assets (1,510 ) (1,886 )
Accounts payable 2,809 1,626
Deferred revenue 1,916 698
Other current and non-current liabilities 778 1,674
Cash generated by operating activities 31,531 15,992
Investing activities:
Purchases of marketable securities (85,022 ) (42,260 )
Proceeds from maturities of marketable securities 7,702 10,211
Proceeds from sales of marketable securities 49,052 21,705
Payments made in connection with business acquisitions, net of cash acquired (350 ) 0
Payments for acquisition of property, plant and equipment (2,778 ) (1,838 )
Payments for acquisition of intangible assets (160 ) (81 )
Other (48 ) 12
Cash used in investing activities (31,604 ) (12,251 )
Financing activities:
Proceeds from issuance of common stock 377 494
Excess tax benefits from equity awards 636 740
Taxes paid related to net share settlement of equity awards (634 ) (258 )
Cash generated by financing activities 379 976
Increase in cash and cash equivalents 306 4,717
Cash and cash equivalents, end of the period $ 10,121 $ 15,978
Supplemental cash flow disclosure:
Cash paid for income taxes, net $ 4,835 $ 1,913
Apple Inc.
Q2 2012 Unaudited Summary Data
(Units in thousands, Revenue in millions)
Q1 2012 Q2 2011 Q2 2012
Sequential Change Year/Year Change
Operating Segments Mac Units Revenue Mac Units Revenue Mac Units Revenue Mac Units Revenue Mac Units Revenue
Americas 1,612 $ 17,714 1,217 $ 9,323 1,214 $ 13,182 - 25 % - 26 % 0 % 41 %
Europe 1,482 11,256 995 6,027 1,048 8,807 - 29 % - 22 % 5 % 46 %
Japan 184 3,550 155 1,383 158 2,645 - 14 % - 25 % 2 % 91 %
Asia Pacific 814 7,697 596 4,743 771 10,153 - 5 % 32 % 29 % 114 %
Retail 1,106 6,116 797 3,191 826 4,399 - 25 % - 28 % 4 % 38 %
Total Operating Segments 5,198 $ 46,333 3,760 $ 24,667 4,017 $ 39,186 - 23 % - 15 % 7 % 59 %
Sequential Change Year/Year Change
Product Summary Units Revenue Units Revenue Units Revenue Units Revenue Units Revenue
Mac Desktops (1)(9) 1,479 $ 1,936 1,009 $ 1,441 1,199 $ 1,563 - 19 % - 19 % 19 % 8 %
Mac Portables (2)(9) 3,719 4,662 2,751 3,535 2,818 3,510 - 24 % - 25 % 2 % - 1 %
Subtotal Mac 5,198 6,598 3,760 4,976 4,017 5,073 - 23 % - 23 % 7 % 2 %
iPod (3)(9) 15,397 2,528 9,017 1,600 7,673 1,207 - 50 % - 52 % - 15 % - 25 %
Other Music Related Products and Services (4) 2,027 1,634 2,151 6 % 32 %
iPhone and Related Products and Services (5)(9) 37,044 24,417 18,647 12,298 35,064 22,690 - 5 % - 7 % 88 % 85 %
iPad and Related Products and Services (6)(9) 15,434 9,153 4,694 2,836 11,798 6,590 - 24 % - 28 % 151 % 132 %
Peripherals and Other Hardware (7) 766 580 643 - 16 % 11 %
Software, Service and Other Sales (8) 844 743 832 - 1 % 12 %
Total Apple $ 46,333 $ 24,667 $ 39,186 - 15 % 59 %
(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 product, 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.

Photo

Zach Epstein

April 24th


Apple


Tags: , , , , , , , , , , , , , , , , , , ,