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AAPL - Apple Inc. - Q3 2013 Earnings Call Transcript

    Ticker:AAPL
    Company Name:Apple Inc.
    Event Title:Q3 2013 Earnings Call Transcript
    Event Date:23-Jul-2013
    Event Time:05:00 PM ET

    Presentation



    Operator

    Good day everyone and welcome to this Apple Incorporated Third Quarter Fiscal Year 2013 Earnings Release Conference Call. Today's call is being recorded.

    At this time for opening remarks and introduction, I would like to turn the call over to Nancy Paxton, Senior Director of Investor Relations. Please go ahead Ma'am.

    Nancy Paxton

    Investor Relations
    Thank you. Good afternoon and thanks to everyone for joining us. Speaking first today is Apple's CFO Peter Oppenheimer, and he will be joined by CEO Tim Cook and Treasurer Gary Wipfler for the Q&A session with analysts.

    Please note that some of the information you will hear during our discussion today will consist of forward-looking statements including without limitation, those regarding revenue , gross margins, operating expenses , other income and expense, stock-based compensation expense, taxes 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 2012, the Form 10-Q for the first and second quarters of 2013 and the Form 8-K filed with the SEC today along with the associated press release. Apple assumes no obligation to update any forward-looking statements or information which speak as of their respective date.

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

    Peter Oppenheimer

    Senior Vice President and Chief Financial Officer
    Thank you Nancy.

    We are pleased to report the results of our third fiscal quarter. We established a new June quarter record for iPhone sales, driving Apple's strongest June quarter revenue ever. Revenue for the quarter was 35.3 billion up 300 million or 1% from the year ago quarter and at the high end of our guidance range. Gross margin was 36.9% also was behind of our guidance range and operating margin was 9.2 billion, representing 26% of revenue . Net income was 6.9 billion, translating to diluted earnings per share of $7.47.

    Channel inventories declined sequentially by $1 billion during the June quarter this year, meaning that sell-through was 36.3 billion. In contrast, channel inventory increased 700 million from the beginning to the end of the June quarter last year meaning that sell-through was 34.3 billion in that quarter. As such, our June quarter sell-through increased by 2 billion, or 6% year-over-year ahead of our 1% sale in and revenue growth.

    As for the details of the quarter, I’d like to begin with iPhone. We sold 31.2 million iPhones compared to 26 million in the year-ago quarter, an increase of 5.2 million or 20%. We had a sequential decrease of about 600,000 iPhones in channel inventory in the June quarter, translating to iPhone sell-through of about 31.8 million units.

    iPhone sales were ahead of our expectations and we were particularly pleased with very strong year-over-year growth in iPhone sales in a number of both developed and emerging markets including the U.S., UK, Japan, Brazil, Russia, India, Thailand and Singapore. iPhone 5 remains by far the most popular iPhone but we were also very happy with sales of iPhone 4 and 4S.

    We exited the quarter with about 11 million units of total iPhones in channel inventory and ended within our target range of four to six weeks of iPhone channel inventory . iPhone unit sales in the U.S. increased 51%, compared to the year ago quarter. And based on research recently published by compScore, iPhone once again achieved the number one spot in the U.S. smartphone market for the three months period ending in May with over 39% share.

    iPhone sales were also very strong in Japan, growing 66% year-over-year. IPhone is the top selling smartphone in Japan based on the latest published quarterly data from IDC and Apple is the number one or number two selling smartphone manufacturer in most markets IDC tracks, including North America, Western Europe, Russia, Turkey, Australia, Hong Kong, Taiwan, Malaysia and Singapore.


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