10-QPeriod: Q1 FY2011

Apple Inc. Quarterly Report for Q1 Ended Dec 25, 2010

Filed January 19, 2011For Securities:AAPL

Summary

Apple Inc. reported robust financial performance for the quarter ending December 25, 2010, showcasing significant year-over-year growth. Net sales surged by 71% to $26.74 billion, driven by stellar performance in its iPhone and iPad product lines, which together accounted for over half of the quarter's revenue. The company also saw substantial growth in its Mac and Asia-Pacific segments. Despite increased investment in research and development and selling, general, and administrative expenses, Apple maintained strong profitability, with net income rising by approximately 78% to $6.00 billion. The company's strong cash generation, evidenced by a significant increase in cash, cash equivalents, and marketable securities, positions it well for continued investment and operational flexibility.

Financial Statements
Beta

Key Highlights

  • 1Net sales increased by 71% to $26.74 billion compared to the prior year's quarter.
  • 2Net income grew by 78% to $6.00 billion, translating to diluted EPS of $6.43, up from $3.67.
  • 3iPhone sales were a major driver, with revenue up 88% to $10.47 billion, representing 39% of total net sales.
  • 4iPad sales debuted strongly, contributing $4.61 billion in revenue, accounting for 17% of total net sales.
  • 5Mac net sales increased by 22% to $5.43 billion, driven by strong performance in portable systems.
  • 6The company ended the quarter with a strong liquidity position, holding $59.7 billion in cash, cash equivalents, and marketable securities.
  • 7Gross margin percentage slightly decreased to 38.5% from 40.9% year-over-year, attributed to higher cost structures of new products like iPhone 4 and iPad.

Frequently Asked Questions

For the quarter ended December 25, 2010, Apple reported net sales of $26.74 billion, a 71% increase year-over-year. Net income was $6.00 billion, a 78% increase year-over-year.

The primary drivers of revenue growth were the iPhone, which saw an 88% increase in sales to $10.47 billion, and the newly launched iPad, which contributed $4.61 billion in sales. Mac sales also grew by 22%.

Apple's profitability improved significantly. Diluted earnings per share increased to $6.43 from $3.67 in the prior year's comparable quarter. This was supported by strong revenue growth despite a slight decrease in gross margin percentage.

As of December 25, 2010, Apple held $59.7 billion in cash, cash equivalents, and marketable securities, an increase from the previous quarter. This strong liquidity is available for working capital needs, capital asset purchases, and other operational requirements.