Apple Q3 2010 by the numbers: Record quarterly revenue tops $15.7 billion

Today, Apple set the stage for a historical competitive upset: Exceeding Microsoft revenue during the same quarter. Cupertino, Calif.-based Apple's quarterly earnings again blew past Wall Street consensus, which already were $1.55 billion to $1.75 billion higher than company guidance. Apple also exceed quarterly revenue consensus estimates for Microsoft, which announces fiscal 2010 results on Thursday. I first posted about Apple revenue exceeding Microsoft revenue in April and again in June, not once but twice.

After the bell, Apple reported $15.7 billion revenue and net profits of $3.25 billion, or $3.51 a share. A year earlier, Apple reported revenue of $9.73 billion and $1.83 billion net quarterly profit, or $2.01 per share. Revenue rose 61 percent year over year and earnings by 78 percent. Fiscal 2010 third quarter ended June 26, 2010. By the way, analyst revenue consensus for Microsoft is $15.27 billion.

Three months ago, Apple forecast revenue between $13 billion and $13.4 billion, with earnings per share ranging between $2.28 and $2.39. Analyst average estimates were much higher than Apple guidance: $14.75 billion revenue and $3.11 earnings per share. Apple blew past the Street. Again.

Apple exceeding Microsoft, should it happen this quarter, would be more symbolic victory -- representing the shift from the PC era to the cloud-connected mobile device era. The reasons why are more substantive: iPad and iPhone. During fiscal third quarter, Apple opened up a completely new line of business that generated $2.17 billion in new revenue. Additionally, despite all the fuss over so-called "Death Grip," Apple sold 3 million iPhone 4s during the quarter. Combined, iPad and iPhone accounted for nearly 48 percent of fiscal third quarter revenue.

For fiscal 2010 forth quarter, Apple forecasts $18 billion in revenue and $3.44 earnings per share. Apple's guidance beats current analyst consensus for Microsoft revenue by more than $2 billion during the same quarter, which would be Microsoft's fiscal 2011 first. Apple plans to defer about $175 million during the current quarter until fiscal 2011 Q1-- related to free cases the company will offer to iPhone 4 owners.

In a statement, Apple CEO Steve Jobs said: "It was a phenomenal quarter that exceeded our expectations all around, including the most successful product launch in Apple's history with iPhone 4. iPad is off to a terrific start, more people are buying Macs than ever before, and we have amazing new products still to come this year."

Q3 2010 Revenue by Product

  • Desktops: $1.3 billion, up 15 percent from $1.13 billion a year earlier.
  • Portables: $3.1 billion, up 40 percent from $2.2 billion a year earlier.
  • iPod: $1.55 billion, up 4 percent from $1.5 billion a year earlier.
  • Music: $1.2 billion, up 27 percent from $958 million a year earlier.
  • iPhone: $5.33 billion, up 74 percent from $3.06 billion a year earlier.
  • iPad: $2.17 billion; no comparable -- new product.
  • Peripherals: $396 million, up 16 percent from $340 million a year earlier.
  • Software & Services: $646 million, up 22 percent from $530 million a year earlier.

Apple's gross margin was 39.5 percent, with the margin decline significantly less than guidance given 3 months ago. Apple ended the quarter with $45.8 billion in cash, up from $41.7 billion a quarter earlier.

Apple ended fiscal Q3 with normal inventory levels for Macs and iPod. However, iPad and iPhone supplies are seriously constrained, with Apple ending the quarter with a big backlog. "In the scheme of things, it's a good problem to have," Apple COO Tim Cook said during a conference call with financial analysts late this afternoon. "We're selling everything we can make currently," he later emphasized. "My phone is ringing off the hook for people that want more supply."

iPhone. Apple shipped -- what company executives really mean by sold -- 8.4 million iPhones worldwide during fiscal third quarter. If not for inventory adjustments between new iPhone models, shipments would have been about 225,000 higher. That number does not include lost sales to the backlog.

A year earlier, Apple shipped 5.21 million iPhones. Apple shipments into the channel are usually several million units higher than numbers released by Gartner, which measures actual sales. However, the backlog means that shipments more closely equal sales. During the quarter, iPhone was available from 154 carriers in 88 countries. The average selling price for iPhone was about $595.

Wall Street analyst average estimate was 8.5 million units, with some analysts lowering estimates following Apple's July 16 announcement of 3 million iPhone 4s sold. The smartphone is backordered between two to four weeks. Revenue rose 74 percent year over year, giving the biggest boost to Apple's quarter. The smartphone and supporting services accounted for about 33 percent of total Apple revenue, down from 41 percent the previous quarter.

Q3 2010 Unit Shipments by Product

  • Desktops: 1 million units, up 18 percent from 849,000 units a year earlier.
  • Portables: 2.5 million units, up 41 percent from 1.75 million units a year earlier.
  • iPod: 9.4 million units, down 8 percent from 10.2 million units a year earlier.
  • iPhone: 8.4 million units, up 61 percent from 5.21 million units a year earlier.
  • iPad: 3.27 million units; no comparable -- new product.

Computers. Apple shipped 3.47 million Macs during the quarter, up from 2.6 million units a year earlier. Wall Street consensus ranged from about 2.7 million to 3.5 million units worldwide, with consensus around 3.2 million.

Last week, Gartner and IDC released preliminary second calendar quarter PC shipment data. In the United States, Apple shipped 1.75 million computers, for 24.7 percent year-over-year growth, according to Gartner. However, IDC put Apple shipments lower, at 1.62 million, with growth a much lower 15.4 percent.

Q3 2010 Revenue by Geography

  • Americas: $6.3 billion, up 39 percent from $4.47 billion a year earlier.
  • Europe: $4.16 billion, up 66 percent from $2.5 billion a year earlier.
  • Japan: $910 million, up 63 percent from $560 million a year earlier.
  • Asia Pacific: $1.83 billion, up 160 percent from $703 million a year earlier.
  • Retail: $2.6 billion, up 73 percent from $1.5 billion a year earlier.

Apple ranked fourth in the United States, moving back up one place, with 9.8 percent market share, up from 9.1 percent a year earlier, according to Gartner. But IDC put Apple's market share lower -- 8.8 percent, up from 8.6 percent year over year. Just two years ago, Apple had risen to third place in US PC shipments. Gartner and IDC won't tabulate Apple's worldwide ranking until the final figures are released, and generally the information is not publicly available.

iPod. Apple shipped 9.4 million iPods during fiscal third quarter, down from 10.2 million a year earlier. Analyst consensus for Q3 was around 9.4 million units. While units declined, revenue rose 4 percent from a year earlier.  ASPs declined about $7, in part because of a back-to-school promotion giving away iPod touch with new Macs.

Q3 2010 Unit Shipments by Geography

  • Americas: 1.36 million units, up 18 percent from 1.15 million units a year earlier.
  • Europe: 914,000 units, up 46 percent from 626,000 units a year earlier.
  • Japan: 129,000 units, up 19 percent from 108,000 units a year earlier.
  • Asia Pacific: 394,000 units, up 71 percent from 230,000 units a year earlier.
  • Retail: 677,000 units, up 38 percent from 492,000 units a year earlier.

iPad. Apple shipped about 3.27 million iPads during the launch quarter. Analyst consensus was about 3 million units. The tablet was available in 10 countries, and the ASP was $640. About half of Fortune 100 companies are testing or deploying iPad, the company revealed during today's conference call. The product added $2.17 billion new revenue.

Retail. Revenue rose 73 percent year over year, with Apple retail stores selling 677,000 units, compared to 492,000 a year earlier. Apple opened seven new stores in the quarter, for a total of 293 retail outlets worldwide. There was an average 288 stores open in the quarter, with average revenue of $9 million. Apple retail stores had 60.5 million visitors during the quarter up 27 percent year over year. Apple plans to open 24 new stores during fiscal Q4.

[Editor's Note: This was a live document posted at 4:45 p.m. EDT and completed at 6:15 p.m. -- following Apple's quarterly earnings call.]

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