Apple Posts $818 Million Profit for 3rd Quarter 2007 [Updated]

Apple announced their financial results for the 3rd Quarter of fiscal 2007. Apple posted revenue of $5.41 billion and net quarterly profit of $818 million, or $.92 per diluted share. These results compare to revenue of $4.37 billion and net quarterly profit of $472 million, or $.54 per diluted share, in the year-ago quarter. Gross margin was 36.9 percent, up from 30.3 percent in the year-ago quarter. International sales accounted for 40 percent of the quarter's revenue.

Apple shipped 1,764,000 Macintosh computers, representing 33 percent growth over the year-ago quarter and exceeding the previous company record for quarterly Mac shipments by over 150,000. The Company also sold 9,815,000 iPods during the quarter, representing 21 percent growth over the year-ago quarter.

Steve Jobs said "We're thrilled to report the highest June quarter revenue and profit in Apple's history, along with the highest quarterly Mac sales ever" and expects to sell one million iPhones by the end of the 4th quarter.

Apple's financial results will be webcast live.

Conference Call Notes

- Landmark quarter for Apple
- Highest revenue in June Quarter in history of Apple
- Record breaking Mac sales
- Mac business represents ~60% of Quarterly revenue. 33% Growth year-over-year growth.
- Sales of Mac notebooks grew 42% year-over-year.
- Music Business represents ~40% of Quarterly revenue.
- Other Music revenue grew 33% year over year
- NPD reported iTunes became 3rd largest music retailer in the U.S.
- Apple says it sold 270,000 iPhones in the 1st 30 hours of sales.
- Activation problems initially, but now working smoothy.
- Based on surveys, people love their iPhones. 90% of iPhone owners were Extremely or Very satisfied with their phone. 85% Extremely or Very Likely to recommend the iPhone to others.
- Expect to sell 1 million iPhones by Sept 29th
- 4th Calendar Quarter to sell iPhone in Europe.
- Announcement later this quarter.
- 10 Million iPhones goal in Calendar 2008
- Plan on incorporating new Software and Features into iPhone over time. Will begin to receive payments from AT&T in the future quarters.
- Subscription accounting on iPhone and Apple TV sales.Q&A Highlights
Q: More details on iPhone sales?
A: We've gotten off to a great start. Focus is not on initial sales, but instead a long term business. Our perspective is measured in years, not months. Reward is huge. Apple has the skill that makes us confident to succeed. iPhone in Europe next quarter in a few select countries. It took Apple almost 2 years to sell one million iPods, we expect to sell one million iPhones in the first full quarter.

Q: See any shortages in iPhone components?
A: Almost all AT&T and Apple Retail stores have the iPhone in stock and we are shipping units off of Apple.com in 1-2 days. We've included our expectations of long term supply/demand in our projections.

Q: You mentioned no payment from AT&T this quarter, can you clarify that comment?
A: We can't go beyond it and won't discuss the terms of the agreement. We will recognize revenue eared from AT&T over time.

Q: How to model AT&T revenue share?
A: Can't comment on it.

Q: In the near term, how do you think about the initial wave of iPhone sales.
A: 270,000 in the 30 hours laster quarter. What we've seen so far gives us a lot of confidence we can sell 10 million iPhones in 2008.

Q: In addition to payments from AT&T are you getting any other payments for placement of applications on the iPhone?
A: We don't discuss it.

Q: How's the Best Buy rollout? Did it contribute to Mac sales?
A: Around 50 stores at the beginning last quarter, around 75 at the end. Over 200 by end of this quarter. 300 by end of calendar year.

Q: iPhone price points? Should we assume we'll have a family of Phones?
A: We believe the iPhone offers tremendous value that customers couldn't even imagine before. It's 3 products in one.

Q: Any seasonality in the iPod and Mac?
A: June quarter begins education buying season. June -> September seasonality has been mixed. In terms of the iPod, we've learned that what drives the product is innovative new features and holiday seasonality.

Q: You see any slowdown in sales prior to Leopard?
A: We'll have to see, but last quarter we sold more Macs than ever.

Q: iPod cannibalization from iPhone?
A: Haven't seen any in the June quarter, but will monitor it.

Q: Are there thoughts about addressing corporate email on the iPhone?
A: We think that the iPhone is a breakthrough product for all customers including business customers. With very little help from the IT department, it will work. Have many business customers who are very happy so far.

Q: Store Openings?
A: We expect to open 12 stores in the September Quarter to end the year with 197 stores. We've not set a target for 2008 openings.

Q: Apple TV Units?
A: We don't announce that level of product detail.

Q: Is there any high level commentary with regard to the learning experiences with launching the iPhone?
A: We've only been at this a few weeks. We're very much beginners at this, so every day there's something to learn. We're interested in building the business to the next level.

Popular Stories

Beyond iPhone 13 Better Blue Face ID Single Camera Hole

Six Reasons to Wait for Next Year's iPhone 17

Thursday February 22, 2024 4:20 am PST by
Apple's iPhone development roadmap runs several years into the future and the company is continually working with suppliers on several successive iPhone models concurrently, which is why we sometimes get rumored feature leaks so far ahead of launch. The iPhone 17 series is no different, and already we have some idea of what to expect from Apple's 2025 smartphone lineup. If you plan to skip...
General Apps Messages

iOS 17.4 to Add This 'Groundbreaking' New Messaging Feature

Friday February 23, 2024 5:05 am PST by
With iOS 17.4, set to arrive in March 2024, Apple is bringing a new cryptographic security feature to iMessage called PQ3. This "groundbreaking" and "state-of-the-art" protocol provides "extensive defenses against even highly sophisticated quantum attacks," according to Apple. Let's break down what that means. Apple's iMessage service already supports end-to-end encryption, but security...
iPhone Notch

Apple Explored These Notch and Dynamic Island Designs for iPhones

Friday February 23, 2024 2:05 pm PST by
With the iPhone 14 Pro models in 2022, Apple introduced the Dynamic Island, which can morph and expand to display system alerts, sports scores, and a variety of other information. The feature makes the space surrounding the front camera and Face ID sensors useful compared to the notch on older iPhone models. Apple explored a variety of ideas for the iPhone's notch area over the years before...
Apple car wheel icon feature yellow

Apple Cancels Electric Car Project

Tuesday February 27, 2024 11:05 am PST by
Apple has canceled all plans to release an autonomous, electric vehicle, reports Bloomberg. Apple has been working on an Apple Car for more than a decade and invested millions of dollars into development before deciding it was not a viable project. Apple's Chief Operating Officer Jeff Williams today told approximately 2,000 employees working on the Apple Car that the project was canceled,...
New Macs iPads iOS 17 4

What to Expect at Potential Apple Event in March: iPads, Macs, and More

Friday February 23, 2024 8:35 am PST by
Apple often holds its first media event of the year in March, so the company could be just weeks away from announcing new products. Below, we have outlined what to expect from a potential Apple Event this March. Past Apple Events in March Apple has held five events in March since 2015:Monday, March 9, 2015 Monday, March 21, 2016 Tuesday, March 27, 2018 Monday, March 25, 2019 Tuesday,...
iOS 17

iOS 17.4 Coming Soon With These New Features for Your iPhone

Monday February 26, 2024 6:08 am PST by
In a press release last month, Apple confirmed that iOS 17.4 will be released in March, and the update includes several new features and changes for the iPhone. Key new features in iOS 17.4 include major App Store changes in the EU, Apple Podcasts transcripts, and an iMessage security upgrade. The update also adds new emoji and includes preparations for the launch of next-generation CarPlay...