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TBR 2Q11 Apple Inc. Report
TBR 2Q11 Apple Inc. Report
TBR 2Q11 Apple Inc. Report
TBR 2Q11 Apple Inc. Report
TBR 2Q11 Apple Inc. Report
TBR 2Q11 Apple Inc. Report
TBR 2Q11 Apple Inc. Report
TBR 2Q11 Apple Inc. Report
TBR 2Q11 Apple Inc. Report
TBR 2Q11 Apple Inc. Report
TBR 2Q11 Apple Inc. Report
TBR 2Q11 Apple Inc. Report
TBR 2Q11 Apple Inc. Report
TBR 2Q11 Apple Inc. Report
TBR 2Q11 Apple Inc. Report
TBR 2Q11 Apple Inc. Report
TBR 2Q11 Apple Inc. Report
TBR 2Q11 Apple Inc. Report
TBR 2Q11 Apple Inc. Report
TBR 2Q11 Apple Inc. Report
TBR 2Q11 Apple Inc. Report
TBR 2Q11 Apple Inc. Report
TBR 2Q11 Apple Inc. Report
TBR 2Q11 Apple Inc. Report
TBR 2Q11 Apple Inc. Report
TBR 2Q11 Apple Inc. Report
TBR 2Q11 Apple Inc. Report
TBR 2Q11 Apple Inc. Report
TBR 2Q11 Apple Inc. Report
TBR 2Q11 Apple Inc. Report
TBR 2Q11 Apple Inc. Report
TBR 2Q11 Apple Inc. Report
TBR 2Q11 Apple Inc. Report
TBR 2Q11 Apple Inc. Report
TBR 2Q11 Apple Inc. Report
TBR 2Q11 Apple Inc. Report
TBR 2Q11 Apple Inc. Report
TBR 2Q11 Apple Inc. Report
TBR 2Q11 Apple Inc. Report
TBR 2Q11 Apple Inc. Report
TBR 2Q11 Apple Inc. Report
TBR 2Q11 Apple Inc. Report
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TBR 2Q11 Apple Inc. Report

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Technology Business Research is a different kind of research company. Our bottoms-up approach provides a look at the technology industry unlike anything you’ve seen before. We analyze company …

Technology Business Research is a different kind of research company. Our bottoms-up approach provides a look at the technology industry unlike anything you’ve seen before. We analyze company performance in professional services, networking and mobility, computing and hardware, and software on a quarterly basis, leveraging our data to create industry benchmarks and landscapes that provide a business perspective on leaders and laggards and their business plans. We are experts in the business of technology.


Record growth across the iPhone and iPad product lines continues to stem from Apple’s unique value proposition of simplifying the user experience while maintaining a consistent level of quality. As a result, Apple is increasingly able to penetrate the booming smartphone and tablet markets, despite the swarm of new entrants and cheaper Android devices, while maintaining record sales and profit performance.

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  • 1. Technology Business ResearchAccelerating Customer Success Through Business Research TBR T E C H N O L O G Y B U S I N E S S R ES E AR C H , I N C .
  • 2. COMPUTER BUSINESS QUARTERLYSMApple Inc.Second Calendar Quarter 2011Third Fiscal Quarter 2011 Ended June 25, 2011 TBR OUTLOOK – POSITIVE TBR SCORE (0-10 SCALE)  6.71Publish Date: August 9, 2011Authors: Ezra Gottheil (ezra.gottheil@tbri.com), Computing PracticeSenior Analyst and Beau Skonieczny, Computing PracticeResearch Analyst TBR T E C H N O L O G Y B U S I N E S S R ES E AR C H , I N C .Content Editor: John Spooner, Computing Practice Director
  • 3. Contents TBR Company Analysis Company Data Models 3 TBR Position 23 Income Statement 4 Executive Summary 24 Balance Sheet 6 Strategy Overview 25 Segment Revenue Model 8 Corporate SWOT Analysis 26 Unit Shipments & ASP Model 9 Scenario Discussion 27 Operating Expense Model 12 Financial Model Strategy 28 Revenue by Customer Model 16 Go-to-Market & Product Strategies 29 PC Revenue Model 18 Alliance & Acquisition Strategies 30 Geographic Model 19 Geographic Overview 31 Future Outlook Graph 20 Resource Management Strategy 32 Appendix Graphs 22 Organizational Structure 35 Alliances Table 36 Product Portfolio Table 39 About TBR3 Apple 2Q11 | Computer Business Quarterly ©2011 Technology Business Research, Inc.
  • 4. TBR Position TBRApple will continue to ride the wave of explosive growth for mobiledevices to support record sales and profit expansion TBR Assessment Corporate Strategic Objectives Record growth across the iPhone and iPad Dominate public awareness with innovative products and product lines continues to stem from Apple’s astute marketing unique value proposition of simplifying the user Apple’s reputation for products and service drives growth and experience while maintaining a consistent level margins. The company continues to see margin benefits as a of quality. As a result, Apple is increasingly able result of record iPhone sales, allowing it to achieve an to penetrate the booming smartphone and operating margin expansion of 580 basis points year-to-year tablet markets, despite the swarm of new to 32.8%. entrants and cheaper Android devices, while Maintain a premium market position in all product lines maintaining record sales and profit performance. Despite lower-priced alternatives from competitors, customers continue to deplete iPad 2 stocks, helping Apple support its unrivaled lead in the tablet market. TBR believes the APPLE 2Q11 PERFORMANCE VS. EXPECTATIONS introduction of iOS 5 will help sustain demand levels and(In $ Billions) Consensus Guidance Actual position Apple more competitively against rival tablets inRevenue $ 24.9 $20.9 - $26.6 $ 28.6 terms of new and enhanced features.Operating Income N/A N/A $ 9.4EPS $ 5.80 $4.15 - $6.08 $ 7.79 Be a retail leader by leveraging Apple stores as a strategic differentiator, driving sales and margins while strengthening APPLE 3Q11 GUIDANCE AND EXPECTATIONS customer relationships(In $ Billions) TBR Estimate Consensus Guidance Apple is seeing positive results from its personal setupRevenue $ 27.2 $ 27.7 $ 25.0 program, which accounted for over 2 million product setups inOperating Income $ 8.6 N/A N/AEPS N/A $ 6.42 $ 5.50 2Q11. TBR believes Apple’s increased focus on the consumerSOURCE: TBR AND APPLE buying experience at retail outlets will help promote sales to new customers, as evidenced by the trend in Mac sales in 2Q11, in which approximately 50% of unit sales were attributed to new users.4 Apple 2Q11 | Computer Business Quarterly ©2011 Technology Business Research, Inc.
  • 5. Executive Summary TBR Cyclical product introductions will help Apple sustain industry-leading sales, supported by IP-backed acquisitions and emerging market expansion TBR assessment of Apple’s two-year strategic outlook Key Takeaways Strategic Outlook Financial: Continual product and service • Apple will seek to streamline interoperability between its introductions, such as iOS 5, iCloud, OS X Lion, new entire product portfolio to help attract customers to the Macbook Airs and the expected iPhone 5 will Apple ecosystem. Key design features of both OS X Lion and continue to fuel strong revenue expansion. iOS 5 seek to replicate a familiar and simplified user experience across all devices. iCloud will help drive cross- Go to Market: An abundance of cash on hand will sales between Apple product lines to capitalize on a more afford Apple the ability to develop new technologies seamless data management and device collaboration. internally and possibly look into acquiring niche companies to broaden its IP footprint. • Apple will continue to seek niche acquisitions of technology companies that hold unique IP to strengthen Apple’s patent Resource: Retail store expansion, primarily in library to help gain leverage in legal matters and facilitating untapped markets such as Greater China, along with product innovations. TBR believes Apple is in a strong increased R&D investments, will continue to drive position in the patent wars with its deep reserves of both staff expansion on a global scale. internally developed and acquired patents, which was TBR APPLES ESTIMATED ANNUAL REVENUE recently enhanced by the $2.4 billion purchase (Apple’s $140,000 largest purchase ever) of Nortel’s patent portfolio. $120,000 $105,000 $100,000 $90,000 • Apple will continue to push into emerging markets with lower-priced iPhones as more carriers are supported andIn $ Millions $76,283 $80,000 $60,000 smartphone demand expands. TBR believes Apple’s $40,000 $20,000 investment in Greater China will have the most dramatic $0 improvement on international iPhone sales, as the market CY10 CY11 Est. CY12 Est. remains largely untapped. NOTE: Annual revenue and projections are for calendar 2010, 2011 and 2012, respectively. SOURCE: APPLE AND TBR 5 Apple 2Q11 | Computer Business Quarterly ©2011 Technology Business Research, Inc.
  • 6. Executive Summary TBRApple’s rapid revenue expansion and overall financial performancecontinued to be fueled by iPhone and iPad sales in 2Q11 Company Average in Standard Company Average in StandardFINANCIAL METRICS TBR Score Figure Class Deviation/2 TBR Score GO-TO-MARKET METRICS Figure Class Deviation/2Revenue (in $ Thousands) 7.91 $ 28,571,000 $ 13,785,795 $ 5,087,163 Annual revenue per salesperson* 4.79 $ 5,127,626 $ 6,027,257 $ 4,370,752Gross Margin 5.48 41.7% 37.6% 8.7% Cost per revenue dollar 6.67 $ 0.03 $ 0.08 $ 0.03SG&A (% of revenue) 7.48 6.7% 18.2% 4.6% Cost per margin dollar 7.59 $ 0.07 $ 0.23 $ 0.06Sales & Marketing (% of revenue) 7.21 5.0% 14.5% 4.3%General & Admin (% of revenue) 7.09 1.7% 3.7% 1.0% Channel expense as a % of S&M expense 3.07 38.8% 21.8% 8.8%R&D (% of revenue) 6.64 2.2% 7.2% 3.1% Marketing expense as a % of S&M expense 2.90 44.3% 26.2% 8.6% Annual sales expenseTotal operating expenses (% of revenue) 7.65 8.9% 26.6% 6.7% 6.16 $ 142,857 $ 270,925 $ 110,656 per sales employee*Operating Margin 8.97 32.8% 11.4% 5.4% Annual marketing expenseNet Margin 8.35 25.6% 8.1% 5.2% 6.93 $ 143,779 $ 286,636 $ 74,126 per marketing employee*Revenue Growth YTY 10.00 82.0% 14.6% 10.8% TOTAL AVERAGE TBR SCORE 5.36Gross Profit YTY change 10.00 94.3% 20.9% 11.3% *in $ thousandsSG&A YTY change 3.23 33.2% 13.7% 11.0%Sales & Marketing YTY change 2.94 39.6% 16.2% 11.4% CALENDAR QUARTER RESULTSGeneral & Admin YTY change 4.33 17.1% 6.9% 15.1% TBR SCORING SUMMARY: 2Q10 3Q10 4Q10 1Q11 2Q11R&D YTY change 2.56 35.3% 12.9% 9.2% Financial Model Strategy: 6.34 6.17 6.45 6.97 7.16Total operating expenses YTY change 5.03 10.6% 10.8% 8.7%Operating income YTY change 5.09 121.5% 59.5% 718.5% Go-to-Market & Services Strategies: 5.93 5.95 5.63 5.61 5.36Net Income YTY change 4.71 124.7% 696.6% 1974.5% Resource Management Strategy: 6.86 6.81 7.01 6.98 7.14TOTAL AVERAGE TBR SCORE 7.16 TOTAL AVERAGE TBR SCORE: 6.37 6.28 6.39 6.63 6.71 Company Average in Standard TBR ScoreRESOURCE MANAGEMENT METRICS Figure Class Deviation/2Days sales outstanding 8.41 19.2 46.5 8.0Turns on inventory 10.00 7.55 73.2 5.0 19.7 35.1 7.7 11.8 Despite Apple’s aggressive marketing and channelDays inventory outstandingFixed asset turnover 4.95 17.6 18.2 12.7 spending resulting in a decline in its go-to-marketDays cash outstanding 5.04 89.4 91.0 41.1 score, Apple improved its overall TBR score inTotal asset turnover 4.98 1.1 1.1 0.2Debt/asset ratio 8.72 0.3 0.6 0.1 2Q11, supported by another record revenueCurrent ratio 5.51 1.7 1.6 0.3 quarter spurred by iPhone and iPad sales.Return on assets 10.00 26.0% 8.3% 3.5%Return on equity 5.59 40.5% 27.2% 22.3%Headcount growth YTY 2.27 27.8% 7.9% 7.3% KeyAnnual revenue per employee* 8.67 $ 1,984,609 $ 731,936 $ 341,235 Represents an area where Apple is currently challenged versus peersAnnual G&A expense* 5.69 $ 215,296 $ 297,542 $ 119,244 Represents an area where Apple is outperforming its peersAnnual R&D expense per developer* 3.82 $ 448,867 $ 329,908 $ 101,229 7.14 Represents an area where Apple is neither significantly outperformingTOTAL AVERAGE TBR SCORE nor underperforming its peers6 Apple 2Q11 | Computer Business Quarterly ©2011 Technology Business Research, Inc.
  • 7. Strategy Overview TBRApple continues to improve its brand presence through record iPhonesales and new product announcements … Function Key Strategies TBR Assessment  Following the close of 2Q11, Apple launched a new line of Macbook Airs as well as OS X Lion, which TBR believes will help invigorate Mac Leverage cyclical product Portable sales in 2H11. refreshes to sustain a strong Overall  While Apple has traditionally launched new iPhone models at its growth trajectory and gain market share WWDC event, TBR expects it will shift to a fall release with the iPhone 5. TBR believes the release timing will be beneficial, allowing Apple to capitalize on consumers’ stronger seasonal demand in 2H11.  Apple improved margin performance in 2Q11, resulting from a Support margin improvement stronger mix of iPhone sales, which are margin-accretive due to by focusing on sales of Financial Apple’s most profitable decreased manufacturing costs as process improvements have been made and component prices have fallen since the iPhone 4’s product lines. introduction. Retail outlets help Apple  With dedicated retail stores, Apple can retain more quality control of build a more intimate, product distribution and presentation to consumers through service, satisfactory customer support and even training such as its recently launched one-on-one experience and expand into setup program for new purchases. new regions.  While similar features and offerings have been introduced on Go to Market Apple’s selective approach to competing devices, Apple’s planned release of iOS 5 and iCloud will software improvements help ensure greater customer satisfaction. TBR believes Apple’s more allows for a more thought- selective approach to software innovations allows the company to out design to improve gauge which features and capabilities will be most impactful to Apple functionality and customer device users, rather than inundating users with features that could satisfaction. degrade a product’s ease of use. Key:  Working: Short-term impact expected on bottom / top line  Not working: No major impact or differentiation expected7 Apple 2Q11 | Computer Business Quarterly ©2011 Technology Business Research, Inc.
  • 8. Strategy Overview TBR… while using its stockpile of cash as leverage in large-scale supplieragreements and to produce higher-quality productsFunction Key Strategies TBR AssessmentAlliance & Apple forms alliances and, to  In a new partnership with China Mobile, Apple will be betterAcquisition a lesser degree, makes positioned to accelerate iPhone market penetration into acquisitions to remain Greater China’s nearly 1 billion mobile device users. competitive, delivering comprehensive product  Apple will continue to target smaller-scale specialty firms to ecosystems and serving enhance its IP base and implement improved technologies customers. into existing and future product designs.Operations &  Apple’s tight control of SKUs helps the sales and branding Apple works with suppliers process and enables immediate product availability withGlobal Delivery and ODMs to deliver minimal inventory.Model products, including a comparatively large number  Apple is able to maintain a competitive advantage in securing of customized components. large quantities of components by leveraging its strong cash Its large volumes help drive position to prepay major suppliers. TBR believes this has a favorable deals. two-fold benefit of drying up competitors’ supply levels and achieving volume discounts that translate into profit.Resources &  While product introductions and R&D investments remain an Apple maintains a strong cash integral component of Apple’s sales growth, the scale of anyInvestment position to remain nimble, such investment is minimal when compared to its $76 billion and able to respond quickly cash and marketable security reserve. to strategic opportunities  Apple’s headcount additions were primarily a result of its such as international global retail expansion efforts, which will continue to gain expansion. momentum, as Apple plans to reach 363 stores by September. Key:  Working: Short-term impact expected on bottom / top line  Not working: No major impact or differentiation expected8 Apple 2Q11 | Computer Business Quarterly ©2011 Technology Business Research, Inc.
  • 9. Corporate SWOT Analysis TBRApple continues to focus on device simplicity, interoperability andquality to support its record revenue performance in 2Q11 Corporate SWOT Analysis Strengths Opportunities • Apple continues to drive interoperability between • New product offerings such as OS X Lion, iOS 5 and OS X and iOS devices to promote a simpler, hassle- iCloud will attract new customers. free user experience. • Legal battles with Samsung could result in Apple seeking • iPad remains unthreatened by tablet competitors, less competitive suppliers. as they are unable to match the quality and ease- • China expansion will continue to offer new sources of of-use of Apple’s device. revenue for Apple. • The rapidly growing iPhone adoption rate continues • Establish a more robust developer ecosystem through to establish a broader base of dedicated repeat enhanced legal protection stemming from Apple’s iPhone customers. defense against patent sharks. • The appeal of Apple retail stores generates high foot traffic to help promote sales and a closer customer connection. Weaknesses Threats • CDMA network with Verizon limits U.S. customers • The appeal of 4G speeds in major cities may cause from international use potential iPhone customers to switch to competing • iPad lacks Flash web-browsing, 4G compatibility devices. and mini-USB ports • Ongoing legal struggles with HTC, Samsung and others • Low Asia Pacific revenue base despite recent places pressure on Apple’s IP and could lead to delays in growth momentum future product development. • Prices for entry-level Macs are far higher than • New tablet PC market entrants such as HP, Sony and competitors’ entry prices Samsung will vie for a chunk of Apple’s market share.9 Apple 2Q11 | Computer Business Quarterly ©2011 Technology Business Research, Inc.
  • 10. Scenario Discussion TBRApple is leveraging its resources and patent library to create a saferenvironment for developers to create apps over competitor platformsScenario Discussion: Apple has been trying to fend off attacks from patent trolls preying on small iOS developersScenario SWOT Assessment Apple is creating a haven for developers by stepping up to protectStrength: Significant cash base and legal against patent attacksfortitude, as well as a large number of patents • While Apple has been caught up in litigation of its own, theto defend the developer community from company extended its legal battles by attempting to shield developers from attacks by patent sharks. Organizations likepatent trolls. Lodsys are targeting small iOS and Mac developers by filing claimsWeakness: Limited insight into potential of patent infringement, bypassing Apple entirely. Apple hasthreats being placed on Apple developers. recognized the issue and quickly intervened by taking on LodsysOpportunity: By guarding against patent directly, as small iOS developers have little means to support suchattacks more effectively than Google, Apple a case.will attract and retain more small • To further ensure developers are not taken advantage of, Apple isprogrammers to the Apple development taking steps to determine if application submissions are due tocommunity than Android. legal issues with additional survey questions, so as to provide assistance earlier on. TBR believes the safety net Apple providesThreat: Excessive harassment by patent trolls against patent trolls presents a significant advantage in themay deter developers from developing on developer community, which will help the company furtherApple platforms. expand its app store by attracting more quality developers. • TBR believes Apple’s quick action instills a sense of safety amongst the company’s developer community. Beyond establishing a safe haven for developers, TBR believes developers on other platforms, such as Android, will be enticed to choose Apple as their main development platform, or even switch over entirely to avoid legal risk. SOURCE: APPADVICE.COM10 Apple 2Q11 | Computer Business Quarterly ©2011 Technology Business Research, Inc.
  • 11. Scenario Discussion TBRThe release of OS X Lion and iCloud will make for a more integratedcomputing experience that will cater to both Windows and iOS usersScenario Discussion: OS X Lion represents a significant leap forward for Apple’s operating systemScenario SWOT Assessment Apple has unleashed Lion, a step forward in simplifying the consumerStrength: OS X has been redesigned for a PC experiencemore efficient and simpler user experience. • The launch of OS X Lion presents a significant leap in terms ofWeakness: Windows market share still operating systems, particularly for the Macbook series. Thedwarfs the Mac installed base. aggressive adoption of many of the core UI components that have been responsible for the success of iOS will help Lion target aOpportunity: Help promote Macbook Air broader audience of Mac users.sales with enhanced multi-touch • With the introduction of Lion, Apple will be implementing a numbercapabilities. of familiar features the multitude of iOS users have seen before andThreat: The anticipated launch of Windows use on a day-to-day basis. While the core file system remains intact,8 will result in some users holding out for there are several visual differences and nuances that will help sellthe next Windows experience. the new operating experience more effectively to Windows users who have been hesitant to make the switch. • OS X Lion achieved over 1 million downloads in the first 24 hours of release, demonstrating a successful product launch despite being download-only. • TBR expects the launch of iCloud will further enhance sales opportunities for Lion-based macs due to the seamless syncing that can take place between devices. This raises an increased value proposition for those who already own Apple products, as their experience will be improved with the ability to connect, share and sync files and media between multiple devices. SOURCE: Gawker Media11 Apple 2Q11 | Computer Business Quarterly ©2011 Technology Business Research, Inc.
  • 12. Scenario Discussion TBRiOS 5 will help prevent existing customers from switching to alternativemobile devices with an improved feature setScenario Discussion: Apple’s new version of iOS aims to address many user interface complaints iOS deviceowners have had since its inceptionScenario SWOT Assessment TBR believes Apple leverages a selective approach to softwareStrength: A simpler user interface provides a updates to polish and streamline functionality despite being later to the game than the competitionshorter learning curve for new users. • iOS will introduce a multitude of new and enhancedWeakness: iOS lacks the user customization features, such as iMessage, notification center and PC-freeoptions of Android. functionality. While many of these features have beenOpportunity: Broader features will allow Apple to implemented in devices by Google and RIM, TBR believespoach Android and Blackberry users more the added development and design time Apple has taken toeffectively to expand market share. fine-tune and fully integrate the iOS enhancements willThreat: An influx of Android devices continues to result in a more streamlined and simpler user experience.flood the market and lead in market share. • TBR believes iOS 5 will help accelerate Apple’s mobile device market share expansion efforts by combining highly sought-after features, such as an improved notification iOS 5 Main App Improvements system, with a minimalistic software design. The improved messaging system in iOS 5, iMessage, will help court Blackberry users into purchasing an iPhone One of the key services Blackberry has been able to leverage for success has been Blackberry Messenger (BBM). BBM is a popular proprietary instant messaging program that has been long-rumored to be made available on iOS. However, Apple beat RIM to the punch by offering a similar program to BBM in hopes to get Blackberry users to switch over. SOURCE: ENGADGET12 Apple 2Q11 | Computer Business Quarterly ©2011 Technology Business Research, Inc.
  • 13. Financial Model Strategy TBRProduct refreshes and new iPhone market penetration will continue todrive aggressive revenue expansion in 3Q11 and beyondRevenue Performance and Strategies APPLE TWO-YEAR REVENUE AND GROWTH 2Q11 Revenue: $28.57 billion, 82.0% YTY TBR $30,000 90% • Revenue growth was driven by strong sales of the iPhone 80% and iPad, with unit sales growing 142.2% and 182.8% year- Revenue Growth Year-to-year $25,000 70% to-year, respectively. Revenue ($ millions) $20,000 60% • iPad sales comprise 21.2% of Apple’s total revenues, up 50% $15,000 40% from 11.5% in 1Q11, driven by strong demand in mature $10,000 30% markets for tablet PCs and accelerated restocking cycles for $5,000 20% iPad 2 inventory. 10% $0 0% • Mac sales growth started to slow during 2Q11; however, 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 Est. Apple continued to outpace the market growth rate for PC 3Q11 sales. TBR attributes the slower Mac sales to a lack of any SOURCE: TBR AND APPLE Revenue Y/Y Growth Rate major Macbook product upgrade, as consumers held out for new hardware and the release of OS X Lion. TBR APPLE SEGMENT PERFORMANCE Revenue and Growth Outlook $28,000 $6,046 • The growth trend in Mac sales is expected to continue in $24,000 $1,571 3Q11 with the introduction of new Macbook Airs and Mac $20,000 $696 Minis in July. TBR expects Mac sales to be further enhanced In $ Millions $16,000 $2,166 by back-to-school buying cycles. $1,214 $12,000 $646 $13,311 • TBR believes iPad 2 sales will maintain their growth $8,000 $5,334 trajectory as Apple ramps inventory cycles and seasonal $1,325 $4,000 $1,545 $396 $517 consumer demand improves in 2H11. We expect iPhone $0 $4,399 $5,105 sales will taper off as pent-up demand builds for the next 2Q10 2Q11 iteration of the iPhone; however, the lower-priced iPhone iPad iTunes Software and Services iPhone iPod Peripherals Computers 3GS will sustain sales momentum by targeting the lower- SOURCE: TBR AND APPLE end smartphone market, particularly in emerging regions.13 Apple 2Q11 | Computer Business Quarterly ©2011 Technology Business Research, Inc.
  • 14. Financial Model Strategy TBRRecord iPhone sales helped offset ramping expenses from retailexpansion and sales investments to achieve margin expansion in 2Q11 Cost & Margin Performance and Strategies 2Q11 Operating Expense: $2.54 billion APPLE PERCENT EXPENSE BY FUNCTION TBR 8% 7% Gross margin increased 260 basis points year- 6% Cost of to-year to 41.7% of revenue, resulting from Percent Revenue 5% Services, stronger sales from the more profitable iPhone 4% 3% Gross Profit product segment, lower manufacturing costs 2% and a relatively weak U.S. dollar. 1% 0% 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 Est. 3Q11 • SG&A expense rose 8.6% sequentially to $1.91 S&M G&A R&D billion, as Apple continued to ramp up SOURCE: TBR AND APPLE headcount, particularly with more aggressive retail expansion and R&D investments. SG&A TBR APPLES GROSS AND OPERATING PROFIT • Apple continued to increase sales through 50% AND PROJECTIONS higher advertising and marketing expenditures, 40% 40.9% 41.8% 40.9% 41.7% 39.1% 36.9% 38.8% 36.7% 35.2% which TBR attributes to Apple building stronger Gross and Operating Margin 30% 27.0% 30.2% 30.1% 29.5% 27.0% 26.8% 28.2% 26.4% 25.3% awareness for the iPad 2. 20% • Operating margin increased from 27.0% in 10% 2Q10 to 32.8% in 2Q11, as Apple’s revenue 0% growth continued to outpace cost increases. 2Q10 3Q10 4Q10 1Q11 2Q11 Est. 3Q11 CY10 CY11 Est. CY12 Est. Operating Gross Margin Operating Margin • As Apple introduces new product updates and Margin and NOTE: Annual gross and operating profit and projections are for calendar 2009, 2010 and 2011, respectively. SOURCE: TBR AND APPLE continues to penetrate new markets with Outlook iPhone, TBR believes the company will be able to sustain its growth trend and maintain an operating margin above 35% into 2012.14 Apple 2Q11 | Computer Business Quarterly ©2011 Technology Business Research, Inc.
  • 15. Financial Model Strategy TBR iPhone continues to fuel Apple’s record sales, with strong iPad demand and emerging market expansion supporting its growth trajectory Segment Revenue Performance and Strategies Segment FinancialsTBR APPLE SEGMENT CONTRIBUTIONS More than 20.3 million units were sold as iPhone sales 100% grew significantly in international markets, and the iPhone device saw stronger enterprise adoption. In addition,Percent of Total Revenue 80% $5,334 $8,822 $10,468 $13,311 $12,298 60% TBR believes the Verizon iPhone helped drive unit sales 40% $4,925 $5,512 $9,464 $6,070 $8,942 despite strong pent-up demand for the next iteration. 20% $5,441 $6,009 0% $6,809 $6,299 $6,318 Mac sales growth slowed due to some cannibalization 2Q10 3Q10 4Q10 1Q11 2Q11 from iPad sales and delayed consumer spending Mac iPhone iPod, iPad & iTunes PCs, SW, Svcs, & Peripherals resulting from anticipation of a notebook productSOURCE: TBR AND APPLE refresh. Despite pressure to replenish iPad 2 stocks to meet TBR APPLE PERCENT REVENUE BY SEGMENT iPad demand, Apple achieved another record iPad sales quarter, with unit sales growth of 183% year-to-year. 60% 50% Percent Revenue iPod unit sales fell 20% year-to-year, as other iOS 40% devices cannibalized iPod sales; however, Apple 30% iPod continues to maintain its market share lead in the U.S. 20% for MP3 players. 10% 0% Peripherals revenue rose 31% year-to-year to $517 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 million, driven by the success of the second-generation Peripherals PCs, SW, Svcs, & Peripherals iPod, iPad & iTunes iPhone Apple TV; however, the company noted in 2Q11 SOURCE: TBR AND APPLE earnings that Apple TV will remain a “hobby” for now. 15 Apple 2Q11 | Computer Business Quarterly ©2011 Technology Business Research, Inc.
  • 16. Financial Model Strategy TBRConsumer revenue growth outstripped Apple’s impressive commercialgrowth rate Customer Segment Revenue Performance and Strategies Customer Segment FinancialsTBR 2Q11 APPLE CONSUMER VS. COMMERCIAL PERCENT OF REVENUE Commercial • Consumer revenue was $22.71 billion in 2Q11, 20.49% compared to $19.47 billion in 1Q11. Demand for iPhone and iPad continued to fuel consumer sales. Consumer TBR expects the next iteration of the iPhone, Consumer $22.72 expected to launch later this year, will help sustain 79.51% billion the consumer growth trend into 2012. (up 88.9% year-to-year) • TBR believes Apple’s recently launched “One-to-SOURCE: TBR AND APPLE One” program helped promote consumer sales and increased satisfaction by providing a personalized setup service for purchases at Apple retail stores. • Professional customers continued to purchase more Mac products in 2Q11, with professional revenues at $3.47 billion, up from $1.98 billion in TBR APPLE REVENUE BY PRODUCT LINE $30 1Q11. TBR believes Apple is gaining ground in the $25 Commercial enterprise space by marketing the reliability and Revenue in $ Billions $20 $5.85 billion security of its Mac operating environment for $15 $10 (up 59.3% business use. $5 year-to-year) • The iPhone and iPad are slowly catching on with $0 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 private enterprise. TBR believes the release of iPhone iPods, iPads & iTunes Macs, etc. iWork 11 on the iPhone will cater to the mobile SOURCE: TBR AND APPLE needs of businesses looking to gain full access to documents on the go. 16 Apple 2Q11 | Computer Business Quarterly ©2011 Technology Business Research, Inc.
  • 17. Go-to-Market & Product Strategies TBRThe introduction of iCloud and iOS 5 will help Apple vie for market shareagainst feature-rich Android devicesNew Product Development: Apple plans to release iOS 5 and iCloud in the fall, expanding the capabilities of Applemobile devices while leveraging a cloud solution that seamlessly integrates all Apple products for a more cohesive,flexible consumer experience.Key Takeaways • Apple is targeting an improved value proposition across all product• iOS 5 will address some of users’ top lines with the anticipated release of iOS 5 and iCloud. By addressing concerns with iOS, such as an improved nearly all the major concerns users have had with iOS through a new notification system and PC-free activation. firmware iteration, Apple will be better-positioned to compete with Google Android phones and tablets. While Android has had a leg up• iCloud will provide more streamlined and on iOS in terms of syncing data to the cloud, PC or other devices, we hassle-free syncing capabilities between believe iCloud will provide Apple with an advantage over the Android devices to promote cross-sales of Macs. platform through enhanced media storage and streaming capabilities. • Despite the possible introduction of a new iPhone this fall, TBRData accessibility through iCloud believes the combined feature enhancements of iCloud and iOS 5 will create a new wave of demand for existing iPhones, iPads and Macs. • While the new iOS upgrade may cause iOS device owners to hold out longer to replace their hardware, the benefits iCloud offers will entice Apple customers to purchase Mac computers. We attribute the sales to consumers seeking a simplified computing experience across multiple devices while minimizing the time needed to manage data. • TBR believes iCloud will see rapid adoption rates as a result of its appealing pricing, with the base 5 GB storage option provided for free, while an additional 10 GB, 20 GB and 50 GB of capacity will be provided for an annual fee of $20, $40 and $100, respectively. SOURCE: MACRUMORS17 Apple 2Q11 | Computer Business Quarterly ©2011 Technology Business Research, Inc.
  • 18. Go-to-Market & Product Strategies – SMB Focus TBR iOS improvements will help Apple penetrate the SMB space and contend more effectively with devices that are more established in business arenas New SMB Development: Apple will continue to expand in the SMB space by leveraging a more business-oriented approach to app development and expanding its retail and channel presence into new enterprise markets. Key Takeaways While Apple remains primarily a consumer-driven organization, it is • Apple’s iPad and iPhone translate well to the gaining traction in the enterprise space by catering to the needs of SMB community with the stability, security and business users. ease-of-use of the iOS mobile operating system; • iMessage, a new feature of iOS 5, will help promote enterprise however, Apple lags competitors in terms of adoption of Apple devices by allowing iOS and Mac users to send mobile device features and capabilities. text messages over Wi-Fi or 3G networks without tapping into a • Apple leverages a bottom-up approach to SMB texting plan. TBR believes the added communication channels penetration by first targeting VSBs through and more cost-effective use of intra-company communication will retail stores and service centers to establish help drive increased iPhone and iPad sales for business use. familiarity and acceptance of Apple products. • Apple continues to reach out to the business community with the Subsequently, Apple is able to gain ground in App store, particularly with the launch of iWork for iPhone. An businesses of all sizes as users help define what increasing number of business applications, combined with the they want to use in a work environment. stability and security of iOS, is allowing Apple to more effectively target VSB and SMB users as more organizations invest in new smartphones and tablet PCs. TBR APPLE ENTEPRISE REVENUE AND Y-Y GROWTH Apple continues to leverage channel partners and dedicated $8,000 100.0% enterprise programs as an inlet into the business community. 80.8% 83.3%Thousands $6,000 69.4% 80.0% • Apple’s channel network continues to grow on a global scale, 58.2% 60.3% $4,000 $3,466 60.0% allowing the organization to more quickly enter new enterprise $3,089 $2,980 $1,891 $2,528 40.0% markets with on-site presence for setup and support of Apple $2,000 20.0% solutions. $- 0.0% • The Apple Joint Venture program provides various training, 2Q10 3Q10 4Q10 1Q11 2Q11 Enterprise Revenue Enterprise Growth Y-Y workshops and setup assistance to help migrate businesses to an SOURCE: TBR AND APPLE Apple work environment. 18 Apple 2Q11 | Computer Business Quarterly ©2011 Technology Business Research, Inc.
  • 19. Alliance & Acquisition Strategies TBRA stronger carrier presence in China will open new avenues for growthwhile Apple continues to seek ways to secure its valuable IPMap of Alliance, Acquisition and Development Synergies International expansion and possible supplier migration will help sustain Apple’s revenue and profit growth into Internal 2012, as emerging market demand improves and supplier Development patent suits ensue. Acquisitions • iOS 5 will add over 200 new features Apple will gain traction in the world’s largest cell phone • Apple is well- positioned to pursue to Apple’s mobile market by teaming with China Mobile to spark iPhone sales small- and large- devices, helping in Greater China capture increased • With nearly 1 billion mobile phone subscribers in China, scale acquisitions with over $28 billion market share from triple the U.S. total, the partnership with China Mobile will in on-hand cash. Google Android. bolster Apple’s iPhone sales and provide opportunities to expand in adjacent markets across Greater China. • TBR believes China will be a significant growth opportunity Alliances for Apple; however, China’s less strict copyright laws allow • The China Mobile alliance for a high degree of lower-priced knock-off products that will accelerate Apple’s will consume some of Apple’s regional market share. presence in east Asia. The patent battles between Apple and Samsung could lead • A supplier shift from Apple to seek alternative component suppliers in 2012 Samsung may prove Apple’s corporate focus on securing IP continues to be beneficial for Apple. threatened by Samsung in recent product introductions. A transition to a new supplier that does not hold a competing product portfolio, such as Taiwan Semiconductor Apple will continue to enhance and secure its IP Manufacturing Company, would help Apple alleviate the internally and through small-scale acquisitions in legal pressures it is facing. Subsequently, Apple could focus the midst of ongoing patent suits with Samsung. more resources on product innovations rather than IP protection.19 Apple 2Q11 | Computer Business Quarterly ©2011 Technology Business Research, Inc.
  • 20. Geographic Overview TBRApple will continue to capitalize on iPhone growth opportunities inGreater China while broadening its mobile product reach into new marketsTBR Conclusions APPLE REVENUE BY REGION TBR • The iPad 2 is available in over 30 countries, driving $30,000 revenue growth across the globe. $25,000 $8,228 $20,000 In $ Millions • Deals with foreign carriers are allowing the iPhone to $15,000 $2,941 $7,694 further expand its market share, with Apple adding 42 $10,000 $4,572 new carriers and 15 new countries to its roster in 2Q11. $5,000 $8,186 $12,650 • The discounted iPhone 3GS pricing is helping Apple target $0 2Q10 Calendar Quarter 2Q11 the lower-end smartphone market in emerging regions. In SOURCE: TBR AND APPLE APAC EMEA Americas addition, Apple will leverage expansion in China as a model for growth in other emerging markets. Americas EMEA East Asia • Apple is leveraging carrier expansion The Americas comprised 35.4% of EMEA sales grew 70.6% year- as a medium for growth, particularly Apple’s revenue, down from 39.7% to-year in 2Q11, supported in Greater China, where Apple in 2Q10. While the expansion of by carrier expansion and the partnered with China Mobile to help Apple products to the Verizon introduction of the iPad 2. In support sales of $3.8 billion in 2Q11, Key network and the introduction of addition, Apple opened four six times higher than in 2Q10. Strategies the iPad 2 helped spur growth in retail stores across France, • Chinese manufacturing giant Hon Hai the Americas, aggressive the U.K. and Germany, which international expansion led to a will help sustain robust will open up to 500 retail stores lower share of Americas revenue. growth in EMEA. selling Apple products in the next few years to bolster expansion in China.20 Apple 2Q11 | Computer Business Quarterly ©2011 Technology Business Research, Inc.
  • 21. Resource Management Strategy TBRDespite the expected loss of its head of retail, Apple will continue toexpand its base of global retail outlets for new growth avenuesResource Management Strategy• Ron Johnson, head of all Apple retail operations, will leave to TBR APPLE EFFICIENCY METRICS (IN $000S) become CEO of JC Penny in November. While Johnson has 2Q10 2Q11 been a key contributor to the success of Apple’s retail chain Revenue per Employee $1,497 $1,994 h since its inception in 2001, TBR does not believe his departure S&M Employee Expense per head $151 $133 h will significantly impact the strategic direction of Apple’s R&D Employee Expense per head $404 $447 i retail segment. TBR believes Apple would benefit from an G&A Expense per G&A head $241 $261 i individual with demonstrated capabilities in globalization and Revenue per Salesperson $4,251 $6,699 h international retail markets, particularly in Asia, where the SOURCE: TBR AND APPLE company is focusing on aggressive expansion.• Apple plans to have 363 retail locations around the world by the end of FY11 (ending in September), up from 327 at the close of 2Q11. Apple will also expand its retail presence in emerging markets through a partnership with Hon Hai that will establish 400-500 retail outlets across China, which TBR TBR APPLE PROFITABILITY AND GROWTH believes will operate similarly to Apple Stores. 50% 90% 40%Apple Capital Investments Revenue Growth 60% 30% Margins• Steve Jobs proposed plans to develop a new Apple campus in 20% 30% Cupertino, Calif. by 2015 that will support the company’s 10% rapid expansion by accommodating up to 12,000 employees. 0% 0% 2Q10 3Q10 4Q10 1Q11 2Q11• In an effort to support the upcoming iCloud service, Apple is Gross Margin Operating Margin Net Margin Revenue Growth Year-to-Year leveraging its 500,000-square-foot, $1 billion datacenter in Maiden, NC. The large-scale facility indicates Apple SOURCE: TBR AND APPLE anticipates significant demand for its iCloud solution.21 Apple 2Q11 | Computer Business Quarterly ©2011 Technology Business Research, Inc.
  • 22. Resource Management Strategy TBR Apple’s headcount grew in 2Q11, driven by retail expansion, sales investments and preparations for new service and product launchesHeadcount Strategies Headcount Drivers and ChangesTBR APPLE TTM REVENUE PER EMPLOYEE $2,500,000 60,000 • Sales & Marketing – Sales & Marketing employee additionsRevenue per Employee 50,000 expanded in line with Apple’s sales growth, which TBR expects Headcount $2,000,000 40,000 $1,500,000 30,000 to continue as Apple maintains its growth trajectory and $1,000,000 20,000 introduces new products and services. $500,000 10,000 $- - • General & Administrative – TBR believes Apple continued to 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 grow G&A headcount in 2Q11 to support the organization’s continued operations as it expands into new regions. Revenue per Employee Average Headcount SOURCE: TBR AND APPLE • Research & Development – Increased R&D spending has led to an increase in R&D headcount, most likely in anticipation of the iPhone 5 and iPad 3 and development of iCloud.TBR APPLE HEADCOUNT • Service & Support – We estimate Service & Support headcount 60,000 750 2,000 rose from 8,600 in 2Q10 to 10,100 in 2Q11 as Apple preps 50,000 670 1,800 2,050 5,500 3,000 support staff for the fall launch of the iCloud service. 40,000 1,880Headcount 4,300 2,600 10,100 • Retail – Apple’s retail headcount grew to 30,600 full-time 30,000 20,000 8,600 employees in 2Q11, supported by the opening of four new 22,400 30,600 international retail locations. 10,000 0 Keep on the Radar 2Q10 2Q11 Manufacturing and Other Marketing Low-Cost Regions – Apple will continue to expand globally by Sales General and Administrative pushing its retail segment into emerging regions such as China Research and Development Service and Support and LATAM. RetailSOURCE: TBR AND APPLE 22 Apple 2Q11 | Computer Business Quarterly ©2011 Technology Business Research, Inc.
  • 23. Organizational Structure TBRApple, Inc. Organizational Chart Steve Jobs CEO Timothy D. Cook Peter Oppenheimer Acting CEO Senior Vice President Chief Operating Officer and Chief Financial Officer Bruce Sewell Jonathan Ive Senior Vice President Senior Vice President and General Counsel Industrial Design Ron Johnson will leave Apple in November, Philip W. Schiller though no replacement Ron Johnson Senior Vice President has been named. Senior Vice President Worldwide Product Retail Marketing Craig Federighi Scott Forstall Senior Vice President Senior Vice President Software Engineering iOS Software Sina Tamaddon Bob Mansfield Senior Vice President Senior Vice President Applications Mac Hardware Engineering Jeff Williams Senior Vice President Operations23 Apple 2Q11 | Computer Business Quarterly ©2011 Technology Business Research, Inc.
  • 24. Appendix – Income Statement TBR APPLE, INC. Consolidated Statement of Income TBR (i n $ Thous a nds ) CALENDAR QUARTER 2Q10 3Q10 4Q10 1Q11 2Q11 Est. 3Q11 FISCAL QUARTER 3Q10 4Q10 1Q11 2Q11 3Q11 Es t. 4Q11 Net Sales $15,700,000 $20,343,000 $26,741,000 $24,667,000 $28,571,000 $27,200,000 Cost of Sales 9,564,000 12,832,000 16,443,000 14,449,000 16,649,000 15,975,840 Gross Profit 6,136,000 7,511,000 10,298,000 10,218,000 11,922,000 11,224,160 SG&A 1,438,000 1,571,000 1,896,000 1,763,000 1,915,000 2,042,300 R&D 464,000 494,000 575,000 581,000 628,000 617,500 Operating Income 4,234,000 5,446,000 7,827,000 7,874,000 9,379,000 8,564,360 Other Income (Expense) 58,000 14,000 136,000 26,000 172,000 50,000 EBITD 4,292,000 5,460,000 7,963,000 7,900,000 9,551,000 8,614,360 Income Taxes 1,039,000 1,153,000 1,959,000 1,913,000 2,243,000 2,067,446 Net Income $3,253,000 $4,307,000 $6,004,000 $5,987,000 $7,308,000 $6,546,914 AS A PERCENTAGE OF REVENUE Net Sales 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% Cost of Sales 60.9% 63.1% 61.5% 58.6% 58.3% 58.7% Gross Margin 39.1% 36.9% 38.5% 41.4% 41.7% 41.3% SG&A 9.2% 7.7% 7.1% 7.1% 6.7% 7.5% R&D 3.0% 2.4% 2.2% 2.4% 2.2% 2.3% Operating Margin 27.0% 26.8% 29.3% 31.9% 32.8% 31.5% Gain from Sale of Investment 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Other Income (Expense) 0.4% 0.1% 0.5% 0.1% 0.6% 0.2% EBITD 27.3% 26.8% 29.8% 32.0% 33.4% 31.7% Income Taxes 6.6% 5.7% 7.3% 7.8% 7.9% 7.6% Net Margin 20.7% 21.2% 22.5% 24.3% 25.6% 24.1% YEAR-TO-YEAR CHANGE Net Sales 61.3% 66.7% 70.5% 82.7% 82.0% 33.7% Cost of Goods Sold 66.3% 80.7% 77.3% 83.5% 74.1% 24.5% Gross Profit 54.1% 47.1% 60.6% 81.7% 94.3% 49.4% SG&A 42.4% 47.8% 47.2% 44.5% 33.2% 30.0% R&D and Engineering 36.1% 38.0% 44.5% 36.4% 35.3% 25.0% Operating Income 60.9% 47.8% 65.7% 97.9% 121.5% 57.3% Other, Net -3.3% -68.9% 312.1% -48.0% 196.6% 257.1% EBITD 59.4% 46.4% 67.4% 96.1% 122.5% 57.8% Income Taxes 20.3% -3.7% 42.0% 100.3% 115.9% 79.3% Net Income 78.0% 70.1% 77.7% 94.8% 124.7% 52.0% SEQUENTIAL CHANGE Net Sales 16.3% 29.6% 31.5% -7.8% 15.8% -4.8% Cost of Goods Sold 21.5% 34.2% 28.1% -12.1% 15.2% -4.0% Gross Profit 9.1% 22.4% 37.1% -0.8% 16.7% -5.9% SG&A 17.9% 9.2% 20.7% -7.0% 8.6% 6.6% R&D 8.9% 6.5% 16.4% 1.0% 8.1% -1.7% Operating Income 6.4% 28.6% 43.7% 0.6% 19.1% -8.7% Other, Net 16.0% -75.9% 871.4% -80.9% 561.5% -70.9% EBITD 6.5% 27.2% 45.8% -0.8% 20.9% -9.8% Income Taxes 8.8% 11.0% 69.9% -2.3% 17.3% -7.8% Net Income 5.8% 32.4% 39.4% -0.3% 22.1% -10.4% SOURCE: TBR AND APPLE24 Apple 2Q11 | Computer Business Quarterly ©2011 Technology Business Research, Inc.
  • 25. Appendix – Balance Sheet TBR APPLE, INC. Consolidated Balance Sheets TBR (i n $ Thous a nds ) CALENDAR QUARTER 2Q10 3Q10 4Q10 1Q11 2Q11 FISCAL QUARTER 3Q10 4Q10 1Q11 2Q11 3Q11 ASSETS Current Assets Cash & Short-term Investments $ 24,288,000 $ 25,620,000 $ 26,977,000 $ 29,234,000 $ 28,395,000 Accounts Receivable 3,447,000 5,510,000 6,027,000 5,798,000 6,102,000 Inventory 942,000 1,051,000 885,000 930,000 889,000 Deferred Tax Assets 1,216,000 1,636,000 1,724,000 1,683,000 1,892,000 Other Current Assets 6,140,000 7,861,000 8,314,000 9,352,000 9,620,000 Total Current Assets 36,033,000 41,678,000 43,927,000 46,997,000 46,898,000 Long-term marketable securities 21,551,000 25,391,000 32,730,000 36,533,000 47,761,000 Property, Plant, Equip. (Net of Dep.) 3,990,000 4,768,000 5,868,000 6,241,000 6,749,000 Other, Net 3,151,000 3,346,000 4,217,000 5,133,000 5,350,000 Total Assets $ 64,725,000 $ 75,183,000 $ 86,742,000 $ 94,904,000 $ 106,758,000 LIABILITIES AND EQUITY Current Liabilities Accounts Payable 8,469,000 12,015,000 14,301,000 13,714,000 15,270,000 Accrued Expenses 4,452,000 5,723,000 5,953,000 7,022,000 7,597,000 Total Current Liabilities 15,612,000 20,722,000 23,795,000 24,327,000 26,859,000 Other non-current liabilities 4,981,000 5,531,000 7,065,000 7,870,000 9,149,000 Total Liabilities 21,614,000 27,392,000 32,076,000 33,427,000 37,415,000 Stockholders Equity Common Stock & PIC 10,133,000 10,668,000 11,502,000 12,326,000 12,715,000 Retained Earnings 32,870,000 37,169,000 43,050,000 49,025,000 56,239,000 Other 108,000 (46,000) 114,000 126,000 389,000 Total Stockholders Equity 43,111,000 47,791,000 54,666,000 61,477,000 69,343,000 Total Liabilities & Equity $ 64,725,000 $ 75,183,000 $ 86,742,000 $ 94,904,000 $ 106,758,000 FINANCIAL RATIOS Cost of Sales 2.31 2.01 1.85 1.93 1.75 Days Sales Outstanding 19.76 24.38 20.28 21.15 19.22 Turns on Inventory 48.43 51.51 67.95 63.69 73.22 Days Inventory Outstanding 7.54 7.09 5.37 5.73 4.98 Fixed Asset Turnover 16.76 18.58 20.11 16.30 17.60 Days Cash Outstanding 139.23 113.35 90.79 106.66 89.45 Total Asset Turnover 1.03 1.16 1.32 1.09 1.13 Debt/Asset Ratio 0.26 0.29 0.29 0.27 0.26 Current Ratio 2.31 2.01 1.85 1.93 1.75 Return on Assets 21.9% 22.3% 23.5% 24.3% 26.0% Return on Equity 32.7% 33.8% 36.0% 37.8% 40.5% Employees 42,250 46,600 51,000 50,600 54,000 Revenue/Employee $1,496,926 $1,582,651 $1,715,671 $1,836,724 $1,984,609 SOURCE: TBR AND APPLE25 Apple 2Q11 | Computer Business Quarterly ©2011 Technology Business Research, Inc.
  • 26. Appendix – Segment Revenue TBR APPLE REVENUE MODEL TBR CALENDAR QUARTER 2Q10 3Q10 4Q10 1Q11 2Q11 Est. 3Q11 FISCAL QUARTER 3Q10 4Q10 1Q11 2Q11 3Q11 Es t. 4Q11 Total Revenue $ 15,700,000 $ 20,343,000 $ 26,741,000 $ 24,667,000 $ 28,571,000 $ 27,200,000 Gross Profit $ 6,136,000 $ 7,511,000 $ 10,298,000 $ 10,218,000 $ 11,922,000 $ 11,224,160 Gross Margin 39.1% 36.9% 38.5% 41.4% 41.7% 41.3% REVENUE BY PRODUCT Notebook $ 3,098,000 $ 3,194,000 $ 3,699,000 $ 3,535,000 $ 3,525,000 $ 3,717,600 MacBook Air & Pro $ 2,125,000 $ 2,117,000 $ 3,175,000 $ 2,900,000 $ 2,950,000 $ 3,700,000 MacBook $ 973,000 $ 1,077,000 $ 524,000 $ 635,000 $ 575,000 $ 17,600 Desktop $ 1,301,000 $ 1,676,000 $ 1,731,000 $ 1,441,000 $ 1,580,000 $ 1,595,800 Mac Pro $ 153,000 $ 248,000 $ 291,000 $ 281,000 $ 380,000 $ 295,800 iMac/Mac mini $ 1,075,000 $ 1,350,000 $ 1,400,000 $ 1,150,000 $ 1,200,000 $ 1,300,000 Total Computer $ 4,399,000 $ 4,870,000 $ 5,430,000 $ 4,976,000 $ 5,105,000 $ 5,313,400 Peripherals $ 396,000 $ 477,000 $ 593,000 $ 580,000 $ 517,000 $ 495,000 iPod $ 1,545,000 $ 1,477,000 $ 3,425,000 $ 1,600,000 $ 1,325,000 $ 1,313,250 iPhone $ 5,334,000 $ 8,822,000 $ 10,468,000 $ 12,298,000 $ 13,311,000 $ 11,557,790 iPad $ 2,166,000 $ 2,792,000 $ 4,608,000 $ 2,836,000 $ 6,046,000 $ 6,106,460 Total Hardware Revenue $ 13,840,000 $ 18,438,000 $ 24,524,000 $ 22,290,000 $ 26,304,000 $ 24,785,900 Software and Services $ 646,000 $ 662,000 $ 786,000 $ 743,000 $ 696,000 $ 775,200 iTunes Revenue $ 1,214,000 $ 1,243,000 $ 1,431,000 $ 1,634,000 $ 1,571,000 $ 1,638,900 PRODUCT MIX (PERCENTAGE OF TOTAL REVENUE) Notebook 19.7% 15.7% 13.8% 14.3% 12.3% 13.7% MacBook Air & Pro 13.5% 10.4% 11.9% 11.8% 10.3% 13.6% MacBook 6.2% 5.3% 2.0% 2.6% 2.0% 0.1% Desktop 8.3% 8.2% 6.5% 5.8% 5.5% 5.9% Mac Pro 1.0% 1.2% 1.1% 1.1% 1.3% 1.1% iMac/Mac mini 6.8% 6.6% 5.2% 4.7% 4.2% 4.8% Total Computer 28.0% 23.9% 20.3% 20.2% 17.9% 19.5% Peripherals 2.5% 2.3% 2.2% 2.4% 1.8% 1.8% iPod 9.8% 7.3% 12.8% 6.5% 4.6% 4.8% iPhone 34.0% 43.4% 39.1% 49.9% 46.6% 42.5% iPad 13.8% 13.7% 17.2% 11.5% 21.2% 22.5% Total Hardware Revenue 88.2% 90.6% 91.7% 90.4% 92.1% 91.1% Software and Services 4.1% 3.3% 2.9% 3.0% 2.4% 2.9% iTunes Revenue 7.7% 6.1% 5.4% 6.6% 5.5% 6.0% Total Non HW Revenue 11.8% 9.4% 8.3% 9.6% 7.9% 8.9% YEAR-TO-YEAR REVENUE GROWTH Notebook 39.5% 10.5% 34.1% 58.7% 13.8% 16.4% MacBook Air & Pro 25.0% -4.9% 47.7% 89.5% 38.8% 74.8% MacBook 87.1% 61.7% -13.8% -9.0% -40.9% -98.4% Desktop 14.7% 53.9% 2.3% -5.9% 21.4% -4.8% Mac Pro -45.2% -14.2% 44.1% 73.5% 148.4% 19.3% iMac/Mac mini 34.4% 82.4% -1.8% -11.5% 11.6% -3.7% Total Computer 31.2% 22.4% 22.0% 32.3% 16.0% 9.1% Peripherals 16.5% 22.0% 26.4% 22.9% 30.6% 3.8% iPod 3.6% -5.5% 1.0% -14.0% -14.2% -11.1% iPhone 74.3% 91.5% 87.7% 125.9% 149.6% 31.0% iPad 0.0% 0.0% 0.0% 0.0% 179.1% 118.7% Total Hardware Revenue 67.8% 74.9% 76.6% 93.2% 90.1% 34.4% Software and Services 21.9% 2.0% 24.6% 17.2% 7.7% 17.1% iTunes Revenue 26.7% 22.1% 22.9% 23.1% 29.4% 31.9% Total Non HW Revenue 25.0% 14.3% 23.5% 21.2% 21.9% 26.7% SOURCE: TBR ESTIMATES AND APPLE26 Apple 2Q11 | Computer Business Quarterly ©2011 Technology Business Research, Inc.
  • 27. Appendix – Units and ASPs TBR APPLES UNIT SHIPMENTS AND ASPs TBR CALENDAR QUARTER 2Q10 3Q10 4Q10 1Q11 2Q11 Est. 3Q11 FISCAL QUARTER 3Q10 4Q10 1Q11 2Q11 3Q11 Es t. 4Q11 UNIT SHIPMENTS Notebook 2,468,000 2,643,000 2,907,000 2,751,000 2,800,000 2,900,000 MacBook Air & Pro 1,556,000 1,582,000 2,395,000 2,330,000 2,380,000 2,650,000 MacBook 912,000 1,061,000 512,000 421,000 420,000 250,000 Desktop 1,004,000 1,242,000 1,227,000 1,009,000 1,005,000 1,175,000 Mac Pro 48,500 77,600 85,000 72,000 70,900 75,000 iMac/Mac mini 942,000 1,150,000 1,135,000 935,000 910,000 1,100,000 Total Computer 3,472,000 3,885,000 4,134,000 3,760,000 3,805,000 4,075,000 iPod 9,406,000 9,051,000 19,446,000 9,017,000 8,500,000 8,500,000 iPhone 8,398,000 14,102,000 16,235,000 18,647,000 18,100,000 18,100,000 iPad 3,270,000 4,188,000 7,331,000 4,694,000 4,950,000 4,950,000 YEAR-TO-YEAR UNIT GROWTH Notebook 40.7% 16.6% 36.6% 53.2% 13.5% 9.7% MacBook Air & Pro 23.9% -3.1% 53.7% 104.9% 53.0% 67.5% MacBook 83.1% 67.4% -10.2% -36.1% -53.9% -76.4% Desktop 18.3% 57.8% -0.6% -12.0% 0.1% -5.4% Mac Pro -50.8% -24.4% 55.1% 42.0% 46.2% -3.4% iMac/Mac mini 27.3% 70.9% -2.7% -13.7% -3.4% -4.3% Total Computer 33.4% 27.3% 23.0% 27.8% 9.6% 4.9% iPod -7.9% -11.1% -7.3% -17.2% -9.6% -6.1% iPhone 61.3% 91.4% 85.8% 113.1% 115.5% 28.4% AVERAGE SELLING PRICE Notebook $ 1,255 $ 1,208 $ 1,272 $ 1,285 $ 1,259 $ 1,282 MacBook Air & Pro $ 1,366 $ 1,338 $ 1,326 $ 1,245 $ 1,239 $ 1,396 MacBook $ 1,067 $ 1,015 $ 1,023 $ 1,508 $ 1,369 $ 70 Desktop $ 1,296 $ 1,349 $ 1,411 $ 1,428 $ 1,572 $ 1,358 Mac Pro $ 3,155 $ 3,196 $ 3,424 $ 3,903 $ 5,360 $ 3,944 iMac/Mac mini $ 1,141 $ 1,174 $ 1,233 $ 1,230 $ 1,319 $ 1,182 Blended Computer ASP $ 1,267 $ 1,254 $ 1,313 $ 1,323 $ 1,342 $ 1,304 iPod $ 164 $ 163 $ 176 $ 177 $ 156 $ 155 iPhone $ 635 $ 626 $ 645 $ 660 $ 735 $ 639 iPad $ 662 $ 667 $ 629 $ 604 $ 1,221 $ 1,234 Y/Y GROWTH - AVERAGE SELLING PRICE Notebook -0.8% -5.3% -1.8% 3.6% 0.3% 6.1% Desktop -3.0% -2.5% 2.9% 6.9% 21.3% 0.6% Blended Computer ASP -1.7% -3.8% -0.8% 3.6% 5.9% 4.0% iPod 12.5% 6.3% 8.9% 3.8% -5.1% -5.3% SOURCE: TBR ESTIMATES AND APPLE27 Apple 2Q11 | Computer Business Quarterly ©2011 Technology Business Research, Inc.
  • 28. Appendix – Operating Expense TBR APPLE OPEX MODEL (IN $ THOUSANDS EXCEPT HEADCOUNT) TBR CALENDAR QUARTER 2Q10 3Q10 4Q10 1Q11 2Q11 Est. 3Q11 FISCAL QUARTER 3Q10 4Q10 1Q11 2Q11 3Q11 Est. 4Q11 Total Revenue $ 15,700,000 $ 20,343,000 $ 26,741,000 $ 24,667,000 $ 28,571,000 $ 27,200,000 SG&A Expense $ 1,438,000 $ 1,571,000 $ 1,896,000 $ 1,763,000 $ 1,915,000 $ 2,042,300 Sales & Marketing Expense $ 1,028,000 $ 1,136,000 $ 1,421,000 $ 1,288,000 $ 1,435,000 $ 1,562,299 General & Administrative Expense $ 410,000 $ 435,000 $ 475,000 $ 475,000 $ 480,000 $ 480,001 Research and Development $ 464,000 $ 494,000 $ 575,000 $ 581,000 $ 628,000 $ 617,500 SALES & MARKETING EXPENSE BREAKOUT Sales Expense $ 550,000 $ 625,000 $ 695,000 $ 675,000 $ 800,000 $ 675,001 Sales Salary and Commissions $ 369,440 $ 400,000 $ 435,000 $ 422,500 $ 242,960 $ 42,000 Partner and Channel Spending $ 180,560 $ 225,000 $ 260,000 $ 252,500 $ 557,040 $ 633,001 Marketing Spending $ 478,000 $ 511,000 $ 726,000 $ 613,000 $ 635,000 $ 887,298 Marketing Salary/expenses $ 64,350 $ 66,288 $ 68,225 $ 70,163 $ 72,100 $ 73,219 Advertising & Programs $ 413,650 $ 444,713 $ 657,775 $ 542,838 $ 562,900 $ 1,539,079 Total Sales & Marketing Expense $ 1,028,000 $ 1,136,000 $ 1,421,000 $ 1,288,000 $ 1,435,000 $ 1,562,299 SPENDING AS A PERCENTAGE OF REVENUE Total SG&A Expense 9.2% 7.7% 7.1% 7.1% 6.7% 7.5% Sales & Marketing Expense 6.5% 5.6% 5.3% 5.2% 5.0% 5.7% Sales Expense 3.5% 3.1% 2.6% 2.7% 2.8% 2.5% Partner and Channel Spending 1.2% 1.1% 1.0% 1.0% 1.9% 2.3% Marketing Spending 3.0% 2.5% 2.7% 2.5% 2.2% 3.3% Advertising 2.6% 2.2% 2.5% 2.2% 2.0% 5.7% General & Administrative 2.6% 2.1% 1.8% 1.9% 1.7% 1.8% Research and Development 3.0% 2.4% 2.2% 2.4% 2.2% 2.3% YEAR-TO-YEAR GROWTH Total SG&A Expense 42.4% 47.8% 47.2% 44.5% 33.2% 30.0% Sales & Marketing Expense 53.8% 60.3% 58.4% 55.2% 39.6% 37.5% General & Administrative 20.1% 22.8% 21.5% 21.8% 17.1% 10.3% Research and Development 36.1% 38.0% 44.5% 36.4% 35.3% 25.0% CORPORATEWIDE HEADCOUNT Non-Retail 19,850 20,100 21,000 22,100 23,400 24,125 Sales 1,880 1,920 2,000 2,025 2,050 2,100 Marketing 1,800 1,850 1,900 1,950 2,000 2,025 General and Administrative 2,600 2,630 2,700 2,900 3,000 3,050 Research and Development 4,300 4,600 5,000 5,200 5,500 5,900 Service and Support 8,600 8,400 8,700 9,300 10,100 10,300 Manufacturing, Distribution, and Other 670 700 700 725 750 750 Retail 22,400 26,500 30,000 28,500 30,600 31,500 Total Employees 42,250 46,600 51,000 50,600 54,000 55,625 SOURCE: APPLE AND TBR ESTIMATES28 Apple 2Q11 | Computer Business Quarterly ©2011 Technology Business Research, Inc.
  • 29. Appendix – Revenue by Customer Segment TBR APPLE REVENUE BY CUSTOMER SEGMENT TBR CALENDAR QUARTER 2Q10 3Q10 4Q10 1Q11 2Q11 Est. 3Q11 REVENUE (IN $ THOUSANDS) Total $15,700,000 $20,343,000 $26,741,000 $24,667,000 $28,571,000 $27,200,000 Consumer $ 12,025,470 $ 15,683,980 $ 21,324,445 $ 19,473,115 $ 22,717,185 $ 21,627,816 Education $ 1,783,185 $ 2,131,010 $ 2,327,465 $ 2,213,445 $ 2,387,815 $ 2,260,244 Education: K-12 $ 620,550 $ 707,260 $ 677,155 $ 574,295 $ 562,925 $ 548,970 Education: University $ 1,162,635 $ 1,423,750 $ 1,650,310 $ 1,639,150 $ 1,824,890 $ 1,711,274 Professional $ 1,891,345 $ 2,528,010 $ 3,089,090 $ 2,980,440 $ 3,466,000 $ 3,311,940 Creative Professional $ 908,710 $ 1,138,055 $ 1,323,110 $ 1,264,340 $ 1,423,720 $ 1,392,093 Business $ 982,635 $ 1,389,955 $ 1,765,980 $ 1,716,100 $ 2,042,280 $ 1,919,848 Total $ 15,700,000 $ 20,343,000 $ 26,741,000 $ 24,667,000 $ 28,571,000 $ 27,200,000 PERCENTAGE OF TOTAL REVENUE Consumer 76.6% 77.1% 79.7% 78.9% 79.5% 79.5% Education 11.4% 10.5% 8.7% 9.0% 8.4% 8.3% Education: K-12 4.0% 3.5% 2.5% 2.3% 2.0% 2.0% Education: University 7.4% 7.0% 6.2% 6.6% 6.4% 6.3% Professional 12.0% 12.4% 11.6% 12.1% 12.1% 12.2% Creative Professional 5.8% 5.6% 4.9% 5.1% 5.0% 5.1% Business 6.3% 6.8% 6.6% 7.0% 7.1% 7.1% Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% Note: Includes revenue from all sources and product groups. SOURCE: TBR ESTIMATES29 Apple 2Q11 | Computer Business Quarterly ©2011 Technology Business Research, Inc.
  • 30. Appendix – PC Revenue TBR APPLE PC REVENUE BY CUSTOMER SEGMENT TBR CALENDAR QUARTER 2Q10 3Q10 4Q10 1Q11 2Q11 Est. 3Q11 REVENUE (IN $ THOUSANDS) Total $15,700,000 $20,343,000 $26,741,000 $24,667,000 $28,571,000 $27,200,000 PC Revenue $4,399,000 $4,870,000 $5,430,000 $4,976,000 $5,105,000 $5,313,400 Consumer $2,625,560 $2,879,330 $3,470,395 $3,187,905 $3,251,275 $3,454,376 Education $1,056,765 $1,169,530 $1,079,605 $1,016,245 $1,019,225 $979,306 Education: K-12 $464,250 $536,410 $470,305 $375,845 $380,975 $366,440 Education: University $592,515 $633,120 $609,300 $640,400 $638,250 $612,866 Professional $716,675 $821,140 $880,000 $771,850 $834,500 $879,718 Creative Professional $478,690 $571,005 $574,720 $554,620 $610,100 $615,844 Business $237,985 $250,135 $305,280 $217,230 $224,400 $263,874 Total $4,399,000 $4,870,000 $5,430,000 $4,976,000 $5,105,000 $5,313,400 PERCENTAGE OF PC REVENUE Consumer 59.7% 59.1% 63.9% 64.1% 63.7% 65.0% Education 24.0% 24.0% 19.9% 20.4% 20.0% 18.4% Education: K-12 10.6% 11.0% 8.7% 7.6% 7.5% 6.9% Education: University 13.5% 13.0% 11.2% 12.9% 12.5% 11.5% Professional 16.3% 16.9% 16.2% 15.5% 16.3% 16.6% Creative Professional 10.9% 11.7% 10.6% 11.1% 12.0% 11.6% Business 5.4% 5.1% 5.6% 4.4% 4.4% 5.0% Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% PC PERCENTAGE OF TOTAL REVENUE Consumer 16.7% 14.2% 13.0% 12.9% 11.4% 12.7% Education 6.7% 5.7% 4.0% 4.1% 3.6% 3.6% Education: K-12 3.0% 2.6% 1.8% 1.5% 1.3% 1.3% Education: University 3.8% 3.1% 2.3% 2.6% 2.2% 2.3% Professional 4.6% 4.0% 3.3% 3.1% 2.9% 3.2% Creative Professional 3.0% 2.8% 2.1% 2.2% 2.1% 2.3% Business 1.5% 1.2% 1.1% 0.9% 0.8% 1.0% Total 28.0% 23.9% 20.3% 20.2% 17.9% 19.5% YEAR-TO-YEAR GROWTH Consumer 32.9% 29.4% 32.4% 38.8% 23.8% 20.0% Education 30.8% 12.7% 1.9% 25.3% -3.6% -16.3% Education: K-12 45.4% 24.7% 5.1% 22.3% -17.9% -31.7% Education: University 21.2% 4.1% -0.4% 27.1% 7.7% -3.2% Professional 25.5% 14.5% 14.4% 18.3% 16.4% 7.1% Creative Professional 25.9% 25.1% 13.4% 16.1% 27.5% 7.9% Business 24.9% -4.0% 16.4% 24.4% -5.7% 5.5% Total 31.2% 22.4% 22.0% 32.3% 16.0% 9.1% SOURCE: TBR ESTIMATES30 Apple 2Q11 | Computer Business Quarterly ©2011 Technology Business Research, Inc.
  • 31. Appendix – Geography TBR APPLE REVENUE AND SHIPMENTS BY GEOGRAPHY TBR CALENDAR QUARTER 2Q10 3Q10 4Q10 1Q11 2Q11 Est. 3Q11 FISCAL QUARTER 3Q10 4Q10 1Q11 2Q11 3Q11 Es t. 4Q11 UNIT SHIPMENTS Americas 1,358,000 1,460,000 1,360,000 1,217,000 1,487,000 1,550,000 EMEA 914,000 978,000 1,245,000 995,000 922,000 950,000 Japan 129,000 118,000 162,000 155,000 150,000 160,000 Asia Pacific 394,000 455,000 516,000 596,000 620,000 650,000 Retail 677,000 874,000 851,000 797,000 768,000 825,000 Total 3,472,000 3,885,000 4,134,000 3,760,000 3,947,000 4,135,000 APPLE REVENUE BY GEOGRAPHY (IN $ THOUSANDS) Americas $ 6,227,000 $ 7,186,000 $ 9,218,000 $ 9,323,000 $ 10,126,000 $ 10,336,000 EMEA $ 4,160,000 $ 5,458,000 $ 7,256,000 $ 6,027,000 $ 7,098,000 $ 6,800,000 Japan $ 910,000 $ 1,401,000 $ 1,433,000 $ 1,383,000 $ 1,510,000 $ 1,360,000 Asia Pacific $ 1,825,000 $ 2,732,000 $ 4,987,000 $ 4,743,000 $ 6,332,000 $ 5,168,000 Retail $ 2,578,000 $ 3,566,000 $ 3,847,000 $ 3,191,000 $ 3,505,000 $ 3,536,000 Total $ 15,700,000 $ 20,343,000 $ 26,741,000 $ 24,667,000 $ 28,571,000 $ 27,200,000 PERCENTAGE OF TOTAL REVENUE Americas 39.7% 35.3% 34.5% 37.8% 35.4% 38.0% EMEA 26.5% 26.8% 27.1% 24.4% 24.8% 25.0% Japan 5.8% 6.9% 5.4% 5.6% 5.3% 5.0% Asia Pacific 11.6% 13.4% 18.6% 19.2% 22.2% 19.0% Retail 16.4% 17.5% 14.4% 12.9% 12.3% 13.0% Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% YEAR-TO-YEAR CHANGE IN REVENUE Americas 39.2% 37.2% 51.3% 86.7% 62.6% 43.8% EMEA 66.1% 68.7% 44.4% 48.8% 70.6% 24.6% Japan 62.5% 121.0% 83.0% 55.9% 65.9% -2.9% Asia Pacific 159.6% 157.5% 175.1% 151.5% 247.0% 89.2% Retail 72.8% 74.7% 95.2% 89.6% 36.0% -0.8% Total 61.3% 66.7% 70.5% 82.7% 82.0% 33.7% SOURCE: TBR ESTIMATES AND APPLE31 Apple 2Q11 | Computer Business Quarterly ©2011 Technology Business Research, Inc.
  • 32. Appendix – Apple Future Outlook Graph TBR TBR 2Q11 CBQ VENDOR POSITION AND PROJECTION: APPLE 10.00 Trailing 12-Month Average Growth for 9.00 Multi-Platform Vendors = 14.6% 8.00 CBQ Corporate Score 7.00 2Q11 6.00 5.00 3Q11 Est. 1Q11 4.00 3.00 2.00 1.00 0% 10% 20% 30% 40% 50% 60% 70% 80% SOURCE: TBR AND APPLE Quarterly Revenue Growth Year-to-year32 Apple 2Q11 | Computer Business Quarterly ©2011 Technology Business Research, Inc.
  • 33. Appendix – Graphs TBR TBR MAC UNIT GROWTH YEAR-TO-YEAR APPLE REVENUE GROWTH YEAR-TO-YEAR TBR 5,000 60.0% 100% 4,134 4,075 82.7% 3,885 In $ Thousands 82.0% 4,000 3,760 3,805 50.0% 80% 70.5% 3,472 61.3% 66.7% 40.0% 60% 3,000 30.0% 40% 2,000 20.0% 20% 1,000 10.0% 0% 0 0.0% 2Q10 3Q10 4Q10 1Q11 2Q11 2Q10 3Q10 4Q10 1Q11 2Q11 Est. 3Q11 Apple CBQ Average SOURCE: TBR AND APPLE Units Shipped Growth in Unit Shipments SOURCE: TBR AND APPLE TBR APPLE OPERATING MARGIN TBR APPLE GROSS MARGIN 40% 31.9% 32.8% 27.0% 26.8% 29.3% 50% 41.4% 41.7% 30% 39.1% 36.9% 38.5% 40% 20% 30% 20% 10% 10% 0% 0% 2Q10 3Q10 4Q10 1Q11 2Q11 2Q10 3Q10 4Q10 1Q11 2Q11 Apple CBQ Average Apple CBQ Average SOURCE: TBR AND APPLE SOURCE: TBR AND APPLE33 Apple 2Q11 | Computer Business Quarterly ©2011 Technology Business Research, Inc.
  • 34. Appendix – Graphs TBR TBR APPLE ANNUAL G&A EXPENSE TBR APPLE ANNUAL REVENUE PER EMPLOYEE PER G&A EMPLOYEE $2,500 $300 $1,985 $250 $2,000 $1,837 In $ Thousands $1,583 $1,716 In $ Thousands $1,497 $200 $1,500 $241 $234 $228 $220 $215 $150 $1,000 $100 $500 $50 $- $- 2Q10 3Q10 4Q10 1Q11 2Q11 2Q10 3Q10 4Q10 1Q11 2Q11 Apple CBQ Average Apple CBQ Average SOURCE: TBR AND APPLE SOURCE: TBR AND APPLE TBR APPLE ANNUAL R&D EXPENSE PER DEVELOPER $500 $420 $435 $443 $449 $404 $400 In $ Thousands $300 $200 $100 $- 2Q10 3Q10 4Q10 1Q11 2Q11 Apple CBQ Average SOURCE: TBR AND APPLE34 Apple 2Q11 | Computer Business Quarterly ©2011 Technology Business Research, Inc.
  • 35. Appendix – Graphs TBR TBR APPLE DAYS CASH OUTSTANDING 200.00 139.23 Number of Days 150.00 113.35 106.66 90.79 89.45 100.00 50.00 0.00 2Q10 3Q10 4Q10 1Q11 2Q11 APPLE CBQ AVERAGE SOURCE: TBR AND APPLE TBR APPLE INVENTORY TURNS 80.00 73.22 67.95 63.69 60.00 51.51 Turns per Year 48.43 40.00 20.00 0.00 2Q10 3Q10 4Q10 1Q11 2Q11 APPLE CBQ AVERAGE SOURCE: TBR AND APPLE35 Apple 2Q11 | Computer Business Quarterly ©2011 Technology Business Research, Inc.
  • 36. Appendix – Apple Retail Partnerships TBR Apple Alliances Company Details China Mobile China Mobile will be distributing the iPhone in China. Random House, Inc. Random House, Inc. has made its full catalog of 17,000 e-books available on Apple’s iBookstore. Apple transitioned to Intel microprocessors in 2006. Intel provides significant technical assistance Intel to Apple. The Thunderbolt I/O was developed from Intel Labs. NVIDIA Provides chipset with integral GPU for notebooks. Hon Hai Hon Hai manufactures Apple’s iPods and iPhones. HBO Premium HBO TV shows are available through iTunes. Major movie studios Movies are available for download rental the same day as DVD availability. AT&T AT&T is a wireless operator for iPhones in the United States. Verizon Verizon is a wireless operator for iPhones in the United States. Apple Mac “store-within-store” sections are becoming available in an increasing number of Best Best Buy Buy locations. Disney Apple offers exclusive Disney content through iTunes. Fox Entertainment Apple and FEG make hit Fox television programs available for purchase. Group36 Apple 2Q11 | Computer Business Quarterly ©2011 Technology Business Research, Inc.
  • 37. Appendix – Apple Product Lineup TBRApple’s Product Portfolio: Mac Portables MacBook Pro Full size Creative pro, video editing and desktop publishing notebook; starting price: $1,799 for 15-inch 2.0 GHz, Quad-Core $2,199 for 15-inch 2.2 GHz, Quad-Core $2,499 for 17-inch 2.2 GHz, Quad-CoreModel Lineup MacBook Pro 13-inch Creative pro, video editing and desktop publishing notebook; starting price: $1,199 for 2.3 GHz, Dual-Core $1,499 for 2.7 GHz, Dual-Core MacBook Air 13-Inch Ultra-light notebook for travel; starting price: $1,299 for 13-inch 1.7 GHz Thin-light MacBook Air 11-Inch Ultra-light notebook for travel; starting price: $999 for 11-inch 1.6 GHz Price and Functionality37 Apple 2Q11 | Computer Business Quarterly ©2011 Technology Business Research, Inc.
  • 38. Appendix – Apple Product Lineup TBRApple’s Product Portfolio: Desktops and Servers Performance Mac Pro High-end desktop for creative professionals, video editing and desktop publishing; starting price: $2,499 for 2.8 GHz Quad-Core $3,499 for 2 x 2.4GHz Quad-Core (8-Core) $4,999 for 2 x 2.66 GHz 6-Core (12-Core)Model Lineup Value/Mainstream $2,999 for 2.8 GHz Quad-Core Server Version iMac All-in-one consumer and professional desktop; starting price: $1,199-$1,499 for 21.5-inch 2.5 GHz – 2.7GHz Quad-core $1,699 for 27-inch 2.7 GHz Quad-Core $1,999 for 27-inch 3.1GHz Quad-Core Mac mini Value consumer desktop; starting price: $699 for 2.3 GHz : 500 GB Entry $799 for 2.5 GHz : 500 GB $999 for 2.3 GHZ: With Lion Server Price and Functionality 38 Apple 2Q11 | Computer Business Quarterly ©2011 Technology Business Research, Inc.
  • 39. Appendix – Apple Product Lineup TBRApple’s Product Portfolio: iOS Devices and iPods iPhone 4 iPad 3G Portable web/app tablet; High-Capacity Web/App Platform/Flash iPhone 3GS Smartphone & web/app platform; starting price: Smartphone and web/app platform; $629 for 16 GB starting price (after subsidy): starting price (after subsidy): $729 for 32 GB $199 for 16 GB $49 for 8 GB $829 for 64 GB $299 for 32 GB Apple TV iPod Touch iPad Online movie and TV show Portable web/app platform; Portable web/app tablet; rentals and streaming of starting price: starting price: online and PC content; $229 for 8 GB $499 for 16 GB starting price: $299 for 32 GB $599 for 32 GBModel Lineup $99 $399 for 64 GB $699 for 64 GB iPod Classic High-capacity music and video player; starting price: $249 for 160 GB iPod Nano Flash music and video player; starting price: Small-Form $149 for 8 GB $179 for 16 GB iPod Shuffle Aimed at flash market; starting price: $49 for 2 GB Price and Functionality 39 Apple 2Q11 | Computer Business Quarterly ©2011 Technology Business Research, Inc.
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