Apple Reports Third Quarter Results

Apple today announced financial results for its fiscal 2007 third quarter ended June 30th, 2007. The Company posted revenue of US$5.41 billion (£2.64bn*) and net quarterly profit of US$818 million (£399m*), or $0.92 per diluted share. These results compare to revenue of US$4.37 billion and net quarterly profit of US$472 million, or $0.54 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.

“We're thrilled to report the highest June quarter revenue and profit in Apple's history, along with the highest quarterly Mac sales ever”, said Steve Jobs, Apple's CEO. “iPhone is off to a great start — we hope to sell our one-millionth iPhone by the end of its first full quarter of sales — and our new product pipeline is very strong”.

“We are very pleased to report strong financial results including cash flow from operations exceeding $1.2 billion for the quarter”, said Peter Oppenheimer, Apple's CFO. “Looking ahead to the fourth fiscal quarter of 2007, we expect revenue of about $5.7 billion and earnings per diluted share of about $0.65”.

This press release contains forward-looking statements about the Company's estimated revenue, iPhone sales and earnings per share. These statements involve risks and uncertainties, and actual results may differ. Risks and uncertainties include potential litigation and government enforcement actions that may result from the matters investigated by the special committee of the board of directors and the restatement of the Company's consolidated financial statements; unfavourable results of legal proceedings; the effect of competitive and economic factors, and the Company's reaction to those factors, on consumer and business buying decisions with respect to the Company's products; war, terrorism, public health issues and other circumstances that could disrupt supply, delivery or demand of products; continued competitive pressures in the marketplace; the Company's reliance on a sole US service provider for iPhone; the continued availability on acceptable terms of certain components and services essential to the Company's business currently obtained by the Company from sole or limited sources; the ability of the Company to deliver to the marketplace and stimulate customer demand for new programmes, products and technological innovations on a timely basis; the effect that product transitions, changes in product pricing or mix, and/or increases in component costs could have on the Company's gross margin; the effect that product quality problems could have on the Company's sales and operating profits; the inventory risk associated with the Company's need to order or commit to order product components in advance of customer orders; the effect that the Company's dependency on manufacturing and logistics services provided by third parties may have on the quality, quantity or cost of products manufactured or services rendered; the Company's dependency on the performance of distributors and other resellers of the Company's products; the Company's reliance on the availability of third-party digital content; and the potential impact of a finding that the Company has infringed on the intellectual property rights of others. More information on potential factors that could affect the Company's financial results is included from time to time in the Company's public reports filed with the SEC, including the Company's Form 10-K for the fiscal year ended September 30th, 2006, its Forms 10-Q for the quarters ended December 30th, 2006 and March 31st, 2007, and its Form 10-Q for the quarter ended June 30th, 2007, to be filed with the SEC. The Company assumes no obligation to update any forward-looking statements or information, which speak as of their respective dates.

Apple ignited the personal computer revolution in the 1970s with the Apple II and reinvented the personal computer in the 1980s with the Macintosh. Today, Apple continues to lead the industry in innovation with its award-winning computers, OS X operating system, and iLife and professional applications. Apple is also spearheading the digital media revolution with its iPod portable music and video players and iTunes online store, and has entered the mobile phone market this year with its revolutionary iPhone.

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