Apple Inc. - Special Call
Apple Inc. (AAPL)
March 19, 2012 9:00 am ET
Nancy Paxton -
Timothy D. Cook - Chief Executive Officer and Director
Peter Oppenheimer - Chief Financial Officer and Senior Vice President
Benjamin A. Reitzes - Barclays Capital, Research Division
Katy Huberty - Morgan Stanley, Research Division
Charles Eugene Munster - Piper Jaffray Companies, Research Division
Bill C. Shope - Goldman Sachs Group Inc., Research Division
Shannon S. Cross - Cross Research LLC
Kulbinder Garcha - Crédit Suisse AG, Research Division
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Thank you. Good morning, and thanks to everyone for joining us. Speaking this morning will be Apple CEO, Tim Cook; and CFO, Peter Oppenheimer, and the purpose of today's call will be to announce the outcome of the company's discussions concerning its cash balance. We will not be providing a business update nor will we be discussing any other topics today. Tim and Peter will provide some opening remarks, and we'll follow that with a short Q&A session with analysts.
Please note that some of the comments you'll hear during our discussion today will consist of forward-looking statements including, without limitation, those regarding anticipated dividends and share repurchase activity and the expected performance of Apple's business. Actual execution of these activities and results of business operations could differ materially from our forecast. For more information, please refer to the risk factors discussed in Apple's Form 10-K for 2011 and the Form 10-Q for the quarter ended December 31, 2011. Apple assumes no obligation to update any forward-looking statements or information which speak as of their respective dates.
Timothy D. Cook
Thank you, Nancy. Good morning to everyone, and thanks for joining us. I'd like to start by discussing how confident we feel about Apple's future. We are participating in some very large and growing markets, and we see significant opportunities ahead of us.
Starting with iPhone. In our mostly recently reported quarter, we sold 37 million iPhones. That's a very large number, but it represented less than 9% of handsets sold during the quarter. The handset market is expected to grow dramatically in the years ahead from 1.6 billion in 2011 to over 2 billion by 2015, and it's our belief that eventually, all handsets will be smartphones, so the potential for iPhone is enormous.
We're off to an amazing start with iPad, selling 55 million from the launch of the first iPad in the spring of 2010 through the end of our most recent quarter. And with the launch of the new iPad, it just keeps getting better. Gartner estimates that the tablet market will be 325 million units by 2015. And as I've said many times before, we believe that the tablet market will eventually surpass the PC market in size. It's just a question of when.
And with the Macintosh. As of last quarter, we had outperformed the PC market for 23 consecutive quarters, yet we have less than 6% market share of this 350 million unit per year market. We are innovating at an incredible pace, building a tremendous ecosystem with apps and content, providing great services such as iCloud, which has already eclipsed over 100 million users within just a few months of its launch, and we're delivering incredible developments like Siri, a profound new way to interface with the iPhone.
All of this innovation and success have led to generation of substantial amounts of cash, both domestically and abroad. We have used some of our cash to make great investments in our business through increased research and development, acquisitions, new retail store openings, strategic prepayments and capital expenditures in our supply chain and building out of our infrastructure, and you will see more of all of these in the future.
Even with these investments, we can maintain a war chest for strategic opportunities and have plenty of cash to run our business. So we are going to initiate a dividend and share repurchase program. We have thought very deeply and very carefully about our cash balance. We will continue to invest in the business, and we will maintain our disciplined and focused approach in the future.
Innovation is the most important objective at Apple, and we will not lose sight of that. These decisions will not close any doors for us. Subject to a board declaration, we plan to initiate a quarterly dividend of $2.65 per share beginning in the September quarter. A quarterly dividend will provide current income to our shareholders, and we also believe it will broaden Apple's investor base by attracting new investors who don't currently own Apple stock.
Additionally, in the December quarter, we plan to commence a share repurchase program. The board has authorized the repurchase of $10 billion of stock over the next 3 fiscal years with the primary objective of neutralizing dilution from future grants through Apple's employee equity programs. We will continually assess the opportunities to invest further in our business, and in consultation with our board, we will review our dividend and share purchase plans periodically. We will continue to do what we believe is in the best interest of Apple and our long-term shareholders.