Apple Inc. (AAPL) March 19, 2012 9:00 am ET Executives Nancy Paxton - Timothy D. Cook - Chief Executive Officer and Director Peter Oppenheimer - Chief Financial Officer and Senior Vice President Analysts 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 Presentation Operator
With that, I'd like to turn the call over to Tim Cook.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.
We are also investing in distribution around the world. We continue to open our own stores, including 40 this fiscal year alone. We are expanding our footprint with new carrier partners and other third-party resellers, and we are investing in our direct enterprise sales force. Simply stated, we don't see ceilings to our opportunities.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. Read the rest of this transcript for free on seekingalpha.com