Shareholder Letter

Dear Customers, employees and shareholders,

The success of our company in 2011 is something to be proud of and should be greatly celebrated. We lost one of the world’s top innovators and one of our own this past year, Steve Jobs. He was a true visionary and the backbone of Apple. With Steve Jobs in both our minds and our hearts, we have continued to thrive in this poor economy and have continued to lead in the digital world as the top innovator. Our goal is to grow the legacy that Steve Jobs started at Apple, and after this past year, we are well on our way.   



Here is a brief snapshot of our 2011 financial results:

• Total revenue of $108.25 billion, a 65 percent increase from last year.

• Operating income of $33.79 billion, an 83 percent increase from last year.

• Net income of $25.92 billion, an 84 percent increase from last year.

• Diluted earnings per share of $27.68.



Product Launches in 2011

As the top company in our industry, we have to stay ahead of the curve by creating new products to enter the market and thinking of new ways to improve the products we already have. We successfully did this in 2011 through four core products consisting of the Mac App Store, the iPhone for Verizon, the new MacBook Air, and the iPad 2.



• Mac App Store: The Mac App Store has made it easy for customers to download apps straight to their devices with no hassle. With the launch of the new app store, profits increased by 15 percent over the past year.



• Verizon iPhone: The iPhone is now offered through Verizon, which helped increase net sales by 87 percent. The revenue generated from the iPhone alone accounted for 43 percent of our company’s total net sales in 2011. 



• New MacBook Air: Our new MacBook Air was released this year. Combined with sales from the MacBook Pro, net sales of Mac increased by 25 percent with the MacBook Air, bringing in $21.8 billion.



• iPad 2: With the huge success we saw with the iPad, we took it a step further and introduced the second generation iPad 2. In 2011, the net sales of iPads increased by 311 percent and there were 32,394 iPad units sold.



The Road Ahead

We cannot control how the economy will affect product sales and the company this upcoming year, but we can control the quality of products we offer consumers. We welcome the new year with the same mentality and thought process that we had last year (i.e., create new products to enter the market and enhance existing products already in the market). We are planning to do this by:

• Increasing research and development to $2.6 billion.

• Connecting to customers on a multi-channel basis to better create two-way communication.

• Implementing three new product launches over the course of 2012.

• Continuing store growth, with the announcement of nine new Apple stores and 7 new Mac stores across the country.



I’m pleased to announce the continued growth and success our company has had over the past year, and I look forward to the upcoming year. We are dedicated to continuing the legacy Steve Jobs started. As he stated, "Man is the creator of change in this world. As such he should be above systems and structures and not subordinate to them." We will honor him by keeping his vision alive.



On behalf of everyone at Apple, thank you for your continued support and loyalty.

Sincerely,

Tim Cook
CEO, Apple



*This shareholder letter was written for a class assignment; it is not authorized by Apple.