BGR: The Three Biggest Letters In Tech » Q3 http://www.bgr.com Fri, 01 Jun 2012 00:40:15 +0000 en hourly 1 http://wordpress.org/?v=3.2.1 Verizon iPhone sales double to more than 4.2 million in Q4 http://www.bgr.com/2012/01/04/verizon-iphone-sales-double-to-more-than-4-2-million-iphones-in-q4/ http://www.bgr.com/2012/01/04/verizon-iphone-sales-double-to-more-than-4-2-million-iphones-in-q4/#comments Wed, 04 Jan 2012 21:55:58 +0000 Jonathan S. Geller http://www.bgr.com/?p=119833

Fueled by the launch of Apple’s iPhone 4S, Verizon Wireless sold more than 4.2 million iPhones in the fourth quarter last year — more than double the number of iPhones it sold in the third quarter. Verizon’s chief financial officer Fran Shammo revealed the carrier’s iPhone sales for the December quarter during a talk at a Citigroup conference in San Francisco on Wednesday. Verizon Wireless’s largest competitor, AT&T, is expected to have a record quarter as well for iPhone sales. While AT&T has not yet revealed any figures for the fourth quarter, we estimate that the company sold more than 5.5 million iPhones during its holiday quarter. The nation’s No.2 carrier announced last month that it expected record smartphone sales for the quarter, and it had already sold 6 million units between October and November alone. AT&T’s previous single-quarter sales record was 6.1 million smartphones.

]]> http://www.bgr.com/2012/01/04/verizon-iphone-sales-double-to-more-than-4-2-million-iphones-in-q4/feed/ 0 http://www-bgr-com.vimg.net/wp-content/uploads/2011/10/verizon-iphone-4-128x128.jpg Tablet shipments miss targets but still balloon 264.5%, IDC says http://www.bgr.com/2011/12/15/tablet-shipments-miss-targets-but-still-balloon-264-5-idc-says/ http://www.bgr.com/2011/12/15/tablet-shipments-miss-targets-but-still-balloon-264-5-idc-says/#comments Thu, 15 Dec 2011 23:25:52 +0000 Todd Haselton http://www.bgr.com/?p=116671

IDC said Thursday that media tablet shipments during the third calendar quarter increased 264.5% over the same period last year, but that overall shipments were 5.8% lower than the 19.2 million units the research firm had previously estimated. Apple’s iPad continues to be the driving catalyst for tablet sales. The company shipped 11.1 million units during the third quarter, up from the 9.3 million it shipped during the second quarter this year. Apple’s market share fell however, from 63.3% during the second quarter to 61.5%. Read on for more.

HP shipped 903,354 TouchPad units during the quarter for a 5% market share before discontinuing the product, and Samsung had a 5.6% share of the tablet market during the third quarter. IDC believes Android’s tablet market share will grow to 40.3% during the fourth quarter of this year, propelled by the introduction of the Amazon Kindle Fire and Barnes & Noble Nook tablet. The growth will come at the expense of Apple’s market share, which is expected to slip from 61.5% to 59%, and RIM’s BlackBerry OS (presumably QNX) market share, which could slide from 1.1% to 0.7%.

“Amazon and Barnes & Noble are shaking up the media tablet market, and their success helps prove that there is an appetite for media tablets beyond Apple’s iPad,” said IDC’s Tom Mainelli, research director, mobile connected devices. “That said, I fully expect Apple to have its best-ever quarter in 4Q11, and in 2012 I think we’ll see Apple’s product begin to gain more traction outside of the consumer market, specifically with enterprise and education markets.”

IDC expects worldwide tablet shipments to reach 63.3 million units for the year, up from its earlier estimate of 62.5 million units.

Media Tablet Shipments Miss Third Quarter Targets, But New Entrants and Holiday Demand Will Spark Fourth Quarter Growth, According to IDC

FRAMINGHAM, Mass., December 15, 2011 – Worldwide media tablet shipments into sales channels rose by 23.9% on a sequential basis in the third calendar quarter of 2011 (3Q11) to 18.1 million units, according to the International Data Corporation (IDC) Worldwide Quarterly Media Tablet and eReader Tracker. That represents an increase of 264.5% from the same quarter last year, but 5.8% below the original forecast of 19.2 million units. Despite these slightly lower-than-expected shipments in 3Q11, IDC sees strong demand in 4Q11 and has increased its worldwide shipment forecast for 2011 to 63.3 million units, up from a previous projection of 62.5 million units.

Apple continued to drive worldwide media tablet shipments in 3Q11. The company shipped 11.1 million units in 3Q11, up from 9.3 million units in 2Q11. That represents a 61.5% worldwide market share (down from 63.3% in 2Q11). HP entered and left the market in 3Q11 with its TouchPad product. The company shipped 903,354 units to grab a 5% share of the worldwide market, number three behind Samsung’s 5.6% market share. After IDC updated its taxonomy to move LCD-based devices such as Barnes & Noble’s Nook Color into the media tablet category, Barnes & Noble shipped 805,458 units to achieve the number four spot with a 4.5% market share. ASUS rounded out the top five with a 4% share.

After ceding share in 3Q11 (down to 32.4% from 33.2% the previous quarter), IDC expects Android to make dramatic share gains in 4Q11 growing to 40.3%. That increase is due mostly to the entrance of Amazon’s Kindle Fire, and to a lesser extent the Barnes & Noble Nook Tablet, into the market. The share increase comes at the expense of Blackberry (slipping from 1.1% to 0.7%), iOS (slipping from 61.5% to 59.0%), and webOS (slipping from 5% to 0%). Despite HP’s announcement last week that it would contribute webOS to the Open Source community, IDC does not believe the operating system will reappear in the media tablet market in any meaningful way going forward.

“Amazon and Barnes & Noble are shaking up the media tablet market, and their success helps prove that there is an appetite for media tablets beyond Apple’s iPad,” said Tom Mainelli, research director, Mobile Connected Devices. “That said, I fully expect Apple to have its best-ever quarter in 4Q11, and in 2012 I think we’ll see Apple’s product begin to gain more traction outside of the consumer market, specifically with enterprise and education markets.”

“Apple’s larger portfolio of tablet-specific apps, upcoming iPad versions, and growing physical store presence in key emerging markets like Asia/Pacific will help maintain its global leadership. However, an improving Android OS experience and lower competitor pricing in an environment with worldwide economic concerns should help Android to increase its market share,” said Jennifer Song, research analyst, Worldwide Trackers.

Despite the loss of LCD-based products (relocated into the media tablet category), ePaper-based eReaders continued to see strong shipment growth. In 3Q11 the worldwide total improved to 6.5 million units, up from 5.1 million units in 2Q11, representing quarter-over-quarter growth of 27% and year-over-year growth of 165.9%. IDC expects growth to continue in the fourth quarter thanks to new products introductions and price cuts from the major vendors.

“Amazon’s introduction of the $79 entry-level Kindle and $99 touch-based Kindle (both with ads) led to a round of price cuts from competitors,” Mainelli said. “That drops these products well into the range of impulse and gift buys for many, and we expect a very strong 4Q11 as a result.”

“From a worldwide perspective, eReader volumes in the U.S. are expected to remain a huge majority at 80% share. Europe, the second largest market, should rise to its highest volume levels in 4Q11 due to holiday shopping, but is not growing at the expected rate due to lack of local language content and the uncertain euro zone climate,” added Song.

]]> http://www.bgr.com/2011/12/15/tablet-shipments-miss-targets-but-still-balloon-264-5-idc-says/feed/ 0 http://www-bgr-com.vimg.net/wp-content/uploads/2011/10/ipad-2-closeup-128x128.jpg RIM beats Q3 earnings; Q4 guidance worse than expected http://www.bgr.com/2011/12/15/rim-reports-q3-earnings-beats-lowered-guidance/ http://www.bgr.com/2011/12/15/rim-reports-q3-earnings-beats-lowered-guidance/#comments Thu, 15 Dec 2011 21:19:34 +0000 Zach Epstein http://www.bgr.com/?p=116793

Research In Motion on Thursday reported earnings for the third quarter of fiscal 2012. The struggling smartphone vendor announced earlier this month that it would miss its third-quarter guidance of between $5.3 billion and $5.6 billion in revenue, and it said EPS would likely be in line with the low end of its earlier guidance. The numbers are now in, and RIM pulled in $5.2 billion last quarter while recording earnings of $1.27 per share, or $667 million, beating its lowered guidance. RIM shipped 14.1 million smartphones in the third quarter, in line with its guidance of between 13.5 million and 14.5 million units, and sell-through came in below expectations at 13 million units. Net income dropped to $285 million from $911 million in the same quarter last year, and the vendor’s fourth-quarter guidance was worse than expected. Read on for more.

“RIM continues to have strong technology, unique service capabilities and a large installed base of customers, and we are more determined than ever to capitalize on our strengths to overcome the recent execution challenges surrounding product launches and the resulting financial performance,” the company’s co-CEOs said in a joint statement. “As part of our commitment to improving our performance to better meet the expectations of shareholders and customers, we continue to evaluate ways to improve in several areas of the Company’s operations. It may take some time to realize the benefits of these efforts and the platform transition that we are undertaking, but we continue to believe that RIM has the right set of strengths and capabilities to maintain a leading role in the mobile communications industry.”

RIM’s global subscriber base grew to nearly 75 million customers during the quarter, up more than 30% over the same quarter last year.

The lack of interest in RIM’s debut tablet, the BlackBerry PlayBook, has finally come to a head — RIM took a charge of $485 million related to unsold PlayBook inventory in the third fiscal quarter. The Waterloo, Ontario-based company only sold 150,000 PlayBook tablets into sales channels last quarter after selling 500,000 units in the first quarter and 200,000 in the second.

During the second quarter, RIM total cash and cash equivalents dropped from $2.9 billion to $1.4 billion due in large part to $780 million spent on Nortel patents. At the end of the third fiscal quarter, RIM’s available cash was up sequentially to $1.5 billion.

In the fourth fiscal quarter, RIM has forecast EPS of between $0.80 and $0.95 compared to the Street’s earlier $1.08 consensus, and the vendor anticipates revenue of between $4.6 billion and $4.98 billion compared to Wall Street’s $5.12 billion. Shares of RIM stock dropped 7% in after-hours trading on the news.

The company expects to ship between 11 and 12 million BlackBerry smartphones in the fourth fiscal quarter, and its full press release follows below.

RESEARCH IN MOTION REPORTS THIRD QUARTER FISCAL 2012 RESULTS

Waterloo, ON – Research In Motion Limited (RIM) (NASDAQ: RIMM)(TSX: RIM), a world leader in the mobile communications market, today reported third quarter results for the three months ended November 26, 2011 (all figures in U.S. dollars and U.S. GAAP, except where otherwise indicated).

Highlights:

– Revenue of $5.2 billion, up 24% from last quarter — BlackBerry smartphone shipments of 14.1 million, up 33% from Q2 — GAAP net income of $265 million or $0.51 per share diluted; adjusted net income of $667 million or $1.27 per share diluted — Subscribers up 35% year-over-year to almost 75 million — Cash flow from operations of approximately $895 million — Total of cash, cash equivalents, short-term and long-term investments of $1.5 billion

Q3 Results:

Revenue for the third quarter of fiscal 2012 was $5.2 billion, up 24% from $4.2 billion in the previous quarter and down 6% from $5.5 billion in the same quarter of last year. The revenue breakdown for the quarter was approximately 79% for hardware, 19% for service and 2% for software and other revenue. During the quarter, RIM shipped approximately 14.1 million BlackBerry smartphones and approximately 150,000 BlackBerry PlayBook tablets.

“Despite the challenges faced in the third quarter, the BlackBerry subscriber base grew to almost 75 million customers around the world. In addition, RIM launched a range of new BlackBerry 7 based smartphones globally and introduced holiday promotions that helped drive growth in the installed base of BlackBerry PlayBook users,” said Jim Balsillie and Mike Lazaridis, Co-CEOs at Research In Motion. “RIM continues to have strong technology, unique service capabilities and a large installed base of customers, and we are more determined than ever to capitalize on our strengths to overcome the recent execution challenges surrounding product launches and the resulting financial performance. As part of our commitment to improving our performance to better meet the expectations of shareholders and customers, we continue to evaluate ways to improve in several areas of the Company’s operations. It may take some time to realize the benefits of these efforts and the platform transition that we are undertaking, but we continue to believe that RIM has the right set of strengths and capabilities to maintain a leading role in the mobile communications industry.”

The Company’s GAAP net income for the quarter was $265 million, or $0.51 per share diluted, compared with GAAP net income of $329 million, or $0.63 per share diluted, in the prior quarter and GAAP net income of $911 million, or $1.74 per share diluted, in the same quarter last year. Adjusted net income for the third quarter was $667 million, or $1.27 per share diluted. Adjusted net income and adjusted diluted earnings per share exclude the impact of pre-tax charges of $54 million ($40 million after tax) to revenue related to the service interruption experienced in the third quarter, $485 million ($356 million after tax) for the PlayBook inventory provision taken in the third quarter and $7 million ($6 million after tax) for the Company’s cost optimization program that was implemented in the second quarter of fiscal 2012. These charges and their related impacts on GAAP net income and diluted earnings per share are summarized in the table below.

View data

Reconciliation of GAAP revenue and net income to adjusted revenue and net income (United States dollars, in millions except per share data) For the quarter ended November 26, 2011 —————————————- Revenue Net Income Diluted EPS (before (net of (net of taxes) income tax) income tax) —————————————- As reported $ 5,169 $ 265 $ 0.51 Adjustments: PlayBook Inventory Provision(1) – 356 0.68 Cost Optimization Program(2) – 6 0.01 Q3 Service Interruption(3) 54 40 0.07 —————————————- Adjusted $ 5,223 $ 667 $ 1.27 —————————————- —————————————

Note: Adjusted revenue, adjusted net income and adjusted diluted earnings per share do not have a standardized meaning prescribed by GAAP and thus are not comparable to similarly titled measures presented by other issuers. The Company believes that the presentation of adjusted revenue, adjusted net income, and adjusted diluted earnings per share enables the Company and its shareholders to better assess RIM’s operating results relative to its operating results in prior periods and improves the comparability of the information presented. Investors should consider these non-GAAP financial measures in the context of RIM’s GAAP results.

(1) During the third quarter of fiscal 2012, the Company recorded a pre-tax provision of approximately $485 million, $356 million after tax, related to its inventory valuation of BlackBerry PlayBook tablets. The charge was predominantly non-cash.

(2) Cost of sales, research and development, and selling, marketing and administration expenses included approximately $7 million in total pre-tax charges, $6 million after tax, during the third quarter of fiscal 2012 related to the cost optimization program to streamline operations across the Company. Included in the cost of sales, research and development, and selling, marketing and administration expenses for the third quarter of fiscal 2012 were approximately $1 million, $3 million, and $3 million, respectively, of pre-tax charges related to the cost optimization program.

(3) During the third quarter of fiscal 2012, the Company experienced a service interruption which resulted in the loss of service revenue and the payment of service credits in the quarter totalling approximately $54 million, $40 million after tax, related to the interruption in the availability of the Company’s network.

The total of cash, cash equivalents, short-term and long-term investments was $1.5 billion as at November 26, 2011, compared to $1.4 billion at the end of the previous quarter, an increase of $87 million from the prior quarter. Cash flow from operations was approximately $895 million and uses of cash included strategic purchases of intellectual property assets of approximately $375 million, and property, plant and equipment expenditures of approximately $205 million.

Q4 Outlook

Revenue for the fourth quarter of fiscal 2012 ending March 3, 2012 is expected to be in the range of $4.6-$4.9 billion. Gross margin percentage for the fourth quarter is expected to be approximately 38%. BlackBerry smartphone shipments are expected to be between 11 million and 12 million units. Earnings per share for the fourth quarter is expected to be in the range of $0.80-$0.95.

]]> http://www.bgr.com/2011/12/15/rim-reports-q3-earnings-beats-lowered-guidance/feed/ 0 http://www-bgr-com.vimg.net/wp-content/uploads/2011/12/rim-sign-gd1-128x128.jpg Dell reports stagnant Q3 revenue, CFO says prices may increase http://www.bgr.com/2011/11/15/dell-reports-stagnant-q3-revenue-cfo-says-prices-may-increase/ http://www.bgr.com/2011/11/15/dell-reports-stagnant-q3-revenue-cfo-says-prices-may-increase/#comments Wed, 16 Nov 2011 00:50:09 +0000 Todd Haselton http://www.bgr.com/?p=112788

Dell reported its third-quarter earnings on Tuesday, noting that its revenue of $15.4 billion was flat compared to the same period last year. GAAP earnings came in at $0.49 per share, up 17% from the same quarter in 2010. Revenue from Dell’s enterprise solutions and services branch was an all-time high $4.7 billion; sales of servers, storage, networking and services jumped 8% from the same period last year. Dell’s consumer unit reported $2.8 billion in revenue, down 6% from the third quarter of 2010, but the company said that its high-end XPS computers fared particularly well. In fact, revenue from its XPS consumer laptop family increased 207% from last year. Read on for more.

Dell warned that the flooding in Thailand, which has resulted in shortages of hard drives from Western Digital and Seagate, has forced the company to look to the “lower end of the range of its revenue outlook” of 1-5% growth for the year. ”To the that extent we see higher [hard drive] prices we’ll also see some offsets in other components and we’re going to do everything we can to protect our customers,” Dell CFO Brian Gladden said.”But maybe in some cases we do have to raise our prices.” Read on for the full press release from Dell.

Dell Reports Strong Profitability in Third Quarter

Fiscal Year 2012 Third Quarter Financial Statements in PDF format

  • Earnings per share of $0.49 (GAAP) and $0.54 (non-GAAP) up 17 and 20 percent, respectively; Operating Income up 12 percent (GAAP); up 10 percent (non-GAAP)
  • Enterprise solutions and services revenue at all-time high of $4.7 billion
  • Cash flow from operations for the quarter was $851 million and $5.2 billion for the past four quarters

Dell’s continued strategic focus on higher-value opportunities, combined with an increased mix of enterprise solutions and services sales, resulted in increased profitability on revenue of $15.4 billion in its third quarter, flat compared with revenue a year ago.

“Our results this quarter and over the past year reflect a new Dell, one focused on providing our customers productivity-enhancing solutions either developed organically or acquired,” said Michael Dell, chairman and CEO. “We’re now investing in research and development activities at almost a billion-dollar annual run rate and our earnings per share is up 86 percent over the last 12 months.”

Revenue for Dell’s enterprise solutions and services business – including sales of servers, storage, networking, andservices – increased 8 percent over the same quarter last year to $4.7 billion, an all-time high. As the revenue mix steadily shifts more to the higher-value enterprise portfolio, Dell is delivering on its commitment to improve profitability, with operating income up 12 percent for the quarter and at 7.6 percent of revenue for the fiscal year to date.

“We delivered strong third-quarter results, maintaining our focus on operating income and improving our mix of higher-value enterprise solutions,” said Brian Gladden, Dell chief financial officer. “Consistent with our strategy and the investments we have made, we continued to see excellent momentum in our enterprise business, with double-digit revenue growth in services, servers and networking, and in key growth countries, despite some macroeconomic uncertainty.”

Results:

  • Revenue in the quarter was $15.4 billion, flat compared with the same quarter last year.
  • GAAP earnings per share was 49 cents, up 17 percent; non-GAAP EPS was 54 cents, up 20 percent.
  • GAAPoperating income was $1.1 billion, or 7.4 percent of revenue. Non-GAAP operating income was $1.3 billion, or 8.4 percent of revenue.
  • Cash flow from operations was $851 million for the quarter and $5.2 billion over the last four quarters. Dell ended the quarter with $16 billion in cash and investments and repurchased $600 million in stock in the quarter. For the year, Dell has spent $2.18 billion to purchase 142 million shares of Dell stock.

Fiscal-Year 2012 Third Quarter and Year-To-Date Highlights

                                                                          Third Quarter              Fiscal Year-to-Date

(in millions) FY12 FY11 Change FY12 FY11 Change
Revenue $15,365 $15,394 0% $46,040 $45,802 1%
Operating Income (GAAP) $1,142 $1,024 12% $3,500 $2,288 53%
Net Income (GAAP) $893 $822 9% $2,728 $1,708 60%
EPS (GAAP) $0.49 $0.42 17% $1.46 $0.87 68%
Operating Income (non-GAAP) $1,288 $1,167 10% $3,992 $2,863 39%
Net Income (non-GAAP) $983 $875 12% $3,039 $2,088 46%
EPS (non-GAAP $0.54 $0.45 20% $1.62 $1.06 53%

Information about Dell’s use of non-GAAP financial information is provided under “Non-GAAP Financial Measures” below. Non-GAAP financial information excludes costs related primarily to the amortization of purchased intangibles, severance and facility-action costs, certain settlement costs and acquisition-related charges. All comparisons in this press release are year over year unless otherwise noted.

Strategic Highlights:

  • Enterprise solutions and services revenue was $4.7 billion in the quarter and represented 31 percent of Dell’s revenue.
  • Server and networking revenue increased 13 percent year over year, driven by continued momentum in server virtualization. Dell is working with customers to provide mission-critical services and solutions around the server, creating competitive differentiation, richer configurations and stronger profitability.
  • Dell-branded storage revenue grew 23 percent year over year, driven by demand for EqualLogic and Compellent technology.
  • Dell Services revenue grew 10 percent to $2.1 billion and now represents 14 percent of Dell’s business. Dell’s total value of new services contracts signed for the past 12 months is $1.9 billion. Services backlog is now $15.5 billion, up 11 percent from a year ago.

Business Units and Regions:

  • Large Enterprise had $4.5 billion of revenue, up 4 percent from a year ago on a 19 percent increase in revenue for servers and networking and a 14 percent increase in revenue for services. Enterprise solutions and services revenue was $1.9 billion. Operating income was $441 million, or 9.8 percent of revenue.
  • Public had $4.4 billion of revenue, down 2 percent from a year ago, and including an increase in services revenue of 7 percent. Operating income was $463 million or 10.6 percent of revenue. Enterprise solutions and services revenue was $1.6 billion. Spending was slow in U.S. federal and Western Europe. Customers continue to invest in our solutions to reduce spending and increase productivity.
  • Small and Medium Business had revenue of $3.7 billion, up 1 percent. Operating income was $386 million or 10.4 percent of revenue. Enterprise solutions and services revenue was $1.1 billion, an all-time high, and up 18 percent, driven by a gain in servers of 18 percent; services of 23 percent, and storage of 9 percent.
  • Consumer revenue was $2.8 billion, a 6 percent decline. Operating income was $76 million or 2.7 percent of revenue. The migration to higher-value products has proven to be effective, with overall company revenue for the high-end XPS consumer laptop growing 207 percent. XPS revenue now accounts for nearly 20 percent of Dell’s total consumer laptop business.
  • Internationally, revenue in growth countries – defined as those outside the U.S., Canada, Western Europe and Japan – grew 11 percent in the third quarter and is up 14 percent for the fiscal year. These geographies account for 29 percent of Dell’s revenue. Regionally, Asia Pacific and Japan had the greatest revenue growth at 10 percent, led by China’s 23 percent growth and Australia/New Zealand’s 13 percent increase. EMEA revenue increased 4 percent. Revenue in European growth countries increased 12 percent, led by the Czech Republic, Poland and Russia. Revenue in BRIC countries increased 14 percent.

Company Outlook:

Dell has delivered $5.3 billion in operating income on a trailing, 12-month basis, and a 44-percent increase year-over-year on a non-GAAP basis. The company remains committed to its strategy and is on track to exceed its guidance of 17 to 23 percent full fiscal-year operating income growth.

Given the uncertain macroeconomic environment and complexity in working through the industry-wide hard drive issue, the company is trending to the lower end of the range of its revenue outlook of 1 to 5-percent full fiscal-year growth.

Results through Q3 show that Dell is on track for another outstanding year. The company has made significant progress in building a more diversified and competitive set of enterprise and services-focused businesses that now represent almost 50 percent of its margin.

]]> http://www.bgr.com/2011/11/15/dell-reports-stagnant-q3-revenue-cfo-says-prices-may-increase/feed/ 0 http://www-bgr-com.vimg.net/wp-content/uploads/2011/08/dell-sign-logo110819114438-128x128.jpg T-Mobile USA revenues slip, contract customers continue to flee in Q3 http://www.bgr.com/2011/11/10/t-mobile-usa-revenue-slips-contract-customers-continue-to-flee-in-q3/ http://www.bgr.com/2011/11/10/t-mobile-usa-revenue-slips-contract-customers-continue-to-flee-in-q3/#comments Thu, 10 Nov 2011 14:01:38 +0000 Todd Haselton http://www.bgr.com/?p=112059

T-Mobile USA on Thursday announced its results for the third quarter of 2011. The carrier said it added 126,000 net customers during the quarter, an improvement over the net loss of 50,000 customers it reported during the second quarter, but fewer than the 137,000 new customers it added during the same quarter last year. Contract customers continued to flee, however, as T-Mobile reported a net loss of 186,000 contract customers for the quarter. The carrier lost 281,000 contract customers during the second quarter but just 64,000 during the same quarter last year. The number of smartphone customers increased 40% from the same time period last year, however, and T-Mobile now has 10.1 million customers using smartphones on its network. Read on for more.

T-Mobile’s service revenues totalled $4.67 billion in the third quarter, down from the $4.71 billion during the third quarter last year, and the carrier attributed the decline to contract customer losses. Total revenues for the quarter were $5.2 billion, up from $5.1 billion reported last quarter but down from the $5.4 billion reported during the third quarter of 2010.

The introduction of new “unlimited Value Plans” and new cost management programs helped propel the company’s operating income before depreciation and amortization (OIBDA). OIBDA increased 13% from the second quarter to $1.45 billion. The carrier’s blended churn, which includes contract and prepaid customers, increased from 3.3% during the second quarter to 3.5%. T-Mobile USA’s full press release follows below.

T-Mobile USA Reports Third Quarter of 2011 Results

Adjusted OIBDA of $1.45 billion in the third quarter of 2011, an increase of 13% from the second quarter of 2011 and 9% from the third quarter of 2010, largely due to the introduction of new unlimited Value plans and cost management programs

BELLEVUE, Wash., Nov 10, 2011 (BUSINESS WIRE) — –Adjusted OIBDA margin of 31% in the third quarter of 2011, up from 28% in the second quarter of 2011 and third quarter of 2010

–Service revenues of $4.67 billion in the third quarter of 2011, up 1.0% from the second quarter of 2011 but down 0.9% from the third quarter of 2010

–Net customer additions of 126,000 related to Value plan and unlimited Monthly 4G prepaid growth, compared to a net customer loss in the second quarter of 2011 of 50,000 and 137,000 net customer additions in the third quarter of 2010

–Contract ARPU of $53 in the third quarter of 2011, consistent with $53 in the second quarter of 2011 and up from $52 in the third quarter of 2010 attributed in part to data ARPU growth

–Data ARPU of $14.00 in the third quarter of 2011, up 13% from $12.40 in the third quarter of 2010

–As of the end of the third quarter of 2011, 10.1 million customers were using 3G/4G smartphones, up 40% compared to 7.2 million as of the end of the third quarter of 2010

T-Mobile USA, Inc. (“T-Mobile USA”) today reported third quarter 2011 service revenues of $4.67 billion, slightly down from $4.71 billion in the third quarter of 2010, and adjusted OIBDA of $1.45 billion, up from $1.32 billion reported in the third quarter of 2010. Additionally, net customer additions were 126,000 in the third quarter of 2011, a 176,000 improvement from net customer losses in the second quarter of 2011 of 50,000 and slightly down from 137,000 net customer additions in the third quarter of 2010.

“Earnings improved as we continued to focus on making smartphones affordable to all Americans through our unlimited Value plans, improvements to our 4G network, and an expanding portfolio of 4G devices,” said Philipp Humm, President and CEO of T-Mobile USA. “Attractive prepaid offerings helped us add customers in the third quarter of 2011 and data ARPU grew as smartphone adoption continued to increase. Discipline on the cost side contributed to year-on-year margin improvement, while postpay churn, in particular related to the iPhone 4S launches by competitors, will continue to be an area of concern.”

“I am pleased with the development of adjusted OIBDA in the third quarter of 2011. The increase, partly thanks to successful cost saving initiatives, is a positive sign in a still challenging environment,” said Rene Obermann, CEO of Deutsche Telekom.

Total Customers

– T-Mobile USA served 33.7 million customers (as defined in Note 1 to the Selected Data, below) at the end of third quarter of 2011, compared to 33.6 million customers at the end of second quarter 2011 and 33.8 million customers at the end of third quarter 2010.

– Third quarter 2011 net customer additions of 126,000, compared to a net customer loss in the second quarter of 2011 of 50,000, and net customer additions of 137,000 in the third quarter of 2010. — During the second and third quarters of 2011, as part of T-Mobile USA’s strategy of providing simple, value-based customer offers, T-Mobile USA introduced new unlimited Value plans for individuals, families and businesses, which resulted in improvement in net contract customer losses during the quarter.

– The quarter-over-quarter improvement in net customer additions was driven by improvements in both contract and prepaid gross additions resulting from the introduction of unlimited Value plans discussed above and growth of prepaid unlimited Monthly 4G plans. This growth may be impacted in the fourth quarter of 2011 due to competitor launches of the iPhone 4S.

Contract Customers

– Contract net customer losses, including connected devices (as defined in Note 1 to the Selected Data, below), were 186,000 in the third quarter of 2011, an improvement from 281,000 net contract customer losses in the second quarter of 2011. Net contract customer losses were 54,000 in the third quarter of 2010.

– Branded contract net customer losses, excluding connected devices, were 389,000 in the third quarter of 2011, an improvement of 147,000 net branded contract customer losses from 536,000 in the second quarter of 2011. Net branded contract customer losses improved 64,000 in the third quarter of 2010. — Sequentially, the improvement in net contract customer losses was driven primarily by higher gross additions related to the new unlimited Value plans.

– The year-over-year change was primarily due to fewer branded contract gross customer additions resulting in part from the implementation of strengthened credit standards as an aspect of T-Mobile USA’s focus on improving the overall quality of its contract customer base. Additionally, customer migrations from prepaid products as a result of the strategic phase out of certain hybrid plans contributed to the year-on-year growth in net branded contract customers.

– Connected device net customer additions were 204,000 in the third quarter of 2011 compared to 256,000 in the second quarter of 2011 and 271,000 in the third quarter of 2010. Connected device customers, which have significantly lower ARPUs (averaging less than $2) than other contract customers, totaled 2.5 million at September 30, 2011.

Prepaid Customers

– Prepaid net customer additions, including MVNO customers (as defined in Note 1 to the Selected Data, below), were 312,000 in the third quarter of 2011, an improvement from 231,000 net prepaid customer additions in the second quarter of 2011, and 190,000 net prepaid customer additions in the third quarter of 2010.

– Branded prepaid net customer additions, excluding MVNO customers, were 254,000 in the third quarter of 2011, up 325,000 from second quarter 2011 branded prepaid net customer losses of 71,000, and improved by 333,000 from 79,000 net branded prepaid customer losses in the third quarter of 2010. — The sequential and year-on-year growth in branded prepaid net customer additions was due primarily to growth in unlimited Monthly 4G prepaid plans.

– MVNO customers increased slightly in the third quarter of 2011, totaling 3.5 million as of September 30, 2011. In the third quarter of 2011, net MVNO customer growth was lower compared to the second quarter of 2011 and the third quarter of 2010 due to higher MVNO customer churn.

Churn

– Blended churn (as defined in Note 3 to the Selected Data, below), reflecting both contract and prepaid customers, increased to 3.5% in the third quarter of 2011, up from 3.3% in the second quarter of 2011 and 3.4% in the third quarter of 2010. — The sequential and year-on-year increase in blended churn was primarily driven by higher churn from MVNO customers.

– Churn from branded customers was 3.2% in the third quarter of 2011, consistent with the second quarter of 2011, and an improvement from 3.4% in the third quarter of 2010. The year-on-year decrease was primarily due to improvement in branded prepaid churn as a result of unlimited Monthly 4G prepaid plans.

– Contract churn, including connected devices, was 2.4% in the third quarter of 2011, consistent with the second quarter of 2011 and the third quarter of 2010. — To address contract churn, T-Mobile USA continued to focus on loyalty efforts during the quarter, including re-contracting its most loyal customers.

– Prepaid churn, including MVNO, increased to 7.2% in the third quarter of 2011, from 6.6% in the second quarter of 2011 and was consistent with the third quarter of 2010. — The sequential increase in prepaid churn was driven primarily by higher MVNO deactivations.

Adjusted OIBDA and Net Income

– T-Mobile USA reported Adjusted OIBDA (as defined in Note 8 to the Selected Data, below) of $1.45 billion in the third quarter of 2011, compared to $1.28 billion in the second quarter of 2011 and $1.32 billion in the third quarter of 2010. — Adjusted OIBDA in the third quarter of 2011 and the second quarter of 2011 excludes AT&T transaction-related costs of $51 million and $13 million, respectively, primarily consisting of employee-related expenses.

– Sequentially and year-on-year, adjusted OIBDA increases were due to lower losses related to equipment subsidies resulting from the launch of the unlimited Value plans, as described below. Third quarter 2011 operating expenses, excluding the cost of equipment sales, remained fairly consistent sequentially and year-on-year as cost savings programs in 2011 have been effective in controlling expense growth. Additionally, during the third quarter of 2011, adjusted OIBDA increased due to a settlement related to the discontinued retail partnership with RadioShack.

– T-Mobile USA’s new unlimited Value plans, allow customers to subscribe to wireless services without the purchase of or upfront payment for a bundled handset, resulting in reduced costs per gross addition and subscriber retention costs, benefitting adjusted OIBDA and net income within the quarter. Qualifying customers may separately purchase handsets at any time, either deferring payments over 21-month installment contracts or paying the full price at point-of-sale. Compared to traditional bundled price plans, the new unlimited Value plans result in lower service revenues being recognized over the service contract period, while recognizing higher equipment revenues at the time of the sale.

– Adjusted OIBDA margin (as defined in Note 9 to the Selected Data, below) was 31% in the third quarter of 2011, up from 28% in both the second quarter of 2011 and the third quarter of 2010. — Sequentially and year-on-year OIBDA margin improved primarily due to the reductions in costs per gross addition in connection with the new unlimited Value plans, as described above.

– Net income in the third quarter of 2011 was $332 million, up 57% compared to $212 million in the second quarter of 2011 and up 4% from the $320 million reported in the third quarter of 2010. — Sequentially and year-on-year, the changes in net income were driven by the factors impacting adjusted OIBDA, as described above. Expenses related to the AT&T transaction, primarily consisting of employee-related costs, totaled $51 million during the third quarter of 2011 and $13 million in the second quarter of 2011. Additionally, fair value adjustments to certain of T-Mobile USA’s financial instruments impacted Other expense, net, contributing to the changes in net income.

Revenue

– Service revenues (as defined in Note 4 to the Selected Data, below) were $4.67 billion in the third quarter of 2011, up from $4.62 billion in the second quarter of 2011, but down 0.9% from $4.71 billion in the third quarter of 2010. — Service revenues in the third quarter of 2011 increased compared to the second quarter of 2011 principally due to the growth in customer adoption of T-Mobile USA’s unlimited Monthly 4G plans. Additionally, the sequential increase in service revenues was due in part to the introduction of reconnect fees for certain delinquent customer accounts.

– Year-on-year, quarterly service revenues decreased primarily due to contract customer losses, which were partially offset by the increased adoption of data plans in the contract and prepaid customer base and from T-Mobile USA directly providing handset insurance services to its customers.

– Service and Sales revenues (as defined in Note 13 to the Selected Data, below) were $5.2 billion in the third quarter of 2011, up from $5.0 billion in the second quarter of 2011, but decreased slightly from $5.3 billion in the third quarter of 2010. — Service and Sales revenues increased from the second quarter of 2011 largely due to handset pricing changes in connection with the introduction of T-Mobile USA’s new unlimited Value plans.

– Compared to the third quarter of 2010, Service and Sales revenues decreased slightly due primarily to lower handset sales volumes, which were partially offset by handset pricing changes in connection with the introduction of T-Mobile USA’s new unlimited Value plans.

– Total revenues, including service, equipment sales, and other revenues were $5.2 billion in the third quarter of 2011, up from $5.1 billion in the second quarter of 2011, but down from $5.4 billion in the third quarter of 2010. — Compared to the second quarter of 2011 and third quarter of 2010, total revenues changed due primarily to the changes in equipment sales revenues as described above.

– Other revenues increased compared to the second quarter of 2011 and the third quarter of 2010 due in part to a settlement related to the discontinued retail partnership with RadioShack in the third quarter of 2011.

ARPU

– Blended Average Revenue Per User (“ARPU” as defined in Note 4 to the Selected Data, below) was $46 in the third quarter of 2011, consistent with each of the three preceding quarters but down from $47 in the third quarter of 2010.

– Contract ARPU, including connected devices, was $53 in the third quarter of 2011, consistent with the second quarter of 2011 and up from $52 in the third quarter of 2010. — Year-on-year, contract ARPU increased as data revenue growth more than offset lower voice revenue. Also contributing to the increase in contract ARPU was higher handset insurance contract revenues due to the launch of the directly-provided T-Mobile USA Personal Handset Protection insurance and warranty program in the fourth quarter of 2010.

– Prepaid ARPU, including MVNO, was $18 in the third quarter of 2011, consistent with the second quarter of 2011 but down from $19 in the third quarter of 2010. — Quarter-on-quarter, prepaid ARPU remained consistent as growth in unlimited Monthly 4G prepaid was offset by the strategic phase out of the FlexPay no-contract product.

– Year-on-year, prepaid ARPU decreased due to the shift in customer mix away from FlexPay no-contract customers.

– Data service revenues (as defined in Note 4 to the Selected Data, below) were $1.4 billion in the third quarter of 2011, up 12% from the third quarter of 2010. Data service revenues in the third quarter of 2011 represented 30% of blended ARPU, or $14.00 per customer, compared to 30% of blended ARPU, or $13.60 per customer in the second quarter of 2011, and 27% of blended ARPU, or $12.40 per customer in the third quarter of 2010. — In the third quarter of 2011, the increase in the number of customers using smartphones, along with T-Mobile USA’s continued upgrading of its 3G and 4G networks helped drive Internet access revenue growth through the increased customer adoption of mobile broadband data plans.

– 10.1 million customers were using smartphones enabled for the T-Mobile USA 3G/4G network (as defined in Note 12 to the Selected Data, below) such as the T-Mobile(R) Sidekick(R) 4G, the HTC(R) Sensation(TM) 4G, and the T-Mobile(R) myTouch(TM) 4G Slide, at the end of the third quarter of 2011. This represents a net increase of 40% or 2.9 million customers using smartphones from the third quarter of 2010.

– 3G/4G smartphone customers now account for 30% of total customers, up from 29% in the second quarter of 2011 and 21% in the third quarter of 2010.

– Messaging revenue (as described in Note 5 to the Selected Data, below) continued to be an important component of data service revenues. Messaging accounted for approximately 32% of total data revenues in the third quarter of 2011, compared to 35% in the second quarter of 2011 and 36% in the third quarter of 2010.

CPGA and CCPU

– The average cost of acquiring a customer, Cost Per Gross Add (“CPGA” as defined in Note 7 to the Selected Data, below) was $260 in the third quarter of 2011, down from $320 in the second quarter of 2011 and $290 in the third quarter of 2010. — Sequentially and year-on-year, CPGA decreased in the third quarter of 2011 due primarily to lower handset subsidies as a result of T-Mobile USA’s new unlimited Value plans, which do not bundle subsidized handsets as in traditional wireless service contracts.

– The average cash cost of serving customers, Cash Cost Per User (“CCPU” as defined in Note 6 to the Selected Data, below), was $23 per customer per month in the third quarter of 2011, consistent with the second quarter of 2011, but down from $24 in the third quarter of 2010.

Capital Expenditures

– Cash capital expenditures (as defined in Note 10 to the Selected Data, below) were $741 million in the third quarter of 2011, compared to $688 million in the second quarter of 2011 and $643 million in the third quarter of 2010. — Sequentially and year-on-year, the increase in cash capital expenditures was a result of payment timing differences. In the third quarter of 2011, incurred capital expenditures remained generally consistent with the second quarter of 2011 and the third quarter of 2010 as a result of the continued build-out of the HSPA+ 21 and HSPA+ 42 networks (as defined in Note 11 to the Selected Data, below).

– To further improve the value provided to customers through its 4G mobile broadband network, T-Mobile USA has continued to invest in its HSPA+ 42 network, which reached over 170 million people as of the end of the third quarter of 2011, doubling the theoretical speed of its 4G network to 42 Mbps.

T-Mobile USA Recent Highlights

– On March 20, 2011, Deutsche Telekom AG and AT&T Inc. entered into a definitive agreement under which AT&T will acquire T-Mobile USA from Deutsche Telekom in a cash and stock transaction valued at approximately $39 billion, subject to adjustment in accordance with the agreement. The agreement has been approved by the Board of Directors of both companies, and is expected to provide an optimal combination of network assets to add capacity and provide an opportunity to improve network quality in the near term for the customers of both companies. In particular, the transaction is important to address spectrum constraints and gives T-Mobile USA customers a clear path to take advantage of new generation LTE (Long Term Evolution) services. As part of the transaction, Deutsche Telekom will receive an equity stake in AT&T that, based on the terms of the agreement, would give Deutsche Telekom an ownership interest in AT&T of approximately 8 percent and one seat on the AT&T Board of Directors. In the third quarter of 2011, the U.S. Department of Justice (DOJ) filed a complaint in the Federal District Court of Washington, D.C. to block the acquisition. Deutsche Telekom and AT&T continue to pursue the acquisition, with a trial date on the DOJ’s complaint set for mid-February 2012. Deutsche Telekom anticipates closing the transaction in the first half of 2012.

– During the third quarter of 2011, T-Mobile USA introduced new unlimited Value plans. In August 2011, T-Mobile USA launched new Small Business Rate Plans, reinforcing the Company’s focus on support of small business to make it more affordable for customers to experience America’s Largest 4G Network. These plans include offerings of unlimited talk, text and data services.

– T-Mobile USA continues to unveil cutting edge devices including 42 Mbps-capable smartphones such as the HTC(R) Amaze(TM) 4G and the Samsung Galaxy S(TM) II.

– On August 15, 2011, T-Mobile USA earned the highest ranking in the J.D. Power and Associates 2011 United States Full-Service Wireless Purchase Experience Study(SM) — Volume 2, the fifth consecutive highest ranking for T-Mobile USA in that study. On September 15, 2011, J.D. Powers and Associates ranked T-Mobile USA second highest in the Southwest and West Regions and tied for second highest in the Northeast and Mid-Atlantic Regions in their 2011 Wireless Network Quality Performance Study(SM) — Volume 2.

– During the third quarter of 2011, T-Mobile USA leveraged changes in retail distribution through new retail partnerships focused on new distribution opportunities. In line with this strategy, T-Mobile USA partnered with 7-Eleven Inc., Toys R Us and Family Dollar to begin offering a no-contract wireless product in these companies’ retail locations. On July 26, 2011, T-Mobile USA and RadioShack discontinued their retail partnership.

– During the third quarter of 2011, T-Mobile USA announced the rollout of a new global design for nearly 400 new and remodeled stores across the country in an ongoing commitment to provide the ultimate customer experience to consumers.

T-Mobile USA is the U.S. wireless operation of Deutsche Telekom AG (otcqx:DTEGY). In order to provide comparability with the results of other US wireless carriers, all financial amounts are in US dollars and are based on accounting principles generally accepted in the United States (“GAAP”). T-Mobile USA results are included in the consolidated results of Deutsche Telekom, but as presented there differ from the information contained herein as, among other things, Deutsche Telekom reports financial results in Euros and in accordance with International Financial Reporting Standards (IFRS).

This press release includes non-GAAP financial measures. The non-GAAP financial measures should be considered in addition to, but not as a substitute for, the information provided in accordance with GAAP. Reconciliations from the non-GAAP financial measures to the most directly comparable GAAP financial measures are provided below following Selected Data and the financial statements.

                                                           SELECTED DATA FOR T-MOBILE USA
        (thousands)                                                    Q3 2011     Q2 2011     Q1 2011     Full Year    Q4 2010     Q3 2010
                                                                                                             2010
                                                                     ---------   ---------   ---------   ----------   ---------   ---------
        Customers, end of period(2)
          Total Branded Contract Customers                           23,074      23,463      23,999      24,574       24,574      24,938
          Total Connected Devices                                     2,525       2,321       2,065       1,873        1,873       1,761
                                                                     ------      ------      ------      ------       ------      ------
        Total Contract Customers                                     25,598      25,784      26,065      26,447       26,447      26,698
                                                                     ------      ------      ------      ------       ------      ------
          Branded Prepaid Customers                                   4,599       4,345       4,416       4,497        4,497       4,643
          MVNO Customers                                              3,514       3,456       3,154       2,790        2,790       2,415
                                                                     ------      ------      ------      ------       ------      ------
        Total Prepaid Customers                                       8,113       7,801       7,570       7,287        7,287       7,059
                                                                     ------      ------      ------      ------       ------      ------
        Total T-Mobile USA Customers, end of period                  33,711      33,585      33,635      33,734       33,734      33,757
                                                                     ======      ======      ======      ======       ======      ======
          Thereof, Branded Customers                                 27,673      27,808      28,415      29,071       29,071      29,581
        Net customer additions/(losses)(2)
          Total Branded Contract Customers                             (389)      (536)      (574)    (1,069)       (364)      (325)
          Total Connected Devices                                       204         256         192         751          113         271
                                                                     ------      ------      ------      ------       ------      ------
        Total Contract Customers                                       (186)      (281)      (382)      (318)       (251)       (54)
                                                                     ------ ---  ------ ---  ------ ---  ------ ----  ------ ---  ------ ---
          Branded Prepaid Customers                                     254         (71)       (82)      (513)       (145)       (79)
          MVNO Customers                                                 57         302         365         775          374         269
                                                                     ------      ------      ------      ------       ------      ------
        Total Prepaid Customers                                         312         231         283         262          229         190
                                                                     ------      ------      ------      ------       ------      ------
        Total T-Mobile USA net customer additions/(losses)              126         (50)       (99)       (56)        (23)       137
                                                                     ======      ====== ===  ====== ===  ====== ====  ====== ===  ======
          Thereof, Branded net customer additions/(losses)             (135)      (608)      (656)    (1,582)       (509)      (404)
        Note: Certain customer numbers may not add due to rounding.
        Minutes of use/contract customer/month(2)                       990         990       1,020       1,100        1,050       1,080
        Contract churn(3)                                              2.40 %      2.40 %      2.40 %      2.30 %       2.50 %      2.40 %
        Branded churn(3)                                               3.20 %      3.20 %      3.30 %      3.20 %       3.40 %      3.40 %
        Blended churn(3)                                               3.50 %      3.30 %      3.40 %      3.40 %       3.60 %      3.40 %
        ($)
        Service and Sales Revenues per customer(13)                      51          50          51          52           52          53
        ARPU (blended)(4)                                                46          46          46          46           46          47
        ARPU (contract)(4)                                               53          53          52          52           52          52
        ARPU (prepaid)(4)                                                18          18          18          19           19          19
        Data ARPU (blended)(5)                                        14.00       13.60       13.10       11.90        12.80       12.40
        Cost of serving (CCPU)(6)                                        23          23          25          23           24          24
        Cost per gross add (CPGA)(7)                                    260         320         300         300          290         290
        ($ millions)
        Total revenues                                                5,228       5,050       5,161      21,347        5,363       5,350
        Total Service and Sales Revenues(13)                          5,151       5,000       5,117      21,137        5,306       5,307
        Service revenues(4)                                           4,666       4,620       4,630      18,733        4,694       4,708
        Adjusted OIBDA(8)                                             1,445       1,277       1,188       5,478        1,342       1,323
        Adjusted OIBDA margin(9)                                         31 %        28 %        26 %        29 %         29 %        28 %
        Capital expenditures(10)                                        741         688         749       2,819          828         643

Since all companies do not calculate these figures in the same manner, the information contained in this press release may not be comparable to similarly titled measures reported by other companies.

1. A customer is defined as a SIM card with a unique T-Mobile USA mobile identity number which generates revenue. Branded contract customers and prepaid customers include FlexPay customers depending on the type of rate plan selected. FlexPay customers with a contract are included in branded contract customers, and FlexPay customers without a contract are included in branded prepaid customers. Additionally, connected devices (also known as machine-to-machine customers) are included within contract customers, some of which may not have monthly recurring charges required under contract. Mobile virtual network operators (MVNO) are classified as prepaid customers as they most closely align with this customer segment.

2. Prior quarter amounts have been restated to conform to current period customer reporting classifications.

3. Churn is defined as the number of customers whose service was discontinued, expressed as a rounded monthly percentage of the average number of customers during the specified period. We believe that churn, which is a measure of customer retention and loyalty, provides relevant and useful information and is used by our management to evaluate the operating performance of our business.

4. Average Revenue Per User (“ARPU”) represents the average monthly service revenue earned from customers. ARPU is calculated by dividing service revenues for the specified period by the average customers during the period, and further dividing by the number of months in the period and rounding to the nearest dollar. We believe ARPU provides management with useful information to evaluate the revenues generated from our customer base.

Service revenues include contract, prepaid, and roaming and other service revenues, and do not include equipment sales and other revenues. Data services revenues (including messaging and non-messaging revenue) are a non-GAAP financial measure and are included in the various components of service revenues. Handset insurance revenues are included in contract service revenues beginning the fourth quarter of 2010 as the Company began directly providing handset insurance services which had previously been provided by a third party.

5. Data ARPU is defined as total data revenues divided by average total customers during the period, rounded to the nearest ten cents. Total data revenues include data revenues from contract customers, prepaid customers, Wi-Fi revenues and data roaming revenues. The relative value of data revenues from bundled unlimited voice and data plans (including a relative value for messaging and non-messaging data revenue) are included in total data revenues.

6. The average cash cost of serving customers, or Cash Cost Per User (“CCPU”) is a non-GAAP financial measure and includes all network and general and administrative costs as well as the subsidy loss unrelated to customer acquisition. Subsidy loss unrelated to customer acquisition includes upgrade and insurance claim handset costs offset by upgrade equipment revenues and other related direct costs. This measure is calculated as a per month average by dividing the total costs for the specified period by the average total customers during the period and further dividing by the number of months in the period before rounding to the nearest dollar. We believe that CCPU, which is a measure of the costs of serving a customer, provides relevant and useful information and is used by our management to evaluate the operating performance of our business.

7. Cost Per Gross Add (“CPGA”) is a non-GAAP financial measure and is calculated by dividing the costs of acquiring a new customer, consisting of customer acquisition costs plus the subsidy loss related to customer acquisition for the specified period, by gross customers added during the period and then rounded to the nearest ten dollars. Subsidy loss related to customer acquisition consists primarily of the excess of handset and accessory costs over related revenues incurred to acquire new customers. We believe that CPGA, which is a measure of the cost of acquiring a customer, provides relevant and useful information and is used by our management to evaluate the operating performance of our business.

8. Operating Income Before Interest, Depreciation and Amortization (“OIBDA”) is a non-GAAP financial measure, which we define as operating income before depreciation and amortization. In a capital-intensive industry such as wireless telecommunications, we believe OIBDA, as well as the associated percentage margin calculation, to be meaningful measures of our operating performance. OIBDA should not be construed as an alternative to operating income or net income as determined in accordance with GAAP, as an alternative to cash flows from operating activities as determined in accordance with GAAP or as a measure of liquidity. We use OIBDA as an integral part of our planning and internal financial reporting processes, to evaluate the performance of our business by senior management and to compare our performance with that of many of our competitors. We believe that operating income is the financial measure calculated and presented in accordance with GAAP that is the most directly comparable to OIBDA. OIBDA was adjusted in the third quarter of 2011 to exclude AT&T transaction-related costs that are not reflective of our ongoing operating performance.

9. Adjusted OIBDA margin is a non-GAAP financial measure, which we define as adjusted OIBDA (as described in Note 8 above) divided by service revenues.

10. Capital expenditures consist of amounts paid for construction and purchase of property and equipment.

11. High speed packet access plus (HSPA+ 21) and HSPA+ 42 technology offers customers a 4G experience, including data speeds comparable to other 4G network speeds currently available to mobile device users in the United States.

12. Smartphones are defined as UMTS/HSPA/HSPA+ 21/HSPA+ 42 enabled converged devices, which integrate voice and data services.

13. Service and Sales revenues per customer is a non-GAAP financial measure, which we define as service and sales revenue divided by average total customers during the period. We believe that service and sales revenues per customer provide management with useful information about average monthly revenues generated by wireless customers.

Service and sales revenues include all service revenues and equipment sales from customers and third party distributors and wholesalers.

                                                         T-MOBILE USA
                                             Condensed Consolidated Balance Sheets
                                                     (dollars in millions)
                                                          (unaudited)
                                         ASSETS                                     September 30,      December 31,
        Current assets:                                                                 2011               2010
                                                                                 ------------------ ------------------
          Cash and cash equivalents                                                 $     421          $     109
          Receivables from affiliates                                                     912                310
          Accounts receivable, net of allowances of $318 and $368, respectively         2,794              2,857
          Inventory                                                                       520                621
          Current portion of net deferred tax assets                                      926                914
          Other current assets                                                            621                500
                                                                                      -------            -------
            Total current assets                                                        6,194              5,311
        Property and equipment, net of accumulated depreciation of $15,313             12,898             13,213
        and $13,801, respectively
        Goodwill                                                                       12,044             12,044
        Spectrum licenses                                                              15,265             15,282
        Other intangible assets, net of accumulated amortization of $203                   73                113
        and $163, respectively
        Long-term investments and other assets                                            239                328
                                                                                      -------            -------
            Total assets                                                            $  46,713          $  46,291
                                                                                 ==== =======       ==== =======
                          LIABILITIES AND STOCKHOLDER'S EQUITY
        Current liabilities:
          Accounts payable and accrued liabilities                                  $   2,905          $   3,248
          Current payables to affiliates                                                  992                805
          Other current liabilities                                                       388                402
                                                                                      -------            -------
            Total current liabilities                                                   4,285              4,455
                                                                                      -------            -------
        Long-term payables to affiliates                                               15,170             15,854
        Deferred tax liabilities                                                        4,176              3,756
        Deferred rents and other long-term liabilities                                  1,994              1,734
                                                                                      -------            -------
            Total long-term liabilities                                                21,340             21,344
                                                                                      -------            -------
        Stockholder's equity:
          Common stock and additional paid-in capital                                  31,600             31,600
          Accumulated other comprehensive loss                                           (122)              (39)
          Accumulated deficit                                                         (10,390)          (11,069)
                                                                                      ------- ----       ------- ----
            Total T-Mobile USA stockholder's equity                                    21,088             20,492
                                                                                      -------            -------
            Total liabilities and stockholder's equity                              $  46,713          $  46,291
                                                                                 ==== =======       ==== =======
                                                              T-MOBILE USA
                                             Condensed Consolidated Statements of Operations
                                                          (dollars in millions)
                                                               (unaudited)
                                                                                Quarter Ended    Quarter Ended    Quarter Ended
                                                                                September 30,      June 30,       September 30,
                                                                                    2011             2011             2010
                                                                              -------------    -------------    -------------
        Revenues:
          Contract                                                               $ 4,087          $ 4,082          $ 4,150
          Prepaid                                                                    436              414              395
          Roaming and other services                                                 143              124              163
                                                                                   -----            -----            -----
        Service Revenues                                                           4,666            4,620            4,708
          Equipment sales                                                            485              380              599
                                                                                   -----            -----            -----
        Total Service and Sales Revenues                                           5,151            5,000            5,307
          Other                                                                       77               50               43
                                                                                   -----            -----            -----
             Total revenues                                                        5,228            5,050            5,350
                                                                                   -----            -----            -----
        Operating expenses:
          Network                                                                  1,249            1,248            1,258
          Cost of equipment sales                                                    873              881            1,085
          Customer acquisition                                                       795              787              800
          General and administrative                                                 866              857              884
          Depreciation and amortization                                              731              755              723
                                                                                   -----            -----            -----
             Total operating expenses (excl. AT&T transaction-related costs)       4,514            4,528            4,750
                                                                                   -----            -----            -----
        Adjusted operating income (excl. AT&T transaction-related costs)             714              522              600
        AT&T transaction-related costs                                                51               13                -
                                                                                   -----            -----            -----
        Operating income                                                             663              509              600
                                                                                   -----            -----            -----
        Other expense, net                                                          (137)           (156)            (79)
                                                                                   ----- ----       ----- ----       ----- ----
        Income before income taxes                                                   526              353              521
        Income tax expense                                                          (194)           (141)           (201)
                                                                                   ----- ----       ----- ----       ----- ----
        Net income                                                                   332              212              320
        Other comprehensive gain/(loss), net of tax:
                                                                                     (56)            (11)            (50)
          Unrealized (loss) on cash flow hedges and foreign currency
          translation
                                                                                      (1)              6                -
          Unrealized gain/(loss) on available-for-sale securities
                                                                                   ----- ----       -----            -----
        Total comprehensive income                                               $   275          $   207          $   270
                                                                              ==== =====       ==== =====       ==== =====
                                                          T-MOBILE USA
                                         Condensed Consolidated Statements of Cash Flows
                                                      (dollars in millions)
                                                           (unaudited)
                                                                       Quarter Ended     Quarter Ended    Quarter Ended
                                                                       September 30,       June 30,       September 30,
                                                                           2011              2011             2010
                                                                     --------------    -------------    --------------
        Operating activities:
        Net income                                                      $    332          $   212          $    320
        Adjustments to reconcile net income to net cash provided by
        operating activities:
            Depreciation and amortization                                    731              755               723
            Income tax expense                                               194              141               201
            Bad debt expense                                                 169              149               173
            AT&T transaction-related costs                                    51               13                 -
            Other, net                                                        (1)              4               (11)
            Changes in operating assets and liabilities:
              Accounts receivable                                           (320)           (122)            (251)
              Inventory                                                      (41)            169               (52)
              Other current and non-current assets                           (25)            (20)             (38)
              Accounts payable and accrued liabilities                       137             (114)             117
                                                                          ------            ----- ----       ------
                Net cash provided by operating activities                  1,227            1,187             1,182
                                                                          ------            -----            ------
        Investing activities:
            Purchases of property and equipment                             (741)           (688)            (643)
            Expenditures related to spectrum licenses                         (7)             (4)              (3)
            Short-term affiliate loan receivable, net                       (425)           (225)            (425)
            Other, net                                                        23               10               (10)
                                                                          ------            -----            ------ ----
                Net cash used in investing activities                     (1,150)           (907)          (1,081)
                                                                          ------ ----       ----- ----       ------ ----
        Financing activities:
           Debt borrowings from parent                                         -                -                 7
           Short-term borrowings, net                                          -              (33)               -
                                                                          ------            ----- ----       ------
                Net cash (used in) provided by financing activities            -              (33)               7
                                                                          ------            ----- ----       ------
        Change in cash and cash equivalents                                   77              247               108
        Cash and cash equivalents, beginning of period                       344               97                48
                                                                          ------            -----            ------
        Cash and cash equivalents, end of period                        $    421          $   344          $    156
                                                                     ==== ======       ==== =====       ==== ======
                                                                           T-MOBILE USA
                                                  Reconciliation of Non-GAAP Financial Measures to GAAP Financial
                                                                             Measures
                                                          (dollars in millions, except for CPGA and CCPU)
                                                                            (unaudited)
        Adjusted OIBDA is reconciled to operating income as follows:
                                                                                Q3 2011      Q2 2011      Q1 2011       Full         Q4 2010      Q3 2010
                                                                                                                        Year
                                                                                                                        2010
                                                                             ---------    ---------    ---------    ----------    ---------    ---------
           Adjusted OIBDA                                                     $ 1,445      $ 1,277      $ 1,188      $  5,478      $ 1,342      $ 1,323
           Depreciation and amortization                                         (731)       (755)       (735)      (2,773)       (729)       (723)
                                                                                ----- --     ----- --     ----- --     ------ --     ----- --     ----- --
           Adjusted operating income (excl. AT&T transaction-related costs)       714          522          453         2,705          613          600
                                                                                -----        -----        -----        ------        -----        -----
           AT&T transaction-related costs                                         (51)        (13)          -             -            -            -
                                                                                ----- --     ----- --     -----        ------        -----        -----
           Operating income                                                   $   663      $   509      $   453      $  2,705      $   613      $   600
                                                                             == =====     == =====     == =====     == ======     == =====     == =====

The following schedule reflects the CPGA calculation and provides a reconciliation of cost of acquiring customers used for the CPGA calculation to customer acquisition costs reported on our condensed consolidated statements of operations:

                                                                         Q3 2011      Q2 2011      Q1 2011      Full        Q4 2010      Q3 2010
                                                                                                                Year
                                                                                                                2010
                                                                       --------    ---------    ---------    --------    ---------    ---------
        Customer acquisition costs                                      $  795      $   787      $   782     $  3,205     $   786      $   800
        Plus:
                       Subsidy loss
                       Equipment sales                                    (485)       (380)       (487)     (2,404)      (612)       (599)
                       Cost of equipment sales                             873          881        1,018        4,237       1,109        1,085
                                                                          ----        -----        -----       ------       -----        -----
                         Total subsidy loss                                388          501          531        1,833         497          486
        Less:                                                              237          240          319          926       258            232
                       Subsidy loss unrelated to customer acquisition
                                                                           151          261          212          907         239        254
                       Subsidy loss related to customer acquisition
                         Cost of acquiring customers                    $  946      $ 1,048      $   994     $  4,112     $ 1,025      $ 1,054
                                                                       == ====     == =====     == =====     = ======    == =====     == =====
                         CPGA ($/new customer added)                    $  260      $   320      $   300     $    300     $   290      $   290
                                                             T-MOBILE USA
                                    Reconciliation of Non-GAAP Financial Measures to GAAP Financial
                                                               Measures
                                            (dollars in millions, except for CPGA and CCPU)
                                                              (unaudited)
        The following schedule reflects the CCPU calculation and provides
        a reconciliation of the cost of serving customers used for the
        CCPU calculation to total network costs plus general and
        administrative costs reported on our condensed consolidated
        statements of operations:
                                                                Q3 2011    Q2 2011    Q1 2011     Full      Q4 2010    Q3 2010
                                                                                                  Year
                                                                                                  2010
                                                              --------   --------   --------   --------   --------   --------
        Network costs                                           $ 1,249    $ 1,248    $ 1,253    $ 4,895    $ 1,219    $ 1,258
        General and administrative costs                            866        857        920      3,532        907        884
                                                                  -----      -----      -----      -----      -----      -----
        Total network and general and administrative costs        2,115      2,105      2,173      8,427      2,126      2,142
        Plus: Subsidy loss unrelated to customer acquisition        237        240        319        926        258        232
                                                                  -----      -----      -----      -----      -----      -----
             Total cost of serving customers                    $ 2,352    $ 2,345    $ 2,492    $ 9,353    $ 2,384    $ 2,374
                                                              === =====  === =====  === =====  === =====  === =====  === =====
             CCPU ($/customer per month)                        $    23    $    23    $    25    $    23    $    24    $    24
]]> http://www.bgr.com/2011/11/10/t-mobile-usa-revenue-slips-contract-customers-continue-to-flee-in-q3/feed/ 0 http://www-bgr-com.vimg.net/wp-content/uploads/2011/07/t-mobile-sign110727113024-80x80.jpg Samsung mobile sales reach all-time high in Q3 http://www.bgr.com/2011/10/28/samsung-mobile-sales-reach-all-time-high-in-q3/ http://www.bgr.com/2011/10/28/samsung-mobile-sales-reach-all-time-high-in-q3/#comments Fri, 28 Oct 2011 21:50:14 +0000 Todd Haselton http://www.bgr.com/?p=110158

In its recent third-quarter earnings report, Samsung said its telecommunications business achieved record quarterly sales of 14.90 trillion won, up 37% from the same period last year. The unit shipped 27.9 million smartphones during the period, 10 million more than Apple shipped during the same quarter, pushing Samsung into the top smartphone spot globally. Those sales resulted in a record operating profit of 2.52 trillion won for the telecommunications business. Hit the break for more.

Samsung reported revenue of 41.27 trillion Korean won, up 3% year-on-year. Net income was 3.44 trillion won, a 23% decline from the same period last year. Operating profit of 4.25 trillion won beat the company’s 4.2 trillion won estimates for the quarter, but that figure is down from the 4.9 trillion won reported during the third quarter of 2010.

The company’s chip business posted 5.50 trillion won in sales, down from the 7.5 trillion won it reported in 2010. Its OLED panel business reported an operating loss of 90 billion won, a 13% fall from the third quarter of last year. Samsung expects its strong mobile sales to continue into the fourth quarter as it introduces the Galaxy Nexus and the Galaxy Note. The company’s full press release follows below.

Samsung Electronics Announces Third Quarter 2011 Results

- Consolidated operating profit reaches 4.25 trillion won on revenues of 41.27 trillion won

SEOUL, Korea – October 28, 2011 – Samsung Electronics Co., Ltd. today announced revenues of 41.27 trillion Korean won on a consolidated basis for the third quarter ended September 30, 2011, a three-percent increase year-on-year. For the quarter, the company posted consolidated net income of 3.44 trillion won, representing a 23-percent decrease year-on-year. Consolidated operating profit for the quarter was 4.25 trillion won.
In its earnings guidance disclosed on October 7, Samsung estimated third-quarter consolidated revenues would reach approximately 41 trillion won with an operating profit of 4.2 trillion won.

Highlighting the quarterly performance, the Telecommunications businesses recorded all-time high quarterly sales of 14.90 trillion won, up 37 percent from the previous year, with growth mainly driven by strong sales of Samsung’s GALAXY smartphones. Operating profit for the businesses also hit a record 2.52 trillion won.

The Semiconductor unit also saw sales hit 9.48 trillion won during the June-to-September period, after posting 9.16 trillion won in the second quarter. Increased demand for NAND flash chips used in mobile devices and enhanced revenue in the System LSI Business, which creates mobile application processors and CMOS Image Sensors, supported overall profitability.

“Despite the difficult business environment due to the economic slowdown in developed markets, Samsung achieved a solid performance and recovered its double-digit operating profit margin in the quarter, driven by strong sales of our smartphones,” said Robert Yi, Vice President and Head of Investor Relations.

Yi said Samsung’s efforts to achieve balanced earnings across its component and sets businesses were beginning to materialize. “In anticipation of explosive growth in the mobile market, we have been focusing on fostering growth of certain component businesses, such as Mobile DRAM, application processors, NAND and OLED panels. These industry-leading technologies, combined with our design and software capabilities, have enhanced the competitiveness of our set products,” he said.

Looking ahead into the fourth quarter – when industry demand is traditionally at its peak – Samsung expects sales of mobile devices to remain strong and flat panel TV shipments to increase. However, Yi cautioned that due to lingering global economic uncertainties, “We cannot rule out the possibility of demand growth slowing compared to previous years.”

Capital expenditure in the third quarter amounted to 4.9 trillion won, bringing year-to-date total investments to around 16 trillion won. Samsung will announce Capex plans for fiscal year 2012 in the fourth quarter earnings report.

On the non-operating side, the rapid depreciation of the Korean won against the US dollar in September resulted in foreign exchange-related losses of around 420 billion won due to translation of foreign currency- denominated assets and liabilities. However, Samsung expects to recover the translation loss in the fourth quarter, considering the current strengthening of the won against the greenback.

NAND Demand Strong Amid Mobile Market Growth

Samsung’s Semiconductor businesses – including Memory and System LSI – registered sales of 9.48 trillion won and a consolidated operating profit of 1.59 trillion won in the third quarter, declining both on-quarter and year-on-year.

The Memory Business posted 5.50 trillion won in sales for the quarter, down from 7.49 trillion won posted the same period of 2010 and 5.89 trillion won in the second quarter of this year. Profitability in DRAM remained weak despite growth in global PC shipments in the high-single digit percentage quarter-on-quarter and a push in sales of mobile and server DRAM. Despite sluggish market conditions, Samsung maintained solid profitability through its differentiated memory solutions and cost leadership based on its migration to 30-nanometer-class DRAM production.

The demand for NAND flash memory, which is a core component in mobile devices, remained strong as market growth in smartphones and tablet PCs continued to drive up orders. Spot prices for NAND flash memory rebounded in the third quarter due to decreased channel supply.

In the fourth quarter, demand for PC memory will remain weak but DRAM for mobile devices and servers is projected to keep growing with the introduction of new products and a boom in the smartphone business. Samsung expects to keep its frontrunner status in the global memory semiconductor industry with competitive products and differentiated cost structure.

OLED Panel Sales Brighten Outlook

The Display Panel Business recorded an operating loss of 90 billion won on revenue of 7.08 trillion won, representing a decline in sales of 13 percent compared with the same period last year.

Global market demand for large size LCD panels was flat with shipments rising just 1 percent quarter-on-quarter to 179 million units, while average sales prices of panels fell across the notebook PC, monitor and TV panel segments. However, Samsung’s overall on-quarter profitability improved on the back of demand for OLED panels from the growing tablet device market. Sales of light-emitting diode (LED) panels for TVs also showed continuous growth.

Affected by the global economic slowdown, panel sales growth will continue to be limited in the fourth quarter although the year-end and Chinese New Year holidays are expected to lift demand. As demand for tablet devices increases, Samsung expects to maintain strong earnings momentum in the OLED business by broadening its customer base and offering a diverse product lineup.

The evolution of the industry will continue with LED TV panels sales expected to rise to account for more than 50 percent of the global market in the fourth quarter.

Record Profit Driven By Smartphone Sales Growth

The Telecommunications businesses – including mobile communications and telecommunication systems – posted a record operating profit of 2.52 trillion won on revenue of 14.90 trillion won. This represents an operating profit margin of 16.9 percent for the quarter.

Samsung’s Mobile Communications Business saw revenues rise 39 percent year-on-year to 14.42 trillion won. Handset shipments rose more than 20 percent quarter-on-quarter, driven by growth in the smartphone segment where sales were up more than 40 percent on-quarter and 300 percent year-on-year. Samsung continued the global rollout of its flagship GALAXY SII, which has now sold more than 10 million units in the five months since its introduction.

Despite enhanced price competition, the average sales price of Samsung’s handsets increased on-quarter, while sales volume for the GALAXY Tab portfolio of tablets increased with the expansion of the 8.9- and 10.1-inch devices into the lineup.

Samsung expects strong seasonal demand to drive sales of its diverse portfolio of smartphones in the fourth quarter assisted by the launch of new premium devices, including GALAXY Nexus which features the latest Android 4.0 operating system for the first time in a smartphone, and the 5.3-inch GALAXY Note which is opening a new mobile device category. Strong demand in developed countries will sustain tablet growth in the quarter.

For the Telecommunications Systems Business, sales and profitability improved year-on-year due to the expansion of its 4G Long-term Evolution (LTE) business and 3G network upgrade business. Samsung expects strong network sales growth with expansion of LTE business in North America and Asia as well as 3G network upgrade business globally.

Digital Media & Appliances Defies Market Conditions

The Digital Media & Appliances businesses – including Visual Display, IT Solutions, Digital Imaging and Digital Appliances – posted revenues of 14.36 trillion won for the third quarter.

Samsung’s shipments of flat panel TVs outstripped market growth of more than 10 percent on-quarter, which was led by demand in emerging markets. Profitability also improved quarter-on-quarter as LED TV sales passed 50 percent of all Samsung LCD TVs sold for the quarter, reflecting the growing acceptance of the new technology.

With peak season demand in the fourth quarter expected to increase 30 percent on-quarter, Samsung aims to outperform the market and enhance profitability through marketing and sales expansion of premium products such as LED TVs and Smart TVs supported by customized TV applications.

For the Digital Appliances Business, the economic slowdown in developed markets resulted in weakening revenue and profitability, though sales grew in some emerging markets including the CIS and Africa. In the fourth quarter, the challenging global economy will continue to limit demand in developed markets although Samsung will look to target premium products for growth. Additionally, Samsung expects to capitalize on a slight increase in demand in emerging markets by expanding sales of its localized models.

 

]]> http://www.bgr.com/2011/10/28/samsung-mobile-sales-reach-all-time-high-in-q3/feed/ 0 http://www-bgr-com.vimg.net/wp-content/uploads/2011/09/samsung-sign-128x128.jpg Sprint reports smaller loss than usual in Q3 earnings http://www.bgr.com/2011/10/26/sprint-reports-smaller-loss-than-usual-in-q3-earnings/ http://www.bgr.com/2011/10/26/sprint-reports-smaller-loss-than-usual-in-q3-earnings/#comments Wed, 26 Oct 2011 12:10:26 +0000 Jonathan S. Geller http://www.bgr.com/?p=109805

Sprint just released earnings for Q3, and while the company managed to add their best ever amount of net new wireless subscribers — 1.3 million — Sprint still lost 44,000 subs. Sprint’s postpaid ARPU has grown by $1 sequentially and $3 year-over-year as well. Sprint still didn’t make money this quarter, though, with a reported net loss of $301 million, down from a net loss of $911 million one year ago. Investors were looking to see a number north of around $-0.22 a share, and Sprint’s diluted loss for the quarter came in at $-0.10 a share. Of note: Sprint’s iPhone 4 and iPhone 4S sales are not included in here as the phones didn’t launch until October 14th. Full release is available at Sprint’s investor site.

Read

]]> http://www.bgr.com/2011/10/26/sprint-reports-smaller-loss-than-usual-in-q3-earnings/feed/ 13 http://www-bgr-com.vimg.net/wp-content/uploads/2011/10/6cb55ae272e2dede4da0a419866452b4-128x128.jpg Amazon profit falls 73% in Q3 despite record Kindle launch http://www.bgr.com/2011/10/25/amazon-profit-falls-73-in-q3-despite-record-kindle-launch/ http://www.bgr.com/2011/10/25/amazon-profit-falls-73-in-q3-despite-record-kindle-launch/#comments Tue, 25 Oct 2011 21:05:46 +0000 Todd Haselton http://www.bgr.com/?p=109759

Amazon reported third-quarter earnings on Tuesday, noting net sales increased 44% from the same quarter last year to $10.88 billion. That figure is on a par with Wall Street’s revenue expectations of $10.93 billion. Amazon reported EPS of $0.14, which missed the Street’s estimates of $0.24 per share. Net income fell 73% quarter-over-quarter, however. Amazon reported net income of $63 million during the third quarter, down from $231 million in the second quarter. The online retailer said September 28th was its biggest day ever for Kindle sales, including during the previous peak holiday season. “In the three weeks since launch, orders for electronic ink Kindles are double the previous launch,” Amazon CEO Jeff Bezos said. “And based on what we’re seeing with Kindle Fire pre-orders, we’re increasing capacity and building millions more than we’d already planned.” Looking forward to the fourth quarter, Amazon expects net sales to fall between $16.45 billion and $18.65 billion, 27-44% growth over the fourth quarter of last year. The company also confirmed better than expected demand for its Kindle Fire tablet, noting that it is building “millions more” tablets than it had initially orders. Shares of Amazon stock fell more than 14% in after-hours trading. Read on for the full press release from Amazon.

Amazon.com Announces Third Quarter Sales up 44% to $10.88 Billion; Introduced Four New Kindle Devices for the Holidays

SEATTLE, Oct 25, 2011

Amazon.com, Inc. (NASDAQ:AMZN) today announced financial results for its third quarter ended September 30, 2011.

Operating cash flow increased 19% to $3.11 billion for the trailing twelve months, compared with $2.62billion for the trailing twelve months ended September 30, 2010. Free cash flow decreased 17% to $1.53 billion for the trailing twelve months, compared with $1.83 billion for the trailing twelve months ended September 30, 2010.

Common shares outstanding plus shares underlying stock-based awards totaled 469 million on September 30, 2011, compared with 465 million a year ago.

Net sales increased 44% to $10.88 billion in the third quarter, compared with $7.56 billion in third quarter 2010. Excluding the $371 million favorable impact from year-over-year changes in foreign exchange rates throughout the quarter, net sales would have grown 39% compared with third quarter 2010.

Operating income was $79 million in the third quarter, compared with $268 million in third quarter 2010. The favorable impact from year-over-year changes in foreign exchange rates throughout the quarter on operating income was $14 million.

Net income decreased 73% to $63 million in the third quarter, or $0.14 per diluted share, compared with net income of $231 million, or $0.51 per diluted share, in third quarter 2010.

“September 28th was the biggest order day ever for Kindle, even bigger than previous holiday peak days – we introduced Kindle Fire for $199, Kindle Touch 3G for $149, Kindle Touch for $99, and our all new Kindle for only $79,” said Jeff Bezos, founder and CEO of Amazon.com. “In the three weeks since launch, orders for electronic ink Kindles are double the previous launch. And based on what we’re seeing with Kindle Fire pre-orders, we’re increasing capacity and building millions more than we’d already planned.”

Highlights

 

  • Amazon announced the Kindle Fire, a new class of Kindle for movies, TV shows, music, books, magazines, apps, games, and web browsing with all the content, free storage in the Amazon Cloud, Whispersync, vibrant color touch screen, a powerful dual-core processor, and “Amazon Silk” – Amazon’s new revolutionary web browser that accelerates the power of the mobile device by using the computing speed and power of the Amazon Web Services Cloud. Kindle Fire is only $199.
  • Amazon announced three all-new Kindle e-readers that are smaller, lighter, and more affordable than ever before. The $79 latest generation Kindle is for customers who want the lightest, most compact Kindle at an incredible price. The $99 Kindle Touch includes an easy-to-use touch screen. Kindle Touch 3G is the top of the line e-reader with the unparalleled convenience of free 3G where customers never have to hunt or pay for a Wi-Fi hotspot – you simply download and read books anytime and anywhere – all for $149. Each of these e-readers includes all the benefits of the most advanced electronic ink display that reads like real paper, even in bright sunlight.
  • Amazon.fr launched the French Kindle Store offering customers a vast selection of over 35,000 French-language Kindle books. Amazon also announced that its series of free “Buy Once, Read Everywhere” apps for the most popular devices, including iPad, iPod touch, iPhone, PCs, Macs and Android-based devices, are now available in French-language versions. In addition, Amazon announced that the all-new Kindle with French navigation is available at Amazon.fr for only 99EUR .
  • Amazon.com announced licensing agreements with Twentieth Century Fox and PBS that allow the millions of Amazon Prime members to instantly stream a broad selection of popular movies and TV shows from their vast libraries. These deals will bring the total number of Prime instant videos to more than 12,000 movies and TV shows from partners such as CBS, FOX, PBS, NBCUniversal, Sony, Warner Bros., and many more.
  • Amazon Publishing released 61 titles in the quarter, including Kindle bestsellers “The Detachment” by Barry Eisler, “Dove Season” by Johnny Shaw, and “A Small Fortune” by Audrey Braun. Recent acquisitions include Tim Ferriss’ “The 4-Hour Chef,” Penny Marshall’s memoir “My Mother Was Nuts,” and the epic Foreworld Series project led by Neal Stephenson and Greg Bear. Amazon Publishing also announced a new imprint, 47North, which is dedicated to science-fiction, fantasy, and horror. 47North joins sister imprints AmazonEncore, AmazonCrossing, Powered by Amazon, Montlake Romance, and Thomas & Mercer.
  • The Company launched Amazon.es, a Spanish-language website offering customers a vast selection of books, DVDs, video games, music, and consumer electronics at everyday low prices. Amazon.es’s convenient services include Amazon Premium, the local version of Amazon Prime, with unlimited free guaranteed 2-3 day delivery for an annual fee of 14.95EUR . The first product sold on Amazon.es was a Blu-ray pack of “Star Wars: The Complete Saga” to a new Premium customer in Madrid.
  • North America segment sales, representing the Company’s U.S. and Canadian sites, were $5.93 billion, up 44% from third quarter 2010.
  • International segment sales, representing the Company’s U.K., German, Japanese, French, Chinese, Italian and Spanish sites, were $4.94 billion, up 44% from third quarter 2010. Excluding the favorable impact from year-over-year changes in foreign exchange rates throughout the quarter, sales grew 33%.
  • Worldwide Media sales grew 24% to $4.15 billion. Excluding the favorable impact from year-over-year changes in foreign exchange rates throughout the quarter, sales grew 19%.
  • Worldwide Electronics and Other General Merchandise sales grew 59% to $6.32 billion. Excluding the favorable impact from year-over-year changes in foreign exchange rates throughout the quarter, sales grew 54%.
  • Amazon Web Services (AWS) announced new features to make it even easier for enterprise customers to utilize the AWS infrastructure. New services like Direct Connect, Identity and Access Management, and Virtual Private Clouds allow enterprises to reliably, securely, and cost effectively use the existing AWS infrastructure for their computing needs.
  • AWS launched GovCloud, a new AWS Region designed to allow U.S. government agencies and contractors to move more sensitive workloads into the cloud by addressing their specific regulatory and compliance requirements. AWS also announced it has received Federal Information Security Management Act (FISMA) Moderate Authorization and Accreditation from the U.S. General Services Administration.

Financial Guidance

The following forward-looking statements reflect Amazon.com’s expectations as of October 25, 2011. Our results are inherently unpredictable and may be materially affected by many factors, such as fluctuations in foreign exchange rates, changes in global economic conditions and consumer spending, world events, the rate of growth of the Internet and online commerce and the various factors detailed below.

Fourth Quarter 2011 Guidance

 

  • Net sales are expected to be between $16.45 billion and $18.65 billion, or to grow between 27% and 44% compared with fourth quarter 2010.
  • Operating income (loss) is expected to be between $(200) million and $250 million, or between 142% decline and 47% decline compared with fourth quarter 2010.
  • This guidance includes approximately $200 million for stock-based compensation and amortization of intangible assets, and it assumes, among other things, that no additional business acquisitions or investments are concluded and that there are no further revisions to stock-based compensation estimates.

A conference call will be webcast live today at 2 p.m. PT/5 p.m. ET, and will be available for at least three months at www.amazon.com/ir. This call will contain forward-looking statements and other material information regarding the Company’s financial and operating results.

These forward-looking statements are inherently difficult to predict. Actual results could differ materially for a variety of reasons, including, in addition to the factors discussed above, the amount that Amazon.com invests in new business opportunities and the timing of those investments, the mix of products sold to customers, the mix of net sales derived from products as compared with services, the extent to which we owe income taxes, competition, management of growth, potential fluctuations in operating results, international growth and expansion, the outcomes of legal proceedings and claims, fulfillment center optimization, risks of inventory management, seasonality, the degree to which the Company enters into, maintains and develops commercial agreements, acquisitions and strategic transactions, and risks of fulfillment throughput and productivity. Other risks and uncertainties include, among others, risks related to new products, services and technologies, system interruptions, government regulation and taxation, payments and fraud. In addition, the current global economic climate amplifies many of these risks. More information about factors that potentially could affect Amazon.com’s financial results is included in Amazon.com’s filings with the Securities and Exchange Commission (“SEC”), including its most recent Annual Report on Form 10-K and subsequent filings.

Our investor relations website is www.amazon.com/ir and we encourage investors to use it as a way of easily finding information about us. We promptly make available on this website, free of charge, the reports that we file or furnish with the SEC, corporate governance information (including our Code of Business Conduct and Ethics), and select press releases and social media postings.

]]> http://www.bgr.com/2011/10/25/amazon-profit-falls-73-in-q3-despite-record-kindle-launch/feed/ 11 http://www-bgr-com.vimg.net/wp-content/uploads/2011/05/Amazon_jeff_bezos110513135536-80x80.jpg Netflix beats Street but loses 800,000 subscribers in Q3; DVD decline to continue http://www.bgr.com/2011/10/24/netflix-beats-street-but-loses-800000-subscribers-in-q3-dvd-decline-to-continue/ http://www.bgr.com/2011/10/24/netflix-beats-street-but-loses-800000-subscribers-in-q3-dvd-decline-to-continue/#comments Mon, 24 Oct 2011 21:30:57 +0000 Todd Haselton http://www.bgr.com/?p=109594

Shares of Netflix stock plummeted more than 27% in after-hours trading as the company revealed it lost more than 800,000 customers in the third quarter. Netflix now serves 23.8 million total customers and it reported third-quarter revenue of $822 million, beating estimates of $812 million. Earnings worked out to $1.16 per share, which also beat Wall Street’s consensus of $0.96. “While we dramatically improved our $7.99 unlimited streaming service by embracing new platforms, simplifying user-interface, and more than doubling domestic spending on streaming content over 2010, we greatly upset many domestic Netflix members with our significant DVD-related pricing changes, and to a lesser degree, with the proposed-and-now-cancelled rebranding of our DVD service,” Netflix said in a letter to shareholders Monday. Netflix expects DVD shipments to decline sharply during the fourth quarter, a continuation of the company’s earlier changes, but it expects growth in weekly gross additions compared to the December quarter last year. The company said it expects global consolidated income to fall between $19 million and $37 million during the fourth quarter and EPS is expected to land between $0.36 and $0.70.

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]]> http://www.bgr.com/2011/10/24/netflix-beats-street-but-loses-800000-subscribers-in-q3-dvd-decline-to-continue/feed/ 11 http://www-bgr-com.vimg.net/wp-content/uploads/2010/07/Netflix-logo-80x80.jpg iPad and iPad 2 dominate enterprise, represent 98% of tablet activations http://www.bgr.com/2011/10/20/ipad-and-ipad-2-dominate-enterprise-represent-98-of-tablet-activations/ http://www.bgr.com/2011/10/20/ipad-and-ipad-2-dominate-enterprise-represent-98-of-tablet-activations/#comments Fri, 21 Oct 2011 00:20:02 +0000 Todd Haselton http://www.bgr.com/?p=109139

Apple’s iPad and iPad 2 tablets continue to dominate in the enterprise market, according to the Good Technology Device Activations Report for the third quarter of 2011. 4% of all tablet activations in the enterprise were for Android tablets, while the iPad and iPad 2 were responsible for 96% of activations. The iPhone 4 was the most popular handset with 28.3% of all device activations during the quarter. It was followed by the iPad 2 (15.6% of all activations). Sprint’s EVO 4G was the most popular Android device with 1.6% of all enterprise smartphone activations. Read on for more.

“This quarter, we saw Android smartphones gain in percentage of total activations,” Good Technology senior vice president of corporate strategy John Herrema said. “This is likely due to the consumers holding back purchases of new iPhones in anticipation of Apple’s latest release (the iPhone 4S) — as our reports indiciate, consumers are setting the agenda for enterprise mobility.” IPhone 4 activations fell from 32.4% during the second quarter to 28.3% during the third quarter as a result of that anticipation.

It must be noted, however, that Good’s report does not take BlackBerry or Windows Phone 7 activations into consideration. “Since RIM devices use only the BlackBerry Enterprise Server for corporate email access, Good does not have insight into BlackBerry handset activation trends and they are not reflected in this report,” Good Technology clarified in its report.

Read [PDF]

]]> http://www.bgr.com/2011/10/20/ipad-and-ipad-2-dominate-enterprise-represent-98-of-tablet-activations/feed/ 34 http://www-bgr-com.vimg.net/wp-content/uploads/2011/10/Screen-shot-2011-10-20-at-10.07.09-AM-128x128.png Dell, HP may release Windows 8 tablets in Q3 of 2012 http://www.bgr.com/2011/10/18/dell-hp-may-release-windows-8-tablets-in-q3-of-2012/ http://www.bgr.com/2011/10/18/dell-hp-may-release-windows-8-tablets-in-q3-of-2012/#comments Tue, 18 Oct 2011 15:01:53 +0000 Todd Haselton http://www.bgr.com/?p=108486

Dell and HP will reportedly be among the first manufacturers to launch Windows 8 tablets, and the devices could be on the market as soon as the third quarter of next year, DigiTimes said recently. Supposedly, Amazon’s low-priced Kindle Fire has driven several manufacturers to pursue Windows 8 over Android in an effort to avoid stiff competition in the low-cost tablet market. Lenovo and Dell will stick to creating enterprise-focused tablets according to the report. Dell’s devices will continue to run Windows but Lenovo will still offer Android as a choice on its business-oriented tablets. In addition, recent rumors have suggested HTC is also working on a Windows 8 tablet. Windows 8 shipped to developers in September and most reports have suggested the first devices bearing the OS will launch in late 2012.

Read

]]> http://www.bgr.com/2011/10/18/dell-hp-may-release-windows-8-tablets-in-q3-of-2012/feed/ 18 http://www-bgr-com.vimg.net/wp-content/uploads/2011/10/windows-8-home-screen110913184405-128x128.jpg 18.7 million tablets reportedly shipped in Q3, iPad market share grows http://www.bgr.com/2011/10/18/18-7-million-tablets-reportedly-shipped-in-q3-ipad-market-share-grows/ http://www.bgr.com/2011/10/18/18-7-million-tablets-reportedly-shipped-in-q3-ipad-market-share-grows/#comments Tue, 18 Oct 2011 14:00:26 +0000 Todd Haselton http://www.bgr.com/?p=108504

Tablet vendors shipped 18.7 million units during the third quarter of this year, DigiTimes said on Tuesday. Third-quarter shipments were up 27.5% over the second quarter, but the increase was less than the 60.9% jump in shipments between the first and second quarters of this year. The slower growth was attributed to a weaker global economy, and the entire industry suffered. Apple is estimated to have shipped 13 million units in the September quarter, fewer than DigiTimes’s prediction that Apple would ship 14-15 million units. That figure, however, is still up up 36.8% over the second quarter. 5.7 million non-iPad units shipped during the third quarter, up 10.1% sequentially, but growth suffered due to an “inability to attract customers” away from the iPad, DigiTimes senior analyst James Wong said. Apple’s share of the tablet market grew from 64% in the second quarter to 70% in the third quarter according to DigiTimes’s figures. Apple will reveal its third-quarter earnings on Tuesday evening.

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]]> http://www.bgr.com/2011/10/18/18-7-million-tablets-reportedly-shipped-in-q3-ipad-market-share-grows/feed/ 26 http://www-bgr-com.vimg.net/wp-content/uploads/2011/10/1-128x128.jpg Sony Ericsson sales, net income slide in Q3; smartphones primary focus in 2012 http://www.bgr.com/2011/10/14/sony-ericsson-sales-net-income-slide-in-q3-smartphones-primary-focus-in-2012/ http://www.bgr.com/2011/10/14/sony-ericsson-sales-net-income-slide-in-q3-smartphones-primary-focus-in-2012/#comments Sat, 15 Oct 2011 00:40:52 +0000 Todd Haselton http://www.bgr.com/?p=108147 Sony Ericsson reported its third-quarter results on Friday and while several figures suggest the company is on the upswing quarter-over-quarter, its net income and shipments were still down compared to the same quarter in 2010. The company shipped 9.5 million devices during the quarter, up 33% from the 7.6 million it shipped last quarter but down from the 10.4 million it shipped during the third quarter last year. It attributed the decline to fewer feature phone shipments as the company continues to pivot its focus to smartphones. Sony Ericsson’s Xperia family of devices accounted for more than 80% of its sales and 22 million such devices have shipped to date. ”We will continue to invest in the smartphone market, shifting the entire portfolio to smartphones during 2012,” Sony Ericsson president and CEO Bert Nordberg said. Net income for the quarter fell €49 million from the third quarter of 2010, but increased €50 million from the second quarter. Read on for the full press release from Sony Ericsson.

Sony Ericsson reports third quarter 2011 results

  • Income before taxes was Euro 31 million
  • 33 percent increase in sales quarter-on-quarter
  • Smartphones account for more than 80 percent of total sales

The consolidated financial summary for Sony Ericsson Mobile Communications AB (Sony Ericsson) for the third quarter ended September 30, 2011 is as follows:

Q3 2010

Q2 2011

Q3 2011
Number of units shipped (million)
Average selling price (Euro)

10.4
154

7.6
156

9.5
166
Sales Euro m.)

1,603

1,193

1,586
Gross margin(%)

30%

31%

 27%
Operating income (Euro m.)

63

-37

38
Operating margin(%)

4%

-3%

2%
Restructuring charges (Euro m.)

4

       -

-
Operating income excl. restructuring charges (Euro m.)

67

-37

38
Operating margin excl. restructuring charges (%)

4%

   -3%

2%
Income before taxes (IBT)(Euro m.)

62

-42

31
IBT excl. restructuring charges (Euro m.)

66

-42

31
Net income (Euro m.)

49

-50

0

Bert Nordberg, President and CEO of Sony Ericsson commented, “We delivered a solid 73 million Euro improvement in income before taxes as we rebounded from the previous quarter with a 33 percent increase in sales. Android-based Xperia™ smartphone sales now account for more than 80 percent of sales and we have shipped 22 million Xperia smartphones to date.  We will continue to invest in the smartphone market, shifting the entire portfolio to smartphones during 2012.”

Units shipped during the quarter were 9.5 million, a 9% decrease year-on-year due to a decline in feature phone shipments, partially offset by an increase in smartphone shipments. The 25% quarter-on-quarter increase was due to the higher volume of smartphones shipped.

Average selling price (ASP) for the quarter was Euro 166, up 8% year-on-year and 6% sequentially. The year-on-year increase was due to the shift to smartphones and geographic mix despite a negative effect from foreign exchange rates. The sequential increase was due to product and geographic mix.

Sales for the quarter were approximately Euro 1.6 billion and essentially flat year-on-year.

The gross margin percentage for the quarter was 27%, a decrease of 3 percentage points year-on-year and 4 percentage points from the previous quarter.  The year-on-year decrease in margin is attributed to product and geographic mix.  The sequential decrease in margin was due to inventory-related adjustments and product and geographic mix.

Income before taxes for the quarter was Euro 31 million, compared to income before taxes of Euro 62 million for the same quarter in the previous year.  Loss before taxes for the previous quarter was Euro 42 million. The sequential improvement was reflective of higher sales and lower operating expenses, while the year-on-year decline was due to lower gross margin percentage offset by lower operating expenses.

Net income during the quarter improved by Euro 50 million sequentially, while net income decreased by Euro 49 million year-on-year. Income taxes recorded during the quarter reflect the distribution of profits and losses between various jurisdictions and tax adjustments. Minority interest reflects higher net income at a majority-owned joint venture company.

Cash flow from operating activities during the quarter was Euro 53 million. External borrowings of Euro 51 million were repaid during the quarter, resulting in total borrowings of Euro 718 million at the end of the quarter. Total cash balances at September 30, 2011 amounted to Euro 466 million.

Sony Ericsson estimates that its share of the global Android-based smartphone market during the quarter was approximately 12% in volume and 11% in value.

Sony Ericsson maintains its forecast for modest industry growth in total units in the global handset market for 2011.

The liquid identity is a registered trademark of Sony Ericsson Mobile Communications AB. Xperia™ is a trademark of Sony Ericsson Mobile Communications AB. Sony is a registered trademark of Sony Corporation. Ericsson is a registered trademark of Telefonaktiebolaget LM Ericsson. Any rights not expressly granted herein are reserved and subject to change without prior notice.

]]> http://www.bgr.com/2011/10/14/sony-ericsson-sales-net-income-slide-in-q3-smartphones-primary-focus-in-2012/feed/ 5 http://www-bgr-com.vimg.net/wp-content/uploads/2011/09/Sony-Ericsson-Xperia-Play1110213182832-420x405110908200249-128x128.jpg Google reports huge Q3; revenue up 33%, profit up 26% http://www.bgr.com/2011/10/13/google-reports-huge-q3-revenue-up-33-profit-up-26/ http://www.bgr.com/2011/10/13/google-reports-huge-q3-revenue-up-33-profit-up-26/#comments Thu, 13 Oct 2011 21:20:54 +0000 Todd Haselton http://www.bgr.com/?p=108077

Google announced its third quarter 2011 results on Friday, which surpassed analyst expectations. “We had a great quarter,” Google CEO Larry Page said. “Revenue was up 33% year on year and our quarterly revenue was just short of $10 billion,” Page explained, noting that the company’s brand new Google+ social network now has more than 40 million users. To clarify Page’s statement, the company’s revenue was $9.72 billion, up from the $7.29 billion reported during the third quarter of 2010. Operating income was $3.06 billion, up from the $2.55 billion in operating revenue reported during the same period last year. Net income for the quarter was $2.73 billion, up from the $2.17 billion in the third quarter of 2010. Google’s Cost-Per-Click, which includes advertisements on Google’s sites and from its AdSense partners, increased 5% year-over-year and declined 5% consecutively. The Internet giant also said it now has $42.6 billion in cash. Google did not discuss figures related to its Android operating system. Read on for the full press release.

Google Announces Third Quarter 2011 Financial Results

MOUNTAIN VIEW, Calif. – October 13, 2011 – Google Inc. (NASDAQ: GOOG) today announced financial results for the quarter ended September 30, 2011.

“We had a great quarter,” said Larry Page, CEO of Google.  “Revenue was up 33% year on year and our quarterly revenue was just short of $10 billion. Google+ is now open to everyone and we just passed the 40 million user mark. People are flocking into Google+ at an incredible rate and we are just getting started!”

Q3 Financial Summary

Google reported revenues of $9.72 billion for the quarter ended September 30, 2011, an increase of 33% compared to the third quarter of 2010. Google reports its revenues, consistent with GAAP, on a gross basis without deducting traffic acquisition costs (TAC). In the third quarter of 2011, TAC totaled $2.21 billion, or 24% of advertising revenues.

Google reports operating income, operating margin, net income, and earnings per share (EPS) on a GAAP and non-GAAP basis. The non-GAAP measures, as well as free cash flow, an alternative non-GAAP measure of liquidity, are described below and are reconciled to the corresponding GAAP measures at the end of this release.

  • GAAP operating income in the third quarter of 2011 was $3.06 billion, or 31% of revenues. This compares to GAAP operating income of $2.55 billion, or 35% of revenues, in the third quarter of 2010. Non-GAAP operating income in the third quarter of 2011 was $3.63 billion, or 37% of revenues. This compares to non-GAAP operating income of $2.93 billion, or 40% of revenues, in the third quarter of 2010.
  • GAAP net income in the third quarter of 2011 was $2.73 billion, compared to $2.17 billion in the third quarter of 2010. Non-GAAP net income in the third quarter of 2011 was $3.18 billion, compared to $2.46 billion in the third quarter of 2010.
  • GAAP EPS in the third quarter of 2011 was $8.33 on 327 million diluted shares outstanding, compared to $6.72 in the third quarter of 2010 on 322 million diluted shares outstanding. Non-GAAP EPS in the third quarter of 2011 was $9.72, compared to $7.64 in the third quarter of 2010.
  • Non-GAAP operating income and non-GAAP operating margin exclude the expenses related to stock-based compensation (SBC). Non-GAAP net income and non-GAAP EPS exclude the expenses related to SBC and the related tax benefits. In the third quarter of 2011, the charge related to SBC was $571 million, compared to $380 million in the third quarter of 2010. The tax benefit related to SBC was $116 million in the third quarter of 2011 and $85 million in the third quarter of 2010. Reconciliations of non-GAAP measures to GAAP operating income, operating margin, net income, and EPS are included at the end of this release.

Q3 Financial Highlights

Revenues – Google reported revenues of $9.72 billion in the third quarter of 2011, representing a 33% increase over third quarter 2010 revenues of $7.29 billion. Google reports its revenues, consistent with GAAP, on a gross basis without deducting TAC.

Google Sites Revenues – Google-owned sites generated revenues of $6.74 billion, or 69% of total revenues, in the third quarter of 2011. This represents a 39% increase over third quarter 2010 revenues of $4.83 billion.

Google Network Revenues – Google’s partner sites generated revenues, through AdSense programs, of $2.60 billion, or 27% of total revenues, in the third quarter of 2011. This represents a 18% increase from third quarter 2010 network revenues of $2.20 billion.

International Revenues – Revenues from outside of the United States totaled $5.3 billion, representing 55% of total revenues in the third quarter of 2011, compared to 54% in the second quarter of 2011 and 52% in the third quarter of 2010. Excluding gains related to our foreign exchange risk management program, had foreign exchange rates remained constant from the second quarter of 2011 through the third quarter of 2011, our revenues in the third quarter of 2011 would have been $53 million lower. Excluding gains related to our foreign exchange risk management program, had foreign exchange rates remained constant from the third quarter of 2010 through the third quarter of 2011, our revenues in the third quarter of 2011 would have been $483 million lower.

  • Revenues from the United Kingdom totaled $1.05 billion, representing 11% of revenues in the third quarter of 2011, compared to 12% in the third quarter of 2010.
  • In the third quarter of 2011, we recognized a benefit of $1 million to revenues through our foreign exchange risk management program, compared to $89 million in the third quarter of 2010.

A reconciliation of our non-GAAP international revenues excluding the impact of foreign exchange and hedging to GAAP international revenues is included at the end of this release.

Paid Clicks – Aggregate paid clicks, which include clicks related to ads served on Google sites and the sites of our AdSense partners, increased approximately 28% over the third quarter of 2010 and increased approximately 13% over the second quarter of 2011.

Cost-Per-Click – Average cost-per-click, which includes clicks related to ads served on Google sites and the sites of our AdSense partners, increased approximately 5% over the third quarter of 2010 and decreased approximately 5% over the second quarter of 2011.

TAC – Traffic acquisition costs, the portion of revenues shared with Google’s partners, increased to $2.21 billion in the third quarter of 2011, compared to TAC of $1.81 billion in the third quarter of 2010. TAC as a percentage of advertising revenues was 24% in the third quarter of 2011, compared to 26% in the third quarter of 2010.

The majority of TAC is related to amounts ultimately paid to our AdSense partners, which totaled $1.83 billion in the third quarter of 2011. TAC also includes amounts ultimately paid to certain distribution partners and others who direct traffic to our website, which totaled $383 million in the third quarter of 2011.

Other Cost of Revenues – Other cost of revenues, which is comprised primarily of data center operational expenses, amortization of intangible assets, content acquisition costs as well as credit card processing charges, increased to $1.17 billion, or 12% of revenues, in the third quarter of 2011, compared to $747 million, or 10% of revenues, in the third quarter of 2010.

Operating Expenses – Operating expenses, other than cost of revenues, were $3.28 billion in the third quarter of 2011, or 34% of revenues, compared to $2.19 billion in the third quarter of 2010, or 30% of revenues.

Stock-Based Compensation (SBC) – In the third quarter of 2011, the total charge related to SBC was $571 million, compared to $380 million in the third quarter of 2010.

We currently estimate SBC charges for grants to employees prior to October 1, 2011 to be approximately $2.0 billion for 2011. This estimate does not include expenses to be recognized related to employee stock awards that are granted after September 30, 2011 or non-employee stock awards that have been or may be granted.

Operating Income – GAAP operating income in the third quarter of 2011 was $3.06 billion, or 31% of revenues. This compares to GAAP operating income of $2.55 billion, or 35% of revenues, in the third quarter of 2010. Non-GAAP operating income in the third quarter of 2011 was $3.63 billion, or 37% of revenues. This compares to non-GAAP operating income of $2.93 billion, or 40% of revenues, in the third quarter of 2010.

Interest and Other Income, Net – Interest and other income, net increased to $302 million in the third quarter of 2011, compared to $167 million in the third quarter of 2010.

Income Taxes – Our effective tax rate was 19% for the third quarter of 2011.

Net Income – GAAP net income in the third quarter of 2011 was $2.73 billion, compared to $2.17 billion in the third quarter of 2010. Non-GAAP net income was $3.18 billion in the third quarter of 2011, compared to $2.46 billion in the third quarter of 2010. GAAP EPS in the third quarter of 2011 was $8.33 on 327 million diluted shares outstanding, compared to $6.72 in the third quarter of 2010 on 322 million diluted shares outstanding. Non-GAAP EPS in the third quarter of 2011 was $9.72, compared to $7.64 in the third quarter of 2010.

Cash Flow and Capital Expenditures – Net cash provided by operating activities in the third quarter of 2011 totaled $3.95 billion, compared to $2.89 billion in the third quarter of 2010. In the third quarter of 2011, capital expenditures were $680 million, the majority of which was related to IT infrastructure investments, including data centers, servers, and networking equipment. Free cash flow, an alternative non-GAAP measure of liquidity, is defined as net cash provided by operating activities less capital expenditures. In the third quarter of 2011, free cash flow was $3.27 billion.

We expect to continue to make significant capital expenditures.

A reconciliation of free cash flow to net cash provided by operating activities, the GAAP measure of liquidity, is included at the end of this release.

Cash – As of September 30, 2011, cash, cash equivalents, and short-term marketable securities were $42.6 billion.

Headcount – On a worldwide basis, Google employed 31,353 full-time employees as of September 30, 2011, up from 28,768 full-time employees as of June 30, 2011.

WEBCAST AND CONFERENCE CALL INFORMATION

A live audio webcast of Google’s third quarter 2011 earnings release call will be available at http://investor.google.com/webcast.html. The call begins today at 1:30 PM (PT) / 4:30 PM (ET). This press release, the financial tables, as well as other supplemental information including the reconciliations of certain non-GAAP measures to their nearest comparable GAAP measures, are also available on that site.

FORWARD-LOOKING STATEMENTS

This press release contains forward-looking statements that involve risks and uncertainties. These statements include statements regarding our continued investments in our core areas of strategic focus, our expected SBC charges, and our plans to make significant capital expenditures. Actual results may differ materially from the results predicted, and reported results should not be considered as an indication of future performance. The potential risks and uncertainties that could cause actual results to differ from the results predicted include, among others, unforeseen changes in our hiring patterns and our need to expend capital to accommodate the growth of the business, as well as those risks and uncertainties included under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2010, which is on file with the SEC and is available on our investor relations website at investor.google.com and on the SEC website at www.sec.gov. Additional information will also be set forth in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2011. All information provided in this release and in the attachments is as of October 13, 2011, and we undertake no duty to update this information unless required by law.

ABOUT NON-GAAP FINANCIAL MEASURES

To supplement our consolidated financial statements, which statements are prepared and presented in accordance with GAAP, we use the following non-GAAP financial measures: non-GAAP operating income, non-GAAP operating margin, non-GAAP net income, non-GAAP EPS, free cash flow, and non-GAAP international revenues. The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. For more information on these non-GAAP financial measures, please see the tables captioned “Reconciliations of non-GAAP results of operations measures to the nearest comparable GAAP measures,” “Reconciliation from net cash provided by operating activities to free cash flow,” and “Reconciliation from GAAP international revenues to non-GAAP international revenues” included at the end of this release.

We use these non-GAAP financial measures for financial and operational decision-making and as a means to evaluate period-to-period comparisons. Our management believes that these non-GAAP financial measures provide meaningful supplemental information regarding our performance and liquidity by excluding certain expenses and expenditures that may not be indicative of our “recurring core business operating results,” meaning our operating performance excluding not only non-cash charges, such as SBC, but also discrete cash charges that are infrequent in nature. We believe that both management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning, forecasting, and analyzing future periods. These non-GAAP financial measures also facilitate management’s internal comparisons to our historical performance and liquidity as well as comparisons to our competitors’ operating results. We believe these non-GAAP financial measures are useful to investors both because (1) they allow for greater transparency with respect to key metrics used by management in its financial and operational decision-making and (2) they are used by our institutional investors and the analyst community to help them analyze the health of our business.

Non-GAAP operating income and operating margin. We define non-GAAP operating income as operating income plus expenses related to SBC, and, as applicable, one-time events. Non-GAAP operating margin is defined as non-GAAP operating income divided by revenues. Google considers these non-GAAP financial measures to be useful metrics for management and investors because they exclude the effect of SBC and as applicable, one-time events so that Google’s management and investors can compare Google’s recurring core business operating results over multiple periods. Because of varying available valuation methodologies, subjective assumptions and the variety of award types that companies can use under FASB ASC Topic 718, Google’s management believes that providing a non-GAAP financial measure that excludes SBC allows investors to make meaningful comparisons between Google’s recurring core business operating results and those of other companies, as well as providing Google’s management with an important tool for financial and operational decision making and for evaluating Google’s own recurring core business operating results over different periods of time. There are a number of limitations related to the use of non-GAAP operating income versus operating income calculated in accordance with GAAP. First, non-GAAP operating income excludes some costs, namely, SBC, that are recurring. SBC has been and will continue to be for the foreseeable future a significant recurring expense in Google’s business. Second, SBC is an important part of our employees’ compensation and impacts their performance. Third, the components of the costs that we exclude in our calculation of non-GAAP operating income may differ from the components that our peer companies exclude when they report their results of operations. Management compensates for these limitations by providing specific information regarding the GAAP amounts excluded from non-GAAP operating income and evaluating non-GAAP operating income together with operating income calculated in accordance with GAAP.

Non-GAAP net income and EPS. We define non-GAAP net income as net income plus expenses related to SBC, and, as applicable, one-time events less the related tax effects. We define non-GAAP EPS as non-GAAP net income divided by the weighted average outstanding shares, on a fully-diluted basis. We consider these non-GAAP financial measures to be a useful metric for management and investors for the same reasons that Google uses non-GAAP operating income and non-GAAP operating margin. However, in order to provide a complete picture of our recurring core business operating results, we exclude from non-GAAP net income and non-GAAP EPS the tax effects associated with SBC. Without excluding these tax effects, investors would only see the gross effect that excluding these expenses had on our operating results. The same limitations described above regarding Google’s use of non-GAAP operating income and non-GAAP operating margin apply to our use of non-GAAP net income and non-GAAP EPS. Management compensates for these limitations by providing specific information regarding the GAAP amounts excluded from non-GAAP net income and non-GAAP EPS and evaluating non-GAAP net income and non-GAAP EPS together with net income and EPS calculated in accordance with GAAP.

Free cash flow. We define free cash flow as net cash provided by operating activities less capital expenditures. We consider free cash flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated by the business that, after the acquisition of property and equipment, including information technology infrastructure and land and buildings, can be used for strategic opportunities, including investing in our business, making strategic acquisitions, and strengthening the balance sheet. Analysis of free cash flow also facilitates management’s comparisons of our operating results to competitors’ operating results. A limitation of using free cash flow versus the GAAP measure of net cash provided by operating activities as a means for evaluating Google is that free cash flow does not represent the total increase or decrease in the cash balance from operations for the period because it excludes cash used for capital expenditures during the period. Our management compensates for this limitation by providing information about our capital expenditures on the face of the statement of cash flows and under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Quarterly Report on Form 10-Q and Annual Report on Form 10-K. Google has computed free cash flow using the same consistent method from quarter to quarter and year to year.

Non-GAAP international revenues. We define non-GAAP international revenues as international revenues excluding the impact of foreign exchange and hedging. Non-GAAP international revenues are calculated by translating current quarter revenues using prior quarter and prior year exchange rates, as well as excluding any hedging gains realized in the current quarter. We consider non-GAAP international revenues as a useful metric as it facilitates management’s internal comparison to our historical performance.

The accompanying tables have more details on the GAAP financial measures that are most directly comparable to non-GAAP financial measures and the related reconciliations between these financial measures.

]]> http://www.bgr.com/2011/10/13/google-reports-huge-q3-revenue-up-33-profit-up-26/feed/ 18 http://www-bgr-com.vimg.net/wp-content/uploads/2011/08/google-sign110815114530-128x128.jpg Gartner: Global PC shipments jump just 3% in Q3 2011 http://www.bgr.com/2011/10/12/gartner-global-pc-shipments-jump-just-3-in-q3-2011/ http://www.bgr.com/2011/10/12/gartner-global-pc-shipments-jump-just-3-in-q3-2011/#comments Thu, 13 Oct 2011 01:15:54 +0000 Todd Haselton http://www.bgr.com/?p=107903

Global shipments of PCs grew slightly but less than analysts had predicted during the third quarter of 2011, Gartner said recently, citing preliminary findings of a new research report. 91.8 million PCs were shipped during the quarter, a 3.2% jumped from the same quarter of last year. The figures are lower than Gartner’s original estimate, which suggested PC vendors would ship 5.1% more units during the quarter. Gartner said the lower sales can be attributed to a weak Western European PC market. Read on for more.

HP maintains the largest PC market share with a 17.7 grip on the industry, a 5.3% increase from the same period last year, and the company shipped 16.2 million units during the quarter. Lenovo had the largest increase in market share and jumped 25.2% to a 13.5% share. Dell (11.6%), Acer (10.6%), and ASUS (6.2%) followed in the market share rankings.

“The inventory buildup, which slowed growth the last four quarters, mostly cleared out during the third quarter of this year; however, the PC industry has been performing below normal seasonality,” Gartner principal analyst Mikako Kitagawa said. “As expected, back-to-school PC sales were disappointing in mature markets, confirming that the consumer PC market continues to be weak. The popularity of non-PC devices, including media tablets, such as the iPad and smartphones, took consumers’ spending away from PCs.”

In the U.S., HP was the top PC vendor in the third quarter with 28.9% of the market followed by Dell with 21.9%, Apple with 12.9%, Toshiba with 8.4% and Acer with 7.8% of the market. Gartner’s full press release follows below.

Gartner Says Worldwide PC Shipments Grew 3.2 Percent in Third Quarter of 2011

For the First Time, Lenovo Moved Into the No. 2 Position and Asus Became the No. 5 Vendor

STAMFORD, Conn., October 12, 2011—

Worldwide PC shipments totaled 91.8 million units in the third quarter of 2011, a 3.2 percent increase from the third quarter of 2010, according to preliminary results by Gartner, Inc. These results are slightly lower than Gartner’s earlier projection of 5.1 percent growth for the quarter. The EMEA region contributed to lower-than-expected growth led by a weak Western European market.

“The inventory buildup, which slowed growth the last four quarters, mostly cleared out during the third quarter of this year; however, the PC industry has been performing below normal seasonality,” said Mikako Kitagawa, principal analyst at Gartner. “As expected, back-to-school PC sales were disappointing in mature markets, confirming that the consumer PC market continues to be weak. The popularity of non-PC devices, including media tablets, such as the iPad and smartphones, took consumers’ spending away from PCs.

“As the PC market faced a slowdown, vendor consolidation has become a more apparent trend in the industry. Lenovo’s recent merger with NEC, and its acquisition of Medion, as well as HP’s announcement that it may spin off or sell its PC business, underlined this trend during the quarter.”

HP, the No. 1 vendor based on global PC shipments, grew faster than the industry average, and its market share reached 17.7 percent in the third quarter of 2011 (see Table 1). Despite announcing in the middle of 2Q11 the potential spinoff of its PC business, HP experienced strong growth in the U.S., while outside the U.S., growth was relatively weak or average.

Lenovo became the second-largest PC vendor in the worldwide market for the first time. The company’s expansion was boosted in part by the joint vendor with NEC in Japan. However, its aggressive marketing to both the professional and consumer PC markets accelerated its shipment volume.

Table1
Preliminary Worldwide PC Vendor Unit Shipment Estimates for 3Q11 (Units)

Company

3Q11 Shipments

3Q11 Market Share (%)

3Q10 Shipments

3Q10 Market Share (%)

3Q10-3Q11 Growth (%)
HP

16,231,528

17.7

15,419,654

17.3

5.3
Lenovo

12,352,194

13.5

9,867,917

11.1

25.2
Dell

10,676,360

11.6

10,829,115

12.2

-1.4
Acer Group

9,686,853

10.6

12,612,822

14.2

-23.2
Asus

5,693,146

6.2

4,802,481

5.4

18.5
Others

37,146,785

40.5

35,420,559

39.8

4.9
Total

91,786,865

100.0

88,952,547

100.0

3.2

Note: Data includes desk-based PCs, mobile PCs, including mini-notebooks but not media tablets such as the iPad. Final estimates will be subject to change.
Lenovo shipments include NEC shipments, but not Medion’s shipments.
Source: Gartner (October 2011)

Dell’s performance was below the industry average in most regions, as the company faced intensified competition in the professional space, where Dell has been traditionally strong. Acer mostly cleared its inventory buildup in the EMEA region by the third quarter of 2011. However, channels have been adopting a conservative position in regard to placing orders following the inventory issues. Asus widened the gap with Toshiba, the sixth-largest vendor. Asus achieved strong growth in China.

In the U.S., PC shipments totaled 17.8 million units in the third quarter of 2011, a 1.1 percent increase from the third quarter of 2010. The U.S. PC market experienced year-over-year growth for the first time in three quarters. While the consumer market continued to be weak with disappointing back-to-school sales in the third quarter, the inventory was kept mostly in check as industry expectations were relatively low.

“The main contributor to the weak consumer PC market in the U.S. was intensified competition for consumers’ money,” Ms. Kitagawa said. “Media tablets and smartphones took center stage in the U.S. retail sector, and the expectation is for continuing demand for these devices throughout the holiday season.”

HP showed strong growth in the U.S. PC market, as shipments increased 15.1 percent in the third quarter, and its market share totaled 28.9 percent (see Table 2). Despite the potential spinoff of its PC business, HP executives’ efforts to give the appearance of “business as usual” seemed to work in the quarter.

Dell struggled as shipments declined 7.2 percent in the third quarter of 2011. “Dell’s issue has been balancing profitability and market share gain, a difficult task in a PC industry where high volumes and low margins are the norm,” Ms. Kitagawa said.

Gartner’s early study shows that Apple experienced the strongest growth among the top five vendors in the U.S. PC market. Apple’s PC shipments increased 21.5 percent in the third quarter of 2011. The robust growth of the MacBook Air continued to lead Apple’s overall growth in the U.S. market.

Table 2
Preliminary United States PC Vendor Unit Shipment Estimates for 3Q11 (Units)

Company

3Q11 Shipments

3Q11 Market Share (%)

3Q10 Shipments

3Q10 Market Share (%)

3Q11-3Q10 Growth (%)
HP

5,132,614

28.9

4,459,120

25.4

15.1
Dell

3,886,864

21.9

4,188,687

23.8

-7.2
Apple

2,300,000

12.9

1,893,600

10.8

21.5
Toshiba

1,486,100

8.4

1,545,630

8.8

-3.9
Acer Group

1,378,768

7.8

1,848,511

10.5

-25.4
Others

3,580,989

20.2

3,635,684

20.7

-1.5
Total

17,765,335

100.0

17,571,232

100.0

1.1

Note: Data includes desk-based PCs, mobile PCs, including mini-notebooks but not media tablets such as the iPad. Final estimates will be subject to change.
Source: Gartner (October 2011)

PC growth in EMEA reached 26.6 million units in the third quarter of 2011, a 2.9 percent decline from the second quarter of 2010. It was the third consecutive quarter that the EMEA region has experienced negative growth. However, analysts said vendors may have seen the end of backed-up inventory issues, which have been pulling down growth. The consumer PC market in Western Europe remained weak, with consumer confidence permanently shaken by the economic issues spreading across most of the region. Furthermore, the market share of mini-notebooks continued to decline, especially in Western Europe, which also contributed to the weak year-over-year comparison.

In Asia/Pacific, PC shipments reached 31.8 million units in the third quarter of 2011, a 6 percent increase from the same period last year. Vendors continued to stimulate demand aggressively with promotions and prices, benefiting buyers looking for good prices. It also provided an opportunity for some consumers to buy their first mobile PC.

The PC market in Latin America grew 19.6 percent in the third quarter of 2011. Mobile PC shipments grew 31.1 percent year over year, and desk-based PC shipments increased 6.5 percent in the third quarter of 2011.

PC shipments in Japan grew 3 percent, with shipments reaching 3.9 million units. The consumer market received a boost in demand with the introduction by vendors of new consumer models in September. There was also a rebound in production for the professional market, after a drop in enterprise demand because of the higher prioritization for business continuity plans that coincided with the earthquake and tsunami in March.

These results are preliminary. Final statistics will be available soon to clients of Gartner’s PC Quarterly Statistics Worldwide by Region program. This program offers a comprehensive and timely picture of the worldwide PC market, allowing product planning, distribution, marketing and sales organizations to keep abreast of key issues and their future implications around the globe. Additional research can be found on the Computing Hardware section on Gartner’s website at http://www.gartner.com/it/products/research/asset_129157_2395.jsp.

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