EQUITY RESEARCH Technology | U.S. IT Hardware | 19 March 2012

Stock Rating 1-OVERWEIGHT APPLE, INC. Unchanged Still See Strong Growth – Upside from New Sector View 2-NEUTRAL Unchanged iPad & Promise with iPhone 5 Price Target USD 730.00 Unchanged We continue to believe Apple’s market cap can see further gains as it extracts more profits out of the traditional PC and mobile phone industries. Reiterate 1-Overweight. Price (19-Mar-2012) USD 601.10 Today’s announcement was in line with our expectations in terms of dividend amount Potential Upside/Downside +21% Tickers AAPL and share repurchases. Most importantly, Apple reiterated its confidence in future growth opportunities, including its product pipeline. Apple has many open-ended Market Cap (USD mn) 545968 growth opportunities in smartphones and tablets, as well as in its ability to expand Shares Outstanding (mn) 932.37 internationally. In short, we believe the announcement holds promise for all types of Free Float (%) 99.88 investors; growth, value and income – which will attract more shareholders. 52 Wk Avg Daily Volume (mn) 17.0 Dividend Yield (%) N/A Apple just announced that the company sold 3 million iPads since its launch on Friday, Return on Equity TTM (%) 45.58 and we believe sales of the new iPad are very strong out of the gate (meaningfully Current BVPS (USD) 96.60 stronger than the iPad 2). We raised our March quarter estimates earlier today and Source: FactSet Fundamentals anticipate a strong June quarter as well. While material costs are higher, we believe iPad margins could benefit from mix, as we believe higher capacity and 4G models are more Price Performance Exchange-Nasdaq 52 Week range USD 601.77-310.50 popular this time around. We highlight key suppliers in this report including picks within the iPad and iPhone supply chains from the entire Barclays Global Technology Research 600 Team. 500

Our price target for Apple is $730 based on a market multiple of 12.5x our new FY14 400

estimate of $58.40. 300

Apr- 11 Ju l - 1 1 Oct- 11 Jan- 12 AAPL: Quarterly and Annual EPS (USD) Link to Barclays Live for interactive charting 2011 2012 2013 Change y/y

FY Sep Actual Old New Cons Old New Cons 2012 2013 U.S. IT Hardware Q1 6.43A 13.87A 13.87A 13.87A 14.48E 14.48E 14.00E 116% 4% Ben A. Reitzes Q2 6.40A 9.67E 9.67E 9.59E 11.04E 11.04E 10.91E 51% 14% 1.212.526.9517 Q3 7.79A 9.62E 9.62E 9.60E 11.22E 11.22E 11.26E 23% 17% [email protected] BCI, New York Q4 7.05A 11.30E 11.30E 10.16E 14.22E 14.22E 12.13E 60% 26% Year 27.68A 44.45E 44.45E 43.13E 50.95E 50.95E 48.36E 61% 15% Jennifer Thorwart P/E 21.7 13.5 11.8 1.617.342.4181 [email protected] Source: Barclays Research. Consensus numbers are from Thomson Reuters BCI, New York

Matthew Markezin-Press 1.212.526.6180 [email protected] BCI, New York

Barclays Capital Inc. and/or one of its affiliates does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. PLEASE SEE ANALYST(S) CERTIFICATION(S) AND IMPORTANT DISCLOSURES BEGINNING ON PAGE 24. Barclays | Apple, Inc.

COMPANY SNAPSHOT

Apple Inc. IT Hardware

Income statement ($mn) 2011A 2012E 2013E 2014E CAGR Revenue 108,249 161,429 189,956 221,727 27.0% Stock Rating 1-OVERWEIGHT EBITDA 35,604 59,375 70,019 81,260 31.7% Sector View 2-NEUTRAL EBIT 33,790 55,669 63,917 72,992 29.3% Price (19-Mar-2012) $601.10 Pre-tax income 34,205 56,311 64,737 73,910 29.3% Price Target $730 Net income 25,922 42,093 48,553 55,802 29.1% Ticker AAPL Reported EPS ($) $27.68 $44.45 $50.95 $58.40 28.3% Diluted shares (m) 937 947 953 955 0.7% Investment case Dividend per share ($) - 2.65 10.62 12.18 NA We believe Apple's valuation is attractive & that shares can continue to benefit from strong iPad & Margin and return data (%) Average iPhone demand, Mac share gains, international EBITDA margin 32.9 36.8 36.9 36.6 35.8 expansion & new innovations. We believe Apple EBIT margin 31.2 34.5 33.6 32.9 33.1 deserves a higher multiple vs. the group given our view that it is the best growth story in IT hardware Pre-tax margin 31.6 34.9 34.1 33.3 33.5 over the long term. Net margin 23.9 26.1 25.6 25.2 25.2 ROIC 47.0 43.3 44.2 44.5 44.8 ROA 27.1 27.8 24.2 24.3 25.8 Upside case $815 ROE 41.7 44.7 43.6 50.3 45.1 Apple has solid prospects for high organic growth, with open-ended potential to gain share in phones, Balance sheet and cash flow ($mn) CAGR tablets & Macs. We view Apple’s upside scenario at Tangible fixed assets 63,395 117,667 164,284 229,391 53.5% $815 based on about 14x our FY14 EPS estimate of Intangible fixed assets 2,065 2,065 2,065 2,065 0.0% $58.40. Cash and equivalents 9,815 11,734 1,504 (11,385) NA Total assets 116,371 186,902 214,224 245,566 28.3% Short and long-term debt - - - - NA Downside case $525 Other long-term liabilities 23,572 35,152 41,364 48,283 27.0% We believe the biggest issues facing the stock Total liabilities 39,756 59,287 69,764 81,433 27.0% include the overall economy, aggressive competition Net debt/(funds) (81,570) (114,839) (162,847) (218,195) NA & very high expectations. We view Apple’s downside Shareholders' equity 76,615 111,558 111,132 110,722 13.1% scenario at $525 based on about 9x our FY14 EPS Change in working capital 5,757 5,066 6,449 7,094 7.2% estimate of $58.40 (9.5x is Apple’s 5-yr trough multiple). Operating cash flow 37,529 56,008 67,348 78,508 27.9% Capital expenditure (4,260) (8,000) (12,000) (15,600) NA Free cash flow 33,269 48,008 55,348 62,908 23.7% Upside/downside scenarios

$815 Valuation and leverage metrics Average 957 $730 (39.1%) 21.7 13.5 11.8 10.3 14.3 (24.6%) P/E (x) 757 $525 EV/EBITDA (x) 15.5 9.4 8.2 7.2 10.1 (-10.3%) 557 Upside FCF yield (%) 5.9 8.4 9.7 11.0 8.7 Price Case Price/sales (x) 5.2 3.5 3.0 2.6 3.6 357 Downside Target Case Price/BV (x) 7.3 5.1 5.2 5.2 5.7 157 Dividend yield (%) 0.0 0.4 1.8 2.0 1.1 24-Mar-11 16-Mar-12 Total debt/capital (%) 0.0 0.0 0.0 0.0 0.0 Source: FactSet Selected operating metrics (units in 000) CAGR Geographic Revenue Distribution FY11 Desktops 4,669 5,171 5,152 5,069 2.8% 10 Line item 1 Line item 2 Notebooks 12,066 14,805 18,264 21,955 22.1% APAC Total Macs 16,735 19,976 23,416 27,024 17.3% 8 21% 6 Americas iPods 42,620 33,029 24,697 18,737 -24.0% 35% iPhones 72,293 138,259 175,313 219,440 44.8% 4 Retail iPads 32,394 50,822 66,818 83,122 36.9% 2 EMEA 0 13% 26% 2011AJapan 2012E 2013E 2014E 5% Source: Company data, Barclays Research Note: FY end Sept.

19 March 2012 2 Barclays | Apple, Inc.

The Barclays Apple Monitor – 3/19/12

A quick guide to the Barclays Apple Monitor: The first section discusses the stories and/or our research over the last week that we think are most important for the stock. The second section tracks iPhone activity on Flickr.com to gauge the product’s ability to move up the consumer value chain and cannibalize point & shoot cameras. The third tells readers about weekly PC and Mac sales trends. The fourth shows ship times for major products on Apple.com, which, in our opinion, provides a "common sense" idea of which products are either most popular, capacity-constrained or both. The fifth shows top seller lists from various sources. Week-to-week changes in top seller lists can indicate something about product popularity, consumer buying patterns and competition. And the sixth section tells readers about Apple’s App store, which we believe is one of the biggest differentiators for the iPhone and iPad experience — creating “stickiness” and distinction.

1. Apple Initiates Dividend and Repurchase Program But Still Focused on Growth; iPad Margins Should be Just Fine Given Mix Apple Announces Plan to Use Some of its Cash Hoard

Apple today announced its plans to utilize some of its $100 billion and growing cash pile with a new dividend and share repurchase program. The company plans to initiate a quarterly dividend of $2.65/share sometime in its 4QFY12 (begins on July 1, 2012), which should consume over $10 billion in cash per year. The implied 1.8% dividend yield compares to 3% for Intel, 2.5% for Microsoft, 2% for HP, 1.6% for Cisco and 1.5% for IBM in terms of its major peer group. Apple indicated it would periodically discuss updating the dividend but no timeframe was set. The company first paid a dividend in June 1987 and stopped payments in December 1995. The Board of Directors has also authorized a $10 billion share repurchase program beginning in Apple’s FY13 (begins Sept 30, 2012), expected to be executed over three years primarily to neutralize the impact of dilution from future employee equity grants and employee stock purchase programs. Apple expects to spend $4 billion in its first fiscal year on the share repurchases. Combined, Apple expects these new programs to utilize about $45 billion of domestic cash in the first three years. We note that Apple had about $33 billion of domestic cash as of its December 2011 quarter- end.

While Apple will be initiating programs to return some cash to shareholders, the company also expects to continue its investments in increased R&D, acquisitions, new retail store openings, strategic prepayments of components, capital expenditures within the supply chain (tooling) and building out Apple’s infrastructure. Apple stated its cash plan involves 1. maintaining flexibility for business opportunities, 2. creating current income for long-term shareholders, 3. widening the investor base, and 4. limiting future dilution.

Today’s announcement was in line with our expectations in terms of dividend amount and share repurchases. Most importantly, Apple reiterated its confidence in future growth opportunities, including its product pipeline. Apple has many open-ended growth opportunities in smartphones and tablets, as well as in its ability to expand internationally. In short, we believe the announcement holds promise for all types of investors; growth, value and income – which should attract more shareholders.

More Growth Ahead: We believe that Apple’s growth trajectory is the most important thing for the stock in terms of holding onto growth investors. We continue to anticipate Apple to ship a new iPhone in C2H12, likely in late September. This iPhone should boast a new design, fast 4G LTE capabilities, a faster processor, a larger screen, a better camera, Siri

19 March 2012 3 Barclays | Apple, Inc.

and more features that could even include NFC capabilities. In short, this iPhone cycle should be ‘‘the big one’’ causing investors to envision an eventual quarter with 50 million plus iPhone units. In addition, we believe that Apple is looking to innovate further in its Mac line, given the MacBook Air is being imitated with Intel’s Ultrabook concept. Apple has a major advantage vs. Windows in terms of time to market and features given its experience with iOS and the iPad. While it isn’t clear that Apple will actually call any new devices a ‘‘Mac’’, we do believe it might make sense eventually for Apple to make devices with a keyboard that utilize ARM processors given multiple technological benefits (battery life, instant-on) and benefits that are specific to Apple (vertical integration). Finally, we continue to believe that an integrated, smart TV would represent a natural extension of Apple’s product line and could come in CY13. We believe a TV from Apple would be much more than a TV and run the iOS operating system (including iCloud and access to the App Store), with the ability to use iPad or iPhone as a remote control. The product could also incorporate Siri and include an iSight camera, a microphone and allow users to access content from Netflix, YouTube and Flickr. We are still not ready to proclaim that an Apple Television will be 100% ready in 2012, as we believe that the next generation of iPhones and iPads will remain the company’s focus for the near term.

Raised Estimates on Higher iPads, Lower Share Count and Interest Income: Apple just announced that the company sold 3 million iPads since its launch on Friday, and we believe sales of the new iPad are very strong out of the gate. Given the solid launch of the new iPad combined with today’s announcement, which should result in lower interest income and share count long-term, we raised our estimates for Apple. We now estimate fiscal 2Q EPS of $9.67 (was $9.48), based on 46% y/y revenue growth to $36 billion (was $35.3 billion) and gross margin of 42.6% (was 42.7%). For FY12, we now estimate EPS of $44.45 (was $43.98) based on 49% y/y revenue growth to $161.4 billion (was $160.2 billion) with gross margin of 43% (unchanged). For FY13 we now estimate EPS of $50.95 (was $50) based on 17.7% y/y revenue growth to $190 billion (was $188.8 billion). For FY14, we now estimate EPS of $58.40 (was $56.70) based on 16.7% y/y revenue growth to $221.7 billion (was $220.4 billion).

Apple just indicated it had a record weekend of sales for the new iPad, selling 3 million units as of today since Friday (3/16). As a result of strong demand, we raised our estimates for iPads in C1Q12 earlier today to 9.5 million (was 8.5 million), which could still prove conservative depending on product availability in the quarter. We now estimate iPad unit sales of 50.8 million iPads for FY12 (was 48.9 million) and iPad unit sales of 66.8 million in FY13 (was 63.5 million). Any new SKU or tablet platform (smaller screen) would be likely to provide upside to these forecasts, should Apple ever feel the need to attack that part of the tablet market.

Apple still has plenty of cash to invest in component pre-buys and capital expenditures. These investments can often be funded with overseas cash. We believe outlays for both of these items will increase significantly as Apple needs to secure supply for NAND, screens, casings and other custom parts. In fact, some component pre-buys may exceed tens of billions in the not so distant future. Ongoing free cash flow supports the new shareholder return initiatives and these other uses of cash. For FY12 we estimate Apple will generate free cash flow of over $50/share, growing to $58/share in free cash flow in FY13. As of last quarter, Apple held about $104/share in net cash including about 2/3 of that cash from overseas.

19 March 2012 4 Barclays | Apple, Inc.

Figure 1: New Barclays iPad Unit Model

Estimates (units in thousands) 2010 Dec-10 Mar-11 Jun-11 Sep-11 2011 Dec-11 Mar-12 Jun-12 Sep-12 2012E 2013E 2014E iPad 7,458 7,331 4,694 9,246 11,123 32,394 15,434 9,500 11,875 14,013 50,822 66,818 83,122 Y/Y Growth 183% 166% 334% 111% 102% 28% 26% 57% 31% 24% Q/Q Growth 75% -36% 97% 20% 39% -38% 25% 18% Source: Company Reports, Barclays Equity Research

Figure 2: Previous Barclays iPad Unit Model

Estimates (units in thousands) 2010 Dec-10 Mar-11 Jun-11 Sep-11 2011 Dec-11 Mar-12 Jun-12 Sep-12 2012E 2013E 2014E iPad 7,458 7,331 4,694 9,246 11,123 32,394 15,434 8,489 11,460 13,522 48,905 63,505 79,000 Y/Y Growth 183% 166% 334% 111% 81% 24% 22% 51% 30% 24% Q/Q Growth 97% 20% 39% -45% 35% 18% Source: Company Reports, Barclays Equity Research

Valuation – 12-month Price Target $730: Our price target for Apple is $730 based on a market multiple of 12.5x our new FY14 estimate of $58.40. Given Apple's unprecedented growth, we believe that this type of valuation is very conservative - but somewhat realistic given the difficulty to "move the needle" with a company this large - in terms of attracting incremental investor funds to move it materially higher. We believe focusing on FY14 is appropriate given investors are likely to be valuing Apple on prospects for that year 12 months from now. We also note that our target multiple of 12.5x FY14 estimates is merely in line with the FY2 P-E’s for dividend paying stocks in the S&P 500 with yields of 1.7%- 2.0%. If Apple were to be able to grow its dividend faster than the market, then our target P- E multiple could be conservative. Given its attractive valuation and unprecedented growth, Apple remains our top pick in the IT Hardware sector.

Apple Valuation Compelling vs. Companies with Comparable Dividend Yields in S&P 500…

19 March 2012 5 Barclays | Apple, Inc.

Figure 3: Table of Select Companies, their Dividend Yields and P/E Ratios

DIVIDEND YIELD P/E FY1 P/E FY 2 Ticker Company Current Current 5-Year Average Current 5-Year Average KR Kroger 1.89 10.53x 16.13x 9.78x 14.62x MUR Murphy Oil 1.87 9.74x 15.73x 8.36x 11.37x IVZ INVESCO 1.87 13.89x 15.32x 11.82x 13.34x TYC Tyco International 1.86 14.79x 15.50x 12.95x 13.92x LOW Lowe's 1.84 16.58x 15.13x 13.74x 13.12x HIG Hartford Financial Services Group 1.83 6.53x 9.78x 5.92x 9.19x AIZ Assurant 1.81 7.16x 10.76x 6.51x 9.76x PGR Progressive 1.80 14.46x 11.31x 13.34x 12.02x DNB Dun & Bradstreet 1.77 12.69x 19.42x 11.38x 16.90x EQT EQT 1.75 21.79x 20.25x 15.87x 17.52x TSS Total System Services 1.75 17.91x 25.01x 16.20x 22.20x BF.B Brown-Forman 1.74 22.30x 20.74x 20.24x 18.78x MSI Motorola Solutions 1.74 16.88x 17.29x 14.62x 14.11x NWL Newell Rubbermaid 1.73 11.03x 17.29x 10.08x 15.55x PDCO Patterson Cos. 1.73 16.93x 21.73x 15.16x 18.87x PH Parker Hannifin 1.73 12.73x 12.34x 11.58x 11.68x UNM Unum Group 1.72 7.75x 11.93x 7.02x 10.39x WLP WellPoint 1.71 8.70x 14.21x 7.91x 12.33x TIF Tiffany & Co. 1.71 18.69x 20.34x 17.32x 17.96x YUM Yum! Brands 1.67 20.91x 17.88x 18.27x 16.04x ATI Allegheny Technologies 1.66 16.03x 13.69x 10.68x 12.54x EFX Equifax 1.64 16.39x 16.77x 14.05x 15.23x COL Rockwell Collins 1.63 13.12x 20.37x 11.68x 18.30x CAT Caterpillar 1.62 11.94x 11.57x 10.03x 10.30x CSCO Cisco Systems 1.60 10.92x 19.62x 10.11x 16.72x AVERAGE 14.02x 16.40x 12.19x 14.51x

AAPL Apple 1.76 13.58x 27.66x 12.11x 23.38x

Data as of 3/19/12 Source: Barclays Research, FactSet

Despite Higher Costs for the Screen and Camera, We Believe iPad Margins are Fine

Last Friday (3/16) IHS iSuppli released the results of its preliminary teardown of the iPad. According to IHS iSuppli’s research a 32GB, 4G/LTE capable version of the new iPad costs $375.10 for components and manufacturing, 9% more than the iPad 2 with 32GB of memory and 3G wireless capability. IHS iSuppli believes that the Bill of Materials (BOM) for all new iPad models is generally higher than the iPad 2 even though the new iPad retains the same original retail pricing as the iPad 2. While the cost of components has gone up, we do not believe that Apple’s margins will be adversely affected. In fact, we believe that the high definition Retina display will drive increased consumption of HD video and pictures, which could help product mix as consumers may need higher capacity iPads to enjoy the content. For example, a 32GB iPad costs $100 more at retail than a 16GB version yet only costs about $17 more to produce according to IHS iSuppli. Furthermore, given the significantly faster speeds for 4G connectivity compared with 3G models, and the new mobile hotspot capability, we believe that 4G/LTE capable iPads will become a higher percentage of total iPad mix. Therefore, while the BOM of the new iPad may have increased, we believe that a shift to higher priced SKUs could more than offset the increased production cost.

19 March 2012 6 Barclays | Apple, Inc.

Many Other Potential Winners in the Food Chain from iPad and iPhone

Last Thursday (3/15) the first teardown of the new iPad became available. A 4G/LTE capable version running on AT&T’s network was disassembled and according to U.S. Semiconductors Analyst Blayne Curtis, Avago and Skyworks were the big winners. Avago likely has 3-4 sockets of content in the current generation of iPad compared to almost no content in the iPad 2. Skyworks had slightly less content than in the iPad 2, however this was above expectations. While the new iPad adds 4G/LTE technology to the iPad platform the internal components were broadly in line with expectations. In addition, TriQuint, QUALCOMM, Broadcom and Texas Instruments all have content inside the new iPad.

We wanted to highlight how the potential success of the new iPad and the anticipated release of the iPhone 5 later this year can bring upside to many companies in the Apple food chain. The following chart highlights stocks that stand to become beneficiaries of the success of the iPad and the iPhone 5. Below we highlight companies covered by our colleagues across the globe that reportedly have exposure to Apple products.

Figure 4: New iPad Beneficiaries - According to Barclays Technology Research

Ticker Name Relationship Rating Analyst

2354.TW Foxconn Technology Casings 2-EW/2-NEU Allen Chang 6121.TW Simplo Battery packs 1-OW/2-NEU Allen Chang DLGS.DE Dialog Semiconductor Power management IC 1-OW/2-NEU Andrew Gardiner AVGO Avago Power amplifier 1-OW/1-POS Blayne Curtis SWKS Skyworks Power amplifier 1-OW/1-POS Blayne Curtis BRCM Broadcom Connectivity 1-OW/1-POS CJ Muse MX MagnaChip Audio Codec/AMP manufacturer 1-OW/1-POS CJ Muse TER Teradyne Tests QCOM and BRCM chips and final unit test 1-OW/2-NEU CJ Muse 3008.TW Largan Camera lens 1-OW/1-POS Dale Gai 3673.TW TPK Touch panel maker 1-OW/1-POS Jamie Yeh 6176.TW Radiant Backlight maker 2-EW/1-POS Jamie Yeh QCOM QUALCOMM Baseband/LTE 1-OW/2-NEU Jeff Kvaal/CJ Muse 2018.HK AAC Technologies Acoustic components for iDevices 1-OW/1-POS Jones Ku 2317.TW Hon Hai Contract manufacturer 1-OW/2-NEU Kirk Yang 4062.T Ibiden PCBs, FC-CSP for A5X 1-OW/1-POS Masaru Koshita 6762.T TDK MLCCs, inductors, batteries 1-OW/1-POS Masaru Koshita 6981.OS Murata MLCCs, inductors, antenna connectors, other components 2-EW/1-POS Masaru Koshita 000660.KS Hynix DRAM and NAND 1-OW/3-NEG SC Bae 005930.KS Samsung Electronics A5X Processor, CIS, flash memory, DRAM, display 1-OW/3-NEG SC Bae 006400.KS Samsung SDI Polymer battery vendor 1-OW/2-NEU SC Bae 034220.KS LG Display Display vendor 1-OW/1-POS SC Bae IMG.L Imagination Graphics IP 1-OW/2-NEU Youssef Essaegh

Source: Company Reports, Barclays Equity Research.

19 March 2012 7 Barclays | Apple, Inc.

Figure 5: Potential iPhone 5 Beneficiaries - According to Barclays Technology Research

Ticker Name Relationship Rating Analyst

6121.TW Simplo Battery packs 1-OW/2-NEU Allen Chang 2354.TW Foxconn Technology Casings 2-EW/2-NEU Allen Chang DLGS.DE Dialog Semiconductor Power management IC 1-OW/2-NEU Andrew Gardiner SWKS Skyworks Power amplifier 1-OW/1-POS Blayne Curtis MX MagnaChip Audio Codec/AMP Manufacturer 1-OW/1-POS CJ Muse TER Teradyne Tests QCOM and BRCM chips and final unit test 1-OW/1-POS CJ Muse BRCM Broadcom Connectivity 1-OW/1-POS CJ Muse 3008.TW Largan Camera lens 1-OW/1-POS Dale Gai QCOM QUALCOMM Baseband/LTE 1-OW/2-NEU Jeff Kvaal/CJ Muse 2018.HK AAC Technologies Acoustic components for iDevices 1-OW/1-POS Jones Ku 2317.TW Hon Hai Contract manufacturer 1-OW/2-NEU Kirk Yang 4062.T Ibiden PCBs, FC-CSP 1-OW/1-POS Masaru Koshita 6981.OS Murata MLCCs, inductors and other components 2-EW/1-POS Masaru Koshita 6762.T TDK MLCCs, inductors, batteries 1-OW/1-POS Masaru Koshita 005930.KS Samsung Electronics A5 Processor, flash memory, DRAM, display 1-OW/3-NEG SC Bae 034220.KS LG Display Display vendor 1-OW/1-POS SC Bae 006400.KS Samsung SDI Polymer battery vendor 1-OW/2-NEU SC Bae 000660.KS Hynix DRAM and NAND 1-OW/3-NEG SC Bae IMG.L Imagination Graphics IP 1-OW/2-NEU Youssef Essaegh

Source: Company Reports, Barclays Equity Research.

For more information, please see the following reports:

„ Asia ex-Japan IT Hardware: The new iPad is here - positive to Hon Hai and Apple's supply chain in Asia (Published 3/8/12 by Kirk Yang)

„ Japan Electronic Components (1-Positive): New iPad's specs in line with market expectations; no particular implications for component makers (Published 3/8/12 by Masaru Koshita)

„ U.S. Semiconductors: iPad Teardown: First Take Positive for AVGO and SWKS (Published 3/16/12 by Blayne Curtis)

„ A full list of all Barclays Capital Equity Research publications is available on Barclays Capital Live. Please refer to the reports linked above for SETTLEMENT DISCLOSURES, ANALYST CERTIFICATIONS AND OTHER IMPORTANT DISCLOSURES

2. Flickr Stats – iPhones Are Becoming the Standard for Photo Sharing

We believe that the iPhone is actually becoming the digital camera of choice for consumers and enthusiasts in developed markets given its ease of use and ability to quickly get photos online. This usability helps warrant a premium for the product and creates stickiness with software that connects consumers with other Apple products. The iPhone 4 is very popular on Flickr, and the iPhone 4S is gaining more steam given its popularity and camera improvements.

19 March 2012 8 Barclays | Apple, Inc.

Flickr is a leading image hosting website and is used by many photography enthusiasts to host high quality photos. According to Yahoo!, Flickr’s owner, there are over 51 million registered users that upload about 4.5 million photos daily. Flickr is integrated into Apple’s iPhoto for easy uploading and there is a dedicated app available for the iPhone for easy sharing. This week the Apple iPhone 4 remained the most popular camera on Flickr.com with 4,681 average daily users as of 3/19/12, rising slightly compared to last week. The iPhone 4S’s popularity is rising on Flickr as well with 2,705 average daily users up from 2,572 last week. In fact, Apple has the 4 most popular camera phones on Flickr, including the iPhone 4, iPhone 3G, iPhone 4S and the iPhone 3GS (see table below).

Figure 6: Most Popular Cameras on Flickr.com (Avg. daily users) 2/13 2/21 2/27 3/5 3/12 3/19 1 Apple iPhone 4 4,629 4,607 4,603 4,592 4,650 4,681 3 Canon EOS 5D Mark II 4,032 4,045 4,067 4,081 4,144 4,176 2 Nikon D90 4,028 4,003 4,004 3,996 4,031 4,038 4 Canon EOS REBEL T2i 3,588 3,620 3,655 3,693 3,762 3,803 5 Canon EOS 7D 3,228 3,244 3,271 3,298 3,352 3,385

Source: www.flickr.com/cameras/

Figure 7: Most Popular Cameraphones on Flickr.com (Avg. daily users) 2/13 2/21 2/27 3/5 3/12 3/19 1 Apple iPhone 4 4,629 4,607 4,603 4,592 4,650 4,681 2 Apple iPhone 4S 2,152 2,271 2,349 2,451 2,572 2,705 3 Apple iPhone 3G 1,203 1,185 1,174 1,164 1,172 1,161 4 Apple iPhone 3GS 1,147 1,129 1,118 1,103 1,103 1,098 5 HTC EVO 4G 481 474 470 465 464 461

Source: www.flickr.com/cameras/

3. Weekly PC & Mac Trends – Mac Sales Decline Further in Week of iPad Announcement (3/7) According to NPD, for the week of March 4-March 10, Mac unit volumes were down 10.4% y/y vs. the -18.8% y/y reported last week and have been down at a weighted average of -7.4% y/y over the trailing four weeks. Despite the weekly decline, we believe Mac sales are still relatively strong even as questions on the PC sector remain, as Apple benefits from new stores in China and strong sales of the MacBook Air (monthly data was stronger – see page 7). That said, we do believe that sales may be weaker through March in the US given cannibalization from the new iPad and in advance of new Ivy Bridge based products that could help sales in the June quarter. Our estimate for 15.5% y/y Mac unit growth for C1Q factors in significant overseas momentum – especially in China where growth is much higher. China is Apple’s second largest geography by revenue.

With regard to the entire PC market for the week of 3/4/12 to 3/10/12, NPD indicates that total unit sales in the US decreased 7.6% y/y in units (-9.5% y/y in dollar sales) following a -10.0% y/y performance last week and weighted average growth of -11.9% over the trailing four weeks. Results seem to be showing the impact of ongoing HDD shortages, in addition to weak PC fundamentals in general. Notebook units were indicated -9.0% y/y (vs. -10.7% y/y last week and weighted average growth of -13.6% over the previous four weeks), while desktop units are indicated -2.8% y/y (vs. -7.8% y/y last week, and weighted average growth of -5.5% y/y over the previous four weeks).

19 March 2012 9 Barclays | Apple, Inc.

4. New iPads Still Shipping in 2-3 Weeks The next generation iPads are still showing wait times of 2-3 weeks on Apple’s online store. Furthermore, the discounted 16GB iPad 2’s are now listed as in stock after having ship times of 1-3 business days last week. The 1080p capable Apple TV that was announced on 3/7 is shipping in 3-5 business days following initial ship times of 1-2 weeks last week. We expect Apple TV to get more popular into CY-end as Apple sells more iOS devices and consumers discover the benefits of AirPlay and iCloud.

The iPhone 4S is still listed as “In Stock” as ship times for most Apple products remain unchanged. We still believe that demand for the iPhone 4S remains strong and expect a solid C1Q12 for iPhones given overseas demand. Apple had previously included estimated ship times for many of its products. However, as of Friday, September 9, 2011, the Apple online store only provides an “In Stock” designation for most products instead of the previous time-frame estimate. Ship times have remained stable as almost all of the items listed on the Apple online store are listed as “In Stock.” At this time the HDD shortage doesn’t seem to be impacting mainstream Mac shipments.

The Best Buy iPod and iPad availability table below is based on a 40+ store sample, including stores in MA, NY, CA, TX, PA, and WA. The table for Wal-Mart availability below is based on a 106-store sample (we only count stores that are selling each SKU in our analysis) including stores in MA, NY, CA, TX, PA, and WA. Wal-Mart does change the number of stores selling each SKU weekly, meaning the sample is good for trends but not for absolute availability percentages.

19 March 2012 10 Barclays | Apple, Inc.

Figure 8: Product Ship Times in Business Days from Apple.com

Dec 19 Jan 3 Jan 9 Jan 17 Jan 23 Jan 30 Feb 6 Feb 13 Feb 21 Feb 27 Mar 5 Mar 12 Mar 19

Shuffle 2GB Updated (Sept 10) In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock Nano 8GB Updated (Oct11) In Stock In Stock In Stock In StockIn StockIn StockIn Stock In Stock In Stock In Stock In Stock In Stock In Stock Nano 16GB Updated (Oct11) In Stock In Stock In Stock In StockIn StockIn StockIn Stock In Stock In Stock In Stock In Stock In Stock In Stock Classic 160GB (Sept 09) In Stock In Stock In Stock In StockIn StockIn StockIn Stock In Stock In Stock In Stock In Stock In Stock In Stock Touch 8GB - Black Updated (Oct 11) In Stock In Stock In StockIn StockIn StockIn StockIn Stock In Stock In Stock In Stock In Stock In Stock In Stock Touch 8GB - White (Oct 11) In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock Touch 32GB -Black Updated (Oct 11) In Stock In Stock In StockIn StockIn StockIn StockIn Stock In Stock In Stock In Stock In Stock In Stock In Stock Touch 32GB -White (Oct 11) In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock Touch 64GB -Black Updated (Oct 11) In Stock In Stock In StockIn StockIn StockIn StockIn Stock In Stock In Stock In Stock In Stock In Stock In Stock Touch 64GB -White (Oct 11) In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock Apple TV 1080p (Mar 12) 1-2 Wks 3-5 bd

iPad 2 Black Wi-Fi (Mar 11) In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock 1-3 bd In Stock iPad 2 White Wi-Fi (Mar 11) In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock 1-3 bd In Stock iPad 2 Black 3G Verizon (Mar 11) In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock 1-3 bd In Stock iPad 2 White 3G Verizon (Mar 11) In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock 1-3 bd In Stock iPad 2 Black 3G AT&T (Mar 11) In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock 1-3 bd In Stock iPad 2 White 3G AT&T (Mar 11) In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock 1-3 bd In Stock iPad Black Wi-Fi (Mar 12) 2-3 Wks2-3 Wks iPad White Wi-Fi (Mar 12) 2-3 Wks2-3 Wks iPad Black 4G Verizon (Mar 12) 2-3 Wks2-3 Wks iPad White 4G Verizon (Mar 12) 2-3 Wks2-3 Wks iPad Black 4G AT&T (Mar 12) 2-3 Wks2-3 Wks iPad White 4G AT&T (Mar 12) 2-3 Wks2-3 Wks

iPhone 3GS 8GB AT&T (June 2010) In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock iPhone 4 8GB - Black AT&T (Oct 2011) In Stock In Stock In StockIn StockIn StockIn StockIn Stock In Stock In Stock In Stock In Stock In Stock In Stock iPhone 4 8GB - White AT&T (Oct 2011) In Stock In Stock In StockIn StockIn StockIn StockIn Stock In Stock In Stock In Stock In Stock In Stock In Stock iPhone 4 8GB - Black Verizon (Oct 2011) In Stock In Stock In Stock In Stock In StockIn StockIn StockIn Stock In Stock In Stock In Stock In Stock In Stock iPhone 4 8GB - White Verizon (Oct 2011) In Stock In Stock In Stock In Stock In StockIn StockIn StockIn Stock In Stock In Stock In Stock In Stock In Stock iPhone 4 8GB - Black Sprint (Oct 2011) In Stock In Stock In StockIn StockIn StockIn StockIn Stock In Stock In Stock In Stock In Stock In Stock In Stock iPhone 4 8GB - White Sprint (Oct 2011) In Stock In Stock In StockIn StockIn StockIn StockIn Stock In Stock In Stock In Stock In Stock In Stock In Stock iPhone 4 8GB - Black Unlocked (Oct 2011) In Stock In Stock In Stock In Stock In StockIn StockIn StockIn Stock In Stock In Stock In Stock In Stock In Stock iPhone 4 8GB - White Unlocked (Oct 2011) In Stock In Stock In Stock In Stock In StockIn StockIn StockIn Stock In Stock In Stock In Stock In Stock In Stock iPhone 4S 16GB - Black AT&T (Oct 2011) 1-2 Wks 1-2 Wks 1-2 Wks 3-5 bd 3-5 bd In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock iPhone 4S 16GB - White AT&T (Oct 2011) 1-2 Wks 1-2 Wks 1-2 Wks 3-5 bd 3-5 bd In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock iPhone 4S 32GB - Black AT&T (Oct 2011) 1-2 Wks 1-2 Wks 1-2 Wks 3-5 bd 3-5 bd In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock iPhone 4S 32GB - White AT&T (Oct 2011) 1-2 Wks 1-2 Wks 1-2 Wks 3-5 bd 3-5 bd In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock iPhone 4S 64GB - Black AT&T (Oct 2011) 1-2 Wks 1-2 Wks 1-2 Wks 3-5 bd 3-5 bd In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock iPhone 4S 64GB - White AT&T (Oct 2011) 1-2 Wks 1-2 Wks 1-2 Wks 3-5 bd 3-5 bd In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock iPhone 4S 16GB - Black Verizon (Oct 2011) 1-2 Wks 1-2 Wks 1-2 Wks 3-5 bd 3-5 bd In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock iPhone 4S 16GB - White Verizon (Oct 2011) 1-2 Wks 1-2 Wks 1-2 Wks 3-5 bd 3-5 bd In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock iPhone 4S 32GB - Black Verizon (Oct 2011) 1-2 Wks 1-2 Wks 1-2 Wks 3-5 bd 3-5 bd In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock iPhone 4S 32GB - White Verizon (Oct 2011) 1-2 Wks 1-2 Wks 1-2 Wks 3-5 bd 3-5 bd In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock iPhone 4S 64GB - Black Verizon (Oct 2011) 1-2 Wks 1-2 Wks 1-2 Wks 3-5 bd 3-5 bd In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock iPhone 4S 64GB - White Verizon (Oct 2011) 1-2 Wks 1-2 Wks 1-2 Wks 3-5 bd 3-5 bd In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock iPhone 4S 16GB - Black Sprint (Oct 2011) 1-2 Wks 1-2 Wks 1-2 Wks 3-5 bd 3-5 bd In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock iPhone 4S 16GB - White Sprint (Oct 2011) 1-2 Wks 1-2 Wks 1-2 Wks 3-5 bd 3-5 bd In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock iPhone 4S 32GB - Black Sprint (Oct 2011) 1-2 Wks 1-2 Wks 1-2 Wks 3-5 bd 3-5 bd In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock iPhone 4S 32GB - White Sprint (Oct 2011) 1-2 Wks 1-2 Wks 1-2 Wks 3-5 bd 3-5 bd In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock iPhone 4S 64GB - Black Sprint (Oct 2011) 1-2 Wks 1-2 Wks 1-2 Wks 3-5 bd 3-5 bd In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock iPhone 4S 64GB - White Sprint (Oct 2011) 1-2 Wks 1-2 Wks 1-2 Wks 3-5 bd 3-5 bd In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock iPhone 4S 16GB - Black Unlocked (Nov 2011) 1-2 Wks 1-2 Wks 1-2 Wks 3-5 bd 3-5 bd In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock iPhone 4S 16GB - White Unlocked (Nov 2011) 1-2 Wks 1-2 Wks 1-2 Wks 3-5 bd 3-5 bd In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock iPhone 4S 32GB - Black Unlocked (Nov 2011) 1-2 Wks 1-2 Wks 1-2 Wks 3-5 bd 3-5 bd In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock iPhone 4S 32GB - White Unlocked (Nov 2011) 1-2 Wks 1-2 Wks 1-2 Wks 3-5 bd 3-5 bd In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock iPhone 4S 64GB - Black Unlocked (Nov 2011) 1-2 Wks 1-2 Wks 1-2 Wks 3-5 bd 3-5 bd In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock iPhone 4S 64GB - White Unlocked (Nov 2011) 1-2 Wks 1-2 Wks 1-2 Wks 3-5 bd 3-5 bd In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock

MacBook Air 11" 64GB (July 2011) In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock MacBook Air 11" 128GB (July 2011) In Stock In Stock In StockIn StockIn StockIn StockIn Stock In Stock In Stock In Stock In Stock In Stock In Stock MacBook Air 13" 128GB (July 2011) In Stock In Stock In StockIn StockIn StockIn StockIn Stock In Stock In Stock In Stock In Stock In Stock In Stock MacBook Air 13" 256GB (July 2011) In Stock In Stock In StockIn StockIn StockIn StockIn Stock In Stock In Stock In Stock In Stock In Stock In Stock

MacBook Pro 2.4Ghz 13" (Oct 2011) In Stock In Stock In StockIn StockIn StockIn StockIn Stock In Stock In Stock In Stock In Stock In Stock In Stock MacBook Pro 2.8Ghz 13" (Oct 2011) In Stock In Stock In StockIn StockIn StockIn StockIn Stock In Stock In Stock In Stock In Stock In Stock In Stock MacBook Pro 2.2Ghz 15" (Oct 2011) In Stock In Stock In StockIn StockIn StockIn StockIn Stock In Stock In Stock In Stock In Stock In Stock In Stock MacBook Pro 2.4Ghz 15" (Oct 2011) In Stock In Stock In StockIn StockIn StockIn StockIn Stock In Stock In Stock In Stock In Stock In Stock In Stock MacBook Pro 2.4Ghz 17" (Oct 2011) In Stock In Stock In StockIn StockIn StockIn StockIn Stock In Stock In Stock In Stock In Stock In Stock In Stock

Mac Mini 2.3 GHz (July 2011) In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock Mac Mini 2.5 GHz (July 2011) In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock Mac Mini 2.0 GHz (server) (July 2011) In Stock In Stock In StockIn StockIn StockIn StockIn Stock In Stock In Stock In Stock In Stock In Stock In Stock

iMac 21.5" 2.5 $1,199 (May 11) In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock iMac 21.5" 2.7 $1,499 (May 11) In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock iMac 27" 2.7 $1,699 (May 11) In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock iMac 27" 3.1 $1,999 (May 11) In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock

Mac Pro Quad Core $2,499 (Aug 10) In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock Mac Pro 8 Core $3,499 (Aug 10) In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock In Stock Mac Pro 12 Core $4,999 (Aug 10) 2-4bd 1-3 Wks 1-3 Wks 1-3 Wks 2-4bd 2-4bd 2-4bd 2-4bd 2-4bd 2-4bd 2-4bd 2-4bd 2-4bd Mac Pro Server $2,999 In Stock In StockIn StockIn StockIn StockIn StockIn StockIn Stock In Stock In Stock In Stock In Stock In Stock Source: Apple.com

19 March 2012 11 Barclays | Apple, Inc.

Figure 9: iPod/iPad Availability at Best Buy Retail Stores:

Best Buy: 12-Dec 19-Dec 3-Jan 9-Jan 17-Jan 23-Jan 30-Jan 6-Feb 13-Feb 21-Feb 27-Feb 5-Mar 12-Mar 19-Mar 8GB Touch Black (4G) 97% 27% 32% 58% 37% 33% 33% 92% 65% 95% 60% 82% 17% 45% 32GB Touch Black (4G) 77% 98% 47% 83% 48% 95% 82% 78% 80% 95% 33% 75% 47% 32% 64GB Touch Black (4G) 88% 93% 58% 82% 73% 53% 52% 83% 48% 63% 0% 97% 95% 38% 8GB Nano Graphite (6G) 78% 63% 32% 42% 50% 40% 63% 77% 60% 55% 32% 72% 65% 25% 16GB Nano Graphite (6G) 58% 60% 15% 53% 40% 55% 65% 37% 33% 78% 13% 48% 48% 50% 160GB Classic Black 83% 48% 48% 62% 33% 50% 33% 33% 48% 87% 30% 45% 78% 80% Apple TV (1080p) ------N/A62% 16GB iPad 2 Wi-Fi White 58% 32% 63% 50% 47% 77% 77% 62% 92% 93% 93% 50% 25% 48% 16GB iPad 2 Wi-Fi Black 30% 70% 62% 63% 50% 83% 67% 33% 97% 100% 33% 82% 47% 58% New 16GB iPad Wi-Fi Black------Avail. 3/16N/A New 16GB iPad Wi-Fi White------Avail. 3/1668% Source: BestBuy.com

Figure 10: iPod/iPad Availability at Wal-Mart Retail Stores:

Wal-Mart: 12-Dec 19-Dec 3-Jan 9-Jan 17-Jan 23-Jan 30-Jan 6-Feb 13-Feb 21-Feb 27-Feb 5-Mar 12-Mar 19-Mar 8GB Touch Black (4G) 99% 75% 54% 50% 85% 82% 81% 82% 80% 72% 63% 45% 36% 64% 32GB Touch Black (4G) 99% 87% 59% 50% 71% 83% 77% 74% 82% 78% 75% 40% 29% 29% 64GB Touch Black (4G) 90% 83% N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 8GB Nano Charcoal (6G) 79% 37% 18% 18% 84% 75% 67% 61% 71% 78% 62% 46% 29% 32% 16GB iPad 2 (Wi-Fi; Black) 100% 98% 71% 60% 46% N/A N/A N/A N/A N/A N/A N/A 46% 50% 32GB iPad 2 (Wi-Fi; Black) 97% 96% 40% 38% 51% 61% 56% 65% 37% 29% 20% 20% N/A 15% 64GB iPad 2 (Wi-Fi; Black) 3% 3% 4% 1% 7% N/A N/A N/A 4% 6% 0% N/A N/A N/A 16GB iPad 2 (Wi-Fi; White) 98% 89% 59% 59% 50% N/A N/A N/A N/A N/A N/A N/A 37% 43% 32GB iPad 2 (Wi-Fi; White) 11% 9% 9% 6% 6% 5% 6% 6% 5% 12% 5% 5% N/A 50% 64GB iPad 2 (Wi-Fi; White) N/A N/A 2% 0% 0% N/A N/A N/A 97% 17% 17% 0% N/A N/A New 16GB iPad (Wi-Fi; Black)------16% New 32GB iPad (Wi-Fi; Black)------2% New 64GB iPad (Wi-Fi; Black)------N/A New 16GB iPad (Wi-Fi; White)------12% New 32GB iPad (Wi-Fi; White)------0% New 64GB iPad (Wi-Fi; White)------2% Source: Walmart.com

19 March 2012 12 Barclays | Apple, Inc.

In order to give perspective on the evolution of Apple’s product line we now include a chart that documents select Apple product releases. We include the year of introduction, date of availability as well as the price of the product upon release.

Figure 11: Introduction Timeline of Selected Apple Products

Price @ Year iPhone Release* Date Available

2007 iPhone (4/8GB) $499/599 6/29/07 iPhone (16GB) $499 2/5/08 2008 iPhone 3G (8/16GB Black, 16GB White) $199/299 7/11/08 2009 iPhone 3GS (16/32GB Black, 16/32GB White) $199/299 6/19/09 iPhone 3GS (8GB Black) $99 6/24/10 2010 iPhone 4 GSM (16/32GB Black) $199/299 6/24/10 iPhone 4 GSM (8/16/32GB White, 8GB Black) $99/199/299 4/28/11 (16/32GB White), 10/14/11 (8GB Black/White) 2/10/11 (16/32GB Black), 4/28/11 (16/32GB White), iPhone 4 CDMA (8/16/32GB Black, 8/16/32GB White) $99/199/299 2011 10/14/11 (8GB Black/White) iPhone 4S GSM (16/32/64GB Black, 16/32/64GB White) $199/299/399 10/14/11 iPhone 4S CDMA (16/32/64GB Black, 16/32/64GB White) $199/299/399 10/14/11 Price @ Year iPad Release* Date Available

iPad (16/32/64GB WiFi) $499/599/699 4/3/10 2010 iPad GSM (16/32/64GB WiFi + 3G) $629/729/829 4/30/10 iPad 2 (16/32/64GB WiFi Black, 16/32/64GB WiFi White) $499/599/699 3/11/11 iPad 2 GSM (16/32/64GB WiFi + 3G Black, 16/32/64GB $629/729/829 3/11/11 2011 WiFi + 3G White) iPad 2 CDMA (16/32/64GB WiFi + 3G Black, 16/32/64GB $629/729/829 3/11/11 WiFi + 3G White) iPad (16/32/64GB WiFi) $499/599/699 3/16/12 2012 iPad LTE (16/32/64GB, WiFi + 4G, Verizon/AT&T) $629/729/829 3/16/12

*Price with service contract where applicable Source: Apple.com, Barclays Equity Research

We consider Apple’s retail operation (362 stores) to be very important to company success and the unique customer experience. The brick and mortar Apple retail locations allow consumers to have hands on experience with different products and the Genius Bars allow a high level of customer service. To help understand the expansion of Apple’s retail footprint in the United States we include a map and listing of Apple’s retail locations.

19 March 2012 13 Barclays | Apple, Inc.

Figure 12: Map of Apple Retail Stores in the US

Source: Company Reports, Apple.com, Barclays Research Note: Image not to scale; retail locations approximate; data as of 3/08/12

19 March 2012 14 Barclays | Apple, Inc.

Figure 13: Apple Retail Stores - US

State City Location State City Location State City Location State City Location State City Location Alabama Colorado Iowa New Hampshire Pennsylvania Birmingham The Summit Boulder Twenty Ninth Street West Des Moines Jordan Creek Nashua Pheasant Lane Ardmore Suburban Square Huntsville Bridge Street Broomfield FlatIron Crossing Kansas Salem Rockingham Park King of Prussia King of Prussia Alaska Colorado Springs The Promenade Shops at Briargate Leawood Leawood New Jersey Lancaster Park City Anchorage Anchorage 5th Avenue Mall Denver Cherry Creek Kentucky Atlantic City The Pier Philadelphia Walnut Street Arizona Littleton Aspen Grove Lexington Fayette Mall Bridgewater Bridgewater Pittsburgh Ross Park Chandler Chandler Fashion Center Lone Tree Park Meadows Louisville Oxmoor Cherry Hill Cherry Hill Pittsburgh Shadyside Gilbert SanTan Village Connecticut Louisiana Edison Menlo Park Pittsburgh South Hills Village Glendale Arrowhead Danbury Danbury Fair Mall Baton Rouge Mall of Louisiana Freehold Freehold Raceway Mall Whitehall Lehigh Valley Phoenix Biltmore Farmington Westfarms Metairie Lakeside Shopping Center Marlton Sagemore Rhode Island Scottsdale Scottsdale Quarter Greenwich Greenwich Avenue Maine Paramus Garden State Plaza Providence Providence Place Tucson La Encantada New Haven New Haven South Portland Maine Mall Rockaway Rockaway South Carolina Arkansas Stamford Stamford Maryland Short Hills Short Hills Charleston King Street Little Rock The Promenade at Chenal Delaware Annapolis Annapolis Wayne Willowbrook Greenville Haywood Mall California Newark Christiana Mall Bethesda Bethesda Row Woodcliff Lake Tice's Corner South Dakota Berkeley 4th Street District of Columbia Bethesda Montgomery Mall New Mexico Tennessee Brea Brea Mall Washington Georgetown Columbia Columbia Albuquerque ABQ Uptown Germantown Saddle Creek Burlingame Burlingame Florida Towson Towson Town Center New York Knoxville West Town Mall Canoga Park Topanga Altamonte Springs Altamonte Massachusetts Albany Crossgate Nashville Green Hills Carlsbad Carlsbad Aventura Aventura Boston Boylston Street Buffalo Walden Galleria Texas Cerritos Los Cerritos Boca Raton Boca Raton Braintree South Shore Garden City Roosevelt Field Austin Barton Creek Chula Vista Otay Ranch Brandon Brandon Burlington Burlington Huntington Station Walt Whitman Austin The Domain Corte Madera Corte Madera Estero Coconut Point Cambridge CambridgeSide Lake Grove Smith Haven Dallas Knox Street Costa Mesa South Coast Plaza Fort Lauderdale The Galleria Chestnut Hill Chestnut Hill Manhasset Manhasset Dallas North Park Center Emeryville Bay Street Jacksonville St. Johns Town Center Dedham Legacy Place New York Fifth Avenue El Paso Cielo Vista Mall Escondido North County Miami Dadeland Hingham Derby Street New York Grand Central Fort Worth University Park Village Fresno Fashion Fair Miami The Falls Holyoke Holyoke New York SoHo Friendswood Baybrook Glendale Glendale Galleria Miami Beach Lincoln Road Natick Natick Collection New York Upper West Side Frisco Stonebriar Glendale The Americana at Brand Naples Waterside Shows Peabody Northshore New York West 14th Street Houston Houston Galleria Irvine Irvine Spectrum Center Orlando Florida Mall Michigan Staten Island Staten Island Houston Memorial City Los Angeles Verly Center Orlando Millenia Ann Arbor Briarwood Syracuse Carousel Houston Willowbrook Mall Los Angeles Century City Palm Beach Gardens The Gardens Mall Clinton Township Partridge Creek Victor Eastview Plano Willow Bend Los Angeles The Grove Tampa International Plaza Grand Rapids Woodland West Nyack Palisades San Antonio La Cantera Los Gatos Los Gatos Wellington Wellington Green Novi Twelve Oaks White Plains The Westchester San Antonio North Star Manhattan Beach Manhattan Village Georgia Troy Somerset North Carolina Southlake Southlake Town Square Mission Viejo Mission Viejo Alpharetta North Point Minnesota Charlotte Northlake Mall Sugar Land First Colony Mall Modesto Vintage Faire Atlanta Lenox Square Bloomington Mall of America Charlotte SouthPark The Woodlands The Woodlands Monterey Del Monte Atlanta Perimeter Edina Southdale Durham Southpoint Utah Newport Beach Fashion Island Augusta Augusta Minneapolis Uptown Greensboro Friendly Center Murray Fashion Place Northridge Northridge Buford Mall of Georgia Minnetonka Ridgedale Raleigh Crabtree Valley Mall Salt Lake City The Gateway Palm Desert El Paseo Village Hawaii Roseville Roseville Center North Dakota Vermont Palo Alto Palo Alto Honolulu Ala Moana Mississippi Ohio Virginia Palo Alto Stanford Honolulu Kahala Ridgeland Renaissance at Colony Park Akron Summit Mall Arlington Clarendon Pasadena Pasadena Honolulu Royal Hawaiian Missouri Cincinnati Kenwood Towne Centre Arlington Pentagon City Pleasanton Stoneridge Mall Idaho Kansas City Country Club Plaza Columbus Easton Town Center Fairfax Fair Oaks Rancho Cucamonga Victoria Gardens Boise Boise Towne Square Saint Louis Saint Louis Galleria Columbus Polaris Fashion Place McLean Tysons Corner Roseville Roseville Illinois St. Louis West County Lyndhurst Legacy Village Norfolk MacArthur Center Sacramento Arden Fair Chicago Lincoln Park Mississippi Westlake Crocker Park Reston Reston San Diego Fashion Valley Chicago North Michigan Avenue Ridgeland Renaissance at Colony Park Oklahoma Richmond Short Pump Town Center San Diego UTC Deer Park Deer Park Missouri Oklahoma City Penn Square Washington San Francisco Chestnut Street Naperville Main Place Kansas City Country Club Plaza Tulsa Woodland Hills Bellevue Bellevue Square San Francisco San Francisco Northbrook Northbrook Saint Louis Saint Louis Galleria Oregon Lynnwood Alderwood Mall San Francisco Stonestown Oak Brook Oakbrook St. Louis West County Portland Pioneer Place Seattle University Village San Jose Oakridge Orland Park Orland Square Mall Montana Tigard Bridgeport Village Spokane River Park Square San Luis Obispo Higuera Street Schaumburg Woodfield Nebraska Tigard Washington Square Tacoma Tacoma Mall San Mateo Hillsdale Skokie Old Orchard Omaha Village Pointe Tukwila Southcenter Santa Barbara State Street Indiana Nevada West Virginia Santa Clara Valley Fair Indianapolis Keystone Las Vegas Fashion Show Wisconsin Santa Monica Third Street Promenade Mishawaka University Park Mall Las Vegas The Forum Shops Glendale Bayshore Santa Rosa Santa Rosa Plaza Las Vegas Town Square Madison West Towne Sherman Oaks Sherman Oaks Reno Summit Sierra Wauwatosa Mayfair Simi Valley Simi Valley Wyoming Temecula Promenade Temecula Thousand Oaks The Oaks Valencia Valencia Town Center Walnut Creek Walnut Creek Source: Company Reports, Apple.com, Barclays Research

19 March 2012 15 Barclays | Apple, Inc.

5. Amazon Top Sellers – Lower Priced iPad 2 Could Impact Lower-priced Competition Below we list the weekly trend of the top electronics sold through Amazon.com. As of March 19, 2012, Apple held all 10 of the top 10 MP3 player slots, 4 of the top 10 desktops, and 4 of the top 10 notebooks. In PCs, the netbook ASP was $288 this week vs. $268 last week; for comparison the tablet ASP is $342 vs. 359 last week and the top 10 notebook ASP is $1,010 vs. $1,021 last week (driven lower by fewer Macs in the top 10 and discounts to certain Mac SKUs). Please see our chart in Figure 20, which shows recent trends in both netbook and tablet ASPs. As expected, the Kindle Fire remains Amazon’s most popular tablet and it began to ship in November. In the coming weeks it will be important to see how the lower priced iPad 2 fares in Amazon’s listing, given the threat of lower priced tablets like the Kindle Fire. We expect PC vendors to prioritize PCs ahead of netbooks given potential for HDD shortages, so we may see higher netbook ASPs over the next several months as a result. However, this week the top 10 netbook ASP fell below $300 for the second week in a row as a $130 Android “Mini Laptop” found its way into Amazon’s list of top 10 netbooks.

Figure 14: Top Electronics on Amazon.com

Top Electronics on Amazon: February 27 March 5 March 12 March 19 1 Kindle Fire $199 Kindle Fire $199 Kindle Fire $199 Kindle Fire $199 2 Kindle Touch W/ Offers $99 Kindle Touch W/ Offers $99 Kindle Touch W/ Offers $99 Kindle Touch W/ Offers $99 3 Kindle W/ Offers $79 Kindle W/ Offers $79 Kindle W/ Offers $79 Kindle W/ Offers $79 4 Kindle Touch 3G W/ Offers $149 Garmin nuvi 1450LMT $130 iPod Touch 8GB Black (4G) $187 Apple TV MD199L/A $99 5 iPod Touch 8GB Black (4G) $188 Kindle Touch 3G W/ Offers $149 Kindle Touch 3G W/ Offers $149 Kindle Touch 3G W/ Offers $149 6 iPod Touch 8GB White (4G) $188 iPod Touch 8GB Black (4G) $188 Garmin nuvi 1450LMT $130 Garmin nuvi 1450LMT $130 7 Kindle Keyboard 3G W/ Offers $139 iPod Touch 8GB White (4G) $188 iPod Touch 8GB White (4G) $188 iPod Touch 8GB Black (4G) $188 8 Motorola SB6121 SURFBoard $69 Kindle Keyboard 3G W/ Offers $139 Kindle Keyboard 3G W/ Offers $139 Kindle Keyboard 3G W/ Offers $139 9 Garmin nuvi 1450LMT $140 Roku LT $50 Roku 2 XD $70 iPod Touch 8GB White (4G) $188 10 Roku 2 XD $76 Panasonic Lumix DMC-LX5 $339 iPod Touch 32GB Black (4G) $273 Roku 2 XD $72 11 Panasonic DMP-BDT210 $139 Midland Consumer Radio WR-120B $37 Roku LT $51 Roku 2 XS $90 12 iPod Touch 32GB Black (4G) $273 Midland WR300 Radio $55 Roku 2 XS $96 iPod Touch 32GB Black (4G) $273 13 Roku LT $50 Motorola SB6121 SURFBoard $85 Motorola SB6121 SURFBoard $85 Poetic iPad Case $23 14 Roku 2 XS $96 Roku 2 XS $96 Medialink Wireless N Router $50 Medialink Wireless N Router $50 15 Sony DVP-SR200P/B $30 Roku 2 XD $70 Canon PowerShot ELPH 300 HS $149 Kindle Touch $139 16 iPod classic 160 GB black (4G) $229 iPod Touch 32GB Black (4G) $273 Sony DVP-SR200P/B $35 iPod classic 160 GB black (4G) $229 17 LG BD670 $119 Medialink Wireless N Router $50 Kindle Touch $139 Midland WR300 $48 18 Kindle Touch $139 Sony DVP-SR200P/B $30 iPod classic 160 GB black (4G) $229 Motorola SB6121 SURFBoard $85 19 Medialink Wireless N Router $50 LG 42LV4400 $500 Nikon D800 $2999 Kindle Keyboard 3G $189 20 Panasonic DMP-BD75 $65 Canon EOS 5D Mark III $3,499 Midland WR300 $54 iPod Touch 32GB White(4G) $273 21 Canon PowerShot ELPH 300 $177 iPod classic 160 GB black (4G) $229 Plugable USB 2.0 10 Port Hub $27 LG BD670 $119 22 LG 42LV4400 $500 Kindle Touch $139 Kindle Keyboard 3G $189 Kindle $109 23 iPod Touch 32GB White(4G) $273 iPod Touch 32GB White(4G) $273 iPod 2GB shuffle Silver(4G) $46 Kingle Keyboard (used) $78 24 Kindle Keyboard 3G $189 Roku 2 HD $70 iPod Touch 32GB White(4G) $273 Motorola SB6120 $76 25 Kindle $109 Kindle Keyboard 3G $189 LG 32LK330 $330 Panasonic DMP-BDT220 $135 Source: Amazon.com

Figure 15: Top Tablets on Amazon.com

Top 10 Tablets on Amazon: February 27 March 5 March 12 March 19 1 Kindle Fire $199 Kindle Fire $199 Kindle Fire $199 Kindle Fire $199 2 ASUS Transformer Prime TF201-B1-GR $565 Coby Kyros $96 Samsung Galaxy Tab 10.1"16GB $400 Samsung Galaxy Tab 10.1"16GB $399 3 Samsung Galaxy Tab 10.1"32GB $470 ASUS Transformer Prime TF201-B1-GR $550 Samsung Galaxy Tab 7.0+ 16GB $332 ASUS Transformer Prime TF201-B1-GR $565 4 Coby Kyros $93 Samsung Galaxy Tab 10.1"32GB $470 ASUS Transformer Prime TF201-B1-GR $650 Coby Kyros $97 5 Apple iPad 2 16GB Wifi Wt $450 Samsung Galaxy Tab 7.0+ 16GB $300 Blackberry Playbook 16GB $222 Apple iPad 2 16GB Wifi Wt $460 6 Le Pan TC 970 $199 Samsung Galaxy Tab 16GB $400 Apple iPad 2 16GB Wifi Wt $465 Blackberry Playbook 16GB $220 7 Apple iPad 2 16GB Wifi Bk $486 Apple iPad 2 16GB Wifi Bk $468 Le Pan TC 970 $199 Apple iPad 2 16GB Wifi Bk $452 8 Samsung Galaxy Tab 16GB $400 Le Pan TC 970 $199 Apple iPad 2 16GB Wifi Bk $450 Apple iPad 2 32GB Wifi Bk $517 9 Zeepad 7" Tablet $78 Apple iPad 2 16GB Wifi Wt $478 Coby Kyros $96 HP TouchPad 32GB $308 10 HP TouchPad 32GB $320 Blackberry Playbook 16GB $225 Samsung Galaxy Tab 10.1"32GB $575 Le Pan TC 970 $200 Source: Amazon.com

19 March 2012 16 Barclays | Apple, Inc.

Figure 16: Top Notebooks on Amazon.com

Top 10 Notebooks on Amazon: February 27 March 5 March 12 March 19 1 MacBook Pro MD313LL/A $1139 MacBook Pro MD313LL/A $1139 MacBook Pro MD313LL/A $1139 MacBook Pro MD313LL/A $1120 2 HP g6-1d60us $437 ASUS A53U-ES21 $379 ASUS A53U-ES21 $473 ASUS A53U-ES21 $400 3 MacBook Air MC965LL/A $1220 MacBook Air MC965LL/A $1220 MacBook Air MC965LL/A $1220 ASUS A53U-ES01 $350 4 Toshiba Satellite L755-S5349 $500 HP g6-1d60us $428 ASUS A53U-ES01 $350 MacBook Air MC965LL/A $1220 5 HP g7-1310us $547 HP g7-1310us $549 MacBook Pro MD318LL/A $1710 HP g7-1310us $590 6 MacBook Pro MD318LL/A $1710 MacBook Pro MD318LL/A $1710 HP g7-1310us $559 MacBook Pro MD318LL/A $1680 7 HP dv6-6c10us $550 ASUS N53SV-EH72 $1050 HP g6-1d60us $439 ASUS G74SX-AH71 $1390 8 Dell D620 (used) $158 ASUS G74SX-AH71 $1390 MacBook Pro MD314LL/A $1425 Toshiba Portege Z835-P370 $950 9 Acer Aspire AS5349-2899 $357 MacBook Air MC968LL/A $939 MacBook Air MC966LL/A $1500 MacBook Air MC966LL/A $1500 10 ASUS N53SV-EH72 $870 Toshiba Satellite L755D-S5330 $640 ASUS G74SX-AH71 $1390 ASUS N53SV-EH72 $900 Source: Amazon.com

Figure 17: Top Desktops on Amazon.com

Top 10 Desktops on Amazon: February 27 March 5 March 12 March 19 1 Mac Mini MC815LL/A $569 Mac Mini MC815LL/A $569 Mac Mini MC815LL/A $569 Mac Mini MC815LL/A $569 2 iMac MC309LL/A $1133 iMac MC309LL/A $1133 iMac MC309LL/A $1133 iMac MC309LL/A $1133 3 iMac MC813LL/A $1608 iMac MC813LL/A $1608 iMac MC813LL/A $1608 iMac MC813LL/A $1608 4 Mac Mini MC816LL/A $763 Dell GX620 (used) $116 Dell GX620 (used) $115 Dell GX620 (used) $115 5 Dell GX620 (used) $116 Mac Mini MC816LL/A $763 Mac Mini MC816LL/A $763 Mac Mini MC816LL/A $763 6 Dell Inspiron i570-9114BK $400 iMac MC814LL/A $1895 HP Pavilion p6-2100 $455 HP Pavilion p6-2100 $472 7 Dell Optiplex $500 Dell Inspiron i570-9114BK $469 Dell Optiplex (used) 745 $189 HP Omni 220-1125 $769 8 HP Pavilion p6-2100 $380 Dell Optiplex (used) 745 $180 HP Pavilion p7-1220 $612 Dell Optiplex (used) $154 9 iMac MC814LL/A $1895 Mac Mini MC936LL/A $955 iMac MC814LL/A $1895 Dell Inspiron i620-1298BK $500 10 Dell Optiplex 745 $185 iMac MC812LL/A $1420 iMac MC812LL/A $1420 HP Pavilion p7-1220 $612 Source: Amazon.com

Figure 18: Top MP3 Players on Amazon.com

Top 10 MP3 Players on Amazon: February 27 March 5 March 12 March 19 1 iPod Touch 8GB Black (4G) $188 iPod Touch 8GB Black (4G) $188 iPod Touch 8GB Black (4G) $188 iPod Touch 8GB Black (4G) $188 2 iPod Touch 8GB White (4G) $188 iPod Touch 8GB White (4G) $188 iPod Touch 8GB White (4G) $187 iPod Touch 8GB White (4G) $188 3 iPod Touch 32GB Black (4G) $273 iPod Touch 32GB Black (4G) $273 iPod Touch 32GB Black (4G) $273 iPod Touch 32GB Black (4G) $273 4 iPod classic 160 GB black (4G) $229 iPod classic 160 GB black (4G) $229 iPod classic 160 GB black (4G) $229 iPod classic 160 GB black (4G) $229 5 iPod Touch 32GB White(4G) $273 iPod Touch 32GB White(4G) $273 iPod 2GB shuffle Silver(4G) $46 iPod Touch 32GB White(4G) $273 6 iPod 16GB nano graphite (6G) $140 iPod 16GB nano graphite (6G) $140 iPod Touch 32GB White(4G) $273 iPod 2GB shuffle Silver(4G) $46 7 iPod 2GB shuffle Silver(4G) $46 iPod 2GB shuffle Silver(4G) $46 iPod 16GB nano graphite (6G) $140 iPod 16GB nano graphite (6G) $140 8 iPod 8GB nano graphite (6G) $120 iPod 8GB nano graphite (6G) $120 iPod 8GB nano graphite (6G) $118 iPod 8GB nano graphite (6G) $120 9 SanDisk SDMX22-004G-A57K $40 SanDisk SDMX22-004G-A57K $40 iPod classic 160 GB silver (4G) $230 iPod 2GB shuffle Blue (4G) $46 10 SanDisk Sansa Clip+ 4GB Black $35 Samsung Galaxy 4.0 $180 SanDisk Sansa Clip+ $35 iPod classic 160 GB silver (4G) $230 Source: Amazon.com

Figure 19: Top Netbooks on Amazon.com

Top 10 Netbooks on Amazon: February 27 March 5 March 12 March 19 1 Acer AO722-0472 $330 HP Mini 210-4150NR $312 Acer AO722-0473 $367 Acer AO722-0473 $367 2 Acer AO722-0473 $382 Acer AO722-0473 $381 Acer AOD270-1410 $280 HP Mini 210-4150NR $325 3 HP Mini 210-4150NR $306 ASUS EeePC Meego $220 ASUS 1025C-MU17-BK $300 ASUS X101-CH-EU17-BK $270 4 ASUS 1011PX-MU27-BK $300 ASUS 1025C-MU17-BK $300 HP Mini 210-4150NR $325 Acer AO722-0667 $382 5 Acer AO722-0667 $375 Acer AO722-0667 $355 Acer AO722-0667 $376 Acer AOD270-1410 $304 6 Acer AOD270-1679 $280 Acer AO722-0472 $350 ASUS EeePC Meego $220 ASUS 1025-MU17-BK $300 7 ASUS EeePC Meego $220 ASUS 1011PX-MU17-BK $356 Acer AOD270-1679 $280 ASUS X101-CH-EU17-WT $280 8 ASUS 1001PXD-EU17-BK $390 Acer AOD270-1410 $280 WOLVOL Android Mini Laptop $130 WOLVOL Android Mini Laptop $130 9 Toshiba NB505-N508BL $460 Acer AOD270-1679 $280 WOLVOL Android Mini Laptop $130 Acer AOD270-1679 $304 10 ASUS 1015PX-SU17-RD $400 Toshiba NB505-N508BL $470 ASUS X101CH-EU17-BK $270 ASUS EeePC Meego $220 Source: Amazon.com

19 March 2012 17 Barclays | Apple, Inc.

Figure 20: Amazon Top 10 Netbook & Tablet ASP Weekly Trend (Average ASP of top 10 Netbooks/Tablets for sale)

$450

$400

$350

$300

$250

$200

3 4 1 4 5 2 3 7 3 5 2 r 2 3 1 1 y 1 23 30 y 6 1 e r r er y y r y 1 er 10 er ber 7 er 21 b ar ary 9 ch h 19 b be b m be b m u u ar ary 27 arch r rc o o o m mber u ruar ru M a Jan Jan nuaryebrua Ma M Octob ve vember 28 ce JanuarJan Ja F b Oct OctoberOct 17 Oct Nove Dece ecember 19 Feb FebruaryFe 20 No NovemNo De D

Netbook Tablet

Source: Barclays & Amazon.com

6. Apps a Differentiator for Apple vs. Peers over the Long Term: We believe the App Store remains a key differentiating factor for Apple’s iPhone, iPad and iPod Touch vs. Android and other platforms. This software strategy enables a distinctive “stickiness,” which should enhance customer loyalty/retention over the long term as “apps” personalize devices to levels that competitive imitations cannot match. Also, the use and purchase of apps over cellular networks ensures that iPhones retain relatively high usage characteristics, leading to the purchase of data plans that drive high subsidies from carriers (which equals high margins for Apple over time).

On 3/3/12, Apple announced that 25 billion apps have been downloaded from its App Store. Back on 10/4/11, Apple announced that over 18 billion apps had been downloaded and on 7/7/11, Apple announced it had hit 15 billion downloads. On 3/7/12 Apple announced that there were almost over 585k apps available on the App Store with more than 200k designed specifically for the iPad. Previously, on 3/3/12, Apple stated that there are more than 550 total apps available for download and on 1/24/12 Apple stated that there were over 170K apps native for the iPad. Apple also stated on 1/24/12 that there have been over 315 million iOS device sales, a sizeable increase from the 250 million cumulative iOS device sales announced on 10/4/11. The company also announced on 1/24/12 that there had been over 600,000 downloads of iBooks Author since the App was announced on 1/19/12 and over 3 million copies of the iTunes U app have been downloaded. Apple also

19 March 2012 18 Barclays | Apple, Inc.

announced on 2/16/12 that 100 million customers have signed up for iCloud compared to 85 million on 1/24/12. We believe iCloud is a major driver of App store loyalty given it allows customers to purchase Apps on one iOS device and use it on others. Also, on 1/24/12 Apple announced that 100 million Apps have been downloaded from the Mac App Store in less than one year. Apple has paid developers more than $4 billion since the App Store inception.

19 March 2012 19 Barclays | Apple, Inc.

Figure 21: Apple App Store & Android Market Milestones

Android Market iOS App Store

2Q08

App Store opens 7/11/08 App Store reaches 10M downloads 7/14/08 Android Market announced 8/28/08 3Q08

Android Market opens 10/22/08 App Store reaches 200M downloads 10/22/08 4Q08

1Q09

App Store reaches 1B downloads 4/24/09 2Q09

App Store reaches 1.5B+ downloads 7/14/09 3Q09 App Store reaches 2B+ downloads 9/28/09

4Q09

App Store reaches 3B+ downloads 1/5/10 1Q10

App Store reaches 4B+ downloads 4/8/10

2Q10 App Store reaches 5B+ downloads 6/7/10

Android Market reaches 1B downloads 3Q10

App Store reaches 7B+ downloads 10/20/10 4Q10

App Store reaches 10B+ downloads 1/22/11 1Q11

Android Market reaches 3B+ downloads 4/14/11 2Q11 App Store reaches 14B+ downloads 6/6/11

App Store reaches 15B+ downloads 7/7/11 Android Market reaches 6B+ downloads 7/14/11 3Q11

App Store reaches 18B+ downloads 10/4/11 4Q11 Android Market reaches 10B+ downloads 12/2011 Android Market reaches 11B downloads 1/19/12 App Store reaches 25B downloads 3/3/2012 1Q12

Source: Barclays Estimates, Company Reports

19 March 2012 20 Barclays | Apple, Inc.

Figure 22: Top iPhone Apps

Top 10 Paid Apps 3/5 3/12 3/19 1 The Lorax $0.99 Coco Locl™ $0.99 Angry Birds $0.99 2 Fancy Pants $0.99 WhatsApp Messenger $0.99 MotoHeroz $0.99 3 The Night Sky $0.99 Plants Vs. Zombies $0.99 Words With Friends $0.99 4 Doodle Jump $0.99 Zuma's Revenge! $1.99 Fruit Ninja $0.99 5 Midway Arcade $0.99 iPhoto $4.99 Fancy Pants Adventures $0.99 6 Draw Something $0.99 Fancy Pants $0.99 Tips & Tricks - iPhone Secrets $0.99 7 Dot Lock Protection Pro $0.99 The Night Sky $0.99 Angry Birds Seasons $0.99 8 THE GAME OF LIFE Classic Edition $0.99 Doodle Jump $0.99 Tiny Wings $0.99 9 Camera+ $0.99 Draw Something $0.99 Cut the Rope $0.99 10 Scramble With Friends $0.99 Dot Lock Protection Pro $0.99 WhatsApp Messenger $0.99

Top 10 Free Apps 3/5 3/12 3/19 1 Annoying Orange: Kitchen Carnage Lite ESPN Bracket Bound 2012 Rat On A Skateboard 2 The Official Lorax App NCAA® March Madness Live Milkshake Maker™ 3 Plumber Crack ICEE Store! Air Wings™ 4 Apple Shooting Plants War Zombie Highway 5 Lorax Garden Bejeweled Blitz Mr. Oops!! 6 Fancy Pants Lite Cross Fingers Pandora Radio 7 Jaws™ Revenge Pocket Whip Zombie Jombie 8 Camera Awesome Jetpack Joyride Coin Dozer Pro 9 MLB.com At Bat Castle Age HD DOOORS 10 Old Booth Magic Doodle Truck Lep's World Plus

Top Grossing Apps 3/5 3/12 3/19 1 Draw Something Free FREE NCAA® March Madness Live FREE Tap Paradise Cove FREE 2 Fancy Pants $0.99 Zuma's Revenge! $1.99 NCAA® March Madness Live FREE 3 Dream PetHouse FREE iPhoto $4.99 iPhoto $4.99 4 MLB.com At Bat FREE MASS EFFECT™ INFILTRATOR $6.99 Draw Something Free FREE 5 Draw Something $0.99 Draw Something Free FREE MLB.com At Bat FREE 6 MONOPOLY Hotels FREE MLB.com At Bat FREE Draw Something $0.99 7 iMob 2 FREE Draw Something $0.99 iMob 2 FREE 8 Minecraft - Pocket Edition $6.99 Minecraft - Pocket Edition $6.99 Minecraft - Pocket Edition $6.99 9 Scramble With Friends $0.99 Scramble With Friends $0.99 Pandora FREE 10 Pandora FREE Pandora FREE Bejeweled Bltz FREE Source: Apple.com

19 March 2012 21 Barclays | Apple, Inc.

Figure 23: Top iPad Apps

Top Paid iPad Apps 3/5 3/12 3/19 1 Green Eggs and Ham $1.99 Pinterest+ for iPad $1.99 Weather+ $0.99 2 iBomber Defense Pacific $2.99 Zuma's Revenge HD $4.99 Real Racing 2 HD $2.99 3 Fancy Pants $0.99 Coco Loco™ $0.99 Miso Music: Plectrum $0.99 4 The Lorax $0.99 Where's Waldo?™ $0.99 Sky Gamblers: Air Supremacy $4.99 5 Walking Mars $4.99 iPhoto $4.99 Pinterest+ for iPad $1.99 6 Adobe Photoshop Touch $9.99 iMovie $4.99 iPhoto $4.99 7 Draw Something $0.99 Notability $0.99 iMovie $4.99 8 Pinterest $0.99 MASS EFFECT™ INFILTRATOR $6.99 Notability $0.99 9 Midway Arcade $1.99 Fancy Pants $0.99 Draw Something $0.99 10 Procreate $0.99 Adobe Photoshop Touch $9.99 Quickoffice Pro HD $19.99

Top Free iPad Apps 3/5 3/12 3/19 1 Tiny Zoo Friends Skee-Ball HD Free! Craigslist Mobile for iPad 2 Mystic Diary: Haunted Island HD Khan Academy Zombie Highway 3 Requiem: Unleashed ICEE Store! Vogue 4 Sam's Club for iPad Mahjong!! NYTimes for iPad 5 Fancy Pants Lite Office Jerk for iPad eBay for iPad 6 Smithsonian Channel for iPad Amelia Earhart: Unsolved Mystery Club HD Echoes of the Past: Royal House of Stone HD 7 Pinboard for Pinterest Worlds With Friends HD Free CNN App for iPad 8 MLB.com At Bat AP Mobile The CW Network 9 Readability™ Plants War ColorBox HD 10 The Simpsons™: Tapped Out Remote Calculator Pro for iPad Free

Top Grossing iPad Apps 3/5 3/12 3/19 1 MLB.com At Bat FREE Galaxy Empire FREE Sky Gamblers: Air Supremacy $4.99 2 Adobe Photoshop Touch $9.99 Zuma's Revenge! HD $4.99 Galaxy Empire FREE 3 Quickoffice Pro HD $19.99 NCAA® March Madness Live FREE NCAA® March Madness Live FREE 4 TurboTax 2011 FREE iPhoto $4.99 iPhoto $4.99 5 Bejeweled Blitz FREE Draw Something $0.99 Draw Something $0.99 6 Slotomania HD FREE MLB.com At Bat FREE Quickoffice Pro HD $19.99 7 Temple Run FREE Quickoffice Pro HD $19.99 TurboTax 2011 FREE 8 Mystery Manor: Hidden Adventure FREE TurboTax 2011 FREE Slotomania HD FREE 9 The Sims™ FreePlay FREE Bejeweled Blitz FREE The Sims™ FreePlay FREE 10 Tap Zoo 2: World Tour FREE Slotomania HD FREE Modern War FREE Source: Apple.com

19 March 2012 22 Barclays | Apple, Inc.

Figure 24: Top Mac Apps

Top Paid Mac Apps 3/5 3/12 3/19 1 Hype $49.99 Plants vs. Zombies $4.99 Grand Theft Auto: Vice City $9.99 2 Paper Monsters $1.99 Zuma's Revenge $4.99 Byword $9.99 3 Where's Waldo?™ The Fantastic Journey $0.99 Civilization V: Campaign Edition $29.99 Civilization V: Campaign Edition $39.99 4 Sid Meier's Civilization® IV: Colonization $4.99 Paper Monsters $2.99 Where's Waldo?™ The Fantastic Journey $0.99 5 Pixelmator $29.99 Where's Waldo?™ The Fantastic Journey $0.99 Pixelmator $29.99 6 OS X Lion $29.99 OS X Lion $29.99 OS X Lion $29.99 7 Pages $19.99 Pages $19.99 Pages $19.99 8 Cut the Rope $4.99 Cut the Rope $4.99 Cut the Rope $4.99 9 FaceTime $0.99 FaceTime $0.99 FaceTime $0.99 10 Keynote $19.99 Keynote $19.99 Keynote $19.99

Top Free Mac Apps 3/5 3/12 3/19 1 Read Later Battery Health Finch 2 Blood & Glory Apple Configurator Battery Health 3 Solitaire Free Read Later Apple Configurator 4 Screensaver + free Blood & Glory Blood & Glory 5 Wake Up Time Solitaire Free Solitaire Free 6 CCleaner Screensaver + free Screensaver + free 7 Picture Collage Maker Lite CCleaner Wake Up Time 8 Xcode Xcode Ccleaner 9 Pool! Pool! Xcode 10 Lep's World Lep's World Pool!

Top Grossing Mac Apps 3/5 3/12 3/19 1 Euro Truck Simulator $29.99 Euro Truck Simulator $29.99 Byword $9.99 2 Company of Heroes® Complete: Camp… $49.99 Company of Heroes® Complete: Camp… $49.99 Quicken Essentials for Mac $49.99 3 Hype $49.99 Hype $49.99 Logic Pro $199.99 4 Quicken Essentials for Mac $49.99 CameraBag 2 $18.99 Adobe Photoshop Elements 10 Editor $79.99 5 Logic Pro $199.99 Quicken Essentials for Mac $49.99 Sparrow $9.99 6 Adobe Photoshop Elements 10 Editor $79.99 Logic Pro $199.99 OmniFocus $79.99 7 Civilization IV $4.99 Adobe Photoshop Elements 10 Editor $79.99 1Password $49.99 8 1Password $49.99 1Password $49.99 OmniGraffle Pro $199.99 9 AutoCAD LT $899.99 AutoCAD LT $899.99 Scrivener $44.99 10 OS X Lion $29.99 OS X Lion $29.99 OS X Lion $29.99 Source: Apple.com

19 March 2012 23 Barclays | Apple, Inc.

ANALYST(S) CERTIFICATION(S) I, Ben A. Reitzes, hereby certify (1) that the views expressed in this research report accurately reflect my personal views about any or all of the subject securities or issuers referred to in this research report and (2) no part of my compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed in this research report.

IMPORTANT DISCLOSURES CONTINUED

When an equity research report covers six or more subject companies, Barclays generally does not include specific conflict of interest disclosures regarding the subject companies and instead provides the reader with instructions about how to view or obtain the applicable conflict of interest disclosures. In order to comply with the requirements of the Korea Financial Investment Association, specific disclosures about subject companies with securities listed on the Korea Exchange are included herein. To access important disclosures, including, where relevant, price targets, regarding other companies that are the subject of this research report, please send a written request to: Barclays Research Compliance, 745 Seventh Avenue, 17th Floor, New York, NY 10019 or refer to http://publicresearch.barcap.com or call 1-212-526-1072. The analysts responsible for preparing this research report have received compensation based upon various factors including the firm's total revenues, a portion of which is generated by investment banking activities. Analysts regularly conduct site visits to view the material operations of covered companies, but Barclays policy prohibits them from accepting payment or reimbursement by any covered company of their travel expenses for such visits. In order to access Barclays Statement regarding Research Dissemination Policies and Procedures, please refer to https://live.barcap.com/publiccp/RSR/nyfipubs/disclaimer/disclaimer-research-dissemination.html. The Corporate and Investment Banking division of Barclays produces a variety of research products including, but not limited to, fundamental analysis, equity-linked analysis, quantitative analysis, and trade ideas. Recommendations contained in one type of research product may differ from recommendations contained in other types of research products, whether as a result of differing time horizons, methodologies, or otherwise. Primary Stocks (Ticker, Date, Price) Apple, Inc. (AAPL, 19-Mar-2012, USD 601.10), 1-Overweight/2-Neutral Materially Mentioned Stocks (Ticker, Date, Price) AAC Technologies Holdings (2018.HK, 19-Mar-2012, HKD 21.60), 1-Overweight/1-Positive Avago Technologies Ltd. (AVGO, 19-Mar-2012, USD 38.06), 1-Overweight/1-Positive Broadcom Corp. (BRCM, 19-Mar-2012, USD 38.78), 1-Overweight/1-Positive Dialog Semiconductor (DLGS.DE, 19-Mar-2012, EUR 18.16), 1-Overweight/2-Neutral Foxconn Technology Co., Ltd. (2354.TW, 19-Mar-2012, TWD 125.50), 2-Equal Weight/2-Neutral G-TECH Optoelectronics Corp. (3149.TWO, 19-Mar-2012, TWD 92.50), 2-Equal Weight/1-Positive Hon Hai Precision Industry Co., Ltd. (2317.TW, 19-Mar-2012, TWD 104.00), 1-Overweight/2-Neutral Hynix Semiconductor (000660.KS, 19-Mar-2012, KRW 29300.00), 1-Overweight/3-Negative Ibiden Co., Ltd. (4062.T, 19-Mar-2012, JPY 2098), 1-Overweight/1-Positive Imagination Technologies (IMG.L, 19-Mar-2012, GBP 6.90), 1-Overweight/2-Neutral Largan Precision Co., Ltd. (3008.TW, 19-Mar-2012, TWD 612.00), 1-Overweight/1-Positive LG Display (034220.KS, 19-Mar-2012, KRW 29150.00), 1-Overweight/1-Positive MagnaChip Semiconductor (MX, 19-Mar-2012, USD 11.22), 1-Overweight/1-Positive Murata Manufacturing Co., Ltd. (6981.OS, 19-Mar-2012, JPY 5050), 2-Equal Weight/1-Positive QUALCOMM, Inc. (QCOM, 19-Mar-2012, USD 66.75), 1-Overweight/2-Neutral Radiant Opto-Electronics Corp. (6176.TW, 19-Mar-2012, TWD 130.50), 2-Equal Weight/1-Positive Samsung Electronics (005930.KS, 19-Mar-2012, KRW 1260000.00), 1-Overweight/3-Negative Samsung SDI (006400.KS, 19-Mar-2012, KRW 145500.00), 1-Overweight/2-Neutral Sharp Corporation (6753.T, 19-Mar-2012, JPY 506), 2-Equal Weight/2-Neutral Simplo Technology Co., Ltd. (6121.TW, 19-Mar-2012, TWD 211.50), 1-Overweight/2-Neutral Skyworks Solutions, Inc. (SWKS, 19-Mar-2012, USD 28.66), 1-Overweight/1-Positive TDK Corp. (6762.T, 19-Mar-2012, JPY 4635), 1-Overweight/1-Positive Teradyne Inc. (TER, 19-Mar-2012, USD 17.04), 1-Overweight/2-Neutral TPK Holding Co., Ltd. (3673.TW, 19-Mar-2012, TWD 484.00), 1-Overweight/1-Positive TSMC (2330.TW, 19-Mar-2012, TWD 83.70), 2-Equal Weight/3-Negative

19 March 2012 24 Barclays | Apple, Inc.

IMPORTANT DISCLOSURES CONTINUED Wintek Corporation (2384.TW, 19-Mar-2012, TWD 24.90), 3-Underweight/1-Positive Guide to the Barclays Fundamental Equity Research Rating System: Our coverage analysts use a relative rating system in which they rate stocks as 1-Overweight, 2-Equal Weight or 3-Underweight (see definitions below) relative to other companies covered by the analyst or a team of analysts that are deemed to be in the same industry sector (the "sector coverage universe"). In addition to the stock rating, we provide sector views which rate the outlook for the sector coverage universe as 1-Positive, 2-Neutral or 3- Negative (see definitions below). A rating system using terms such as buy, hold and sell is not the equivalent of our rating system. Investors should carefully read the entire research report including the definitions of all ratings and not infer its contents from ratings alone. Stock Rating 1-Overweight - The stock is expected to outperform the unweighted expected total return of the sector coverage universe over a 12-month investment horizon. 2-Equal Weight - The stock is expected to perform in line with the unweighted expected total return of the sector coverage universe over a 12- month investment horizon. 3-Underweight - The stock is expected to underperform the unweighted expected total return of the sector coverage universe over a 12-month investment horizon. RS-Rating Suspended - The rating and target price have been suspended temporarily due to market events that made coverage impracticable or to comply with applicable regulations and/or firm policies in certain circumstances including where the Corporate and Investment Banking Division of Barclays is acting in an advisory capacity in a merger or strategic transaction involving the company. Sector View 1-Positive - sector coverage universe fundamentals/valuations are improving. 2-Neutral - sector coverage universe fundamentals/valuations are steady, neither improving nor deteriorating. 3-Negative - sector coverage universe fundamentals/valuations are deteriorating. Below is the list of companies that constitute the "sector coverage universe": Asia ex-Japan IT Hardware Acer Inc. (2353.TW) Asustek Computer Inc. (2357.TW) Cheng Uei Precision Industry Co., Ltd. (2392.TW) Chicony Electronics (2385.TW) Compal Electronics Inc. (2324.TW) Darfon Electronics (8163.TW) Digital China Holdings Ltd. (0861.HK) Dynapack International Technology Corp. Epistar Corporation (2448.TW) (3211.TW) Everlight Electronics (2393.TW) Foxconn Technology Co., Ltd. (2354.TW) Hon Hai Precision Industry Co., Ltd. (2317.TW) Inventec Inc. (2356.TW) Ju Teng International Co., Ltd. (3336.HK) Lenovo Group Ltd. (0992.HK) Pegatron Corp. (4938.TW) Quanta Computer Inc. (2382.TW) Samsung SDI (006400.KS) Shin Zu Shing Co., Ltd. (3376.TW) Simplo Technology Co., Ltd. (6121.TW) Skyworth Digital Holdings Ltd. (0751.HK) Sunrex Technology (2387.TW) Synnex Technology International Corp. (2347.TW) TPV Technology Ltd. (0903.HK) Wistron Corporation (3231.TW) Asia ex-Japan LCD Displays Asia Pacific Systems (054620.KS) AU Optronics Corp. (2409.TW) Cando Corporation (8056.TWO) Cheil Industries (001300.KS) Chimei InnoLux Corp. (3481.TW) Coretronic Corporation (5371.TWO) E Ink Holdings Inc. (8069.TWO) eGalax_eMPIA Technology Inc. (3556.TWO) G-TECH Optoelectronics Corp. (3149.TWO) HannStar Touch Solution Inc. (3049.TW) LG Display (034220.KS) Novatek Microelectronics Corp. (3034.TW) Radiant Opto-Electronics Corp. (6176.TW) SFA Engineering (056190.KS) TPK Holding Co., Ltd. (3673.TW) Wintek Corporation (2384.TW) Asia ex-Japan Semiconductors Advanced Semiconductor Engineering Hynix Semiconductor (000660.KS) Kinsus Interconnect Technology (3189.TW) (2311.TW) MediaTek Inc. (2454.TW) MStar Semiconductor, Inc. (3697.TW) Nan Ya Printed Circuit Board (8046.TW) Samsung Electronics (005930.KS) Siliconware Precision Industries (2325.TW) TSMC (2330.TW) United Microelectronics Corp. (2303.TW) Vanguard International Semiconductor Visual Photonics Epitaxy Co., Ltd. (2455.TW) (5347.TWO)

19 March 2012 25 Barclays | Apple, Inc.

IMPORTANT DISCLOSURES CONTINUED

Win Semiconductors Corp. (3105.TWO) Asia ex-Japan Wireless Equipment & Products AAC Technologies Holdings (2018.HK) BYD Electronic (0285.HK) Catcher Technology Co., Ltd. (2474.TW) Foxconn International Holdings (2038.HK) HTC Corp. (2498.TW) Largan Precision Co., Ltd. (3008.TW) LG Electronics (066570.KS) Lite-on Technology Corp. (2301.TW) Silitech Technology Corp. (3311.TW) Tripod Technology Corp. (3044.TW) Unimicron Technology Corp. (3037.TW) Wistron NeWeb Corp. (6285.TW) Young Fast Optoelectronics Co., Ltd. (3622.TW) European Technology Hardware Aixtron AG (AIXGn.DE) Alcatel-Lucent (ALUA.PA) ARM Holdings PLC (ARM.L) ASML Holding NV (ASML.AS) CSR plc (CSR.L) Dialog Semiconductor (DLGS.DE) Ericsson (ERICb.ST) Imagination Technologies (IMG.L) Infineon Technologies AG (IFXGn.DE) Kudelski S.A. (KUD.S) Logitech International SA (LOGN.VX) Nokia (NOK1V.HE) Pace plc (PIC.L) STMicroelectronics NV (STM.PA) Technicolor S.A. (TCH.PA) TomTom NV (TOM2.AS) Japan Consumer Electronics Casio Computer Co., Ltd. (6952.T) Funai Electric Co., Ltd. (6839.OS) JVC KENWOOD Corporation (6632.T) Panasonic Corporation (6752.T) Pioneer Corporation (6773.T) Sharp Corporation (6753.T) Sony Corporation (6758.T) Japan Electronic Components Hirose Electric Co., Ltd. (6806.T) Ibiden Co., Ltd. (4062.T) Kyocera Corp. (6971.T) Murata Manufacturing Co., Ltd. (6981.OS) NGK Spark Plug Co., Ltd. (5334.T) NHK Spring Co., Ltd. (5991.T) Nidec Corp. (6594.OS) Rohm Co., Ltd. (6963.OS) Shinko Electric Ind. (6967.T) Taiyo Yuden Co., Ltd. (6976.T) TDK Corp. (6762.T) U.S. IT Hardware 3D Systems Corp. (DDD) Apple, Inc. (AAPL) Dell Inc. (DELL) EMC Corp. (EMC) Hewlett-Packard (HPQ) IBM Corp. (IBM) Ingram Micro Inc. (IM) Lexmark International (LXK) NetApp, Inc. (NTAP) Seagate Technology (STX) Tech Data Corp. (TECD) Western Digital Corp. (WDC) Xerox Co. (XRX) U.S. Semiconductor Capital Equipment Advanced Energy (AEIS) Applied Materials (AMAT) Brooks Automation (BRKS) Cymer, Inc. (CYMI) FormFactor, Inc. (FORM) Intermolecular Inc. (IMI) KLA-Tencor (KLAC) Lam Research (LRCX) LTX-Credence Corp. (LTXC) MKS Instruments (MKSI) Novellus Systems (NVLS) Teradyne Inc. (TER) U.S. Semiconductors Advanced Micro Devices (AMD) Altera Corp. (ALTR) Analog Devices (ADI) Atmel Corp. (ATML) Avago Technologies Ltd. (AVGO) Broadcom Corp. (BRCM) Cavium Inc. (CAVM) Cypress Semiconductor Corp. (CY) Entropic Communications Inc. (ENTR) Freescale Semiconductor Holdings (FSL) Integrated Device Technology, Inc. (IDTI) Intel Corp. (INTC) Linear Technology (LLTC) LSI Corp. (LSI) MagnaChip Semiconductor (MX) Marvell Technology Group, Ltd. (MRVL) Maxim Integrated Products (MXIM) Microchip Technology (MCHP) Micron Technology, Inc. (MU) NVIDIA Corp. (NVDA) NXP Semiconductors NV (NXPI) RF Micro Devices (RFMD) Silicon Laboratories, Inc. (SLAB) Skyworks Solutions, Inc. (SWKS) Spansion Inc. (CODE) Texas Instruments, Inc. (TXN) Triquint Semiconductor (TQNT) Volterra Semiconductor Corp. (VLTR) Xilinx, Inc. (XLNX)

19 March 2012 26 Barclays | Apple, Inc.

IMPORTANT DISCLOSURES CONTINUED

U.S. Wireless Equipment Comverse Technology, Inc. (CMVT) Ericsson (ERIC) InterDigital, Inc. (IDCC) Motorola Mobility Holdings (MMI) Motorola Solutions, Inc. (MSI) Nokia (NOK) QUALCOMM, Inc. (QCOM) Research In Motion (RIMM)

Distribution of Ratings: Barclays Equity Research has 2245 companies under coverage. 42% have been assigned a 1-Overweight rating which, for purposes of mandatory regulatory disclosures, is classified as a Buy rating; 54% of companies with this rating are investment banking clients of the Firm. 42% have been assigned a 2-Equal Weight rating which, for purposes of mandatory regulatory disclosures, is classified as a Hold rating; 48% of companies with this rating are investment banking clients of the Firm. 13% have been assigned a 3-Underweight rating which, for purposes of mandatory regulatory disclosures, is classified as a Sell rating; 39% of companies with this rating are investment banking clients of the Firm. Guide to the Barclays Research Price Target: Each analyst has a single price target on the stocks that they cover. The price target represents that analyst's expectation of where the stock will trade in the next 12 months. Upside/downside scenarios, where provided, represent potential upside/potential downside to each analyst's price target over the same 12-month period. Barclays offices involved in the production of equity research: London Barclays Bank PLC (Barclays, London) New York Barclays Capital Inc. (BCI, New York) Tokyo Barclays Capital Japan Limited (BCJL, Tokyo) São Paulo Banco Barclays S.A. (BBSA, São Paulo) Hong Kong Barclays Bank PLC, Hong Kong branch (Barclays Bank, Hong Kong) Toronto Barclays Capital Canada Inc. (BCCI, Toronto) Johannesburg Absa Capital, a division of Absa Bank Limited (Absa Capital, Johannesburg) Mexico City Barclays Bank Mexico, S.A. (BBMX, Mexico City) Taiwan Barclays Capital Securities Taiwan Limited (BCSTW, Taiwan) Seoul Barclays Capital Securities Limited (BCSL, Seoul) Mumbai Barclays Securities (India) Private Limited (BSIPL, Mumbai) Singapore Barclays Bank PLC, Singapore branch (Barclays Bank, Singapore)

19 March 2012 27 Barclays | Apple, Inc.

IMPORTANT DISCLOSURES CONTINUED Apple, Inc. (AAPL) Stock Rating Sector View USD 601.10 (19-Mar-2012) 1-OVERWEIGHT 2-NEUTRAL Rating and Price Target Chart - USD (as of 19-Mar-2012) Currency=USD

800 Date Closing Price Rating Price Target 06-Mar-2012 530.26 710.00 700 24-Jan-2012 420.41 630.00 23-Sep-2011 404.30 555.00 600 19-Jul-2011 376.85 515.00

500 20-Apr-2011 342.41 465.00 18-Jan-2011 340.65 450.00 400 12-Jan-2011 344.42 420.00 18-Oct-2010 318.00 390.00 300 12-Oct-2010 298.54 385.00

200 21-Jul-2010 254.24 340.00 22-Jun-2010 273.85 325.00 100 01-Jun-2010 260.83 320.00 21-Apr-2010 259.22 315.00

Ju l - 0 9 Jan- 10 Ju l - 1 0 Jan- 11 Ju l - 1 1 Jan- 12 08-Apr-2010 239.95 300.00

Closing Price Target Price 27-Jan-2010 207.88 285.00

26-Jan-2010 205.94 265.00 07-Jan-2010 210.58 260.00 20-Oct-2009 198.76 235.00 13-Aug-2009 168.42 208.00 22-Jul-2009 156.74 188.00 09-Jun-2009 142.72 173.00 23-Apr-2009 125.40 155.00 06-Apr-2009 118.45 143.00 Link to Barclays Live for interactive charting

Barclays Bank PLC and/or an affiliate is a market-maker and/or liquidity provider in securities issued by Apple, Inc. or one of its affiliates. Barclays Bank PLC and/or an affiliate has received compensation for investment banking services from Apple, Inc. in the past 12 months. Barclays Bank PLC and/or an affiliate trades regularly in the securities of Apple, Inc.. Barclays Bank PLC and/or an affiliate has received non-investment banking related compensation from Apple, Inc. within the past 12 months. Apple, Inc. is, or during the past 12 months has been, an investment banking client of Barclays Bank PLC and/or an affiliate. Apple, Inc. is, or during the past 12 months has been, a non-investment banking client (securities related services) of Barclays Bank PLC and/or an affiliate. Valuation Methodology: Our price target is $730 based on 12.5x our FY14 EPS estimate of $58.40. Risks which May Impede the Achievement of the Barclays Research Price Target: Risks include: 1. the economic environment and consumer spending trends 2. Mac demand momentum 3. execution risk in Apple's ability to continue launching the iPhone successfully in the US and international markets.

19 March 2012 28 Barclays | Apple, Inc.

IMPORTANT DISCLOSURES CONTINUED Hynix Semiconductor (000660 KS / 000660.KS) Stock Rating Sector View KRW 29300.00 (19-Mar-2012) 1-OVERWEIGHT 3-NEGATIVE Rating and Price Target Chart - KRW (as of 19-Mar-2012) Currency=KRW

Date Closing Price Rating Price Target 38,000 03-Feb-2012 26300.00 33000.00 36,000

34,000 21-Nov-2011 22900.00 1-Overweight 27000.00

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Link to Barclays Live for interactive charting

Barclays Bank PLC and/or an affiliate is a market-maker and/or liquidity provider in securities issued by Hynix Semiconductor or one of its affiliates. Barclays Bank PLC and/or an affiliate trades regularly in the securities of Hynix Semiconductor. Valuation Methodology: Our 12-month price target of KRW 33,000 is based on a P/B multiple of 2.3x, which we apply to our 2012E BVPS. Our target multiple is +1STDV to the stock's historical average multiple of 1.9x since we expect an upcycle for NAND and a bottoming out for DRAM. We believe P/B provides a cyclical context. Risks which May Impede the Achievement of the Barclays Research Price Target: 1) Potential for new owner SK Telecom's lack of experience in running a highly cyclical business. 2) Mistimed execution in DRAM and NAND production. 3) Too aggressive capacity expansion on NAND could drive market share competition.

19 March 2012 29 Barclays | Apple, Inc.

IMPORTANT DISCLOSURES CONTINUED LG Display (034220 KS / 034220.KS) Stock Rating Sector View KRW 29150.00 (19-Mar-2012) 1-OVERWEIGHT 1-POSITIVE Rating and Price Target Chart - KRW (as of 19-Mar-2012) Currency=KRW

Date Closing Price Rating Price Target 48,000 28-Nov-2011 24450.00 1-Overweight 36000.00 46,000

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Link to Barclays Live for interactive charting

Barclays Bank PLC and/or an affiliate is a market-maker and/or liquidity provider in securities issued by LG Display or one of its affiliates. Barclays Bank PLC and/or an affiliate trades regularly in the securities of LG Display. Barclays Bank PLC and/or an affiliate has received non-investment banking related compensation from LG Display within the past 12 months. LG Display is, or during the past 12 months has been, a non-investment banking client (securities related services) of Barclays Bank PLC and/or an affiliate. Valuation Methodology: We use the cyclical context of historical P/B and apply the mid-cycle (three-year average) P/B of 1.2x to set our target price of KRW36,000, given our expectation of an upcycle in specialty panels (accounting for 25% of revenue) combined with a recovery cycle in commodity panels (accounting for 75% of revenue). We use a relatively shorter range for historical valuation as the company has shown a de- rating trend since 2006 when global LCD TV penetration started to exceed 50% on an annual basis. Based on 0.6x 2012E BVPS of KRW30,246. Risks which May Impede the Achievement of the Barclays Research Price Target: Keys risks to our view include: 1) irrational behaviour by second-tier panel makers running their fabs below cash cost level to gain market share could result in greater-than-expected ASP decline of commodity panels; 2) slower demand growth in the EU on macro concerns; and 3) greater-than-expected cannibalization of TVs by tablet PCs.

19 March 2012 30 Barclays | Apple, Inc.

IMPORTANT DISCLOSURES CONTINUED Samsung Electronics (005930 KS / 005930.KS) Stock Rating Sector View KRW 1260000.00 (19-Mar-2012) 1-OVERWEIGHT 3-NEGATIVE Rating and Price Target Chart - KRW (as of 19-Mar-2012) Currency=KRW

1.6M Date Closing Price Rating Price Target

1.5M 15-Mar-2012 1250000.00 1500000.00 30-Jan-2012 1115000.00 1300000.00 1.4M 08-Nov-2011 970000.00 1-Overweight 1250000.00 1.3M

1.2M

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Link to Barclays Live for interactive charting

Barclays Bank PLC and/or an affiliate is a market-maker and/or liquidity provider in securities issued by Samsung Electronics or one of its affiliates. Barclays Bank PLC and/or an affiliate has received compensation for investment banking services from Samsung Electronics in the past 12 months. Barclays Bank PLC and/or an affiliate trades regularly in the securities of Samsung Electronics. Barclays Bank PLC and/or an affiliate has received non-investment banking related compensation from Samsung Electronics within the past 12 months. Samsung Electronics is, or during the past 12 months has been, an investment banking client of Barclays Bank PLC and/or an affiliate. Samsung Electronics is, or during the past 12 months has been, a non-investment banking client (securities related services) of Barclays Bank PLC and/or an affiliate. Valuation Methodology: Our 12-month price target of KRW1.5mn for SEC is based on a cyclical context historical P/B valuation. In our valuation, we apply a target P/B multiple of 2.00x to our estimate for the average BVPS of 2012 and 2013. Our target multiple is the stock's historical average for the past 10 years. We use the average P/B since 2002. Our price target is roughly equivalent to a P/E of 12.1x for 2012, which is slightly higher than the stock's historical average P/E for the past 10 years of 11.5x. Risks which May Impede the Achievement of the Barclays Research Price Target: Key risks to our positive call on SEC include: 1) a double dip in global economy, which might impact demand across the board; 2) much slower-than-expected (flexible) OLED ramp-up, which is the key to market share gains in smart devices, in our view; and 3) materially negative results from any kind of lawsuit.

19 March 2012 31 Barclays | Apple, Inc.

IMPORTANT DISCLOSURES CONTINUED Samsung SDI (006400 KS / 006400.KS) Stock Rating Sector View KRW 145500.00 (19-Mar-2012) 1-OVERWEIGHT 2-NEUTRAL Rating and Price Target Chart - KRW (as of 19-Mar-2012) Currency=KRW

0.22M Date Closing Price Rating Price Target 10-Feb-2012 151500.00 1-Overweight 180000.00 0.20M

0.18M

0.16M

0.14M

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0.10M

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Link to Barclays Live for interactive charting

Barclays Bank PLC and/or an affiliate is a market-maker and/or liquidity provider in securities issued by Samsung SDI or one of its affiliates. Barclays Bank PLC and/or an affiliate trades regularly in the securities of Samsung SDI. Barclays Bank PLC and/or an affiliate has received non-investment banking related compensation from Samsung SDI within the past 12 months. Samsung SDI is, or during the past 12 months has been, a non-investment banking client (securities related services) of Barclays Bank PLC and/or an affiliate. Valuation Methodology: Our KRW180,000 PT for Samsung SDI is set using a P/B-based SOTP valuation, which is equivalent to 10.9x 2012E EPS and 1.0x 2012E BPS. We apply a SOTP valuation to reflect different profitablilty of each division.In valuing SDI's investment assets, we reflect a 15% discount to the listed companies and a 30% discount to the unlisted companies. Risks which May Impede the Achievement of the Barclays Research Price Target: Key risks to our KRW180,000 PT for Samsung SDI are: 1) a possible takeover of SDI's stake in SMD by SEC at a price level that does not fully reflect growing OLED value; 2) aggressive capacity expansion at battery competitors that could create pressure on product ASP. General risks to the OLED sector include: 1) worse-than-expected execution of OLED development, especially for TV applications; 2) a lower- than-expected ASP premium over LCD; and 3) the emergence of an alternative technology such as crystal LEDs that could have a competitive edge in initial investment cost and power consumption.

19 March 2012 32

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