Apple Reports Third Quarter Results
marketwatch.com
marketwatch.com
Mac sales are static, overall iPhone sales softening as the lineup ages, iPads surging, iPod continues to dwindle, miscellaneous sales remain miscellaneous.
+ stock buyback next year + dividends being issued as expected + China sales exploding
So: a quiet quarter. New Mac OS released tomorrow. Yay!
Most articles blame the next iPhone for the lower than expected sales. So In 1 year there are 4 quarters, and in the last 2 quarters misses on estimates are explained by rumours for the next iphone, this year and last year. Finally, will the current quarter also be worse for iPhone due next release approaching?
Analysts; please be clever enough to take care of new releases in your estimates.
"We've also just updated the entire MacBook line, will release Mountain Lion tomorrow and will be launching iOS 6 this Fall. We are also really looking forward to the amazing new products we've got in the pipeline."
"Apple's Board of Directors has declared a cash dividend of $2.65 per share of the Company's common stock. The dividend is payable on August 16, 2012, to stockholders of record as of the close of business on August 13, 2012."
Yep. Hi. *waves from a 3g-only Verizon iPhone 4 :(
It's also worth noting that upgrade games for iPhone users are quite common outside the US (higher "early upgrade" fee, delayed upgrade eligibility and so on). It isn't terribly surprising to see AT&T borrowing from that playbook (though I suppose they should patent those tricks before Apple does ;) ).
The fact is Apple is a PRODUCT company. Meaning they do the software, hardware and most importantly everything in between the two.
In all seriousness Apple isn't either. They make better software than any hardware company I know of, and better hardware than any software company I know.
Totally agree that Apple isn't either, which was exactly my point.
Apple (or Microsoft) sells a platform. Samsung sells hardware. Intuit sells software.
They missed their estimates and stocks tumbled 6% in after hours trading. That's $33, more than 10 times the dividends they will be paying on that $8B profit.
Since they reported numbers that were in the neighborhood of 6% below what was expected, their stock fell about 6%. Which is a pretty large drop.
Via http://www.mercurynews.com/breaking-news/ci_21147940/apples-...
It doesn't matter how much money you actually make when you are as big as Apple, it matters what you make compared to what people (analysts) think and expect you to make.
Edit: Put wrong quarter numbers, fixed.
These analysts have their heads up their asses, though, as that's the only place you could get numbers like this.
People tend to assume that when a stock loses a significant amount of value in a short period of time, a company has done something wrong. This is a great example of why this is not the case - speculators wrongly assumed that Apple would be even more ultra-profitable than they actually are, and overvalued the stock. The resulting correction was healthy.
Q: Can you talk about what your conversations are like with carriers in terms of pricing, subsidies, etc.?
Tim Cook: (laughing out loud)
I don't want to talk about specifics with carriers, but generally I'd say our role is to make the very best smartphone in the world that has an incredible user experience that's far superior than anything else, that customers want to use every day at the end of the day, carriers want to provide what customers want to buy the most important thing for Apple is to continue making the best products in the world. we are maniacally focused on it
Because that would be dumb.
I'm no Apple fanboy, but it always amuses me that the Android boosters talk unit numbers while Apple continues their "BMW" revenues on product. Congrats, you sold 100 Beetles... our sales of 1 BMW generated more profit.
I'm not sure if you are actually asking for an answer here - it seems you think you already know the answer.
Samsung just had record profit last quarter, prior to the Galaxy 3 launch.
They don't break down per phone profit & margin, but:
Samsung's quarterly handset division profits nearly tripled to 4.27 trillion won ($3.8 billion), accounting for 73 percent of total profit, and operating margins jumped to 18.4 percent from 12 percent in the preceding quarter on strong sales of the Galaxy S and the Note phone/tablet, the surprise consumer hit of recent months.[1]
Now 18.4% profit margin isn't as high as Apple's, but OTOH it includes a lot of low end (and less profitable) phones too.
TL;DR? That thing about Apple making most of the profit in the mobile phone market is no longer true.
[1] http://www.reuters.com/article/2012/04/27/samsung-idUSL3E8FQ...
And it seems to work out that way most of the time. If there are two technologies, and one manages to become a commodity that is installed all over, that's the technology that you see innovation coming from and the future coming out of. It is often the worse technology. But it wins.
I don't have a horse in the phone race. But when I see Apple folks talking about profit margins and Android folks talking about units sold, I'd lay my money on Android winning in the long run. It may be a worse market to be in now, it may make a lot less money. But where the users are is where the future tends to be.
This happens for a lot of reasons. Let me give just one. When teenage kids (who don't have a lot of money of their own) get a smart phone, they are going to be given Android devices because it is cheaper. When they play around with those phones and master them, they will be learning Android. Many will stick with Android. Others will learn Android, and their first programming experiences will be with it because that is what they have. And once they grow up they will be worth a lot more than $0, both as customers or developers. But they won't be imprinted on iOS.
For example compare the Mac vs Microsoft Windows. The Mac was better, had better product margins, etc. Microsoft was the commodity and completely owned the market.
For other historical examples compare VMS vs Unix, Lisp vs C, OSI protocols vs TCP/IP, Smalltalk vs Java, traditional client-server vs web apps, CORBA vs SOAP (vs JSON rpcs), Perl vs PHP, and so on. In many cases the losing technology was technically much nicer to work with. But the winning technology won.
For a famous essay reflecting on why, see http://www.jwz.org/doc/worse-is-better.html from the Lisp vs C war.
As for Mac vs Windows, I'm referring to the old macs, OS 7, etc. That story ended with Apple almost dying before Steve Jobs came back and did what he did best - focused the company on creating new markets.
Moving back to your focus on profits, I think you could benefit from reading The Innovator's Dilemma and its followup The Innovator's Solution. What you'll learn is how across many types of technologies (examples include ship design, steel production techniques, earth moving machines, disk drives, etc), across many decades, whenever two technologies compete head to head, the odds very, very strongly favor the one that is cheap and crappy. Throughout the competition, all of the revenue to be made is in the established, strong technology - until they suddenly have no market left.
Given that history, there is no question what to expect in phones. The iPhone is clearly the superior option that makes more money. Android is clearly the cheap crappy option that ships more units. But both are going to improve faster than people's needs increase, and Android is going to win.
Why the apple community feels the need to attack the concept of free market competition I have no idea, I think they just like the sound of the phrase, it's certainly become popular recently without any outward sign that most people who use it even know what it means.
If you look at Apple's product line up right now, they are slowly but surely back filling their product line up just like the iPod. Look how that turned out for everyone else.
It's too early to bet on either platform in the long term.
This tells me that the trend you are hoping for in Apple's product line should not be counted on.
The relentless march of capital may be increasingly going off the rails.
The failing here is not that the stock price dropped on results that were worse than the market expected, it's that the market expected too much in the first place, causing the stock to become overvalued.
The thing is, analysts have shown, historically, that either:
1) They are really, really bad at their jobs to have such a consistent track record of producing poor estimates for Apple, or
2) They are really, really good at their jobs, but the jobs they're doing aren't the jobs we think they're doing.
I don't really see how what I said disagrees with what you said - what I was pointing out was that a stock price falling when the company fails to meet expectations is good and rational behaviour. The problem is the bad analytics that caused the inflated expectations in the first place. Feel free to speculate as to the cause of that as you wish :-).