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Comment by ChuckMcM | Hacker News Reader

Interesting stuff indeed:

Q1 2012 46.3B Revenue 13.1B Profit (28.3% net profit) Q1 2013 54.5B Revenue 13.1B Profit (24.0% net profit)

So 4.3% of your net profit (2.3 billion dollars) went somewhere. Did anyone see on their balance sheet where it went? Any extraordinary items? Down payment on the new HQ or anything?

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iPads are lower margin than phones so a higher mix of ipads would give a lower profit percent. Fundamentally though they sold a lot more phones and a lot more ipads which are the big ticket items so you'd think total profits would go up but they are the same 13.1 bln so maybe there is some big investment made.

Neither investments nor dividends impact net profit.

Thanks for the correction.

More Tim Cook on the call:

"regarding the mix as an example, the iPad mini gross margin is significantly below the corporate average "

I'm guessing this is the most likely contributor. They moved a ton of iPad minis it seems like.

> Did anyone see on their balance sheet where it went? Any extraordinary items?

They've introduced new products for every category, so the manufacturing processes are still being refined. As time goes on they should eek more output in a given amount of time with fewer rejects, thus increasing margin.

They're facing actual competition, and with actual competition Apple has to start to compete with themselves (the iPad Mini, a very strong emphasis on the last generation of smartphone as a discount device), and they have to iterate quicker: See that the iPad 3 lasted for 6 months before it was replaced. Apple's margins have always been an extraordinarily out of line with the industry, so really it's just falling back to Earth.

I agree re: faster iteration to keep up with competition, but my point is in line with what was said in the earnings call - Supply of the iPhone 5, ipad Mini and new iMacs was constrained, so they were unable to meet demand. Combine it with a shorter quarter and you can account for a good amount of the shortfall in margin.

https://www.sec.gov/Archives/edgar/data/320193/0001193125130...

Dividend perhaps?

edit: I suppose that doesn't come out of operating expenses

2B stock buyback

That doesn't affect net profit either.

CapEx going forward is $10B vs. $8B in the past. That doesn't account for all of it (lower margin due to the mini is part of it) but apple is a manufacturing machine and spends a lot of money in early product cycles to get supply brought on line.

This impacts GM in the short term, with profitability increasing over several quarters.

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