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Apple Profits Up Due to mini and iPod
dmarx writes "The Ottawa Business Journal reports that Apple's profits have increased more than sixfold. Apple's Q2 profit was $290 million, or 34 cents/share; their total revenues were $3.24 billion. The iPod accounted for 31% of Apple's sales, about $1 billion." Commentary also available on BusinessWeek and ZDNet.
WEll I guess no one really cares about this. Or there's something completely awesome going on and I'm missing it because I'm lurking on slashdot. Check out http://www.apple-history.nl/support_files/h8.html for some interesting mac history all the way from the 1970's to today.
I was really curious to see the total sales of the Mac mini when these reports came out. Exactly how many of those little suckers did they sell in it's first quarter.
I suspect it did not break any records, or Apple would be crowing about it by now, but it would be fun to see how it did.
Information wants to be anthropomorphized.
Boulderdash... every Apple store I've visited has had either a "Don't Touch" sign on their mini's or the LCD turned off. All are orphaned to a standalone table with usually peripherals alongside.
Don't believe everything you read!
Hasn't exactly done wonders for the stock price though has it http://www.google.com/search?hl=en&q=aapl
Ottawa Business Journal
Ottawa Business Journal? Wasn't there a more obscure resource to link to?
Oh well, its always good to get the opinion of Canuckistan
Know what I like about atheists? I've yet to meet one that believes God is on their side.
revenues are about 5% of microsoft's. Price to earnings ratio is about twice that of microsoft and dell. earnings this quarter are down from last quarter, but up 5 fold from last year. Oddly while earnings were 50% higher than the predicted earnings (24 cents verus 36 cents per share), the stock has fallen 8% in the last two days. Are people dissatisfied that apple did not exceed expectations by more? I dont get it.
On the other hand maybe people are just going elsewhere. I note that the annual earnings per share is about half that of dell. However its pretty clear that the upward trend for apple is so large that if it continues it will be twice that of dell by next year. Apple is now growing faster than the computer industry as a whole (which is dominated by dell and microsoft). Apple sold 1 million macs and 5 million ipods in the last quarter alone. Look for an earnings bump the next quarter from Tiger and then another bump in fall with the back-to-school release of new hardware, and it looks like year of sustained earnings.
notably thi
Some drink at the fountain of knowledge. Others just gargle.
Are people dissatisfied that apple did not exceed expectations by more? I dont get it.
They're dissatisfied by the creation of 13 million new shares through the exercise of options, and they're wary because the price has already tripled in the past year. They might also see the iPod numbers as indicating that the low-margin shuffle is responsible for the rise in unit sales. (Compared to last quarter: unit sales up by almost a million, revenue down by about $200 M, per-iPod revenue down by about $70.)
No surprises here. Could be a buying opportunity if you figure Tiger will drive an upgrade cycle and bring some nice high-margin software sales...but it's a speculative gamble no matter how you look at it.
- 18.8% iRiver
- 18.6% Rio
- 15.8% Digital Way
- 8.8% RCA
- 6.2% Samsung
Apple is now claiming that the iPod Shuffle, after one quarter on the market, has 43% market share. In a segment where the existing players were battling to see who'd reach 20% share, that's pretty scary. Of course, all these numbers are probably US-only, but still.Village idiot in some extremely smart villages.
Clearly, Apple can afford to better compensate its employees.
I propose that Steve Jobs's salary be raised to $2.00 per year!
Who's with me?
Village idiot in some extremely smart villages.
is a pretty good one: penetrate markets with low priced products that get people hooked on the elegance and simplicity of Apple's designs. I picked up an iPod last year because of all of the buzz. After playing with it for awhile, I realized how brilliant Apple's design was. So, I decided to check out what else they had at the local Apple store. OS X seemed to be so easy to use, not to mention the power of having a CLI with every utility I'm used to using with linux, I had to buy a PowerBook. Now I do all my development work as well as meet my other desktop application work on one machine that JUST WORKS. I don't have spyware/virus worries. I don't have to worry about finding a driver that works for my wireless card. I just power on and start working.
I used to laugh at the Mac zealots... now I know what they were so excited about.
Sometimes I don't get it.
Well, there's spam egg sausage and spam, that's not got much spam in it.
The options were probably already figured into the price, and there was no evidence of the shuffles causing a decrease in earnings... margins in that area were up.
The real reason that things fell was the tradition that on good news Apple's stock goes down. This is bordering on a truism, and humorously in the past when the numbers were bad the stock went up initially.
Price to earnings ratio is about twice that of microsoft and dell
A high price to earnings ratio is bad, and partially explains why the stock has dropped. A high PE ratio, means that people are expecting future earnings to significantly exceed current earnings, and while that has been happening recently for Apple, yesterday they warned that they do not see that as a long term trend. They expect earnings to continue to increase, but at a much more reasonable rate - 15%.
So, Apple are making big money selling a sub $500 power-pc box to home users, and Microsoft are going to be losing a fortune doing the same?
Of course it's a very strange comparison, as one is supposed to get the brand into new markets and the other is supposed to make money by getting a cut from 3rd party games, but I can't help thinking Apple have come up with a better business plan than Microsoft's console division.
A pizza of radius z and thickness a has a volume of pi z z a
Also, I believe, one of the people in the talk mentioned that this rate of growth is unsustainable. I already knew that, it seems obvious, but I think investors are reacting, in part, to that. The year over year growth has been about 70% the last two quarters (I believe), but, IIRC, Oppenheimer said they expected it to eventually level out around 15% growth annually. This is not nearly as much growth, but is still very respectable, in my opinion.
Well duh. but the high P/E was known before the earnings report, yet the price was high. after the earnings report the P/e got lower not higher. so the stock price drop was not explained.
As a shareholder, I have spent the day perplexed and amazed at the 9% fall today (as well as a 5% fall post-market close!)
I summarize the reasoning thusly:
- Apple's gudance for Q3'05 is the same as the Q2'05. That is, Apple guided analysts towards $0.28 cents per share or about $3.15B for next quarter. This is EXCELLENT right? Well some analysts didn't think so because it is just about the same $3B that Apple posted this quarter. The analysts see the guidance as showing Apple is expecting flat growth. Further compouding this is the fact that the just ended Q2 is typically Apple's weakest of the 4 quarters and so Q3 should be higher than Q2. Offsetting this logic is the fact that in this quarter apple intorduced the iPod Shuffle which was quickly swooped up and generated a great deal of sales not typical for Q2.
- Average price per sale (APS) was lower this quarter than peviously. Now lets try to figure this one out. Apple introduced the Mac mini at $499 and the Shuffle at $99. Demand for the products was high. The average of a $99 Shuffle and a $499 iPod Photo is $299. If Apple sells the same number of iPod Photos but also sells a ton of Shuffles, then the APS drops. (Duh, this is basic math.) The analysts don't like that though - they want high sales, high margins, and high profits. The logic escapes me. For years analysts say "lower your prices so you will sell more" Apple does, and is beat with the Bear stick by the Market.
- Finally, there is the "iPod can't keep this up" camp that is so damn afraid that any moment now Sony will unseat Apple's 70% market share (No worry that Sony doesn't even account for a tenth of that market today). Also there are the people who think that as soon as there is a WMA player built into a cell phone, everyone will buy that instead of the iPod (No worry that Apple and Moto are about to release their own iTunes phone this year).
So there you have it. my personal views. I own the stock so take that into consideration. I am also clammoring up some cash to buy more because I see the $36 and change stock price as pretty darn tastly for a stock that just beat bullish earnings estimate by a dime (that's two nickles) and whose forward PE is 20 though it's trailing is three times that. But don't you go buying up AAPL just because you read this because that would be plain foolish.
I only came here to do two things; kick some ass, and drink some beer...looks like we're almost out of beer.
I thought the options figures were only released with the other financials yesterday; i.e. this is not options granted, but exercised.
As for the shuffle...I was probably wrong to call them "low-margin" but if you look at the numbers it's clear enough that compared to last quarter, they sold more iPods and took in less money for them. (Something like 5.5 M units/$1.08B vs. 4.5 M units/$1.2 B.) True, that doesn't necessarily mean less profit, but it does represent a shift to a mass-market strategy that's unfamiliar to Apple.
I'm not convinced that "tradition" and "sell on news, buy on rumor" is enough to explain this. I do think that despite incredible revenue and income numbers, the stock is still very expensive.
Most people who follow stock prices of their company soon learn to ignore the day to day workings of the company. This sort of "market reaction" is part of the reason.
The thing is, yes, Apple is down today (and more after hours). However, if you look at the stock in a longer term (a quarter represents more than a single day, after all), you'll find that they were up quite a bit. The daytrader philosophy here is "buy on the rumor, sell on the news." However, looking at the stock, I don't think that completely explains it. Partly, it may be that the market overall was down today, and it might simply be that nobody thinks Apple can top themselves this time. Given that they're close to a 3 or 4 year high, its certainly possible that people expect apple to begin a downward trend in sales and revenue from here on out.
The thing to realize is that iPod is a great product, but it's only one great product. Great companies merit their high PE numbers by rolling out new products on a regular basis. Upgrades don't really count here, especially since they're easily planned on and have a fairly established risk compared to a brand new product. You might count a G5 laptop as a new product, though it's stretching it a bit, and there's still significant doubt that they'll ever find a way to really move their laptops forward in horsepower the way x86 laptops have been for some time. I know plenty of people who are interested in apple laptops, but keep saying to themselves and others "maybe once they release a g5 version." The future of "sustained earnings" really looks like a gentle glide down from here-- might as well get out on the top floor, after all.
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Open Source Sysadmin
No surprises here. Could be a buying opportunity if you figure Tiger will drive an upgrade cycle and bring some nice high-margin software sales...but it's a speculative gamble no matter how you look at it.
Nah, a buying opportunity was two years ago when I got my first PowerBook and said "Hey, they make a great product, maybe I should buy in.", and I didn't.
Now that what I didn't buy is worth four times as much, I wouldn't call it a buying opportunity. They're going to keep growing, but they've had their spurt in recent years, and now it's comming back to more realistic levels.
A 512MB flash player for $100? A full-featured desktop computer for $500? A combination audio streamer and 11G base station for $130? A real-time motion graphics application for $300? How about an operating system that's half the price of its biggest competitor?
Apple may not have the absolute cheapest product in a lot of categories, but these days they do have many products that are average price or better.
Lars T.
To the guy who modded me down from perfect to terrible Karma - Apple haters still suck
Motion. Compare it with Adobe After Effects, which is $400 for a limited time only and whose regular price of $700 is more than twice Motion's.
Anecdotal accounts trump empirical evidence, right? Right??