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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.
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.
What does a "Do Not Touch" sign have to do with the topic?
And why are you turning off screens at the Apple Store?
dude, take a look at the two year report, no the report for today http://chart.finance.yahoo.com/c/2y/a/aapl.gif There is deffinitly a steady and steep rise here.
ZDnet:"...the company sold $483m worth of iMacs, eMacs and Mac Minis, down from $620m in the December quarter..." pure Boulderdash!
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.
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- 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.
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.
While it's a little suspicious that they're not talking about Mac mini numbers, they don't ( as far as I recall ) traditionally report unit numbers on these calls ( just $ sales/profit/etc ). So it's not terribly insightful to make a big deal about them not calling the unit number out, though it is true they might have made a big deal out of it if they'd sold a ton. What is clear is that people *are* buying them, though, Apple isn't sitting on a big backlog of unsold minis, nor are they scrambling to supply minis. These are good things, both. We may find out how many they've sold at a later date, but it's not too odd that this conference call as as limited in information as it was.
Just anecdotally, you can find the ranking of various Apple computers on Amazon's top sellers list. For Amazon's list today, the two mini models sold less than the G5 iMac ( but they all outsold the nearest PC competition, but who buys computers on Amazon?? People who buy G5 iMacs, I guess ).
But I didn't see the mini on Apple's own list ( click "Top Sellers" on the right sidebar ). Apple's list makes it look like they only sell stuff for iPods, iTunes, and, oh yea, iLife software. There's a Powerbook somewhere near the bottom of the list, but that's the only computer there today. Probably everyone not buying laptops are holding off for rumored speed bumps.
The two things that are key I'll quote from AtAT : "more Macs sold last quarter than in any other quarter in the past four years; over 60 percent growth in Japan and Europe". In other words, a better Spring than any Winter ( read: includes December ) in the past 4 years. Oh, and "gross margins that, despite the introduction of low-cost offerings like the Mac mini and the iPod shuffle, went up instead of down"... which actually probably means that they're selling a large number of high-end, high-margin things, like iMac G5s and iPods rather than Mac minis and shuffles. Which makes sense. My wife decided she wanted a shuffle, then a friend convinced her an iPod mini for just a hundred bucks more would be a great thing... that's how it works. The mini and the shuffle get you into the store, and before you know it, out you walk with an iPod Photo and a PowerMac. If you have the cash, or a good credit card, of course...
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.
Yeah, the stock got slammed even though Apple beat earnings estimates by $.10/share (not too shabby). The explanation is that iPod sales are up 16%, but iPod revenue is down 16% (they keep slashing prices)... yes, Wall Street views Apple as the maker of iPod and little else. Apparently the drop is because higher expectations were built into the price at $42/43 a few days ago (when I should have sold).
I'm holding for now and hoping Tiger/mini drives up some revenue in the next quarter or two. Hey, it might even be a buying opportunity. Of course, if you're looking for stock advice, you're reading the wrong message board and especially the wrong poster (my track record is mediocre)
Sometimes I don't get it.
Well, there's spam egg sausage and spam, that's not got much spam in it.
Not nearly as well as it would have done if they could supply enough to match demand, that's for sure.
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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
The nearest actual Apple store to me being a 4-hour drive, I ended up at a significantly closer CompUSA on release day, since they have their Apple corner. Definitely not a nice Saturday. It was windy and spitting snow while I was out. They didn't have any minis on display, but I asked a clerk about them, and he said they had a few. I really should have asked how many they had sold so far. There was someone talking to him about the mini before I got a hold of him, but I don't think the person was interested in buying at that time. Regardless, there weren't many people in the Apple section of that store at the time, but I assume that was a combination of the weather, the fact that even I wasn't sure if CompUSA would really have any minis in stock on release day, and maybe the fact that the store isn't in the area of town likely to contain large amounts of Apple users (and that there is another CompUSA in an area that might be more likely to cater to a portion of that crowd). That and that Nashville is a Dell town... or something. Anyway, I ended up getting the 1.42GHz model, into which I recently put a 512MB stick of RAM. It's my first Apple product ever, though I'd used Apple products occasionally in schools (IIe, early iMac (so terrible...), and what I now assume were G4 eMacs with OS X). I'm really enjoying it so far, especially with more RAM. Runs World of Warcraft well enough, though unfortunately without the shaders that make it look so nice. Just this week bought the Cocoa development book that several people recommended in the Ask Slashdot topic lower on the Apple page. Have yet to do anything with that, though.
Honor Among Slackers. A veri
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.
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.