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Apple Profit Falls 22% But iPhone Sales Are Up
New submitter marcushoward writes in with news of Apple's quarterly results. From the article: "Apple on Tuesday reported fiscal
third-quarter revenues of $35.3 billion and profits of $6.9 billion, or $7.47 per share. The revenue number is basically even with Apple’s results from a year ago, but its profits were off by almost $2 billion. Revenues were mostly in line with Wall Street’s expectations of $35.09 billion and slightly above its earnings per share expectation of around $7.31. Apple itself had predicted revenues between $33.5 billion and $35.5 billion."
Compared to this quarter last year, sales of Macs are about even, iPad sales dipped slightly (14.6 million vs 16 million), and iPhone sales are up quite a bit (31 million vs 26 million).
The industry analysts and pundits have been predicting this for ages: that while Apple led for ages, and reaped windfall profits as a consequence, there would be a stampede into the smartphone market, and Google would barge in, turn smartphones into a commodity, and crush Apple's margins. This is not a surprise. Happens in markets all the time, and had previously happened in the PC market, where nowadays, it's impossible to make serious money on PC hardware, and the only people selling parts are people happy to sell huge volumes on razor-thin margins.
What's interesting about this story, at least for me, is that iPad sales have tanked. Maybe that suggests that Android on tablets has matured somewhat from the early days of few, clunky tablet apps, and that tablets are commodities now too.
Apple's cyclic not a steady force. I'm looking forward to the Liquid Metal Iwatch. I worry a bit about the smaller iphones. On the one hand they boost new sales in foreign markets (pity Nokia) and probably spike sales everywhere. But they will canibalise some new sales of the older higher margin phones. Or will they? perhaps they will have higher margins. Or perhaps people who save money on the smaller one will pick up an ipad. Or perhaps sales of the full sized iphone are saturated anyhow so there's little to canibalize. All I know is that they won't lose money!
Some drink at the fountain of knowledge. Others just gargle.
boo hoo.. Only made 6.9 BILLION in PROFIT... the headline should be "HOLY FUCKING SHIT THEY MADE 6.9 BILLION IN PROFIT"
Apple (headline) profits fall, just as they are being asked to pay tax.
During the depths of the recession they were able to negotiate really sweet deals on their huge purchases of components. Those contracts expired, and they're now having to pay more, but they certainly can't raise prices. Of course they explained all this and warned investors of the coming drop in margins about a year ago, but much easier for the irrational Apple-haters to ignore the perfectly sensible explanation from Apple itself, and start looking for strange conspiracies instead...
It's more like this:
Everyone else is losing money. Apple makes $6.9 billion. Die, Apple, Die!
The Samsung Galaxy phone is better and any tablet in the world is better than the iPad.
Nothing against the Galaxy but "better" is a pretty ill defined term. For my Grandmother, who mostly wants to play solitaire and facetime with her grandkids, the Galaxy is a demonstrably worse choice. For your needs or mine it might be the better choice. "Better" depends on what you are doing with it.
As soon as people realize it has no HDMI, no micro-SD port, and no USB port for flash drives, they can go spend 5x less on a tablet that can or get the vastly superior Galaxy tablet for the same price.
There is a market for tablets with those connectors but it is, for better or worse, a minority. My several of my family members have iPads. Most of them would never use any of those ports and in fact most of them don't even know what an HDMI or micro-SD port is. That's not to imply that a tablet with those ports would be pointless. For someone like me they might actually be an attractive feature but I have no illusions that most iPad buyers would need or want them. Furthermore those extra ports add cost, complexity and opportunities for hardware failure. Furthermore there are other ways to accomplish things like file transfer, video display, etc without those ports so it is unclear why they would be necessary in most cases. You don't need HDMI to display video. You don't need USB to store or transfer files. I'm sure some people appreciate those ports but I'd wager a tidy sum that most of the time they go completely unused.
While this article was brought to Slashdot for flame war fodder there is another reason this is news elsewhere. What it comes down to is that businesses, regardless of actual profit, are largely looked on as weak by investors if they're not showing growth.
I'm not one of these people who beat on the idea of capitalism but I do see it as a failing of the perception in that endless growth just isn't possible in the long term. Sadly it's endless growth that drives a majority of today's investors. Most of today's investors don't see their dollars as a building block to better companies with long term goals and good public relations, they see their dollars are something they need to "flip" fast to make it worth their time. That's been a failing of the Wall Street economy for several decades and it only gets worse as time trods on.
Apple will take a hit because of this. It's not because they're technology is weak but because there is enough competition in their field that push investment dollars to the short term gains. And this isn't to say other players in the field aren't really offering anything but their long term outlook is secondary to what they'll offer up in the next quarter or two. Apple hasn't planted itself well enough as a long term solutions company to keep the market interested like IBM, Oracle and Microsoft did. They'll survive and maybe make a bigger comeback some day but they will have to suffer through this lull like every other market leader has to from time to time.
The industry analysts and pundits have been predicting this for ages
Ages huh? 15 years ago Apple was “beleaguered”
that while Apple led for ages
The iPhone went to market only in 2007. *Six* years ago, Apple was late to that game. It was only that the other players were caught with their pants down.
reaped windfall profits as a consequence
Their insane margins were more a testament of Tim Cooks logistics expertise, the reason Steve Jobs hired him.
Google would barge in, turn smartphones into a commodity, and crush Apple's margins
Maybe in bizarro land. Apples only competitor is Samsung. The rest of Android phones replace the feature phones of old.
the PC market, where nowadays, it's impossible to make serious money on PC hardware
Uhm, except for Apple?
What's interesting about this story, at least for me, is that iPad sales have tanked.
Tanked. Yeah, right. Yoy 16 to 14.6 million. With FQ3/12 being the quarter with the brand new retina iPad.
Wish /.mods would cut back on dope.
. I don't know any non-geek buying Windows PCs anymore. Everyone now wants a Mac desktop or laptop based upon superior usability.
Last time I checked Macs had about 10 or 15% market share worldwide. So either the world is 85-90% geek, or you need to get out of your basement more often.
Yes, you will have things like the weaker app market, however Apple is offering iPhones going back to the iPhone 4 yet which is free on contract. So while Apple still gets paid for that phone the amount they are making from the sales of the iPhone 4 and iPhone 4S to the carriers is likely significantly less than the iPhone 5.
I'd suspect a lot of the increase in iPhone sales likely came on the lower profit margins for the iPhone 4 and 4S which would work to eat in to the overall profit of the company. Still they are making a decent margin and plenty of money, many companies would love either the nearly 20% margin or nearly 7 Billion in profits.
This is a very good observation. Wish I had mod points. I've seen the same thing with Tech companies in general: if you're not growing q/q then you're "dying" in the eyes of the investment analysts. So even though your company may be stable and have good market share, and has managed to stay afloat, if you're not growing then they're taking their money elsewhere.
Here's to hot beer, cold women, and Glaswegian kisses for all.
As much as I dislike Apple's products and philosophy, I absolutely hate Samsung's philosophy. In my experience, it's either copying (much more than would be reasonable) successful products or throwing tons of crap at the wall to see what sticks (the galaxy cameras come to mind). Either way, their products are designed to what seem to be very poor standards with atrocious quality control.
Out of 11 Samsung products:
Two were dead on arrival (Ativ Smart PC Pro, a camcorder whose model I don't recall) - they did turn on, but were not in a condition anyone would call useful (dead touchscreen and autofocus, random stability issues, not to mention the fact that the tablet's replacement, like all other units I've seen, had plastic covering one of the keyboard dock's pins and a misaligned speaker grille).
One (40" LCD) developed some unusual dark areas on the screen.
One (Refrigerator) suffers from an ice dispenser button that gets stuck if operated with a single finger, its shelves' plastic is cracking and there's rust developing on some parts of the outside finish.
One (Monitor, Syncmaster 940BW) has a driver issue (seriously. Google it and wonder how it's possible...) under Windows 7 where a driver is automatically installed that includes a bad color profile that causes White to be displayed as Yellow in color-corrected applications, unless a different profile is manually chosen.
One (Dual-SIM phone with crappy resistive touchscreen) was never a decent phone, but its touchscreen decided to crap out one day, for no apparent reason, making it impossible to use.
Another phone (Wave I think it was called... ) was a phone whose hardware showed potential but was running Bada or whatever that OS was called. Not pleasant to use.
Only 4 / 11 Samsung products never gave any reason for complaint (besides limitations that were obvious when buying it - like a screen that is at a fixed height - those were knwon and expected, so there's no reason to blame Samsung): Two 830 SSDs (one 128GB and one 256GB), another monitor (Syncmaster BX2450) and a Blu-Ray drive.
I'm sure someone can give me a comparable amount of Apple horror stories, but I'd bet that most of them are actually limitations that one knows they're buying - like support for newer versions of OS X / iOS being a gamble. The products themselves don't tend to start failing in unpredictable ways, most failures are predictable, in my experience.
tl;dr I won't be buying Samsung again anytime soon (and I wouldn't buy Apple anyway, so don't bother with that angle)
HDMI == AirPlay
SD-slot / USB == iCloud
That's how Apple handles those issues.
Also, I don't believe any iOS battery is soldered; they all have detachable connectors.
In addition to that, their product lineup has changed since a year ago. The iPhone 5 has significantly lower margins due to the higher cost of manufacturing than the iPhone 4S that it replaced, and the iPad mini, which they introduced to fend off competing small form factor tablets, has lower margins than its big brother. As you said, they've been advising investors right from the start that this would be happening.
On top of that, the retina iPads were still recent in the year-ago quarter, so it's actually pretty astounding that sales were even as good as they were this quarter, considering that they haven't had a major product releases in any of their product lines (other than MacBook Air) for a number of months now. Typically they space product releases throughout the year, but they've acknowledged that they're going to have a packed autumn this year, which could work out for them since they'll likely have a number of new product releases going into the holiday season.
Yeah, profit takers are going to dump the stock. Apple's up 6% this morning. Hey, can you manage my portfolio? I feel like losing a lot of money day trading, and you sound like the guy to do it for me.
I've learned that they're worthless, so I don't read AC comments anymore.
This is also the reason why manufacturing industries in America have shipped their jobs overseas. Once a company has reached its peak growth in sales, leadership is under pressure from investors to continue to demonstrate growing profits. So, they look around and quickly seize on their own labor force as ballast.
The American workers are / were thrown overboard to expand profit margins and satiate investors' demand for "growth".
$5 / month hosted VPS on linux = awesome!
I wonder how many people are in the same situation as I am? I'm a self confessed Apple fanboy, but there just wasn't much reason for me to give Apple any money last quarter.
I won't replace my iPhone 4 just now because there is bound to be a new model along soon. I can't replace my 2008 MacPro because they don't sell them in Europe any more, and even if they did, it would be foolish to invest in another cheesegrater when the black bin has already been pre-announced. I like the idea of a tablet, but I'm waiting on the inevitable retina iPad mini. For me Apple isn't tanking, they are just deferring revenue.
A pizza of radius z and thickness a has a volume of pi z z a
using anything other than MacOS on the desktop/laptop right now, but as Jobs himself once said, the post-PC era is upon us, and weirdly, that's where Apple is struggling a bit. After a burst of market innovation during the second half of the '00s, they've basically said "pass" the last several product cycles.
My first iPhone absolutely floored me and there was nothing else like it on the market. Same with my first iPad. But early this year I replaced my iPhone 4 with a Samsung Galaxy Note simply for features reasons (large display, widgets) and ended up going with a 7-inch Galaxy Tab rather than an iPad mini because the Galaxy tab can be had for less than half the price but offers "good enough, similar enough" functionality to the iPad Mini for me.
If Apple wants to stay on top of the post-PC game, they're going to have to:
(1) Tackle the mid-level market more directly or at least differentiate themselves from it, and
(2) Pay attention to the features that the market is paying for
I'm a big believer in Apple quality and Apple design, and in the Apple ecosystem, so it's a bad sign that right now (a) there is no iPhone that I prefer to this hunk-of-junk Android phone whose quality pales in comparison, and (b) the price difference in other lines is so significant (more than 2x — $180 for a Galaxy Tab w/40GB and higher display density but just-as-good build quality out the door at retail, vs. $350 for an iPad Mini w/16gb) that I just can't justify the Apple premium.
STOP . AMERICA . NOW
Every iphone for a 3 year period had a screen that was roughly twice as likely to break as the one before it accordingly to actual phone insurance companies.
"A" screen? No, you're confused. The iPhone 4 has a glass back. Two sides that are glass accounts for the increase in dropping causing cracked glass. The screens themselves have not got more prone to cracking.
And in drop tests iPhones were far less breakable than Samsung Galaxy's.
The newest ipad has been officially rated heavier, hotter, and with a worse battery life than the one before it after they improved something that nobody was complaining about (the graphics power and screen res).
Yes, they vastly improved the graphics, to the extent of 4 times as many pixels. The best on the market. And that needs more battery power. Your premise is that if you assess that people aren't complaining about a particular thing it shouldn't be improved? The iPad 3 flew off the shelves. That's the fundamental reason why a year later (with no new iPad released) iPad sales are down.
The antenna problem is yesterdays news. It affected the iPhone 4.
The purple flare is not an issue. No cameraphone camera is flawless. They all have their own artifacts that you will get if you look for them.
These issues are well known BECAUSE they happen on iPhones. And people care about iPhones. That makes them newsworthy. Every other phone manufacturer also has issues with their phones. But they don't make the mainstream geek news because hardly anyone cares.
It's still 56x slower than my class 10 samsung micro SD card that's in my tablet (it's 70MB/s read speed). What a great improvement in technology!
You have to wait whilst it saves to SD card. There's no waiting to save to iCloud. Thats the difference between file system saving and background syncing.
Samsung did even better than Apple with over 8 billion in profit but their stocks fell sharply because they didn't "grow" as much as was expected. I can't figure out what the hell is going on with these people. Companies that suck ass go up while companies rolling in dough drop. Hell of a world.