Even Record Apple Profits Don't Please Analysts

Even Record Apple Profits Don't Please Analysts

51 million iPhones sold in the last quarter, 26 million iPads, and yet share price drops.

"Revenue for the quarter was $57.6 billion, up $3.1 billion, or 6%, from the year ago quarter and near the high end of our guidance range," says Apple's Peter Oppenheimer. "No technology company has ever generated that much revenue in a single quarter." Yet it's not enough for analysts, who predicted even more sales, and share price dipped after the quarterly report by about 5%.

Apple sold 51 million iPhones in the last quarter, a phenomenal achievement, up from 47.8 million year-on-year. But analysts were expecting 55 million iPhone sales, and even though a record is still a record, people are nervous about Samsung and Apple's other Android rivals. Sure, sales are up, but where's future growth coming from? Maybe China, where Apple recently struck a deal with China Mobile, or maybe somewhere else; but the worry is that maybe there isn't any future growth, and it's all downhill from here.

The Americas is still Apple's largest sales segment, but it's declining; revenue fell 1%, to $20.1 billion. Apple attributes this to supply problems for the 5S, and some carriers changing their upgrade policies, such that customers used to upgrading within a year now were forced to wait a full 24 months. Apple's hoping this is a short term problem, and points to its successes in the emerging markets as a reason for good cheer.

Source: Guardian, Seeking Alpha

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I think part of the problem is that shareholders don't feel like Apple is doing enoguh to counteract the rise of Android smartphones and tablets. A few years ago, Apple had a near monopoly on the smartphone market, and Android was a niche alternative for geeks. Now, companies like Google and Samsung are taking ever bigger bites out of the smartphone/tablet market, and if Apple don't counter that, Android may well end up becoming the majority of the smartphone market.

Releasing another S variant on an already released phone isn't likely to solve that.

TitusGroan:
I think part of the problem is that shareholders don't feel like Apple is doing enoguh to counteract the rise of Android smartphones and tablets. A few years ago, Apple had a near monopoly on the smartphone market, and Android was a niche alternative for geeks. Now, companies like Google and Samsung are taking ever bigger bites out of the smartphone/tablet market, and if Apple don't counter that, Android may well end up becoming the majority of the smartphone market.

Releasing another S variant on an already released phone isn't likely to solve that.

I'd say that's part of the problem. Another is the expectation that technology based companies (Phones, computers, video games/consoles, etc.) are supposed to continue to evolve and bring new things to the table, and with that they should be raking in hundreds of billions of dollars for their companies. "There's over 7 billion people on the planet, why are you not making more as a multinational company?"

But the thing for shareholders, analysts, and other financial people is that technology can and will plateau after a certain point. Which it has for the most part. Other than more memory and slightly better graphics, what can smart phones do to improve themselves other than risky and possible income damaging research and development for the next big thing?

TitusGroan:
I think part of the problem is that shareholders don't feel like Apple is doing enoguh to counteract the rise of Android smartphones and tablets. A few years ago, Apple had a near monopoly on the smartphone market, and Android was a niche alternative for geeks. Now, companies like Google and Samsung are taking ever bigger bites out of the smartphone/tablet market, and if Apple don't counter that, Android may well end up becoming the majority of the smartphone market.

Releasing another S variant on an already released phone isn't likely to solve that.

Android is already the majority of the smartphone market. Last I read, globally, 80% of smartphones and tablets run on Android. In fact, even Windows Phone is rising, already breaking into the double digit marketshare in several Latin American and European countries. The US is actually quite atypical in the global trend of smartphone platform adoption. Of course, the tale is the same as it has always been with shareholders, the goal is constant growth, exponential is desired, even it the expectations cannot reflect reality.

Oh for the love of Christ, are these people ever fucking satisfied with ANYTHING!? No, it's always more money, more more more more MORE money. It's sad really. I used to be more conservative not too long ago, but the people who supported it made better arguments against it than the people who hated it. This is no different.

I notice that also doesn't mention "we took a bath on the 5c" because who the fuck would want to pay premium prices for a discount phone.

TitusGroan:
I think part of the problem is that shareholders don't feel like Apple is doing enoguh to counteract the rise of Android smartphones and tablets. A few years ago, Apple had a near monopoly on the smartphone market, and Android was a niche alternative for geeks. Now, companies like Google and Samsung are taking ever bigger bites out of the smartphone/tablet market, and if Apple don't counter that, Android may well end up becoming the majority of the smartphone market.

Releasing another S variant on an already released phone isn't likely to solve that.

Android already is the majority of the smartphone market. Due in large part to the massive number of android dvcs currently on the market. iPhone is far and away the most popular individual dvc, but as a platform Android dvcs greatly outnumber iOS.

Hoplon:
I notice that also doesn't mention "we took a bath on the 5c" because who the fuck would want to pay premium prices for a discount phone.

This always irritates me when people say this. iPhones are not 'premium priced' dvcs. They haven't been for years. They are exactly the same price as every other comparable smartphone on the market. Take the 3 most popular top tier android phones on sale at the moment: GS4 Note3 and HTC1, every single one of those phones SRP is within 50 dollars of the iphone 5s.

Regarding the 5c the only phone priced at or under it that is clearly superior (from a technical perspective) is the LG G2. Largely due to the fact that LG phones have historically been of a lower quality than other android models and therefore cheaper.

Hmm, Maybe the the lack of innovation starting shortly before Jobs' death is starting to creep up on them. I know they came out with a radically new design for the Mac Pro and simpler upgrades to the look their other products. But, I think even though he wasn't the one coming up with ideas, he did inspire or even force changes in older products and creation of newer ones faster than the rate the company is doing now. I bet if he was still around we'd be seeing him show off a new giant ipad/imac replacement or touch screen mac mouse with dock icons on it or something. I bet he even had a small part in that Mac Pro redesign way back in concept stages.

The massive drop in shares after the loss of Jobs might not have really hit yet. The company might be running on fumes until investors and customers get disinterested and then its shares will plummet until it levels out somewhere where itunes, new iphones, and occasional macs sales keep it afloat. Apple's trendsetting days are probably over and the only thing keeping them different from any other tech company is their OSes. Analysts and Apple's customer based certainly think so.

At the company I used to work for they used to predict 7-9% growth on year, every year for 5 years in a row.

The company was already very large and had plans for growth, but nothing that would justify predictions of this magnitude.

So it never matched the quota for these years that I was there and results came out every month that we were down - even if we were beating ourselves of that month of last year significantly (which happened on a regular basis)!

It was bad for motivation and failed to showcase to people that we were growing (normally 4% every year), which was (and is) very good! We should of been happy, but instead everyone was annoyed. Just because something was predicted by the financial analysts for whatever reason, maybe even aspirationally and not expecting it in reality to try and drive us towards more sales, shouldn't mean that not reaching it immediately equates to failure.

People need to concentrate on success and aim for potential.

If we learned anything from Matthew McConaughey in The Wolf of Wall Street, even the most learned and best stock brokers have no idea what is going to happen with stocks, so don't place too much weight in their significance - instead, just hum, beat your chest and drink martinis with Leonardo DiCaprio.

 

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