Apple Announces Record Revenue but Flat Profit

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warezme

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So? Why does every big company expect their profits to keep growing? What is wrong with sustaining a healthy margin especially if a past trend exceeded normal growth. It's ridiculous that big business expects growth and profit and a bail out if it doesn't happen. If you don't make a profit maybe you need to change your business and if you are so big that you need a bailout, you need to be broken up because you're a monopoly.
 

stevo777

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I think the products that Steve Jobs had a hand in guiding have all been released and anything going forward will be Cook's handywork. It remains to be seen if there will be any real innovation left, but I have my doubts. They have so much money it would take a long time for them to really go under; however, I wouldn't be surprised to see them start losing a lot of market share as most of the cashflow is coming from a rapidly changing handheld environment.
 
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How are apple not making a tonne of profit with the prices they charge, they charge their products at 3x their worth
 

calmstateofmind

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[citation][nom]wozza365[/nom]How are apple not making a tonne of profit with the prices they charge, they charge their products at 3x their worth[/citation]

Did you not just read the article that you're posting on? iPhone sales are down, iPod sales are down, and Mac sales are down. They can price their products at 100x manufacturing cost, but if consumers don't buy amounts equal or close to what they project, they lose money.
 

g00fysmiley

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[citation][nom]JacekRing[/nom]Who buys iPods anymore??? Don't you have a smartphone?[/citation]

depends, i hae a samsung galaxy nexus and between programs and media i have very little space left as it does not have expandable memory. I have a patriot gauntlet node with a 1tb hdd btu that requires more power and onyl lasts about 5 hours on a charge, i love my old 160 gig ipod classic for a music player, holds my 120 gigs of music and good battery life means i can leave it in the car or take it on a run without worrying about the batterry dying and my being without a phone
 

Schmalgar

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So they 'only' made 13.1 billion in profit last year, and they 'only' made 13.1 billion this year? That right there is what's wrong with the stock driven business model. The thinking that if you don't make more profit this year than you did last year, that something is 'wrong'. There is NOTHING wrong with making 13.1 BILLION DOLLARS profit year after year. Seriously big OMG here.
 

headscratcher

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[citation][nom]Schmalgar[/nom]So they 'only' made 13.1 billion in profit last year, and they 'only' made 13.1 billion this year? That right there is what's wrong with the stock driven business model. The thinking that if you don't make more profit this year than you did last year, that something is 'wrong'. There is NOTHING wrong with making 13.1 BILLION DOLLARS profit year after year. Seriously big OMG here.[/citation]
Tell me, assuming you have a retirement portfolio, would you rather the stocks and funds within it stay flat or grow? Stocks that are mature and flat, generally have to start forking over large dividends (see Caterpillar) to maintain stock price. Nothing wrong with that stock market model.
IMO, there is a lot wrong with a company that focuses too much on its stock price - makes me think of dot com bubble - but it must maintain a reasonable level.
 

the1kingbob

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[citation][nom]warezme[/nom]So? Why does every big company expect their profits to keep growing?[/citation]

I think the problem here is not that their profits didn't keep growing. I think the problem is that they brought in more money and did more business, but that didn't transfer to making more money. So in the eyes of investors, they are not doing as good business as before.
 
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Now people see that apple can't grow forever and has to come down some day to a more reasonable stock price that reflects the market.
 

blurr91

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It's about managing expectations. Apple results are not disappointing in absolute terms. $13 billion in profit is nothing to sneeze at. However, what if you were expecing $14 billion profit? What if you had planned your investment portfolio using a $14 billion profit and stock pricing? That's a disappointment.

Investment funds set a price target for all stocks based on a lot of factors. One of them is the expected profit. I expect Apple to make $14 billion this year and the market to embrace Apple's product and stock. The price target for the stock is $650. I buy Apple at $500 and will still make a profit.

However, Apple only made $13 billion, with signs that future profit in jeopardy. The market seems to be losing faith in Apple. The investors on the ball would dump their stocks to limit their losses. Those who bought at $300 have already made a ton of money and will bail. Those who bought at $600 want to write off their losses and be done with it.

That's how a company making $13 billion in pure profit can actually lose stock value. Expectations...
 

blurr91

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Here's an easier example:

You work hard all year and expect a 5% raise. You plan your spending accordingly. The boss only gives you a 4% raise. Happy or disappointed?
 

bllue

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I hope Apple stock keeps going down. Seriously their fad is dying, no reason to keep stock when it won't be going up again. Save your money and find the next big fad.
 

hate machine

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[citation][nom]bllue[/nom]I hope Apple stock keeps going down. Seriously their fad is dying, no reason to keep stock when it won't be going up again. Save your money and find the next big fad.[/citation]

I do too, but only because I've been trying to make money using shorting and options. :0
 

bllue

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[citation][nom]jupiter optimus maximus[/nom]Now people see that apple can't grow forever and has to come down some day to a more reasonable stock price that reflects the market.[/citation]
People also need to realize that Stevie Jobs is no longer the man in charge, the man who everyone has always worshiped. Just think about it, how likely are Apple to create the next big fad? They haven't put anything worth to be called innovation since the first iPad release, which happen at the time when the iPhone fad was getting to its peak. Sure they have over $100 billion but that does not guarantee they will succeed at pushing whatever they come up with next. They've had quite a share of controversy in the last months as well, from iOS 6 to Apple maps, the ebook fiasco, and so on. Again, you can say they have a lot of money but release a couple of fail products and the stock will plummet down faster than you can blink. If you think the stock went down 12% because profits did not go up, wait till you see what happens when a major product release fails. They have enough money to try a few times but the more failures they put out now, the more confidence investors and consumers will lose in Apple. It's a big gamble that many investors are not willing to take, and for good reasons. Expectations are high and it's unclear if Apple will succeed at the next big venture (whatever it is).
 

house70

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In other news, the wheels keep on turning...
Seriously, the same can happen to any company. What is today hot, tomorrow is...not.
Even in Android world, today is Samsung, tomorrow can be LG, SONY, Motorola or HTC (which, BTW, was hot 'yesterday'). These users are lucky, though, because they are not tied to one single device/manufacturer for their needs. Apple's enclosed ecosystem has created a eggs-in-one-basket situation for it's customers.
The die-hards entrenched in the mindset "Apple or bust" feel really threatened by the very thought that Apple might find itself where it was a few years ago: at the bottom of the barrel. They have no alternative solutions to run to, unless they switch teams altogether. Some do, they wake up and smell the other flowers in the garden: WinPhone, Android, even FirefoxOS is around the corner, BB coming back, etc. The ones that are invested heavily (financially, apps, accessories etc.) into Apple's system are the ones that are the most vocal of them all. They know no freedom to choose, because Apple has not allowed them to peek over the wall.
That's why when Apple messes something up the reaction is so violent: the analysts critique, the fans take it personally, the stocks plummet, and everyone freaks out.
 

alidan

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[citation][nom]JacekRing[/nom]Who buys iPods anymore??? Don't you have a smartphone?[/citation]
$200 for an iPod $800 for an iPhone, tough decision to make there.

[citation][nom]Schmalgar[/nom]So they 'only' made 13.1 billion in profit last year, and they 'only' made 13.1 billion this year? That right there is what's wrong with the stock driven business model. The thinking that if you don't make more profit this year than you did last year, that something is 'wrong'. There is NOTHING wrong with making 13.1 BILLION DOLLARS profit year after year. Seriously big OMG here.[/citation]

From my understanding stocks is supposed to give you a stake in the company, the problem is one stocks are valued on the intangible property of said company, and then the value that intangible property is valued at how much money they make.
 

wemakeourfuture

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[citation][nom]calmstateofmind[/nom]Did you not just read the article that you're posting on? iPhone sales are down, iPod sales are down, and Mac sales are down. They can price their products at 100x manufacturing cost, but if consumers don't buy amounts equal or close to what they project, they lose money.[/citation]

Actually you didn't read the article. Their profits increase is FLAT. They made billions and billions in profits that quarter and the entire year.

iPhone sales went from 37 million to 47 million, but below estimates. They made billions of their iPhones but it was a miss compared to expectations.

iPad sales nearly doubled from the previous years quarter, against made billions.

Macs were down 1 million, this was a miss too, but again the rate of growth of Apple has decreased, does not mean they aren't making billions in profits, does not mean their margins are getting lower (they're actually higher), but the growth rate is missing expectations.

If a company's growth rate is slow (rate of change in profits and other metrics) then its stock price will get slaughter, does not mean they aren't making a profit and won't in the future.

Apple as a stock is pretty much dead, just like Microsofts for the past 10 years, doesn't mean there aren't opportunities to buy and sell. But just like Microsoft it may settle much lower than its high and stay there, but still be the most valuable tech company in the world for the near future. And longterm still a large cap tech company.
 

pg55555

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Did you not just read the article that you're posting on? iPhone sales are down, iPod sales are down, and Mac sales are down. They can price their products at 100x manufacturing cost, but if consumers don't buy amounts equal or close to what they project, they lose money
Did you read the article? tehy sold 48 million iPhones vs 37 million previous year. and 23 million iPads vs17 million. So people are buying a LOT
 

Schmalgar

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[citation][nom]the1kingbob[/nom]I think the problem here is not that their profits didn't keep growing. I think the problem is that they brought in more money and did more business, but that didn't transfer to making more money. So in the eyes of investors, they are not doing as good business as before.[/citation]

I agree with your intended statement. But my point is that making 13 billion dollars in PROFIT every year should not be considered 'flat'. That is a massive profit. It's just not MORE massive profit than the year before, and I just don't understand why that's considered a bad thing in the stock market. The company is most certainly still growing if they made another 13 billion dollars profit this year.
 

teh_chem

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[citation][nom]warezme[/nom]So? Why does every big company expect their profits to keep growing? What is wrong with sustaining a healthy margin especially if a past trend exceeded normal growth. It's ridiculous that big business expects growth and profit and a bail out if it doesn't happen.[/citation]
Because a company that doesn't produce gains for investors is not a good investment--unfortunately the perception of gain is only apparent by how profitable a company is. Especially with a company like Apple that hasn't generally paid dividends (except for this year, of course)--so holding onto its stock as the stock price doesn't go up means you're not getting anything from having the stock.

So most investors understand that as a company starts generating less and less profit, it generally means the company is not generating growth. Lack of growth = bad investment/loss of faith by investors (which is a viscous cycle in itself).

I'm not defending the sentiment on how these sorts of things happen. Generally I think once a company gets so large, it's no longer a good investment because indefinitely-sustained growth is impossible. Wonder if Apple has hit that wall, and what they will do to convince investors that they are a good investment. Maybe they'll finally pay dividends as a general principle (vs. a special case like this year).
 

InvalidError

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[citation][nom]the1kingbob[/nom]I think the problem here is not that their profits didn't keep growing. I think the problem is that they brought in more money and did more business, but that didn't transfer to making more money. So in the eyes of investors, they are not doing as good business as before.[/citation]
In other words, Apple had to spin almost 20% harder for its money... all the new potent yet low-cost Android options are starting to herd the iSheep away.

I'm betting Apple's profits will go down this year... I bet on 11.5B$.
 

alidan

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[citation][nom]JacekRing[/nom]Your wrong.....It's $800 for an iPhone. Then you decide if you want an iPod in ADDITION. Because you need a phone, you don't need an iPod. Whether you have the iPod or not, you probably have a phone right?[/citation]
god no...
no one can make a phone that uses a decent mic or a decent speaker... you either get me on skype with a good mic or you email me, i hate asking who people are when i pick them up because apparently im the only person who cant figure out whos who because phone are such low quality.

sure, i have access to A phone when its absolutely required, but other than that, i dont use them, because i hate them.
 
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