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Apple & Samsung capture 103% of handset profits as rivals lose money

post #1 of 178
Thread Starter 
Together, Apple and Samsung accounted for 103 percent of mobile phone profits in 2012, a number made possible because of losses incurred by rivals Motorola, Sony and Nokia.

Apple took a commanding 69 percent of handset profits last year, more than doubling the next closest company, Samsung, which accounted for 34 percent. Together, that gave the two companies more than 100 percent of the industry's profits, according to research released on Wednesday by Canaccord Genuity.

Canaccord


That's because Nokia's losses gave it a negative 2 percent of industry profits, while Motorola and Sony Ericsson both accounted for minus 1 percent.

In fact, the only other company to see any positive in 2012 was HTC, which accounted for just 1 percent of industry profits. Both BlackBerry and LG are estimated to have broken even.

Apple's share of the industry's profits were even greater in the fourth quarter of 2012, when the company launched its latest flagship handset, the iPhone 5. In the holiday quarter, Apple took 72 percent of the industry profits, while Samsung's share slid to 29 percent.

With few major catalysts on the horizon, analyst Michael Walkley of Canaccord Genuity expects Apple and Samsung will retain their dominant shares of the handset industry for the foreseeable future.
post #2 of 178

I just don't get that. They don't magically have more money than they do have, so whatever actual profits (positive money going into the hands of the companies) exist, THAT is the 100%.

Originally Posted by Marvin

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Originally Posted by Marvin

The only thing more insecure than Android’s OS is its userbase.
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post #3 of 178
AAPL will drop as it shows Apple profitability may have peaked .
post #4 of 178
Obviously, Apple is doomed.

Wall Street's response to Apple's success has been baffling. The stock did start to rise today after Apple announced its 25 billionth iTunes download. So the market is excited about Apple selling lots of stuff on iTunes - even though Apple acknowledges that they make little, if any, profit on iTunes.

But hardware success apparently doesn't impress Wall Street.

Go figure.
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post #5 of 178

It would have been helpful if the story had indicated how these guys are able to arrive at Samsung's "mobile device" numbers, considering that Samsung's reporting segment is defined as "IT and Mobile" -- in other words, it includes all sorts of IT and telecom-related equipment and software services (including PCs).

 

In other words, are Samsung's numbers likely inflated?

post #6 of 178
Originally Posted by raymondinperth View Post
…Apple profitability may have peaked .

 

*snort*

Originally Posted by Marvin

The only thing more insecure than Android’s OS is its userbase.
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Originally Posted by Marvin

The only thing more insecure than Android’s OS is its userbase.
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post #7 of 178

more bad news. Waiting for the stock price to drop with analysts claiming Apple should have taken 103% by itself.

post #8 of 178
Quote:
Originally Posted by Tallest Skil View Post

I just don't get that. They don't magically have more money than they do have, so whatever actual profits (positive money going into the hands of the companies) exist, THAT is the 100%.

You've been corrected on this before.

Take a hypothetical market:

Company A $100 profit
Company B $200 profit
Company C $100 loss

The total profits for the industry are $200, not $300. So with the total profits of $200, Company A had 50% of the market's profits and Company B had 100% of market profits.

It works exactly like your taxes. If you have two businesses and one of them earns $1,000 and the other one loses $500, your net reported income would be $500.
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post #9 of 178

Good is the new bad.

 

Up is the new down. 

post #10 of 178
Originally Posted by jragosta View Post
You've been corrected on this before.

 

I know what you said, it's just a stupid way to count things. 

  • How much money was actually made?
  • How much of that money was Apple's?

 

Why does anything else matter? 

Originally Posted by Marvin

The only thing more insecure than Android’s OS is its userbase.
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Originally Posted by Marvin

The only thing more insecure than Android’s OS is its userbase.
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post #11 of 178
Quote:
Originally Posted by Tallest Skil View Post

I just don't get that. They don't magically have more money than they do have, so whatever actual profits (positive money going into the hands of the companies) exist, THAT is the 100%.

It doesn't have to make sense to you as it's long as it's a consistent method of accounting.

Quote:
Originally Posted by Tallest Skil View Post

 

*snort*


You could do something better than a troll post. The problem I see is that people may be influenced too heavily by their surroundings here. It could peak in one country and pick up in another. Note all the articles regarding China over the past two years.

post #12 of 178
Quote:
Originally Posted by jragosta View Post


You've been corrected on this before.

Take a hypothetical market:

Company A $100 profit
Company B $200 profit
Company C $100 loss

The total profits for the industry are $200, not $300. So with the total profits of $200, Company A had 50% of the market's profits and Company B had 100% of market profits.

It works exactly like your taxes. If you have two businesses and one of them earns $1,000 and the other one loses $500, your net reported income would be $500.

 

You are wrong.

Take your first example: Company A had 33% of the profits, Company B had 67% of the profits. In this world at least, we don't take everyone's losses and everyone's profits, net them together, and start dividing things. If you would have continued with your example, would you say that Company C had -50% of the profits? No, Company C had 100% of the losses.

 

Take your second example: Would you say that Business A earned 200% of the profits (1,000/500 x 100%)? No, you wouldn't.

 

As an accountant, you would never present percentage of profits after factoring in losses. It doesn't make sense and creates numbers that are pulled out of thin air. You can never and will never be able to make more than 100% of the profits. There is 100% to go around and that doesn't increase to 103% if some other guy lost money.

 

Take Jack and Jill: Jack went to work and made $10. Jill never made it to work but lost $50. Combined, they netted a $40 loss for the day. Well... wait... would you look at that: JACK MADE -25% (10/-40 *100%) OF THE PROFITS TODAY! AND JILL MADE 125% (-50/-40 *100%) OF THE PROFITS.

 

You are incorrect and so is this article.

post #13 of 178
Quote:
Originally Posted by anantksundaram View Post

It would have been helpful if the story had indicated how these guys are able to arrive at Samsung's "mobile device" numbers, considering that Samsung's reporting segment is defined as "IT and Mobile" -- in other words, it includes all sorts of IT and telecom-related equipment and software services (including PCs).

 

In other words, are Samsung's numbers likely inflated?

http://www.asymco.com/2012/12/03/samsung-electronics-product-line-revenues-and-operating-income-in-context/

 

What does Horace have to say about it?

melior diabolus quem scies
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melior diabolus quem scies
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post #14 of 178
Quote:
Originally Posted by jragosta View Post


You've been corrected on this before.

Take a hypothetical market:

Company A $100 profit
Company B $200 profit
Company C $100 loss

The total profits for the industry are $200, not $300. So with the total profits of $200, Company A had 50% of the market's profits and Company B had 100% of market profits.

It works exactly like your taxes. If you have two businesses and one of them earns $1,000 and the other one loses $500, your net reported income would be $500.

 

Yes, but,...

    If I have two businesses which together turn a $500 profit, that $500 is 100 percent of my business earnings. Business A's $1,000 is 100 percent of its profits, but this is the result of a different measure. I understand perfectly the theory behind the 103 percent number; I merely question the value of the methodology. I'd suggest using actual words in reporting such a story, such as:

 

The mobile phone manufacturing industry made a profit in 2012 only thanks to Apple and Samsung. Profits at the two leading companies more than offset losses by almost all other handset makers.

 

Apple and Samsung together reported more than $53.4 billion in 2012 earnings. Losses at Research in Motion, Motorola, Nokia and Somy Ericsson cut profits by the industry as a whole to $51.7 billion.

post #15 of 178

That Motorola acquisition is starting to look like a real bargain for Google.

post #16 of 178
Quote:
Originally Posted by jragosta View Post


You've been corrected on this before.

Take a hypothetical market:

Company A $100 profit
Company B $200 profit
Company C $100 loss

The total profits for the industry are $200, not $300. So with the total profits of $200, Company A had 50% of the market's profits and Company B had 100% of market profits.

It works exactly like your taxes. If you have two businesses and one of them earns $1,000 and the other one loses $500, your net reported income would be $500.

Do you have a citation for that?

post #17 of 178
Quote:
Originally Posted by Tallest Skil View Post

I know what you said, it's just a stupid way to count things. 
  • How much money was actually made?
  • How much of that money was Apple's?

Why does anything else matter? 

Nothing else may matter to you, but obviously the people who put together this report think it matters. You're not the only one who gets to determine what matters.
Quote:
Originally Posted by BrianCPA View Post

You are wrong.
Take your first example: Company A had 33% of the profits, Company B had 67% of the profits. In this world at least, we don't take everyone's losses and everyone's profits, net them together, and start dividing things. If you would have continued with your example, would you say that Company C had -50% of the profits? No, Company C had 100% of the losses.

Take your second example: Would you say that Business A earned 200% of the profits (1,000/500 x 100%)? No, you wouldn't.

As an accountant, you would never present percentage of profits after factoring in losses. It doesn't make sense and creates numbers that are pulled out of thin air. You can never and will never be able to make more than 100% of the profits. There is 100% to go around and that doesn't increase to 103% if some other guy lost money.

Take Jack and Jill: Jack went to work and made $10. Jill never made it to work but lost $50. Combined, they netted a $40 loss for the day. Well... wait... would you look at that: JACK MADE -25% (10/-40 *100%) OF THE PROFITS TODAY! AND JILL MADE 125% (-50/-40 *100%) OF THE PROFITS.

You are incorrect and so is this article.

Sorry, but you are the one who's wrong.

Think of it like this. You have a holding company which has 4 subsidiaries. The first one earns $100. The second one earns $200. The third one loses $100. The last one breaks even. When you report the income of the holding company, you would report income of $200 after rolling up all the financials.

Reporting profits for an entire market works the same way. You roll up losses just like you roll up income. It makes absolutely no sense to add only the income but not the losses.

Quote:
Originally Posted by cincytee View Post

Yes, but,...
    If I have two businesses which together turn a $500 profit, that $500 is 100 percent of my business earnings. Business A's $1,000 is 100 percent of its profits, but this is the result of a different measure. I

That's correct, but go one step further. Use my example above. You have a holding company which has 4 subsidiaries. The first one earns $100. The second one earns $200. The third one loses $100. The last one breaks even. When you report the income of the holding company, you would report income of $200 after rolling up all the financials.

Reporting profits for an entire market works the same way. You roll up losses just like you roll up income. It makes absolutely no sense to add only the income but not the losses.
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post #18 of 178
Quote:
Originally Posted by anonymouse View Post

That Motorola acquisition is starting to look like a real bargain for Google.

Let's wait until they release their first combined effort before we judge the value.

post #19 of 178
Goes to show that copying does indeed pay. Unfortunately a 2 horse race isn't fun nor beneficial for us as consumers.
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post #20 of 178
Quote:
Originally Posted by anonymouse View Post

That Motorola acquisition is starting to look like a real bargain for Google.

Because losing 13 billion starts to look good compared to what most of their partners are losing on Android?

post #21 of 178

That's a pretty neat trick!

The state is nothing more than a criminal gang writ large.

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The state is nothing more than a criminal gang writ large.

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post #22 of 178

Nonsense. Profits/Earnings can be negative or positive the same way EPS can be negative or positive (see Amazon). 

 

If you exclude 6 of the 10 industry participants in calculation of industry profits, you get a highly inaccurate picture of the health of the broader industry. 

 

Many Android/Non-IOS operators are struggling with profitability. One must question for how long can these android manufacturers sustain losses before they consider cutting their losses. 

 

This should be viewed side-by-side with % of industry revenue and % of industry unit volume to get a more fulsome understanding, but it is nevertheless useful. 

 

An even more interesting stat, based on this data, is that Samsung is received 102% of Android profits. If there were ever a stat to suggest a potentially unstable ecosystem...

post #23 of 178
Originally Posted by hmm View Post
You could do something better than a troll post.

 

I think you meant to quote him. 

Originally Posted by Marvin

The only thing more insecure than Android’s OS is its userbase.
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Originally Posted by Marvin

The only thing more insecure than Android’s OS is its userbase.
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post #24 of 178
Quote:
Originally Posted by anantksundaram View Post

It would have been helpful if the story had indicated how these guys are able to arrive at Samsung's "mobile device" numbers, considering that Samsung's reporting segment is defined as "IT and Mobile" -- in other words, it includes all sorts of IT and telecom-related equipment and software services (including PCs).

 

In other words, are Samsung's numbers likely inflated?

I was thinking the same thing.

 

I mean I can imagine Samsung makes decent margins on the Galaxy line since the phones are pretty much made of plastic and priced about the same as the iPhone, but the majority of the phones Samsung sells probably have margins closer to 0.

 

Probably a better comparison would be all of Apple versus Samsung Mobile/IT? Apple still wins regardless though.

post #25 of 178

I've been saying this all along!  Apple NEEDS to sell to aliens and non human life forms to increase their profits and marketshare.  Until/unless they sell to Martians and aardvarks (AND offering a larger screen size because aardvarks are nearsighted) Apple is DOOMED.  

post #26 of 178
Quote:
Originally Posted by BrianCPA View Post

You are wrong.
Take your first example: Company A had 33% of the profits, Company B had 67% of the profits. In this world at least, we don't take everyone's losses and everyone's profits, net them together, and start dividing things. If you would have continued with your example, would you say that Company C had -50% of the profits? No, Company C had 100% of the losses.

Take your second example: Would you say that Business A earned 200% of the profits (1,000/500 x 100%)? No, you wouldn't.

As an accountant, you would never present percentage of profits after factoring in losses. It doesn't make sense and creates numbers that are pulled out of thin air. You can never and will never be able to make more than 100% of the profits. There is 100% to go around and that doesn't increase to 103% if some other guy lost money.

Take Jack and Jill: Jack went to work and made $10. Jill never made it to work but lost $50. Combined, they netted a $40 loss for the day. Well... wait... would you look at that: JACK MADE -25% (10/-40 *100%) OF THE PROFITS TODAY! AND JILL MADE 125% (-50/-40 *100%) OF THE PROFITS.

You are incorrect and so is this article.

He's exactly right, and it is your arguments that are off on a tangent.

No one here is talking about -- or interested in, at least in this article -- the 'accounting' take on things. It's simply an arithmetic point being made, with a cute headline.
post #27 of 178
Quote:
Originally Posted by GadgetCanada View Post

They had 100% of the profits and 0% of the losses. The headline is stupid.

 

Fully agree. Has the writer ever attended Math 101? It's either 100% of the profits or nothing else. The fact that this "100%" comprises also the total amount of losses from others is absolutely irrelevant - it's STILL 100%.

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post #28 of 178
Quote:

Another pointless link from you. Who's Horace Dideu? (I know, I know, he says he has an MBA from Harvard! wow!!) Another blogger who's a cousin? Can you explain his methodology to us? What does he or his methodology have to do with the company whose numbers and methodology are being quoted in this story? Do you even bother to read the links you cite? Will you actually answer each of these five questions?
post #29 of 178
Quote:
Originally Posted by Tallest Skil View Post

 

I think you meant to quote him. 


Perhaps I should have quoted both. I try to respond to the comment itself or just ignore it. I probably could have left off the first line of my comment. He was saying they peaked. I haven't examined it that closely. I was just saying you can't really determine the trends of a multi-national corporation from your friend's newest phone. It's the same thing as walking into your local Apple Store to look at foot traffic. Both require context, and you could have mentioned this rather than just typing "*snort*". 

post #30 of 178

Samsung has 70% of the people, Apple has 70% of the cash. I'd rather be Apple.

post #31 of 178
Quote:
Originally Posted by jragosta View Post


You've been corrected on this before.

Take a hypothetical market:

Company A $100 profit
Company B $200 profit
Company C $100 loss

The total profits for the industry are $200, not $300. So with the total profits of $200, Company A had 50% of the market's profits and Company B had 100% of market profits.

It works exactly like your taxes. If you have two businesses and one of them earns $1,000 and the other one loses $500, your net reported income would be $500.

 

Perhaps you should attend some Logic classes as well, since your fallacious argument doesn't make the slightest sense. You use false premises to incorrectly "prove" your point - first you talk of NET profits for an industry, and THEN you move on to refer to TOTAL profits of each company concerned. In other words, you mix apples and oranges in trying to justify your flawed reasoning. 

 

Using the examples above, the simple answers would be:

 

NET profits for the whole industry are $200, while TOTAL profits for that same industry are $300;

TOTAL profits for company A make for 33% of the TOTAL profits for the industry;

TOTAL profits for company B make for 67% of the same.

 

Case closed.

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post #32 of 178
I waz tawt at schoo that percen can only go 2 hundred
post #33 of 178

They should have at least written the article headline differently:

 

"Apple and Samsung command all smartphone profits as rivals lose money."

 

How hard is that?

post #34 of 178
Quote:
Originally Posted by jhende7 View Post

I waz tawt at schoo that percen can only go 2 hundred

If you have 1 apple and I give you two more apples what percent increase in apples is that?

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post #35 of 178
Quote:
Originally Posted by allenbf View Post

They should have at least written the article headline differently:

"Apple and Samsung command all smartphone profits as rivals lose money."

How hard is that?

Then there wouldn't be a masturebate.

edit: Um, that was suppose to be 'math debate'.

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post #36 of 178
Quote:
Originally Posted by SolipsismX View Post


If you have 1 apple and I give ou two more apples what percent increase in apples is that?

 

 

Can I has apple too?

post #37 of 178
Quote:
Originally Posted by jragosta View Post


Nothing else may matter to you, but obviously the people who put together this report think it matters. You're not the only one who gets to determine what matters.
Sorry, but you are the one who's wrong.

Think of it like this. You have a holding company which has 4 subsidiaries. The first one earns $100. The second one earns $200. The third one loses $100. The last one breaks even. When you report the income of the holding company, you would report income of $200 after rolling up all the financials.

Reporting profits for an entire market works the same way. You roll up losses just like you roll up income. It makes absolutely no sense to add only the income but not the losses.
That's correct, but go one step further. Use my example above. You have a holding company which has 4 subsidiaries. The first one earns $100. The second one earns $200. The third one loses $100. The last one breaks even. When you report the income of the holding company, you would report income of $200 after rolling up all the financials.

Reporting profits for an entire market works the same way. You roll up losses just like you roll up income. It makes absolutely no sense to add only the income but not the losses.

Percentage is reflective of the relative about of something (between nothing 0 and everything 100). It doesn't matter which way you slice it, companies cannot have more then 100% of the profits. Doesn't matter if you exclude or include companies with losses either.

post #38 of 178
Quote:
Originally Posted by raymondinperth View Post

AAPL will drop as it shows Apple profitability may have peaked .

 

Quote:
Originally Posted by hmm View Post


Perhaps I should have quoted both. I try to respond to the comment itself or just ignore it. I probably could have left off the first line of my comment. He was saying they peaked. I haven't examined it that closely. I was just saying you can't really determine the trends of a multi-national corporation from your friend's newest phone. It's the same thing as walking into your local Apple Store to look at foot traffic. Both require context, and you could have mentioned this rather than just typing "*snort*". 

 

I assumed his comment was tongue-in-cheek since every other bit of good earnings news is treated by Wall St. as evidence that the stock needs to drop... While apparently Amazon is Bizarro Apple?

post #39 of 178
Quote:
Originally Posted by jragosta View Post


Sorry, but you are the one who's wrong.

Think of it like this. You have a holding company which has 4 subsidiaries. The first one earns $100. The second one earns $200. The third one loses $100. The last one breaks even. When you report the income of the holding company, you would report income of $200 after rolling up all the financials.

Reporting profits for an entire market works the same way. You roll up losses just like you roll up income. It makes absolutely no sense to add only the income but not the losses.
That's correct, but go one step further. Use my example above. You have a holding company which has 4 subsidiaries. The first one earns $100. The second one earns $200. The third one loses $100. The last one breaks even. When you report the income of the holding company, you would report income of $200 after rolling up all the financials.
 

 

You are changing the subject. I said you don't net together profits and losses when PRESENTING PROFIT PERCENTAGES. You cannot include losses in a calculation of share of profit percentage. It doesn't work. You can't have more than 100% of profit.

 

A good debater is someone who can shift the subject when they are backed into a corner. Someone that knows what they are talking about will stick to the points.

 

Your response above shows that you are good and distracting from my points but that you miss the point all together. You are absolutely right that you get $200 when you roll up the financials of all of the subs. That never has been nor ever will be the point of the argument. The point of the argument is that, when determining profit percentages, you ONLY include PROFITABLE segments. That's all. In your example above, there is without a doubt $200 of net income. But, Sub#1 earned 33% of net income and Sub#2 and 67% of net income. Sub#3 had 100% of the losses and, well, Sub#4 got nothing. Add those up and what do you get? 100% of profits and 100% of losses are accounted for.

 

You say "it makes absolutely no sense to add only the income but not the losses". You are partially correct. Like I already mentioned, you would add Profits + Losses to get Net Income. However, if you want to know what percentage of the PROFIT a segment made, you ignore losses.

 

Do I understand how the 103% is calculated? Absolutely. Does that number bear any significance? Absolutely not.

post #40 of 178
Quote:
Originally Posted by jhende7 View Post

Percentage is reflective of the relative about of something (between nothing 0 and everything 100). It doesn't matter which way you slice it, companies cannot have more then 100% of the profits. Doesn't matter if you exclude or include companies with losses either.

The trouble is, you don't seem to see (some others in this thread appear to have a similar difficulty) that the term 'profit' (or more precisely, 'net income', even though, that is, colloquially, what the term 'profit' means) does not imply a non-negative number. A 'loss' is simply negative net income or negative profit.

 

Edit: What I meant above was that "profit is the colloquial term for net income...." Sorry. 1smile.gif


Edited by anantksundaram - 2/6/13 at 10:56am
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