Apple & Samsung capture 103% of handset profits as rivals lose money - Page 4

You're right again! My first mistake was debating accounting with someone that knows little about the subject.

Oh boy....

Again, for a person who took umbrage at "attacking the person, not the argument", that's a rather inconsistent thing to say, no?

 

Should I judge your knowledge of accounting based on your inability to define something as basic as 'profit margin'?

Of course not.

 

The point is, you couldn't, even if you wanted to, and you know that.

Yeah, but it was pretty good blow.

Good argument.


I explained why it's not necessary. Or did you not read that part of my post?

How cute. I didn't oppose or support his argument. But you jumped to that conclusion immediately because you were poised to pounce on anything. Spoiling for a fight just for the sake of it, eh? How cute.

Sorry, a number divided by zero is not infinity. It is indeterminate (it approaches infinity).

Again, you and 'BrianCPA' keep making the most basic math mistakes, so it's clear that you don't know what you're talking about.


So if they made more profit than the industry as a whole, how is the percentage not over 100%?

Furthermore, I'm still waiting for you to answer my question in post #54. Where did the extra $10 come from if we do it your way?

Oh, I did. It made no sense. Whatsoever.

I should have expected that. You don't seem to be one who understands math or logic.

You're right. Making a math mistake invalidates everything I know. Just as you being wrong about this argument proves you don't know anything? Invalid logic.

 

You cannot have profit percentages over 100%. I get what you're saying, I know how you came up with your number. It's a cute spin on math but when you are presenting "profit percentages" you don't include losses. You include losses when calculating total industry profit, you include losses when adding segments together, but you do NOT include losses when you are presenting PERCENTAGE OF PROFITS. Percentage of profits specifically means what percentage of profits. Losses are not profits.

 

That's the only point I'm trying to make. Yes, they made more than the total of the market. You can't make more than 100% of revenues, you can't take more than 100% of expenses, and you can't take more that 100% of profits.

 

 

I have nothing to say about post #54 because (1) I did not read it and (2) that was not me you were talking to in that post.

I'll ignore the putdown.

 

If someone else can explain what you wrote, I'd be happy to respond. It surely could be a function of the limitations of my brain's processing capabilities -- although I happen to think it's your inability express your idea clearly -- but your post made no sense at all.

Why do you think that repeating the same circular argument over and over will make ti come true? It doesn't. "You can't have more than 100% of the profits because you can't have more than 100% of the arguments" is an obvious logical fallacy.


And (3) it proves that I'm right and you're too stubborn to admit it.

No, your first mistake was pretending to be a CPA when you obviously don't understand even the most basic financial principles like profit.

LOL loving the Accountants "R" Us TM banter.

 

Reminds me of when sportspeople get off the field and say "I gave it 110% out there today".

 

Yep, I was finding and posting info to support your theory.   You're welcome  

 

 

Apparently they're only talking about handsets.  No tablets.  So that explains it.

 

$30.66B iPhone revenue @ 40% margin  = $12.264B operating profits.

Edited by KDarling - 2/6/13 at 2:44pm

 

My older brother's an actuary.  They're the guys who figure out how to charge for insurance, etc.  Basically, how long each group will live and so forth.

 

They make accountants look like party animals.

 

Q:  What's the definition of an actuary?

A:   He's like an accountant, but without their sense of humor.

Says the person claiming that profit can be negative.

I'm not sure why it's putting my comment as your quote...

What I wouldn't give for your ~/Library/Spelling/LocalDictionary

What amazes me is you have a grasp on the math but not a clue how to apply it.

And, yet, you still haven't responded to post #54 and explained where the extra $10 came from.

It can. I already provided a link. Here's another one:
http://smallbusiness.chron.com/reasons-negative-profit-margin-19358.html

Maybe you should look at Amazon's year-end results. Look at the 'profit' column. Notice the negative number?

Again a profit can be negative when compared to a higher profit, but both are still positive.

Here is Nokia's report right from their website. I've linked to the PDF as well as included an annotated screenshot that clearly shows a negative profit and not simple zero as some are saying profit can not be reported as a loss.

• http://www.results.nokia.com/results/Nokia_results2012Q4e.pdf (PDF)

Simply because there isn't a 'losess' option.

Simply because a separate line for 'loss' would be redundant. By definition, a negative profit is a loss.

It's not there because businesses are not in the business of losing money.

Heh heh. The blowhards here will totally ignore your post.

LOL. This has to be the most embarrassing post in this thread. And that's saying a lot.....

Negative profit is profit realized from effective loss prevention. For example, A company introduces a new procedure that reduces loss by 5%. This 5% is actually profit that would not have been. In essence negative profit is when one loses less than it should have lost. Company A was expected to lose $10 million but instead only lost $5 million, it would show a $5 million negative profit.

Flatterery will get you nowhere lol

Yeah they did a cute analysis to come up with the 103% they make is look like Apple and Samsung took money from the companies who lost money. It is absolutely a bad way to look at it, the fact a company lost money does not mean the market had some sort of negative value. I hate when analysis do this crap. it like saying you giving 110% effort. your creating energy you do not have.

"Negative Profit" as you are describing it is a different concept.

The concept we are talking about is "profit which happens to be below zero" or "profit which is negative". In fact, "negative profit" in the sense you are using it is not a standard GAAP term and is rather something used mostly by academics and consultants. In 3 decades of business management, I've NEVER seen the term used in the sense that you are using it in this post. I first heard about it when searching for 'negative profit' to find links for this thread.

Several of us have called it "negative profit" which is subject to confusion because the term can be used in both the sense that you are using it here and the sense that every other post in this thread is using it. Either one is correct - and since everyone but you is talking about the same thing, the confusion is minor. And the fact that "negative profit" in the sense that the rest of us are using it IS a GAAP term means that there's absolutely nothing wrong with the way it's being used in this thread.

Entertaining thread.

 

Just to beat the dead horse, as I understand it the original argument is over two (at least) methods of calculating some ostensibly useful number, whether "value share" (as in the post) or "profit share" or "profit percentage" or what-have-you.

 

Method A: Take all of the companies involved in selling the widgets. Add up all the money the profitable companies made in profits. Subtract all the money the unprofitable ones lost (or if you prefer, add their negative profits). There is then a pool of money that you can call aggregate profit for the industry. Use this number as the denominator for each company; each company's share is their profit divided by this number.

 

Method B: Take only the profitable companies. Tally up all of their profits, and use that as the denominator; each company's share is their profit divided by this number.

 

Sidestepping the question of which is the "right" way or the "industry standard" way, it seems to me that the number produced by Method A yields less useful information than in Method B. If a company has a value of 500% under Method A, it seems impossible to know whether that's good or bad without knowing more about the market as a whole. First, you have to know whether the market was profitable overall - if not, than any positive number is bad. Second, you have to know what all of the other players got. If company A's number is 500% and company B's is 10%, that's fine for company A, but if company A has that same 500% while company B has 15000%, that's less good. In any case, you need more information than the single number provides. Furthermore, it seems very difficult to compare over time - if a wildly incompetent company enters your market, the number could skyrocket - up to a point, and then suddenly flip to a negative as that other company's red ink pulls the overall market into the red.

 

With Method B on the other hand, you can know right away that if you're at, say, 50%, that's probably pretty good. It's better if that number increases than if it decreases. If you didn't make the cut at all, that's not good. You don't need to know much about the rest of the field to know at a glance how you're doing because you know what the range is (0-100%). Are there things Method A can tell you that Method B cannot? Probably so, but the number you get seems much more straightforward in B.

Numbers seems to be "massaged". How can they make more profit than what is possible?

Your method is extremely misleading - which is why no one (except for a couple of misguided people here use it).

Look at my post #54, for example, to show why that method is wrong.

If you want to compare yourself to a limited subset of companies, you can, of course, do that. But if you want to compare your company to the market, it only makes sense to consider the WHOLE market, not just the companies you choose to include.

So... Some future headlines could read:

"Nokia stuns with 100% of handset profits"
Nokiainsider

"Samsung rockets to 500% phone industry profits"
Samsunginsider

"IPhone stumbles with 20,000% of the mobile pie"
Appleinsider



I understand the maths. I get the logic... But use a little common sense people.

Quite a spirited debate for a thread dominated by math geeks like me.

 

The way I look at it, it doesn't make sense to add profits and losses of the industry together to determine the net profits of the industry, then assign who made what percentage of the net profits.  For example, consider an industry that is a duopoly in which company A has a profit of $1000 and company B has a loss of $2000.  The net profit of the industry is -$1000.  So company A has $1000/-$1000*100% = -100% of the profits, while company B has -$2000/-$1000*100% = 200% of the profits, even though it reported a loss.  It makes much more sense to say that company A has 100% of the profits (well, after all, it does have all of them) and that company B has 100% of the industry's losses (once again, completely accurate).

 

This illustrates why common sense needs to be applied to mathematics when they are used in the real world. Although you can theoretically report a company's proportion of an industry's net profits, it only makes sense to report what portion the company has of the industry's profits or what portion it has of the industry's losses, because its portion of the "net profits" is meaningless.

Whether you think it makes sense or not is irrelevant. That's the way it is done in Industry. It is also consistent with GAAP principles.