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Apple & Samsung capture 103% of handset profits as rivals lose money - Page 5

post #161 of 178
Quote:
Originally Posted by jragosta View Post


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.

I know this has been asked already, but then how do GAAP principles and industry standards say we should deal with this calculation if the net profit is zero (for example, if it is a new industry in which all competitors are in the concept phase only and have not reported any income or expenses)?  Or if the net profit of the industry is negative, such as occurs during an economic downturn, do companies that make a profit report that they have earned a negative percentage of the industry's net profit, which is negative?

 

Just to be clear, I do not pretend to be an accountant.

post #162 of 178
Quote:
Originally Posted by SolipsismX View Post

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.




You can write a negative number in a row for profit, but when you describe that number using words you either write or say “loss."
post #163 of 178
Quote:
Originally Posted by wakefinance View Post

You can write a negative number in a row for profit, but when you describe that number using words you either write or say “loss."

It doesn't matter how you say it verbally. Mathematically, a loss is written as a negative in the profit column. Standard GAAP.
Quote:
Originally Posted by wstanich View Post

I know this has been asked already, but then how do GAAP principles and industry standards say we should deal with this calculation if the net profit is zero (for example, if it is a new industry in which all competitors are in the concept phase only and have not reported any income or expenses)?  Or if the net profit of the industry is negative, such as occurs during an economic downturn, do companies that make a profit report that they have earned a negative percentage of the industry's net profit, which is negative?

Just to be clear, I do not pretend to be an accountant.

In general, GAAP doesn't tell you WHAT to do, but rather it tells you how to do it. The goal of GAAP is to have consistent principles and consistent accounting schemes.

What GAAP requires is that if you are adding profits to get a total, you add the positive AND the negative profits and the total is the mathematical sum of all the pluses and minuses. GAAP would specifically NOT allow you to simply ignore some of the numbers because they're negative.

Now, to be clear, GAAP would not have specific guidelines for adding up profits in a market. But if you want to define a "Total Profits", GAAP would tell you how to do that.

And once you've defined "Total profits", percentages are simple third grade math - % = 100 * part / Total
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post #164 of 178
Originally Posted by macmtnman View Post
So why doesn't Apple make a cheaper smart phone? All of the highly intelligent analysts insist that they must in order to survive. I guess companies that actually make profits on their products cannot survive when up against those subsidized by China and Google with their bottomless bank accounts.

 

I can't tell if this is sarcasm.


Originally Posted by jragosta View Post
And once you've defined "Total profits", percentages are simple third grade math - % = 100 * part / Total

 

I get now what you're saying about industry (aggregate) profits, but I still don't understand for whom this is meaningful or why it matters to know. It sounds somewhat like the basis for the fuzzy math used in other areas to cop Apple out of a correct measure of their performance.

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post #165 of 178
Quote:
Originally Posted by jragosta View Post


It doesn't matter how you say it verbally. Mathematically, a loss is written as a negative in the profit column. Standard GAAP.
In general, GAAP doesn't tell you WHAT to do, but rather it tells you how to do it. The goal of GAAP is to have consistent principles and consistent accounting schemes.

What GAAP requires is that if you are adding profits to get a total, you add the positive AND the negative profits and the total is the mathematical sum of all the pluses and minuses. GAAP would specifically NOT allow you to simply ignore some of the numbers because they're negative.

Now, to be clear, GAAP would not have specific guidelines for adding up profits in a market. But if you want to define a "Total Profits", GAAP would tell you how to do that.

And once you've defined "Total profits", percentages are simple third grade math - % = 100 * part / Total
 

Do these GAAP principles really apply more then to an individual company than they do the market as a whole?  If so, then why apply them to the calculation of one's profits as a percentage of the industry?

 

And as you point out, once these principles are applied, the math is simple.  Which would mean that if the industry as a whole lost money, then a company in the black would be reporting its profits as a negative percentage of the industry's profits.  Go figure (no pun intended).

post #166 of 178

Yet another analyst no one has heard of conjures up a way to capture headlines. Nothing to see here.

Philip Machanick creator of Opinionations and Green Grahamstown
Department of Computer Science, Rhodes University, South Africa

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Philip Machanick creator of Opinionations and Green Grahamstown
Department of Computer Science, Rhodes University, South Africa

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post #167 of 178
Well that was the most entertaining circle jerk ever.
post #168 of 178
Quote:
Originally Posted by wstanich View Post

Do these GAAP principles really apply more then to an individual company than they do the market as a whole?  If so, then why apply them to the calculation of one's profits as a percentage of the industry?

And as you point out, once these principles are applied, the math is simple.  Which would mean that if the industry as a whole lost money, then a company in the black would be reporting its profits as a negative percentage of the industry's profits.  Go figure (no pun intended).

GAAP principles apply to any accounting process. GAAP won't tell you that you should tabulate the total profits in a market, but if you do choose to do so, you should follow the GAAP procedures. All GAAP does is ensure that people aren't playing funny accounting games and doing things in non-standard ways which could be misleading. The goal is that if you see a set of figures, you know that it was calculated properly.
Quote:
Originally Posted by Tallest Skil View Post

I can't tell if this is sarcasm.

I get now what you're saying about industry (aggregate) profits, but I still don't understand for whom this is meaningful or why it matters to know. It sounds somewhat like the basis for the fuzzy math used in other areas to cop Apple out of a correct measure of their performance.

It may not be a useful figure and no one may care, but since someone cared enough to write the article, it should be reported correctly (and it was).
"I'm way over my head when it comes to technical issues like this"
Gatorguy 5/31/13
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"I'm way over my head when it comes to technical issues like this"
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post #169 of 178
After reading this entire thread, I now know why the world is in financial crisis. Not even bloody accountants can agree how numbers should be added. Still, with any luck one of them will be pulling beers at my local and will fill my glass 200%; beer at half the price.
post #170 of 178

This is what a thread looks like when 3 or 4 posters all think they're the "smartest guy in the room".

 

5 pages of exceptionally petty disagreement with each other's points...

and on it goes because no one is wrong1oyvey.gif

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post #171 of 178
Quote:
Originally Posted by Gatorguy View Post

This is what a thread looks like when 3 or 4 posters all think they're the "smartest guy in the room".

5 pages of exceptionally petty disagreement with each other's points...
and on it goes because no one is wrong1oyvey.gif

Actually, someone IS wrong. The people who are claiming that profits can't be negative are wrong - no matter how you slice it.
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post #172 of 178
Quote:
Originally Posted by Gatorguy View Post

This is what a thread looks like when 3 or 4 posters all think they're the "smartest guy in the room".

 

5 pages of exceptionally petty disagreement with each other's points...

and on it goes because no one is wrong1oyvey.gif

At least, people were making points.

 

In your case, the standard M. O. is a post like the one above: zero movement of the discussion forward.

post #173 of 178
Quote:
Originally Posted by anantksundaram View Post

At least, people were making points.

 

In your case, the standard M. O. is a post like the one above: zero movement of the discussion forward.

Ah, and you believe what you had to say in the discussion moved it forward. Like I said, too many posters who think they're the "smartest guy in the room" lead to a thread that looks like this one.

 

For someone who just yesterday stated they are not interested in what I have to say you're missing few opportunities to try and engage me in a discussion.

http://forums.appleinsider.com/t/155819/kindle-fire-android-gain-but-apples-ipad-holds-commanding-81-tablet-share/40#post_2272169


Edited by Gatorguy - 2/7/13 at 8:06am
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post #174 of 178
Quote:
Originally Posted by jragosta View Post

Actually, someone IS wrong. The people who are claiming that profits can't be negative are wrong - no matter how you slice it.

It's just a widely used and accepted oxymoron used in lieu of calling it loss, but that doesn't mean it actually exists. It would be like calling a loss in sports a negative win.
Edited by dasanman69 - 2/7/13 at 8:25am
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"I got the answer by talking in my brain and I agreed of the answer my brain got" a 7 yr old explaining his math HW
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post #175 of 178
Quote:
Originally Posted by dasanman69 View Post

It's just a widely used and accepted oxymoron used in lieu of calling it loss, but that doesn't mean it actually exists. It would be like calling a loss in sports a negative win.

I really don't how an official document showing a negative value on the profits line can be any more clear. If you think that you can't a negative profit id est loss then then any loss should be represented as a zero. It's that simple. Just like if you overdraw your bank account you have zero cash to pull from but it will show that you have a negative amount because you are in debt to them.

You simply can't have it both ways. By your reckoning your profits can't be below zero. By the association if you had three quarters up $10 and 1 quarter down $10 and then say your total profit for the year is $30 (3 x $10). But that would be incorrect as your total profits for the year are only up $20 (3x $10 - $10). Again, if profits can't be below zero then every line for profit must never be below zero.

"There is no rule that says the best phones must have the largest screen." ~RoundaboutNow

 

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post #176 of 178
Quote:
Originally Posted by jragosta View Post


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.

So if we have the following: 

 

Company A: $500 loss

Company B: $500 loss

 

Would GAAP say company A has a certain percentage of profits?    The accounting industry is pretty fucked up so it wouldn't surprise me if you said Company A has -50% of profits.  These kinds of calculations are exactly why I hate Wall Street.  In the real world we don't do stuff like that.  If an engineer designed a car using GAAP math principles, we would have shitty broken down cars.  No surprise that we have a shitty broken down financial system.


Edited by ash471 - 2/7/13 at 6:35pm
post #177 of 178
Quote:
Originally Posted by SolipsismX View Post


I really don't how an official document showing a negative value on the profits line can be any more clear. If you think that you can't a negative profit id est loss then then any loss should be represented as a zero. It's that simple. Just like if you overdraw your bank account you have zero cash to pull from but it will show that you have a negative amount because you are in debt to them.

You simply can't have it both ways. By your reckoning your profits can't be below zero. By the association if you had three quarters up $10 and 1 quarter down $10 and then say your total profit for the year is $30 (3 x $10). But that would be incorrect as your total profits for the year are only up $20 (3x $10 - $10). Again, if profits can't be below zero then every line for profit must never be below zero.

The problem here is that people are calling a profit a loss. A profit is not a loss.  A profit is a profit and a loss is a loss.  At least in the real world that's how it works. In the fucked up world of GAAP accounting you can call numbers anything you want.  That's why we have a shitty broken-down financial system.  

post #178 of 178
Quote:
Originally Posted by ash471 View Post

The problem here is that people are calling a profit a loss. A profit is not a loss.  A profit is a profit and a loss is a loss.  At least in the real world that's how it works. In the fucked up world of GAAP accounting you can call numbers anything you want.  That's why we have a shitty broken-down financial system.  

What is the opposite of profit? A loss. Just as we see on financials of every company reporting a loss they show a negative profit because it corresponds directly to that line in the reporting.


I agree with Horace as this not being the way I would present the info but to say that you can't have the opposite of profit or that the word 'loss' is the only way (as opposed to the best way) to refer to a negative profit is not correct as it done and it is understood what a minus before a dollar sign means.

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