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Apple beats on revenue but sees profits fall for first time in a decade

post #1 of 80
Thread Starter 
Apple on Tuesday said second quarter profits fell roughly 18% to $9.5 billion -- or $10.09 per diluted share -- despite record second quarter sales of $43.6 billion -- the first year-over-year decline in earnings for the one-time tech darling in over a decade.

Apple


The results for the three-month period ended March 30, 2013 compare to revenue of $39.2 billion and net profit of $11.6 billion, or $12.30 per diluted share, in the year-ago quarter. Gross margin was 37.5 percent, approximately 100 basis points lower than the 47.4 percent reported in the year-ago quarter, as consumers gravitated to more affordable, lower-margin products like the iPad mini.

During the quarter, Apple sold 37.4 million iPhones and 19.5 million iPads, compared to 35.1 million iPhones and 11.8 million iPads in the year-ago quarter. The company also said it sold just under 4 million Macs, compared to 4 million in the year-ago quarter. Overall, international sales accounted for 66 percent of the quarter?s revenue.

"We are pleased to report record March quarter revenue thanks to continued strong performance of iPhone and iPad,? said Tim Cook, Apple?s CEO. ?Our teams are hard at work on some amazing new hardware, software and services, and we are very excited about the products in our pipeline.?

Looking ahead to the current June quarter, Apple provided following guidance:
  • revenue between $33.5 billion and $35.5 billion
  • gross margin between 36 percent and 37 percent
  • operating expenses between $3.85 billion and $3.95 billion
  • other income/(expense) of $300 million
  • tax rate of 26%

"Our cash generation remains very strong, with $12.5 billion in cash flow from operations during the quarter and an ending cash balance of $145 billion," said Apple CFO Peter Oppenheimer.

For Apple, Tuesday's results mark the first year-over-year decline in profits since the first quarter of 2003 when the "early 2000s recession" began to set in stateside. The company will provide live streaming of its Q2 2013 financial results conference call beginning at 2:00 p.m. PDT on April 23, 2013.AppleInsider will provide its usual in-depth coverage.
post #2 of 80

Only $9.5 billion in profit? DOOMED, I TELL YOU! DOOMED!!!

post #3 of 80
"...we are very excited about the products in our pipeline."

Oh, well then.
post #4 of 80

Oh man, this thread is going to be a bloodbath. Since I got an iPhone 5 last year, I'm sitting out the phone upgrade cycle this year, but I'm eagerly awaiting the iPad 5... hopefully Apple will deliver the goods and wow us with some more great products to get back on track.

post #5 of 80
Here come the posters saying this bodes well for the stock; a decline in profit can only make the stock go up because history is indeed an indication ¡
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post #6 of 80
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Originally Posted by Mazda 3s View Post

...back on track.

Not sure what you mean by that. Do you think they lost track? Why so? I obviously don't think so, otherwise I wouldn't be asking.
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post #7 of 80

After hours share price is down a tad .03% but holding up pretty well considering all the predictions of doom.

 

oops now it is up 4% so the street apparently likes the numbers.

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post #8 of 80
Quote:
Originally Posted by PhilBoogie View Post

Here come the posters saying this bodes well for the stock; a decline in profit can only make the stock go up because history is indeed an indication ¡

you have take the circumstances into account, this was Fantastic.

 

All the bad news, no new products, no talks, everything pointed for some sort of catastrophe, and here they are, beating stupid inflated expectations. 

post #9 of 80
Quote:
Originally Posted by guytoronto View Post

Only $9.5 billion in profit? DOOMED, I TELL YOU! DOOMED!!!
Sure, if you are ok with $8B next year, $6.5B the following year, and $5.5B the next it is fine. The concern is not what they did today, it is that it isn't as good as yesterday, and what it might look like tomorrow! For a stockholder, the implied PE of that kind of move is about a 4.0.

Their share repurchase plan sounds good; hopefully they already bought some 2014 calls and locked in the price before the announcement. Basically, the shares they are taking off the table reinforces the idea that they expect 15% declines in profits to be sustained for a while.

Guess I won't be retiring any time soon. Oh well.
post #10 of 80
1) Lower profits and lower profit margins after an unprecedented lull between events doesn't look good. One time isn't a pattern so no one should go crazy over this but I sure hope Apple has some major things planned and they are successful.

2) Stock up 5% in after-hours trading. Apparently being less successful is the key to increasing your stock value¡

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post #11 of 80

From yesterdays projections:

 

On average, analysts polled by Thomson Reuters expect Apple to report revenue of $42.49 billion with earnings per share of $10.07. Record iPad sales are expected, while the iPhone may also reach new March quarter highs. But investors also expect Apple's profits to shrink year over year for the first time in a decade.

 

This year the market has a consensus expectation of 36.4 million units, which would be a new March quarter record, according to Chris Whitmore of Deutsche Bank.

 

Consensus calls for Apple to have sold between 18 and 19 million iPads, according to Wu, which would be a significant increase from the 11.8 million Apple sold a year ago.

 

As for the Mac, Wu said market consensus is calling for 3.8 million to 3.9 million units. 

http://forums.appleinsider.com/t/157109/earnings-preview-apple-expected-to-report-record-ipad-sales-first-shrinking-profit-in-a-decade

 

Surprisingly close.

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post #12 of 80
Quote:
Originally Posted by PhilBoogie View Post

Here come the posters saying this bodes well for the stock; a decline in profit can only make the stock go up because history is indeed an indication ¡

The stock is stable in after hours trading. Lots of shares changing hands but the price is stable, mostly because Apple hit the numbers. 

 

Say what we will about the analysts, they more or less nailed the numbers as a group.

 

No report on iPod sales?

 

p.s. Spoke too soon. The stock just spiked 5%. Slower reaction than I expected. I could have made millions just now :)

post #13 of 80
Quote:
Originally Posted by PhilBoogie View Post


Not sure what you mean by that. Do you think they lost track? Why so? I obviously don't think so, otherwise I wouldn't be asking.

 

Back on track to making some more exciting products. I know that Apple can't "wow" everyone with every single product release, but I think that the smartphone/tablet markets are getting to the point where "just being made by Apple" is not enough to guarantee a sale.

 

And I know Tallest Skill would probably shoot me point blank in the face with a shotgun for saying this, but I'm ready for an iOS UI "reboot" or at least a heavy facelift. Reports say that some touchup paint is coming with iOS 7, so I'm hopeful.

post #14 of 80
OMG what with the music on the live stream??!! Are we waiting for the Queen to appear?
post #15 of 80
Quote:
Originally Posted by Gatorguy View Post

From yesterdays projections:

 

On average, analysts polled by Thomson Reuters expect Apple to report revenue of $42.49 billion with earnings per share of $10.07. In comparison, a year ago the company made $12.30 earnings per share on sales of $39.19 billion.Record iPad sales are expected, while the iPhone may also reach new March quarter highs. But investors also expect Apple's profits to shrink year over year for the first time in a decade.

http://forums.appleinsider.com/t/157109/earnings-preview-apple-expected-to-report-record-ipad-sales-first-shrinking-profit-in-a-decade

 

Surprisingly close.

Not surprising. At least, not anymore. While some of their product predictions are absurd, analysts have often impressed me with their predictions of quarterly financials (in general, not necessarily just about AAPL), at least as a group. It's time we give them some measure of credit. How much? I am not sure yet.

post #16 of 80
Quote:
Originally Posted by SolipsismX View Post

Lower profits and lower profit margins after an unprecedented lull between events doesn't look good.
Yeah... I was disappointed they didn't do any better on Mac units with stock available. The lack of recovering margins would seem to indicate they aren't controlling costs. I'll echo your "hopefully they have something big coming," because without it they are going to need to change a lot as a company.
post #17 of 80
And most people thought that the analysts who predicted a fall in profits were idiots.
post #18 of 80
Quote:
Originally Posted by bdkennedy1 View Post

OMG what with the music on the live stream??!!

It's a conference call. You're on hold.

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post #19 of 80
Originally Posted by Mazda 3s View Post

And I know Tallest Skill would probably shoot me point blank in the face with a shotgun for saying this, but I'm ready for an iOS UI "reboot" or at least a heavy facelift.

 

Hey, as long as you have specific ideas, I want to hear everything!

 

"It's stale." "Why?" "Shut up, it's stale, doomed." just doesn't cut it, though.

Originally Posted by Slurpy

There's just a TINY chance that Apple will also be able to figure out payments. Oh wait, they did already… …and you’re already fucked.

 

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There's just a TINY chance that Apple will also be able to figure out payments. Oh wait, they did already… …and you’re already fucked.

 

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post #20 of 80

On hold where? A ballroom at the White House?

Quote:
Originally Posted by mstone View Post

It's a conference call. You're on hold.

post #21 of 80
http://www.apple.com/pr/library/2013/04/23Apple-Reports-Second-Quarter-Results.html

Am I reading it right that they expect all their metrics to decrease in the next quarter too? Revenue and margin? Again? That doesn't seem good.

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post #22 of 80
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Originally Posted by Teamracer View Post

And most people thought that the analysts who predicted a fall in profits were idiots.

No, it was predictable. But those that were saying that it meant "doomed" are huge idiots. Apple made more than google and microsoft combined.

post #23 of 80
Quote:
Originally Posted by aaarrrgggh View Post

Yeah... I was disappointed they didn't do any better on Mac units with stock available. The lack of recovering margins would seem to indicate they aren't controlling costs. I'll echo your "hopefully they have something big coming," because without it they are going to need to change a lot as a company.

Revenues per Mac were $1,378, the highest since 2008, per Horace Deidu. I'd say that's because of the new iMac. I don't expect profit margins to grow with their PCs as this segment will likely continue to slide in a post-PC world.

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post #24 of 80
Quote:
Originally Posted by guytoronto View Post

Only $9.5 billion in profit? DOOMED, I TELL YOU! DOOMED!!!

 

Samsung is really killing Apple..   According to Samsung's pre-earning guidance [1], Samsung's profit is up 50+% YOY or around $7+B for Q1 2013, narrowing the profit gap between the two companies.

 

Apple 2Q iPhone yoy shipment growth is record low. I'm guessing that Q3 iPhone shipment will be even worse since the 5S is expected to be out in Q4 of 2013. 

 

 

Quarters Unit Shipped QOQ (%) YOY (%)  
  270,000      
  1,119,000 314.44    
1Q2008 2,315,000 106.88    
  1,703,000 -26.44    
  717,000 -57.90 165.56  
  6,892,000 861.23 515.91  
1Q2009 4,363,000 -36.69 88.47  
  3,793,000 -13.06 122.72  
  5,208,000 37.31 626.36  
  7,367,000 41.46 6.89   iPhone 3S release (June)
1Q2010 8,737,000 18.60 100.25  
  8,750,000 0.15 130.69  
  8,400,000 -4.00 61.29  
  14,102,000 67.88 91.42   iPhone 4 release (June)
1Q2011 16,235,000 15.13 85.82  
  18,650,000 14.88 113.14  
  20,338,000 9.05 142.12  
  17,070,000 -16.07 21.05  
1Q2012 37,044,000 117.01 128.17   iPhone 4S release (Oct)
  35,064,000 -5.34 88.01  
  26,028,000 -25.77 27.98  
  26,910,000 3.39 57.64   iPhone 5 release (Sept Q4 2012)
1Q2013 47,789,000 77.59 29.01  
  37,400,000 -21.74 6.66  

(source: Apple)

 

 

[1] Samsung's pre-earning guidance, April 05, 2013, http://www.samsung.com/us/aboutsamsung/news/newsIrRead.do?news_ctgry=irpublicdisclosure&news_seq=20528


Edited by tooltalk - 4/23/13 at 9:27pm
post #25 of 80
Quote:
Originally Posted by Tallest Skil View Post

 

Hey, as long as you have specific ideas, I want to hear everything!

 

"It's stale." "Why?" "Shut up, it's stale, doomed." just doesn't cut it, though.

 

The last time I saw someone do a point-by-point, you basically called them an idiot and said "who cares about that stuff" lol.gif

 

Now, I'm not Apple, so I can't think up fabulous stuff in my sleep to do to iOS, but I have a few simple things I would like added functionally:

 

1) The ability to just glance at the lock screen and see weather information without unlocking the phone and swiping down from the top (Yahoo's wonderful new weather app is a good model).

2) Make the hit points for "X" circles from the pull-down menu larger. It's a hit or miss closing them now because they're so small

3) The ability to make other apps the default instead of the stock Apple apps. Apple allows me to download third-party email clients/browsers, so why can't I make Safari my default web browser without jailbreaking? 

 

Visually, the biggest UI change I'd like to see is something done with pages and pages of folders with a dozen or so apps in each folder. I'm not smart enough to figure out a way to make it better, I'll admit that. I just wish something was done to make things not look like a rats nest of icons.

 

And we're basically staring at the same OS "visually" that we first saw 6 years ago.

post #26 of 80
Quote:
Originally Posted by pedromartins View Post

No, it was predictable. But those that were saying that it meant "doomed" are huge idiots. Apple made more than google and microsoft combined.

There are a few other things to consider than just revenue when evaluating earnings reports. For example GOOG EPS was $33 where AAPL was only $10 and MSFT was $2 but MSFT has 8B shares and AAPL has less than 1B.

 

You can't just look at a single metric to make a comparison.

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post #27 of 80
Quote:
Originally Posted by tooltalk View Post


FUD

So?

 

what if Samsung makes 10x more? It does not change the fact that it is at the Android's OEMs expense and their products are lower quality.

It only takes a stronger LG and/or Sony for Samsung profit to go down.

post #28 of 80
Quote:
Originally Posted by tooltalk View Post

Samsung is really killing Apple..   Samsung's Q1 2013 profit is $7+B - they are narrowing the profit gap.

What is the URL for this Samsung Electronics results for 1Q2013? How did you get these numbers 3 DAYS before Samsung released them?

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post #29 of 80
Quote:
Originally Posted by SolipsismX View Post


What is the URL for this Samsung Electronics results for 1Q2013? How did you get these numbers 3 DAYS before Samsung released them?

It doesn't matter. Even if Samsung made 10x more, so what? How are they killing a company that makes 10 billion per quarter?

post #30 of 80
Originally Posted by Mazda 3s View Post
The last time I saw someone do a point-by-point, you basically called them an idiot and said "who cares about that stuff" lol.gif


They probably were.


Your first two points, on the other hand, I'd love to see. Scrolling folders would be great, particularly for the iPhone/iPod touch crowd. Nested* folders would also be nice, but they would have to be done correctly (understandably and aesthetically pleasing).

 

Changing defaults I see left for the mobile version of OS XI, but that's because it will be a feature brought down from the desktop proper rather than an "addition" to the existing mobile OS. As iOS was borne of a stripped down OS X, the future of iOS will be borne of a stripped down OS XI.

 

*But we know how Apple feels about nesting, don't we? Absolutely useless categories in all of their stores… 

Originally Posted by Slurpy

There's just a TINY chance that Apple will also be able to figure out payments. Oh wait, they did already… …and you’re already fucked.

 

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post #31 of 80
Quote:
Originally Posted by SolipsismX View Post

2) Stock up 5% in after-hours trading. Apparently being less successful is the key to increasing your stock value¡

 

What would the stock price be if they weren't upping the buy back?

 

Still.  5% is better than nothing.

post #32 of 80
Quote:
Originally Posted by SolipsismX View Post


What is the URL for this Samsung Electronics results for 1Q2013? How did you get these numbers 3 DAYS before Samsung released them?

 

Is Doctor Who big in your part of the world? Time Travel does have its benefits. Unless you don’t like Daleks. But seriously, Samsung issues an estimate of numbers ahead of a quarterly report.

 

In any case, if Samsung is making less profit than Apple with a vastly bigger array of products (TVs, fridges, washing machines etc.) then I wouldn’t be using this to bash Apple.

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post #33 of 80
Quote:
Originally Posted by Mazda 3s View Post

Quote:
Originally Posted by PhilBoogie View Post

Not sure what you mean by that. Do you think they lost track? Why so? I obviously don't think so, otherwise I wouldn't be asking.

Back on track to making some more exciting products. I know that Apple can't "wow" everyone with every single product release, but I think that the smartphone/tablet markets are getting to the point where "just being made by Apple" is not enough to guarantee a sale.

And I know Tallest Skill would probably shoot me point blank in the face with a shotgun for saying this, but I'm ready for an iOS UI "reboot" or at least a heavy facelift. Reports say that some touchup paint is coming with iOS 7, so I'm hopeful.

Ah, ok, I get your point. True, I also think they cannot possibly keep on creating products like the iPhone and iPad, but that could be due to my limited thinking from myself, where a group of people might 'dream up' new products because of the feedback they'd be getting from the group. Still, I do think the whole experience does indeed sell Apple products, especially after someone buys a product and then gets to understand that it works so seamlessly and in congruence with other hardware they make. The happy faces I see from people who have an iPhone and then experience an iPad (with all their Apps installed because they bought it for their iPhone as well) is simply, well, it simply is. < insert some positive English word here.

But that's more on hardware; you're touching on the iOS evolution is a different story, to which I disagree. I think it's the familiarity that keeps Apple customers faithful and returning ones. Change is good, but not for the sake of change. Apple indeed has the tendency to change, but I think it's usually for the better, not for the sake of change. People buying a new iPhone, iPod touch or iPad, upgrading the OS every year and still seeing the 'same old' 'interface/look/software/buttons/how it works' might just be the main selling point of Apples' touch devices.
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post #34 of 80
Quote:
Originally Posted by SolipsismX View Post

1) Lower profits and lower profit margins after an unprecedented lull between events doesn't look good. One time isn't a pattern so no one should go crazy over this but I sure hope Apple has some major things planned and they are successful.

2) Stock up 5% in after-hours trading. Apparently being less successful is the key to increasing your stock value¡

I missed your post when I remarked on the same change. The spike is a result of hitting "the numbers", with the numbers being what the analysts predict, which in turn are based on Apple's own guidance from Jan. In the past, because Apple was being conservative (i.e. coy), analysts tended to be off the mark more. But now that Apple has vowed to be more "truthful" in their guidance, analysts are looking more prescient as well. 

post #35 of 80
Quote:
Originally Posted by guytoronto View Post

Only $9.5 billion in profit? DOOMED, I TELL YOU! DOOMED!!!

Yeah, I know.  Google did $10 Billion in Net Profit for the entire year last year and Apple only does that in one quarter.  I'd say Apple is doomed.  They didn't even have any product announcements in the March quarter.  They must not have any more product announcements, so they must have fired their R&D staff.

 

Apple's Doomed, the Sky if Falling, and the Android platform has no malware. :-)  

post #36 of 80
Quote:
Originally Posted by Jetz View Post

 

What would the stock price be if they weren't upping the buy back?

 

Still.  5% is better than nothing.

I think it has a lot to do with the increased in pay back to the share holders.

 

I wonder what the biggest influence on their reduction in Profit margins was/is.  I didn't hear the conference call, did they mention that?  Was it because of increased R&D spending?

post #37 of 80
Quote:
Originally Posted by Jetz View Post

 

What would the stock price be if they weren't upping the buy back?

 

Still.  5% is better than nothing.

 

You can't resist being a "Debbie Downer" can you.

post #38 of 80
11% YoY growth in China though!!! :-)
post #39 of 80
Quote:
Originally Posted by philipm View Post

Is Doctor Who big in your part of the world? Time Travel does have its benefits. Unless you don’t like Daleks.

I wouldn't say it's big but it has a following, and one that has grown since the 2005 reboot. I'm personally a huge fan. In fact, I'm such a fan that despite not being a case user I have a TARDIS case for my iPhone 5, with an image of the inside for the Lock Screen, and ring/text tones of the TARDIS sound (which we found out from River Song is because the Doctor leaves the parking break on). I'd actually say I"m a bigger fan of Steven Moffat. Loved Coupling (not well known in the US), love Sherlock (well known), and love the episodes he writes for Who. I was very happy when he became the head writer for the series.

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post #40 of 80
The dividend and the buyback is what's driving the stock up, not the revenue/EPS numbers which came in just about what Wall Street was expecting.
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