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

1356710

Comments

  • Reply 41 of 181

    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. image

  • Reply 42 of 181

    Quote:

    Originally Posted by anantksundaram View Post





    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.


     


    1. If you truly didn't want to talk about the "accounting" in the article, then you would have never responded. This article is about accounting and all the numbers derived in that table were the result of business accounting.


    2. He is not exactly right. He is right on how you calculate net income (adding profits and losses). He is wrong in how you calculate percentage of profit (it does NOT include losses).


     


    Apple earned 70.3% of the profits. That's the bottom line. Is it important? Not really. But, you're both still wrong.

  • Reply 43 of 181


    Would we be having this same discussion if the headline read: "Apple & Samsung capture 103% of market share as rivals lose ground"


     


    Well, maybe - but it's still incorrect.  100% is 100%.  If Apple and Samsung hold 7 of 10 oranges and BB/Msoft hold 3, but lose 3...we don't have 13 oranges.  We have 10 oranges, all held by Apple and Samsung.


     


    I kept the numbers simple for those not willing to take off their shoes to count that high...  ;-)

  • Reply 44 of 181

    Quote:

    Originally Posted by BrianCPA View Post


     


    1. If you truly didn't want to talk about the "accounting" in the article, then you would have never responded. This article is about accounting and all the numbers derived in that table were the result of business accounting.


    2. He is not exactly right. He is right on how you calculate net income (adding profits and losses). He is wrong in how you calculate percentage of profit (it does NOT include losses).


     


    Apple earned 70.3% of the profits. That's the bottom line. Is it important? Not really. But, you're both still wrong.



    Uh, I meant "no here -- except you -- is talking about 'accounting'"....


     


    As to your argument that "the numbers derived ...were on the basis of business accounting" and that therefore we must be talking 'accounting,' that is about as profound as saying that we must be actually talking about prose in the English language since the words we are using were derived on the basis of....


     


    Moving along.....

  • Reply 45 of 181
    Christ, I'm embarrassed for AppleInsider.
  • Reply 46 of 181
    I don't think that the previous post was correct in saying "as long as it's a consistent measure of accounting" -- because I don't think accounting even attempts to say 100% of any market -- it measures what was spent or gained. You don't know what the amount of "profit" in a market is -- you only know how many purchases.

    Profits are also something that creative accountants try and remove from the balance sheet -- and it also depends on the balance sheet used for Wall Street and the one for the IRS -- and yes, companies for some time can have two. Wall Street can see the glory, and the IRS sees the hardship and reality gets stretched on a regular basis. So which "like" do we consistently go with?

    103% sounds like creative certainty from a trade publication to me -- not even a useful number. It might be useful as a score of "who is winning" but it is, as you say, confusing.

    We are used to "market share" -- and that's a useful number because we'd get an idea of whether Samsung's pad is growing versus Apple's. Apple having the most profit is good for their stock -- but not for their control of the market and long term viability -- Wall Street sucks at really predicting how strong a company is, they are merely gambling chips and only suckers buy and hold based on P&E ratios -- but Apple's stock stays strong because they've got a lot of "suckers" and it's got to anger the traders that they make things and don't trade paper with suckers.

    Whenever I come across an article treating "profits" as if this were even remotely a fiction that anyone should depend on -- I feel dumber from having read it.

    The idea that anyone would school tallest skill or the rest of us on "the proper valuation for accounting" based on numbers that are at best -- consistent lies, is kind of absurd.

    Now these numbers can be explained, and they are consistent, but that only compounds the lie; they are bogus numbers. You don't know really what profit or loss any company makes on anything -- all you can hope to know is "what were their sales". With offshore accounts, overspending on subsidiaries widgets in tax havens, and the creative accounting of MBAs -- what fool believes these numbers anyway?

    I suppose fools who can come up with measures like 103% and then explain to everyone as if we are idiots. I'd like another yard of invisible cloth for my golden emperor's robes please.
  • Reply 47 of 181

    Quote:

    Originally Posted by anantksundaram View Post


    Uh, I meant "no here -- except you -- is talking about 'accounting'"....


     


    As to your argument that "the numbers derived ...were on the basis of business accounting" and that therefore we must be talking 'accounting,' that is about as profound as saying that we must be actually talking about prose in the English language since the words we are using were derived on the basis of....


     


    Moving along.....



     


    "-except you-"


    Just to make sure I wasn't going crazy, I looked back and saw at least 5-10 people talking about the "accounting". Maybe you made a accounting mistake when adding?


     


    I digress. It's hard to convince someone they're wrong when they don't understand the subject to begin with.

  • Reply 48 of 181
    Quote:
    Originally Posted by allenbf View Post


    Would we be having this same discussion if the headline read: "Apple & Samsung capture 103% of market share as rivals lose ground"


     


    Well, maybe - but it's still incorrect.  100% is 100%.  If Apple and Samsung hold 7 of 10 oranges and BB/Msoft hold 3, but lose 3...we don't have 13 oranges.  We have 10 oranges, all held by Apple and Samsung.


     


    I kept the numbers simple for those not willing to take off their shoes to count that high...  ;-)

     

    I agree; The other vendors could not have sold "negative" amounts. However -- if the market sold 1, 2, 4 and 5 oranges from 4 companies, someone can have a negative profit. It's just that I think it's customary to treat these numbers as independent -- you certainly can't know what PROFITS are available to a market because profits or losses are based on per product per company -- it's internal to that company.


    I don't think there is any "Grand Accountant" that bothers with reporting profits across the market, so it is of course NOT an accounting figure. Market share is a useful figure, and then you could say profit and loss based on that -- while noting you "cannot really know a corporations real profit and loss." They even lie to themselves on these things because it's important to exaggerate to the IRS and underestimate to Wall Street. Only the CEO and a few other people may know the true profit/loss ratio on the products.
  • Reply 49 of 181
    jungmarkjungmark Posts: 6,705member
    Lies, damn lies, and statistics
  • Reply 50 of 181
    jragostajragosta Posts: 10,473member
    briancpa wrote: »
    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.

    You're arguing in circles. "You can't have more than 100% profits because you can't have more than 100% profits".

    In reality, a loss is simply a negative profit. When you total the profits (whether it's a conglomerate or a market, you add up the profits of all the components.

    In case A, it's easy:
    Business 1 $100
    Business 2 $200
    Business 3 $100
    Total $400

    In case B, it works exactly the same way, except that you're adding a negative number:
    Business 1 $100
    Business 2 $200
    Business 3 -$100 (loss of $100)
    Total $200

    Percentages are calculated as "the part being considered divided by the total". If the part being considered is $200 and the total is $100, then it's 200%. Just the same as if you had sales of $100 in 2010 and $300 in 2011. The growth is greater than the previous total, so the sales grew by 200%.
    jhende7 wrote: »
    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.

    Another circular argument. "Companies can't have more than 100% because they can't have more than 100%". That's not a logical argument (well, technically, it's an argument, but contains a fallacy).

    Do the math:
    1. The total profits of a market is equal to the sum of all the components.
    2. Profits can be either negative or positive
    3. There's absolutely no rule in business or accounting or anywhere else that says you can ignore companies that lost money. You add up ALL the companies to get a total.
    4. Percentage is the part being considered divided by the total times 100.

    While it is uncommon for the percentage of profits from one or two companies to exceed 100%, it's not at all impossible. If you simply follow the math rules, it happens - as in this case.

    Your method leads to some other serious problems. If you're going to ignore the profits of HTC, Motorola, etc, why not the sales? So the entire market sales volume is just Apple and Samsung? That's the logical outcome of your method - since calculating percentages doesn't depend on what you are calculating.
    jhende7 wrote: »
    I waz tawt at schoo that percen can only go 2 hundred

    You need to ask for a refund. If sales in 2010 were $100 and in 2011 sales were $300, then the sales increased by 200%. Percentages can easily go over 100%.

    brlawyer wrote: »
    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.

    ROTLFMAO. Try to tell the SEC that net profits are different than total profits.

    How many multimillion dollar conglomerates have you run? I have - and the way I described it is exactly the way it works in the real world.
  • Reply 51 of 181

    Quote:

    Originally Posted by BrianCPA View Post


     


     


    I digress. It's hard to convince someone they're wrong when they don't understand the subject to begin with.



    And it's even more difficult to get someone to admit they're wrong, nowadays, even when they are presented with clear, irrefutable examples and proof.


     


    That goes for anything and everything. 

  • Reply 52 of 181
    steven n.steven n. Posts: 1,120member
    jragosta wrote: »
    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.

    I fundamentally disagree with you. We are not talking about holding companies but unique companies. If you had:

    Company A: $100 profit
    Company B: ($50) loss
    Company C: ($50) loss

    There was $100 profit captured in the industry. There was also $100 in losses but they don't negate the $100 in profit made by Company A. Likewise, you are claiming that Company A made ? of the profit. No, it made all of the profit at 100%
  • Reply 53 of 181
    jragostajragosta Posts: 10,473member
    allenbf wrote: »
    Would we be having this same discussion if the headline read: "Apple & Samsung capture 103% of market share as rivals lose ground"

    Well, maybe - but it's still incorrect.  100% is 100%.  If Apple and Samsung hold 7 of 10 oranges and BB/Msoft hold 3, but lose 3...we don't have 13 oranges.  We have 10 oranges, all held by Apple and Samsung.

    I kept the numbers simple for those not willing to take off their shoes to count that high...  ;-)

    Your logic fails - this case is not the same thing.

    Let's do it this way - since you seem to be confused about how to do basic math.

    Let's take an example. For simplicity, we'll assume no overhead or fixed costs, but the results would be the same if you include them.

    Company A
    Sales $100 Cost of goods sold $90 Profits $10

    Company B
    Sales $200 Cost of goods sold $180 Profits $20

    Company C
    Sales $100 Cost of goods sold $110 Profits -$10 (loss of $10)

    Now, it's pretty simple to understand that if you want to know the total sales for the market, you simply add them all up. Total sales $400.

    Now, let's say you want to know the total cost of goods sold for the market. You add them up. Total COGS is $380.

    Simple Accounting 101 says that the total profit is the total sales minus the total cost of goods sold - or $400 - 380. Thus, total profits is $20.

    That's the same number you get if you add $10 plus $20 plus -$10.

    If we do it your way and total profits are $30, then where did the extra $10 come from? Profits should be $400 - $380, so you magically created $10 out of thin air.
  • Reply 54 of 181
    jragostajragosta Posts: 10,473member
    steven n. wrote: »
    I fundamentally disagree with you. We are not talking about holding companies but unique companies. If you had:

    Company A: $100 profit
    Company B: ($50) loss
    Company C: ($50) loss

    There was $100 profit captured in the industry. There was also $100 in losses but they don't negate the $100 in profit made by Company A. Likewise, you are claiming that Company A made ? of the profit. No, it made all of the profit at 100%

    You're absolutely wrong. See my example in the previous post. However, instead of creating $10 out of thin air, you created $100 out of thin air. Congratulations.
  • Reply 55 of 181

    Quote:

    Originally Posted by jragosta View Post




    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.


     


    Company A had 33.3% of market profit


    Company B had 66.6% of market profit 


    Company C had 100% of market loss (They had no profit) Saying that had negative profit is just asinine even if someone could argue its legitimacy with a masters of finance. If it is a loss, it isn't profit by the definition of the word.


     


    profit |?präfit|nouna financial gain, esp. the difference between the amount earned and the amount spent in buying, operating, or producing something

  • Reply 56 of 181
    kdarlingkdarling Posts: 1,640member

    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, 



     


    It would've also been helpful if they had indicated how they came up with Apple's handset revenue / profit numbers.


     


    Quote:


    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).



     


    You're right, they seem to have included it all, which is incorrect.   Samsung's own press release gave us more detail:


     


    "The IT & Mobile Communications – comprised of Mobile Communications, Telecommunication Systems, Digital Imaging and Media Solution Center businesses – posted operating profits of 5.44 trillion won on 31.32 trillion won in revenue for the period. Out of the total IM earnings, the handset-making unit claimed 27.23 trillion won in revenue in the October-December quarter."

     


    Okay, so we know that the handset unit alone made ~$25 billion in revenue.  


     


    The handset unit revenue was 87% of the total IT&M revenue. If the operating profit ratio is the same, that's .87 * $5 billion = ~$4.35 billion handset operating profit.


     


    --


     


    Also of interest:  if you believe IDC's figure of 111 million total Samsung phones of all types being sold in that quarter worldwide, that gives an ASP of $225 per handset, including all the highest and the lowest priced phones.


     


    Contrast that to the last known-for-sure 2Q 2012 number from the California trial, where just the US figures for accused devices gave us $678 million / 2 million phones = $339 ASP... showing how much more higher priced phones sell in the USA.

  • Reply 57 of 181
    dysamoriadysamoria Posts: 2,210member
    OFFS.
  • Reply 58 of 181
    jragostajragosta Posts: 10,473member
    Company A had 33.3% of market profit
    Company B had 66.6% of market profit 
    Company C had 100% of market loss (They had no profit) Saying that had negative profit is just asinine even if someone could argue its legitimacy with a masters of finance. If it is a loss, it isn't profit by the definition of the word.

    <span class="hg" style="font-family:Baskerville;font-size:medium;line-height:normal;">[SIZE=24px]profit[/SIZE] |<span class="ph t_respell" style="margin-left:.3em;margin-right:.3em;">?präfit</span>
    |
    </span>
    <span class="sg" style="display:block;margin-left:1em;text-indent:-1em;font-family:Baskerville;font-size:medium;line-height:normal;"><span class="se1" style="display:block;margin-top:.2em;margin-bottom:1em;"><span class="posg"><span class="pos" style="margin-right:.3em;"><span class="gp tg_pos" style="margin-right:.3em;">noun</span>
    </span>
    </span><span class="msDict t_core" id="user_m_en_us1280986.001" style="display:block;text-indent:-1em;"><span class="df">a financial <span>gain</span>, esp. <span>the</span> <span>difference</span> <span>between</span> the amount <span>earned</span> and the amount spent in buying, operating, or <span>producing</span> <span>something</span></span></span>
    </span>
    </span>

    Profits can be positive or negative. If you don't understand that very simple fact, you shouldn't be discussing it at all.
  • Reply 59 of 181

    Quote:

    Originally Posted by jragosta View Post





    Your logic fails - this case is not the same thing.



    Let's do it this way - since you seem to be confused about how to do basic math.



    Let's take an example. For simplicity, we'll assume no overhead or fixed costs, but the results would be the same if you include them.



    Company A

    Sales $100 Cost of goods sold $90 Profits $10



    Company B

    Sales $200 Cost of goods sold $180 Profits $20



    Company C

    Sales $100 Cost of goods sold $110 Profits -$10 (loss of $10)



    Now, it's pretty simple to understand that if you want to know the total sales for the market, you simply add them all up. Total sales $400.



    Now, let's say you want to know the total cost of goods sold for the market. You add them up. Total COGS is $380.



    Simple Accounting 101 says that the total profit is the total sales minus the total cost of goods sold - or $400 - 380. Thus, total profits is $20.



    That's the same number you get if you add $10 plus $20 plus -$10.



    If we do it your way and total profits are $30, then where did the extra $10 come from? Profits should be $400 - $380, so you magically created $10 out of thin air.


    Sorry. Still wrong.


     


    Yes, total profits are $20.


     


    But, if you want to see what percentage of PROFITS Company A brought in, you take *Company A Profit* / *Sum of all companies that took a profit*.


     


    I don't know how much more clear I can make this.


     


    Joe: Hey, what PERCENT OF THE PROFITS DID COMPANY A MAKE?


    Jim: Well Company A had a profit of $10, Company B had a profit of $20 and Company C lost $10. Together they have $20 of net income BUT you are asking for PERCENTAGE OF PROFITS? Since A and B were the only ones with profit that would be 10/(10+20).


    Joe: Ok, they made 33% of the profit. Great.


     


    A company cannot make more than 100% of profits because profits added together add up to 100%.


     


    But, like I said, you can't convince someone they're wrong when they don't understand the subject matter. I went to school, I passed the CPA, I do this for a living. I fundamentally understand the topic here. You are great at calculating net income as you keep showing us that OVER AND OVER AND OVER AGAIN. But, we are talking about profit percentages.

  • Reply 60 of 181

    Quote:

    Originally Posted by jragosta View Post





    Profits can be positive or negative. If you don't understand that very simple fact, you shouldn't be discussing it at all.


    Profits and positive.


    Losses are negative.


     


    That's why they're called P&L statements (Profit and Loss)

Sign In or Register to comment.