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

Posts: 1,225member
jragosta wrote: »
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:
Total \$400

In case B, it works exactly the same way, except that you're adding a negative number:
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%.
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.
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%.
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.

jragosta wrote: »
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.
I am absolutely right and you did not respond to my application of your fundamentally flawed math and principals. The reason you disregard losses in calculating % profit share across companies within an industry is to avoid division by 0 errors that your incorrect method allows. My guess is you ran your multi million conglomerate into the ground?
Posts: 855member

Quote:

Originally Posted by jragosta

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

To reference a quote from person very near to my heart, maybe you should grab an accounting book before you embarrass yourself any further.

Posts: 21member

This is a silly argument of semantics.

If Apple acquired every Smart Phone vendor in the world then its profits i.e. INDUSTRY PROFITS, would be the same figure quoted in the article.

Logically, if Apple were then to divest all these vendors the industry profits shouldn't magically increase (because you exclude those with negative bottom lines).

Industry profit must include all participants in the industry whether they are positive or negative.

Posts: 61member

Quote:

Originally Posted by Steven N.

I am absolutely right and you did not respond to my application of your fundamentally flawed math and principals. The reason you disregard losses in calculating % profit share across companies within an industry is to avoid division by 0 errors that your incorrect method allows.

Thank you.

Everyone here is real good with math (I say that seriously) but they don't understand math from an applied standpoint... you know, when you actually take math out of the classroom and apply to to real-world situations.

Let's try one last time. Let's assume all these companies sell cell phones:

Company E lost \$40.

Taken as whole, the cell phone market made \$0 in profit. As a group, we can all agree here.

Using jragosta's math, we find:

Company A made 0% of the profits

Company B made 0% of the profits

Company C made 0% of the profits

Company D made 0% of the profits

Company E made 0% of the profits

Using real-world accounting principles that are used outside of this forum in every single application of this matter:

Company A made 25% of the profits

Company B made 25% of the profits

Company C made 25% of the profits

Company D made 25% of the profits

Company E made 100% of the losses

So, you all can toss out things like "if you know how to do math" or "this is fundamentally correct" or whatever have you but, at the end of the day, anyone that believes that 103% of the profits went to two companies is wrong. Flat out wrong.

Posts: 855member

Quote:

Originally Posted by Creid1987

This is a silly argument of semantics.

If Apple acquired every Smart Phone vendor in the world then its profits i.e. INDUSTRY PROFITS, would be the same figure quoted in the article.

Logically, if Apple were then to divest all these vendors the industry profits shouldn't magically increase (because you exclude those with negative bottom lines).

Industry profit must include all participants in the industry whether they are positive or negative.

If Apple acquired every other company, then their net profits would equal all profits per division (each acquired company) minus all losses per division.  If they calculated that net profits number, they wouldn't look at their profitable divisions, who made more in profits than their unprofitable divisions lost, and then say that their profitable divisions made more than the entire company made.  That's what you and jragosta are arguing for.

You're attempting to do math with numbers that cannot be added, subtracted, divided, or multiplied while still having a sensible outcome.

Posts: 19,566member
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>

Note the use of the word DIFFERENCE. This means that it also registers negative values.

If you or anyone else thinks that percentage of profit can only be between 0 and 100% then you have to address how there can be a NEGATIVE profit. On top of that, do you et al. not think that a negative can be registered as a profit? It's you lost money your profit is 0% but that isn't what they are accounting for. They clearly show a NEGATIVE profit because of the DIFFERENCE.

Bottom line: you can't use a stict value for total profit for an industry unless you are willing to completely ignore negative profits because then all you're calculating is Nokia's profits as zero, a null value, for the quarter without accounting for any loss because "you can't be below ZERO percent just as you can't be above 100 percent" in this odd have your cake and eat it too mental gymnastics I'm seeing here.

PS: What is asinine is saying that something you colloquially use only in the positive form can't have a negative association when it's a measure of a difference. I thought we were making progress in society as it's been thousands of years since logic, the zero, and other basic things were first worked out but it appears we're making negative progress in society, also known as regressing.
Posts: 20,250member

Quote:

Originally Posted by BrianCPA

"-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.

I'll repeat. There's difference between accounting and arithmetic. Hope you got that.

Posts: 2,680member

Quote:

Originally Posted by SolipsismX

Note the use of the word DIFFERENCE. This means that it also registers negative values.

If you or anyone else thinks that percentage of profit can only be between 0 and 100% then you have to address had a NEGATIVE profit. On top of that, do you et al. not think that a negative can be registered as a profit? It's you lost money your profit is 0% but that isn't what they are accounting for. They clearly show a NEGATIVE profit because of the DIFFERENCE.

Bottom line: you can't use a stict value for total profit for an industry unless you are willing to completely ignore negative profits because then all you're calculating is Nokia's profits as zero, a null value, for the quarter without accounting for any loss because "you can't be below ZERO percent just as you can't be above 100 percent" in this odd have your cake and eat it too mental gymnastics I'm seeing here.

Would the tax on a negative profit be +ve or -ve?

Posts: 855member
I notice that you conveniently ignored the part where profit was defined as a financial gain, a gain in then amount of the difference between what is earned and what is spent.
Posts: 20,250member

Quote:

Originally Posted by Steven N.

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%

Um, no. The industry profit in your example is \$0. Period. At least, that is what any investor who owns, say, an industry ETF would say. Or any halfway credible academic doing research at the industry -- as opposed to the firm -- level.

People passing off as accountants and lawyers and printers here don't appear to grasp that basic point. Perhaps understandable, because their clients are firms, not industries.

Posts: 2,680member

I am no accountant (or lawyer). But I wonder about this: Are there really formal accounting principles governing the total profits of an industry?

I think not. If there are, can I see a reference? I am genuinely interested (but not at all interested in the debate here).

As much as some try to draw an analogy with a company comprising both profitable and non-profitable divisions, they are not the same thing. Such a company would have to file tax returns based on net profits. An "industry" does no such thing. Ergo ...

Posts: 10,473member
briancpa wrote: »
Sorry. Still wrong.

Yes, total profits are \$20.

We're getting somewhere.

Now, go back to third grade. How do you calculate a percentage? You divide the part of interest by the whole.

So if the part of interest is \$20 (company B profits) and the whole is \$20 (you agree that this is the total profits), how can the percentage be anything other than 100%?
briancpa wrote: »
Profits and positive.
Losses are negative.

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

Wrong. Profits can be negative:
http://dictionary.reference.com/browse/negative+profit
steven n. wrote: »

I am absolutely right and you did not respond to my application of your fundamentally flawed math and principals. The reason you disregard losses in calculating % profit share across companies within an industry is to avoid division by 0 errors that your incorrect method allows. My guess is you ran your multi million conglomerate into the ground?

Look at my post #54. Explain where the extra \$10 came from.

briancpa wrote: »
Thank you.

Everyone here is real good with math (I say that seriously) but they don't understand math from an applied standpoint... you know, when you actually take math out of the classroom and apply to to real-world situations.

Let's try one last time. Let's assume all these companies sell cell phones:
Company E lost \$40.

Taken as whole, the cell phone market made \$0 in profit. As a group, we can all agree here.

OK. So you agree that you add up all the numbers to get total profits. That's progress.

So if we do the same thing in the example in this thread. Apple and Samsung together had more profits than the total for the industry. Right?

Or do you change the rules when it's convenient.
briancpa wrote: »
Using jragosta's math, we find:
Company A made 0% of the profits
Company B made 0% of the profits
Company C made 0% of the profits
Company D made 0% of the profits
Company E made 0% of the profits

Wrong. I never made such an absurd claim.

Unfortunately, you failed math. Each company A to D made \$10. Since the total profit was zero, the percentage is undefined (\$10 / \$0 is undefined).
Posts: 2,680member

Quote:

Originally Posted by anantksundaram

I'll repeat. There's difference between accounting and arithmetic. Hope you got that.

Posts: 61member

Quote:

Originally Posted by anantksundaram

Um, no. The industry profit in your example is \$0. Period. At least, that is what any investor who owns, say, an industry ETF would say. Or any halfway credible academic doing research at the industry -- as opposed to the firm -- level.

People passing off as accountants and lawyers and printers here don't appear to grasp that basic point. Perhaps understandable, because their clients are firms, not industries.

When all else fails, attack the person instead of the argument.

Does it eat you alive knowing your still wrong?

Posts: 20,250member

Quote:

Originally Posted by BrianCPA

Profits and positive.

Losses are negative.

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

Surely, an accountant would understand that Net Income can be a negative number.

If Net Income is not equal to "Profit" what would an accountant say the latter means?

PS: An accountant would also know that that they are --more often than not -- called Income Statement or Statement of Operations.

Posts: 2,680member

Quote:

Originally Posted by BrianCPA

When all else fails, attack the person instead of the argument.

Does it eat you alive knowing your still wrong?

You are, not your.

Man, it must be embarrassing to make what you think is a clever put-down, only to be defeated by your own poor command of the language. :-p

Posts: 29member
I am Applesupertramp and I am Steve

Let me ask you this. If company A had \$100 in profits and company B had \$100 dollars in losses, and these were the only two companies in an industry, then what percentage of the profits does company "A" have?

Posts: 1,225member

Quote:

Originally Posted by BrianCPA

Thank you.

Everyone here is real good with math (I say that seriously) but they don't understand math from an applied standpoint... you know, when you actually take math out of the classroom and apply to to real-world situations.

Let's try one last time. Let's assume all these companies sell cell phones:

Company E lost \$40.

Taken as whole, the cell phone market made \$0 in profit. As a group, we can all agree here.

Using jragosta's math, we find:

Company A made 0% of the profits

Company B made 0% of the profits

Company C made 0% of the profits

Company D made 0% of the profits

Company E made 0% of the profits

Using real-world accounting principles that are used outside of this forum in every single application of this matter:

Company A made 25% of the profits

Company B made 25% of the profits

Company C made 25% of the profits

Company D made 25% of the profits

Company E made 100% of the losses

So, you all can toss out things like "if you know how to do math" or "this is fundamentally correct" or whatever have you but, at the end of the day, anyone that believes that 103% of the profits went to two companies is wrong. Flat out wrong.

Close but not quite right:

Using jragosta's math, we find:

Company A made ?% of the profits

Company B made ?% of the profits

Company C made ?% of the profits

Company D made ?% of the profits

Company E made -?% of the profits

The division by 0 causes jragosta's method to simply explode into the indeterminate.

Posts: 855member
Um, no. The industry profit in your example is \$0. Period. At least, that is what any investor who owns, say, an industry ETF would say. Or any halfway credible academic doing research at the industry -- as opposed to the firm -- level.

People passing off as accountants and lawyers and printers here don't appear to grasp that basic point. Perhaps understandable, because their clients are firms, not industries.

You didn't even address his point. Use his example and do the math you're advocating.

Company A makes \$100 in profits.
Company B has \$100 in losses.

The industry net profit is \$0.

You and jragosta are saying that in order yo determine Company A's share of the profits we make the following calculation:

Company profits/total industry profits = \$100/\$0 = infinity.

You are literally arguing for that to be possible and logical.
Posts: 20,250member

Quote:

Originally Posted by BrianCPA

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

Quote:

Originally Posted by BrianCPA

When all else fails, attack the person instead of the argument.

Does it eat you alive knowing your still wrong?

On the topic of 'attacking the person instead of the argument,' I thought I'd have you look again at the first of the two quoted posts above.

Re. the second post, and the question, "Does it eat you alive knowing your [sic] still wrong?  the answer is, 'No,' since I am quite comfortable with the content and substance of my argument.