It is fully invalid to do the math this way. If Apple made $5 and Samsung made $4 and HTC, LG, Google, Sony... Combined LOST $9, Apple and Samsung did not make an indeterminate amount of the profits.
The probability of that happening is zero. You're just being pedantic.
That is not valid in the slightest bit. If another company has a loss, then it's zero profits, not negative profits.
I'm 103% sure that "loss" and "negative profit" are synonymous.
If your were to theoretically look at the smartphone industry as a single company with a single balance sheet. The industry (viewed as a single company) would report 100% of their profits and 100% of their losses. The Samsung division and the Apple division were the only two profitable divisions.
Apple produced 51.46% of the industry profits (viewed as a single company) and Samsung produced 48.54% of the total profits of the industry (viewed as a single company). The total industry profit (viewed as a single company) would be the total profit in [dollars] minus the total loss in [dollars]. Assuming the profits were greater than the losses.
But it is not uncommon for an industry in disruption to show minimal or even no profits (losses outweigh profits). So under this flawed math, you could end up with whacky numbers like company A getting 1290% profit, company B getting 3543% of the profit
Or even worse:
Company A getting -254% of the profit.
To avoid these issues, you have profit and losses. Not just profit. It is not a hard concept to grasp.
To use a simplified example...If Apple makes $5, and Samsung makes $5, and the other companies collectively lose $2, then total industry profits are $8 (5+5-2). Apple obviously has a 5/8 share of the profits (or 62.5%) and Samsung has the same. It's perfectly valid. What other alternative calculation do you think there would be?
It gets fuzzy because you're including losses. How would you chart this in a pie chart, for instance? In comparing Apple and Samsung (the whole point) it should exclude anyone losing money.
I mean, would you want a headline that says both Apple and Samsung are each making 62% of the profits?
That is not valid in the slightest bit. If another company has a loss, then it's zero profits, not negative profits.
That's not correct either because a company that breaks even has zero profit as well. There's no 'loss' column on earnings charts so in order to show a loss a negative number is used and that's why it's common called negative profits, but there's also another definition and one that makes more sense. If a company is expected to lose a certain amount say $10 million but they lose less say $8 million then they have $2 million in negative profit.
People need to read the whole article. The math does indeed work out because losses from Motorola and Blackberry count as negative profit.
53% 50% - 2% - 1% = 100%
Correct. The thing to remember is that profit is a signed number, so if you talk about profit percentages, then you necessarily get signed percentage. It still adds up to 100%.
People confuse that with "percentage of total (positive) industry profits", which would ONLY include players who made a positive profit (negative profit players would be excluded from the pie chart).
You are comparing a down quarter for Apple and a quarter right after the S4 introduction along with the introduction of multiple other S4 models.
A lot of Samsung's growth came from within the Android ecosystem, not really from Apple's.
Not only that. You need to realize, Apple is doing this with basically one model from 3 generations. While Samcrap has fired all the bullets, Apple's time is yet to come.....
And again: what would Samcrap profits be if they would pay for components at market prices? Odor is Constantly trolling and he knows that very well...
It is fully invalid to do the math this way. If Apple made $5 and Samsung made $4 and HTC, LG, Google, Sony... Combined LOST $9, Apple and Samsung did not make an indeterminate amount of the profits.
The probability of that happening is zero. You're just being pedantic.
The probability of that happening exactly may be zero, but the point remains that it represents an example of why taking the ratio of a positive number with a sum (that may be positive, negative or zero) to get a percentage is not meaningful. To take a non-zero probability example, how would the positive profit of a single company be represented as a percentage of an overall loss-making segment? As a negative percentage?
Correct. The thing to remember is that profit is a signed number, so if you talk about profit percentages, then you necessarily get signed percentage. It still adds up to 100%.
People confuse that with "percentage of total (positive) industry profits", which would ONLY include players who made a positive profit (negative profit players would be excluded from the pie chart).
Exactly. The people who keep railing on this methodology are simply proving that they have no concept of how math works.
I fully agree that AAPL is making more profits then Samsung. There was some speculation in the Press if AAPL makes 50% of their operating margin because its revenue is close to 52% of their total revenue. The following are the facts.
Apple's average selling Price for the last 4 quarters is $620 (581, 618, 635, 651).
Average cost of making an iPhone 5 is $207, iPhone 4/4S is $180 (Components cost of iPhone is going down).
So Gross Profit of the iPhones on a average terms is close to 66%.
Average selling Price of an iPad/iPad Mini is $375 and cost of making these iPads is around $270. So Gross profit for iPads is around 40%.
iTunes Gross profit we all know is 30%, because Apple gets 30% of everything they sell in the iTunes Store. Macs estimated gross profit is around 28% approximately.
If you review all the above gross profit among all the products, Apple's iPhone Gross Profit is 70% of all Apple's Profits. So Apple's Profit is close to 70% of all its profit.
If you properly review samsung's earnings, you will notice that they club smartphones, iPads, PC, Laptops in their revenue.
Another way to find is the net profit of Samsung & Apple for the last 12 months is as follows:
Apple - 37.75 Billion Dollars (70% of all profits for iPhone = 26.5)
Samsung - 19.77 Billion Dollars ( Samsung makes 100 different products which includes smartphones, iPads, PC, TV, refrigerator Plus 100 other Products.) Samsung may not be making more than 50% of all its profits on Smartphones, but even if you assume it makes 70%, then Samsung's Net Profit on smartphones is around $13.83 Billions.
The actual factual profit mentioned by Apple & Samsung shows us that Apple still has 65% of all the profits in the smartphone market trailing 12 months. These are facts based on their actual earnings.
I fully agree that AAPL is making more profits then Samsung. There was some speculation in the Press if AAPL makes 50% of their operating margin because its revenue is close to 52% of their total revenue. The following are the facts.
Apple's average selling Price for the last 4 quarters is $620 (581, 618, 635, 651).
Average cost of making an iPhone 5 is $207, iPhone 4/4S is $180 (Components cost of iPhone is going down).
So Gross Profit of the iPhones on a average terms is close to 66%.\
You can stop there. You have no idea what it costs Apple to make an iPhone. Those appear to be the numbers published by a company which only publishes component costs without any of the indirect costs, overheads, and other costs.
Apple's gross margin is certainly far lower than 66%.
The probability of that happening exactly may be zero, but the point remains that it represents an example of why taking the ratio of a positive number with a sum (that may be positive, negative or zero) to get a percentage is not meaningful. To take a non-zero probability example, how would the positive profit of a single company be represented as a percentage of an overall loss-making segment? As a negative percentage?
You're wrong. This is third grad math and it's really sad how many people can't understand it.
Take a single company. Let's say that they exactly broke even last year and this year made $1,000. Their percentage increase was undefined. Does that mean it's impossible for them to break even last year? Of course not. Similarly, the fact that you can come up with a scenario where one of the numbers is undefined doesn't mean it's impossible.
The probability of that happening exactly may be zero, but the point remains that it represents an example of why taking the ratio of a positive number with a sum (that may be positive, negative or zero) to get a percentage is not meaningful. To take a non-zero probability example, how would the positive profit of a single company be represented as a percentage of an overall loss-making segment? As a negative percentage?
You're wrong. This is third grad math and it's really sad how many people can't understand it.
Take a single company. Let's say that they exactly broke even last year and this year made $1,000. Their percentage increase was undefined. Does that mean it's impossible for them to break even last year? Of course not. Similarly, the fact that you can come up with a scenario where one of the numbers is undefined doesn't mean it's impossible.
Again, it's third grade math. Get over it.
You addressed neither the example nor my question, and instead just introduced a different example where an undefined result is the correct and reasonable answer, since, by definition, a change from zero to any finite number is an undefined fractional increase.
Firstly we were not talking about fractional derivatives (changes), we were talking about one quantity as a fraction of another which, third grade math notwithstanding, is different, and secondly, this method for representing profit share results in some obvious logical ambiguities.
I guess I need to formalize the problem. If, as has been done here, we define a company's profit share as its individual profit divided by the net profit of the market (where losses are just summed as negative profit), then, for example, if a company makes a positive profit, p, and the industry, as a whole, makes a net positive profit P, then the company's profit share is p/P (or (p x 100)/P as a percentage). Superficially just fine.
But what if the company makes that same profit, p, but the net industry profit is negative - a loss of P? The profit share calculation is now -p/P. The same magnitude number, but now negative in sign, representing the same actual profit but now in an overall loss-making market. A negative percentage representing a better performance than the same positive percentage. Even worse, that result is indistinguishable from the situation where the company makes a loss of p in a market with a net positive profit of P - both cases would result in reporting the same profit share, -p/P. That does not appear meaningful in any sense. Are you really arguing that it is a useful way to describe profit?
It is fully invalid to do the math this way. If Apple made $5 and Samsung made $4 and HTC, LG, Google, Sony... Combined LOST $9, Apple and Samsung did not make an indeterminate amount of the profits.
You have to treat losses separate from profits.
You clearly never attended Accounting School.
P&Ls use math like this all the time…. but then, I don't presume to understand them, I just focus on the results.
Comments
Quote:
Originally Posted by Steven N.
It is fully invalid to do the math this way. If Apple made $5 and Samsung made $4 and HTC, LG, Google, Sony... Combined LOST $9, Apple and Samsung did not make an indeterminate amount of the profits.
The probability of that happening is zero. You're just being pedantic.
Quote:
You have to treat losses separate from profits.
Says who?! Where? (Other than you, here).
Quote:
Originally Posted by manicakes
Quote:
Originally Posted by Gustav
Uhm, the headline adds up to 103% of the profits.
That is not valid in the slightest bit. If another company has a loss, then it's zero profits, not negative profits.
I'm 103% sure that "loss" and "negative profit" are synonymous.
If your were to theoretically look at the smartphone industry as a single company with a single balance sheet. The industry (viewed as a single company) would report 100% of their profits and 100% of their losses. The Samsung division and the Apple division were the only two profitable divisions.
Apple produced 51.46% of the industry profits (viewed as a single company) and Samsung produced 48.54% of the total profits of the industry (viewed as a single company). The total industry profit (viewed as a single company) would be the total profit in [dollars] minus the total loss in [dollars]. Assuming the profits were greater than the losses.
Corrected headline:
Apple takes 53% of smartphone profits, Samsung at 47%, remainder lose money
If they can make up numbers, so can I.
But it is not uncommon for an industry in disruption to show minimal or even no profits (losses outweigh profits). So under this flawed math, you could end up with whacky numbers like company A getting 1290% profit, company B getting 3543% of the profit
Or even worse:
Company A getting -254% of the profit.
To avoid these issues, you have profit and losses. Not just profit. It is not a hard concept to grasp.
Quote:
Originally Posted by Steven N.
To avoid these issues, you have profit and losses. Not just profit. It is not a hard concept to grasp.
Neither is the concept of a + (plus) or a ? (minus).
It gets fuzzy because you're including losses. How would you chart this in a pie chart, for instance? In comparing Apple and Samsung (the whole point) it should exclude anyone losing money.
I mean, would you want a headline that says both Apple and Samsung are each making 62% of the profits?
That's not correct either because a company that breaks even has zero profit as well. There's no 'loss' column on earnings charts so in order to show a loss a negative number is used and that's why it's common called negative profits, but there's also another definition and one that makes more sense. If a company is expected to lose a certain amount say $10 million but they lose less say $8 million then they have $2 million in negative profit.
People confuse that with "percentage of total (positive) industry profits", which would ONLY include players who made a positive profit (negative profit players would be excluded from the pie chart).
Quote:
Originally Posted by Seankill
Wow...........
You are comparing a down quarter for Apple and a quarter right after the S4 introduction along with the introduction of multiple other S4 models.
A lot of Samsung's growth came from within the Android ecosystem, not really from Apple's.
Not only that. You need to realize, Apple is doing this with basically one model from 3 generations. While Samcrap has fired all the bullets, Apple's time is yet to come.....
And again: what would Samcrap profits be if they would pay for components at market prices? Odor is Constantly trolling and he knows that very well...
I say this article is total BS and useless. Neither company publishes numbers in a way that allows them to be compared to each other.
Quote:
Originally Posted by anantksundaram
Quote:
Originally Posted by Steven N.
It is fully invalid to do the math this way. If Apple made $5 and Samsung made $4 and HTC, LG, Google, Sony... Combined LOST $9, Apple and Samsung did not make an indeterminate amount of the profits.
The probability of that happening is zero. You're just being pedantic.
The probability of that happening exactly may be zero, but the point remains that it represents an example of why taking the ratio of a positive number with a sum (that may be positive, negative or zero) to get a percentage is not meaningful. To take a non-zero probability example, how would the positive profit of a single company be represented as a percentage of an overall loss-making segment? As a negative percentage?
http://www.asymco.com/2013/07/30/that-competition-thing/
Absolutely true.
Exactly. The people who keep railing on this methodology are simply proving that they have no concept of how math works.
Apple's average selling Price for the last 4 quarters is $620 (581, 618, 635, 651).
Average cost of making an iPhone 5 is $207, iPhone 4/4S is $180 (Components cost of iPhone is going down).
So Gross Profit of the iPhones on a average terms is close to 66%.
Average selling Price of an iPad/iPad Mini is $375 and cost of making these iPads is around
$270.
So Gross profit for iPads is around 40%.
iTunes Gross profit we all know is 30%, because Apple gets 30% of everything they sell in the iTunes Store.
Macs estimated gross profit is around 28% approximately.
If you review all the above gross profit among all the products, Apple's iPhone Gross Profit is 70% of all Apple's Profits.
So Apple's Profit is close to 70% of all its profit.
If you properly review samsung's earnings, you will notice that they club smartphones, iPads, PC, Laptops in their revenue.
Another way to find is the net profit of Samsung & Apple for the last 12 months is as follows:
Apple - 37.75 Billion Dollars (70% of all profits for iPhone = 26.5)
Samsung - 19.77 Billion Dollars ( Samsung makes 100 different products which includes smartphones, iPads, PC, TV, refrigerator Plus 100 other Products.) Samsung may not be making more than 50% of all its profits on Smartphones, but even if you assume it makes 70%, then Samsung's Net Profit on smartphones is around $13.83 Billions.
The actual factual profit mentioned by Apple & Samsung shows us that Apple still has 65% of all the profits in the smartphone market trailing 12 months. These are facts based on their actual earnings.
You can stop there. You have no idea what it costs Apple to make an iPhone. Those appear to be the numbers published by a company which only publishes component costs without any of the indirect costs, overheads, and other costs.
Apple's gross margin is certainly far lower than 66%.
You're wrong. This is third grad math and it's really sad how many people can't understand it.
Take a single company. Let's say that they exactly broke even last year and this year made $1,000. Their percentage increase was undefined. Does that mean it's impossible for them to break even last year? Of course not. Similarly, the fact that you can come up with a scenario where one of the numbers is undefined doesn't mean it's impossible.
Again, it's third grade math. Get over it.
Quote:
Originally Posted by jragosta
Quote:
Originally Posted by muppetry
The probability of that happening exactly may be zero, but the point remains that it represents an example of why taking the ratio of a positive number with a sum (that may be positive, negative or zero) to get a percentage is not meaningful. To take a non-zero probability example, how would the positive profit of a single company be represented as a percentage of an overall loss-making segment? As a negative percentage?
You're wrong. This is third grad math and it's really sad how many people can't understand it.
Take a single company. Let's say that they exactly broke even last year and this year made $1,000. Their percentage increase was undefined. Does that mean it's impossible for them to break even last year? Of course not. Similarly, the fact that you can come up with a scenario where one of the numbers is undefined doesn't mean it's impossible.
Again, it's third grade math. Get over it.
You addressed neither the example nor my question, and instead just introduced a different example where an undefined result is the correct and reasonable answer, since, by definition, a change from zero to any finite number is an undefined fractional increase.
Firstly we were not talking about fractional derivatives (changes), we were talking about one quantity as a fraction of another which, third grade math notwithstanding, is different, and secondly, this method for representing profit share results in some obvious logical ambiguities.
I guess I need to formalize the problem. If, as has been done here, we define a company's profit share as its individual profit divided by the net profit of the market (where losses are just summed as negative profit), then, for example, if a company makes a positive profit, p, and the industry, as a whole, makes a net positive profit P, then the company's profit share is p/P (or (p x 100)/P as a percentage). Superficially just fine.
But what if the company makes that same profit, p, but the net industry profit is negative - a loss of P? The profit share calculation is now -p/P. The same magnitude number, but now negative in sign, representing the same actual profit but now in an overall loss-making market. A negative percentage representing a better performance than the same positive percentage. Even worse, that result is indistinguishable from the situation where the company makes a loss of p in a market with a net positive profit of P - both cases would result in reporting the same profit share, -p/P. That does not appear meaningful in any sense. Are you really arguing that it is a useful way to describe profit?
Quote:
Originally Posted by Steven N.
It is fully invalid to do the math this way. If Apple made $5 and Samsung made $4 and HTC, LG, Google, Sony... Combined LOST $9, Apple and Samsung did not make an indeterminate amount of the profits.
You have to treat losses separate from profits.
You clearly never attended Accounting School.
P&Ls use math like this all the time…. but then, I don't presume to understand them, I just focus on the results.