You're not getting it. It is an incremental movement when considered q to q but it a move downward when looked at yoy. What is supposed to be Apple's best quarter and, for all intent and purpose, the quarter where you would expect margins to be sustained from the last q. When you say that +.9 balances out -.7... are you kidding? Really? Start adding up the difference between earnings from each quarter and then you will find out that the two don't even come close to cancelling each other out.
You've proved my point by saying that 40% or greater margins are not sustainable. Exactly what Wall Street is hearing.
So, next year, let's say it drops another .7%... even if the q to q is up .9%... then what happens.
I don't know what I'm not "getting", man. YoY vs QoQ? Increment vs trend? I'm suggesting the major correction happened over a year ago, and since then we're seeing an improving "trend" comparing margins to revenue. Reflected in the past couple of quarters especially... a stabilizing of margins (I see it, and you say I need glasses. Are you even looking at what I'm referring to?). I don't believe we will see a further significant erosion of margins (the kind that matter to the bottom line or long-term health of the company). The supposition of a further YoY decrease of fractional margins (which don't really matter unless they continue long term) is correct, but I don't see that as an ongoing trend.
And I'm not sure what your point is/was to be honest (what I supposedly proved for you?)... a year ago, I was discussing what I saw as a pretty substantial "correction" to their (even then) unrealistic margins. You couldn't sustain those high margins long term and maintain competition, etc. When they adjusted from >40% to high 30s (running roughly between 37 and 38 pretty consistently since) they actually improved their flexibility, ability to adjust to conditions and competition, etc. So, we agree in principal about the >40% margins not being sustainable... but that's REALLY old news!
I don't think growing the margins again from where they are now is actually healthy or desirable. They even have some room to decrease them in a positive way (because not all margin reductions are bad things). I'd probably be happiest if they could ride between 35 and 37. That to me is very sustainable, allows for solid revenue / net profit growth (in real terms, not percentages) while remaining competitive and flexible.
Saying Wall Street is all about the margins is in a small way shifting that "need for growth" philosophy into margins, where there is an inherent ceiling. That shouldn't be the criteria at all. And building on a perception of "shrinking margins" is not accurate if you're implying that they're falling dangerously, or anywhere near distressed levels.
Meanwhile there isn't any measurable or foreseeable ceiling to Apple's revenue growth. The stuff that really matters. Stay in the mid to high 30s for margins, and keep growing revenue. That's a healthy picture. The margin correction in late 2012 was a necessary one. Now we're cruising in high-gain mode. I see margins stabilizing. Why do you see a different picture?
Now I wonder if it's you that doesn't get what I'm trying to say here?
... as a supply chain guy... sure.
He's been heading Apple on and off for over 5 years. At what POINT do you finally give the guy some due??
He clearly isn't doing a bad job. Old saw or no, Apple is has grown huge and is growing huger by leaps and bounds under his leadership.
I may not like his style as much as Jobs', but I can't fault the job he's doing. The team is awesome. The leaps forward last year alone were fantastic, as well as foundation building steps.
What I can do with my iPhone, iPad, MacBook Air and iMac together (due to how iOS, OSX and iCloud work together, not to mention app interoperability) is pretty groundbreaking stuff. Most of that has come together in just the past 12 to 18 months.
I'm sure Jobs had a hand in that. These things didn't happen overnight. But SJ has been gone for over 3 years. His legacy and inspiration remains. And the team today is rocking it WAY better than Sculley and his crew ever did.
I never had much faith in John Sculley. Had serious doubts from day one. He proved my misgivings right. I have the opposite view regarding this team.
I'm surprised you feel any differently having the comparisons at hand.
Pause and reflect on something. 77 MILLION iOS devices (not counting iPods) last quarter alone.
Immensely profitable quarter.
No end in sight for that momentum.
At what point do you finally put aside the cynicism, and just say "wow"....?
Since 2004, really. He took over during the first cancer bout.
But SJ has been gone for over 3 years.
77 MILLION iOS devices (not counting iPods) last quarter alone. Immensely profitable quarter.
That’s grounds for dismissal, that is. " src="http://forums-files.appleinsider.com/images/smilies//lol.gif" />
tallest skil wrote: »
<span style="line-height:1.4em;">Stock prices are always correct</span>
<span style="line-height:1.4em;">Stock prices are always correct</span>
How well did Apple fare in CY 2013 (2012)?
in billion $
revenues: 173.99 (164.69)
net profit: 37.03 ( 41.75)
Macs: 17.11 ( 17.00)
iPads: 74.23 ( 65.70)
iPhones: 153.46 (135.80)
Again... WTF are you talking about?
Do you just respond without reading the other person's post.
Give your head a shake. Why do yo give a sh*t what Wall Street thinks. Damnit man. Apple is healthy. That's all that matters. For that, Apple is winner all the way.
Now let's hope that Cook isn't just good at spitting out products but that he can choose another category winner that will continue Apples stellar growth.
WTF are you talking about?
We're talking about Wall Street's view of Apple. Not mine. I'm giving you the reasons as to why Wall Street is reacting the way it does. At least that was where this started. You can go off on any tangent you want... but it has nothing to do with me.
eric38 wrote: »
What I'd truly like to see as a shareholder is Apple scrapping the 2% dividend, not initiating any more buy-backs, grow their cash, and wait for a $ repatriation holiday from the gov't....and then 6 years down the road buy back over half their shares on the open market in one fell swoop and watch their stock soar past $1200 The 2% dividend is not doing the stock price any favors....it's hurting it.
I was replying to two entirely different threads. The wall street view is a different one. This was about:
Tallest: The decade and a half [[Tim Cook has been]] at Apple thereafter has already disproven it.
You: ... as a supply chain guy... sure.
Then my response. Where is the "wall street perspective" in that exchange? Sorry, you lost me. This here wasn't anything to do with the discussion of margins we've been carrying on....
So, in this thread, I asked what it would take for you to see TC as more than just "the supply chain guy"... you've been expressing doubt comparing him to John Sculley.... or did I misunderstand something there?
oh that's right, I forgot about that brief stint in '04... it was just a few months that time, wasn't it? But he really proved himself capable over those few years. And got the best mentoring anyone could ask for....!
Right, so almost 3 years rather than more than 3 years. I was thinking mostly of when TC really started handling the day to day stuff...
I know right? To hear some of the pundits go on about Cook, it's almost like the sheer enormity of that figure is completely lost on them.
77 MILLION pocket computers, in a single quarter. Do we have final numbers on how many iOS devices were sold in 2013? Close to 200 million I'm guessing...
Yeah, definite grounds for dismissal
oh that's right, I forgot about that brief stint in '04... it was just a few months that time, wasn't it?
You’re right. It was roughly, what, five or six months while Steve recovered from his first operation.
I was thinking mostly of when TC really started handling the day to day stuff...
Oh, you’re right. And Steve officially resigned in August, having been at home for months before that…
WWDC was the last time we saw him on stage and probably around the last time Steve had any big involvement in day to day.
Sorry... I'm old... I get confused.
I'm not comparing Cook to Sculley per se.
Both Cook and Sculley were/have been increasingly very profitable. Both men followed on the heels of successful product introductions by Steve Jobs. Both men did not/have not introduced any new product categories (actually, Sculley introduced the first laptop).
I've seen one of Tim Cook's forays into developing a new product, the 5c, and I'm hoping that isn't any indication of the success of any new product categories.
As far as Apple's financial success under Cook... I'm betting there are at least a couple of other guys on the planet that could have done that much. The real test will be Cook's ability to grow the company beyond its current boundaries... in the same manner as Jobs.
So, yes... I need more evidence of Cook's ability to grow the company. I already know that he can keep the products alive that were developed under Jobs.
No he didn't. The stock was heavily shorted a week before the earnings announcement.
Wrong! Apple had a very LOW short interest and typically has an extremely low short interest as a percentage of market cap.