Notes of interest for Apple's Q3 2008 financial results call

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  • Reply 61 of 76
    merdheadmerdhead Posts: 587member
    Quote:
    Originally Posted by johnqh View Post


    Do you even know how big the cell phone market is? Apple's unit sales, comparing to Nokia, is peanuts.



    Take a look at any cell phone carrier's website, and see how many free (or almost free)-with-contract cell phones they have.



    iPhone is simply too big for many people, especially Asia. Keep in mind, American lifestyle (commute in cars) is not the only lifestyle in the world. When you live by taking subway and bus, iPhone is too big to hang around the neck for girls (cell phone is a fashion element for girls in many countries), and too big to put in a pocket for the guys.



    Even if iPhone Nano is not the "production in transition" here, sooner or later there will be an iPhone Nano. Count on it.



    So you're arguing that Apple will produce an iPhone nano because everyone else does? Because we all know that Apple follows everyone else and have no problem compromising the design of their products in doing so.



    There are other questions: why would Apple want to play in the lower end where there are big, established players and the margins are thin? Apple has an established strategy of skiming the cream of the market at the high end with fat gross margins. Who gives a toss about the number of units they ship if the don't make a decent profit on them and it hurts their brand?



    What you're suggesting would be pretty stupid for Apple.
  • Reply 62 of 76
    minderbinderminderbinder Posts: 1,703member
    Quote:
    Originally Posted by merdhead View Post


    There are other questions: why would Apple want to play in the lower end where there are big, established players and the margins are thin?



    Because they want to expand market share? In other words, growth. And they have pretty much said that they expect their margins to go down, which implies they are getting into a market with narrower margins.



    Quote:
    Originally Posted by merdhead View Post


    Apple has an established strategy of skiming the cream of the market at the high end with fat gross margins. Who gives a toss about the number of units they ship if the don't make a decent profit on them and it hurts their brand?



    Because a smaller profit can be decent, especially if quantity goes up. And who says it would hurt their brand?



    People said they'd never make the mini because it would hurt margins and the brand. Same with the ipod shuffle. Why NOT create phones corresponding to the nano or shuffle? It did wonders for them on the iPod side of the business.
  • Reply 63 of 76
    merdheadmerdhead Posts: 587member
    Quote:
    Originally Posted by minderbinder View Post


    Because they want to expand market share? In other words, growth. And they have pretty much said that they expect their margins to go down, which implies they are getting into a market with narrower margins.







    Because a smaller profit can be decent, especially if quantity goes up. And who says it would hurt their brand?



    People said they'd never make the mini because it would hurt margins and the brand. Same with the ipod shuffle. Why NOT create phones corresponding to the nano or shuffle? It did wonders for them on the iPod side of the business.



    They went into the lower end with the iPod because they ran out of market at the high end. They have plenty of room in the high end of the phone market, and it's a completely different market. The iPod market had no established players who had most of the market share. By your logic they would compete in the low end PC and laptop market, which they don't.
  • Reply 64 of 76
    johnqhjohnqh Posts: 242member
    Quote:
    Originally Posted by merdhead View Post


    So you're arguing that Apple will produce an iPhone nano because everyone else does? Because we all know that Apple follows everyone else and have no problem compromising the design of their products in doing so.



    There are other questions: why would Apple want to play in the lower end where there are big, established players and the margins are thin? Apple has an established strategy of skiming the cream of the market at the high end with fat gross margins. Who gives a toss about the number of units they ship if the don't make a decent profit on them and it hurts their brand?



    What you're suggesting would be pretty stupid for Apple.



    No, I am saying whatever this product is, the revenue is deferred.



    An iPhone nano could be free with contract, but Apple will recognize $300 over two years, and it costs $100 to $150 to make. That is hardly "low-margin" to me.



    Take a look at Nokia's financials (it is about the same as Apple). Low-end doesn't mean low-margin.



    Another potential is new AppleTV with DVR and DVD with the same business model as iPhone - cable companies give it away for free with 2-year contract, but Apple recognize $300 revenue over 2 years and shut off streaming video competitors.
  • Reply 65 of 76
    wigginwiggin Posts: 2,265member
    Quote:
    Originally Posted by minderbinder View Post


    7% market share sure looks like evidence of suffering to me



    Except that it's over twice the 3% they were at not too long ago... everything's relative. In that perspective, 7% is anything but evidence of suffering. They've doubled their market share in just a few years. That's a roaring success in anybody's book!
  • Reply 66 of 76
    jeffdmjeffdm Posts: 12,946member
    Quote:
    Originally Posted by johnqh View Post


    Relax, we are just guesstimating. No need to get so worked up.



    A candy bar or flip phone, with T9 keypad will be fine for text input. After all, people have been texting for a decade before iPhone. Nobody presses multiple keys to get the letter anymore. T9 works well on most phones.



    I didn't say multiple keys, the same key multiple times. I'm not sure if pressing multiple keys ever caught on.
  • Reply 67 of 76
    pmoeserpmoeser Posts: 79member
    Quote:
    Originally Posted by SpamSandwich View Post


    Although your negativity usually grates on me, there may be more truth to this rumor than we know because there is no outright denial forthcoming. Oy!



    In my experience, a denial usually means the rumour is true!
  • Reply 68 of 76
    jeffdmjeffdm Posts: 12,946member
    Quote:
    Originally Posted by minderbinder View Post


    Right now their market share is growing, but it's still low (7% market share sure looks like evidence of suffering to me)



    I'm surprised you say this at all. Luxury brands don't need to sell as many to make a handy profit, move off luxury, then you're in Wal-Mart territory of very tiny margins. I imagine that Apple is making as much net profit as Dell or HP does but without having to sell to the razor-thin margins of the budget computers.



    BTW: 8.5% now, at least in the US.
  • Reply 69 of 76
    anantksundaramanantksundaram Posts: 19,164member
    As of now, the 'bid' is a ridiculous $30 lower than the 'ask.'



    You figure it out!

  • Reply 70 of 76
    macoldmacold Posts: 1member
    Just finished reading conference call transcript. There is one clue to what this "product transition" may be:

    ------

    "Andy Hargreaves - Pacific Crest Securities



    Could you just touch on CapEx? It jumped quite a bit in the quarter. Could you talk about what the spending was on and is the target still $1.25 billion in the year?



    Peter Oppenheimer



    Our capital expenditures in the June quarter were $304 million. We spent $113 million in our retail stores and $191 million outside of our retail stores, in our IT areas, facilities, and some of our manufacturing. And we do anticipate CapEx for fiscal ?08 being $1.2 billion, about $400 million in retail and $800 million in the other parts of our business."

    ------

    Capital expenditure jumping from $190M to $800M?

    Doesn't sound like a new hardware product.

    Since Apple outsources its manufacturing it can't be tooling cost, and since its unlikely they would build/buy new engineering facilities the same quarter the product is coming out and was in development a few years, this appears like an investment in IT, eg a server farm?



    Servers for HD movies? App store? Expansion of mobile me capabilities, like voice over IP?
  • Reply 71 of 76
    mdriftmeyermdriftmeyer Posts: 7,265member
    Apple's Professional Cinema Entertainment Displays. They can be used for their entire product line and HDTV.
  • Reply 72 of 76
    mdriftmeyermdriftmeyer Posts: 7,265member
    Quote:
    Originally Posted by MacOld View Post


    Just finished reading conference call transcript. There is one clue to what this "product transition" may be:

    ------

    "Andy Hargreaves - Pacific Crest Securities



    Could you just touch on CapEx? It jumped quite a bit in the quarter. Could you talk about what the spending was on and is the target still $1.25 billion in the year?



    Peter Oppenheimer



    Our capital expenditures in the June quarter were $304 million. We spent $113 million in our retail stores and $191 million outside of our retail stores, in our IT areas, facilities, and some of our manufacturing. And we do anticipate CapEx for fiscal ’08 being $1.2 billion, about $400 million in retail and $800 million in the other parts of our business."

    ------

    Capital expenditure jumping from $190M to $800M?

    Doesn't sound like a new hardware product.

    Since Apple outsources its manufacturing it can't be tooling cost, and since its unlikely they would build/buy new engineering facilities the same quarter the product is coming out and was in development a few years, this appears like an investment in IT, eg a server farm?



    Servers for HD movies? App store? Expansion of mobile me capabilities, like voice over IP?



    Sure it sounds like a New Hardware Manufacturing/Design/Testing Facility that allows them to develop Prototypes and control end-to-end prototyping of a variety of solutions, more rapidly than dealing with Outsourcing, while keeping the projects "under wraps." The consolidation of Real Estate properties around the campus offers many buildings already quite capable of being augmented to do just this--think NeXT Hardware Manufacturering, on a small scale, for rapid prototyping, testing and then control group studies.
  • Reply 73 of 76
    jragostajragosta Posts: 10,473member
    Profits up 31%, sales up double digits in almost all areas, new products ready to go...... and the stock drops.



    Wall Street bugs the h*** out of me.
  • Reply 74 of 76
    Quote:
    Originally Posted by johnqh


    For the next months, AppleInsider will be devoted to figure out what "product transition" is.



    The MacBook G6
  • Reply 75 of 76
    solipsismsolipsism Posts: 25,726member
    There are currently 909 App Store apps on iTunes. That is pretty damn impressive for 12 days. I wonder what it will be like in 6 months. How do other mobile platforms stack up in comparison?



    Note: many of these have duplicate competitors and some are a free and paid version by the developer, but that is the norm across any platform.
  • Reply 76 of 76
    Quote:
    Originally Posted by MacOld View Post


    Just finished reading conference call transcript. There is one clue to what this "product transition" may be:

    ------

    "Andy Hargreaves - Pacific Crest Securities



    Could you just touch on CapEx? It jumped quite a bit in the quarter. Could you talk about what the spending was on and is the target still $1.25 billion in the year?



    Peter Oppenheimer



    Our capital expenditures in the June quarter were $304 million. We spent $113 million in our retail stores and $191 million outside of our retail stores, in our IT areas, facilities, and some of our manufacturing. And we do anticipate CapEx for fiscal ’08 being $1.2 billion, about $400 million in retail and $800 million in the other parts of our business."

    ------

    Capital expenditure jumping from $190M to $800M?

    Doesn't sound like a new hardware product.

    Since Apple outsources its manufacturing it can't be tooling cost, and since its unlikely they would build/buy new engineering facilities the same quarter the product is coming out and was in development a few years, this appears like an investment in IT, eg a server farm?



    Servers for HD movies? App store? Expansion of mobile me capabilities, like voice over IP?



    $190M is a QUARTER figure, $800M is for the FY, putting them in the same ballpark on average.
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