Apple & Samsung capture 103% of handset profits as rivals lose money
Together, Apple and Samsung accounted for 103 percent of mobile phone profits in 2012, a number made possible because of losses incurred by rivals Motorola, Sony and Nokia.
Apple took a commanding 69 percent of handset profits last year, more than doubling the next closest company, Samsung, which accounted for 34 percent. Together, that gave the two companies more than 100 percent of the industry's profits, according to research released on Wednesday by Canaccord Genuity.
That's because Nokia's losses gave it a negative 2 percent of industry profits, while Motorola and Sony Ericsson both accounted for minus 1 percent.
In fact, the only other company to see any positive in 2012 was HTC, which accounted for just 1 percent of industry profits. Both BlackBerry and LG are estimated to have broken even.
Apple's share of the industry's profits were even greater in the fourth quarter of 2012, when the company launched its latest flagship handset, the iPhone 5. In the holiday quarter, Apple took 72 percent of the industry profits, while Samsung's share slid to 29 percent.
With few major catalysts on the horizon, analyst Michael Walkley of Canaccord Genuity expects Apple and Samsung will retain their dominant shares of the handset industry for the foreseeable future.
Apple took a commanding 69 percent of handset profits last year, more than doubling the next closest company, Samsung, which accounted for 34 percent. Together, that gave the two companies more than 100 percent of the industry's profits, according to research released on Wednesday by Canaccord Genuity.
That's because Nokia's losses gave it a negative 2 percent of industry profits, while Motorola and Sony Ericsson both accounted for minus 1 percent.
In fact, the only other company to see any positive in 2012 was HTC, which accounted for just 1 percent of industry profits. Both BlackBerry and LG are estimated to have broken even.
Apple's share of the industry's profits were even greater in the fourth quarter of 2012, when the company launched its latest flagship handset, the iPhone 5. In the holiday quarter, Apple took 72 percent of the industry profits, while Samsung's share slid to 29 percent.
With few major catalysts on the horizon, analyst Michael Walkley of Canaccord Genuity expects Apple and Samsung will retain their dominant shares of the handset industry for the foreseeable future.
Comments
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%.
Wall Street's response to Apple's success has been baffling. The stock did start to rise today after Apple announced its 25 billionth iTunes download. So the market is excited about Apple selling lots of stuff on iTunes - even though Apple acknowledges that they make little, if any, profit on iTunes.
But hardware success apparently doesn't impress Wall Street.
Go figure.
They had 100% of the profits and 0% of the losses. The headline is stupid.
It would have been helpful if the story had indicated how these guys are able to arrive at Samsung's "mobile device" numbers, 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).
In other words, are Samsung's numbers likely inflated?
Originally Posted by raymondinperth
…Apple profitability may have peaked .
*snort*
more bad news. Waiting for the stock price to drop with analysts claiming Apple should have taken 103% by itself.
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.
Good is the new bad.
Up is the new down.
Apple now taking orders from alternate universes providing them with 103% of the profits.
Originally Posted by jragosta
You've been corrected on this before.
I know what you said, it's just a stupid way to count things.
How much money was actually made?
How much of that money was Apple's?
Why does anything else matter?
Quote:
Originally Posted by Tallest Skil
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%.
It doesn't have to make sense to you as it's long as it's a consistent method of accounting.
Quote:
Originally Posted by Tallest Skil
*snort*
You could do something better than a troll post. The problem I see is that people may be influenced too heavily by their surroundings here. It could peak in one country and pick up in another. Note all the articles regarding China over the past two years.
Quote:
Originally Posted by jragosta
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.
You are wrong.
Take your first example: Company A had 33% of the profits, Company B had 67% of the profits. In this world at least, we don't take everyone's losses and everyone's profits, net them together, and start dividing things. If you would have continued with your example, would you say that Company C had -50% of the profits? No, Company C had 100% of the losses.
Take your second example: Would you say that Business A earned 200% of the profits (1,000/500 x 100%)? No, you wouldn't.
As an accountant, you would never present percentage of profits after factoring in losses. It doesn't make sense and creates numbers that are pulled out of thin air. You can never and will never be able to make more than 100% of the profits. There is 100% to go around and that doesn't increase to 103% if some other guy lost money.
Take Jack and Jill: Jack went to work and made $10. Jill never made it to work but lost $50. Combined, they netted a $40 loss for the day. Well... wait... would you look at that: JACK MADE -25% (10/-40 *100%) OF THE PROFITS TODAY! AND JILL MADE 125% (-50/-40 *100%) OF THE PROFITS.
You are incorrect and so is this article.
Quote:
Originally Posted by anantksundaram
It would have been helpful if the story had indicated how these guys are able to arrive at Samsung's "mobile device" numbers, 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).
In other words, are Samsung's numbers likely inflated?
http://www.asymco.com/2012/12/03/samsung-electronics-product-line-revenues-and-operating-income-in-context/
What does Horace have to say about it?
Quote:
Originally Posted by jragosta
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.
Yes, but,...
If I have two businesses which together turn a $500 profit, that $500 is 100 percent of my business earnings. Business A's $1,000 is 100 percent of its profits, but this is the result of a different measure. I understand perfectly the theory behind the 103 percent number; I merely question the value of the methodology. I'd suggest using actual words in reporting such a story, such as:
The mobile phone manufacturing industry made a profit in 2012 only thanks to Apple and Samsung. Profits at the two leading companies more than offset losses by almost all other handset makers.
Apple and Samsung together reported more than $53.4 billion in 2012 earnings. Losses at Research in Motion, Motorola, Nokia and Somy Ericsson cut profits by the industry as a whole to $51.7 billion.
That Motorola acquisition is starting to look like a real bargain for Google.
Quote:
Originally Posted by jragosta
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.
Do you have a citation for that?
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.
Quote:
Originally Posted by anonymouse
That Motorola acquisition is starting to look like a real bargain for Google.
Let's wait until they release their first combined effort before we judge the value.