Apple Manufacturer Pegatron Reports Quarterly Earnings Increase of 22%

MacRumors · Mar 24, 2014

Apple iPhone 5c manufacturer Pegatron reported a 22 percent jump in fourth quarter earnings due to a revenue increase in its communications products division, which is responsible for manufacturing smartphones, tablets and game consoles (Via The Wall Street Journal).

Apple is a major client of the Taiwanese manufacturer, accounting for approximately 40 percent of the company's revenue, estimates KGI Securities analyst Angela Hsiang. While revenue from its Apple-dominated communications products increased, Pegatron's overall revenue fell slightly year over year due to sluggish sales from its personal computer business.

"While PCs will still be around, mobile devices are a faster growing sector, and we want an even balance between the different parts of our business," Pegatron Chief Executive Jason Cheng said at an investor conference on Monday.

Pegatron has long been a manufacturing partner for Apple, working on previous iPhone and iPad models, including the iPad mini. Last year, though, the company for the first time assumed the role as the primary manufacturer for a new iPhone model -- the iPhone 5c.

Pegatron also is rumored to be producing the iPhone 6 along with Foxconn in the second quarter of this year. The company supposedly is opening a new factory in Kunshan, China and recruiting workers in an effort to meet manufacturing orders for the upcoming phone.

Apple has moved beyond relying only on Foxconn for its manufacturing needs and has turned to Pegatron as it expands its product lineup and tries to minimize supply problems by balancing production between multiple assemblers.

Article Link: Apple Manufacturer Pegatron Reports Quarterly Earnings Increase of 22%

nygiants242 · Mar 24, 2014

Earnings increased by 22%, but it is incredible to consider how thin their margins are.

"Its operating margin inched up to 1.9% in the fourth quarter from 1.6% a year earlier."

Born Again · Mar 24, 2014

So that's great how about discounting it to consumers

Way too much profit for those office white hairs

Iconoclysm · Mar 24, 2014

Radio said:
So that's great how about discounting it to consumers

Way too much profit for those office white hairs

This is revenue not profit - differentiating these very simple business related terms is yet another reason why people with white hair are necessary.

Born Again · Mar 24, 2014

Iconoclysm said:
This is revenue not profit - differentiating these very simple business related terms is yet another reason why people with white hair are necessary.

You do understand that apple controls prices thus revenues could be even be exponentially greater thus resulting in greater profits

Rogifan · Mar 24, 2014

But I thought the 5C was a failure?

keysofanxiety · Mar 24, 2014

Rogifan said:
But I thought the 5C was a failure?

A failure by Apple's standards. Had another OEM had similar sales for one handset, they'd be delighted. But the 5C is overpriced for what it is, and Apple should've made it cheaper.

kdarling · Mar 24, 2014

Rogifan said:
But I thought the 5C was a failure?

It did well in the US during its launch.

It didn't do so well in other places.

As for profit margins, yeah, Foxconn and others make a thin slice compared to Apple:

perealb · Mar 24, 2014

Iconoclysm said:
This is revenue not profit - differentiating these very simple business related terms is yet another reason why people with white hair are necessary.

Ouch!

macs4nw · Mar 24, 2014

nygiants242 said:
Earnings increased by 22%, but it is incredible to consider how thin their margins are.

"Its operating margin inched up to 1.9% in the fourth quarter from 1.6% a year earlier."

If true, even though they lagged earnings slightly, those margins also increased by almost 20%.

I'd call that more than "inched"; that's a robust increase.

proline · Mar 24, 2014

keysofanxiety said:
A failure by Apple's standards. Had another OEM had similar sales for one handset, they'd be delighted. But the 5C is overpriced for what it is, and Apple should've made it cheaper.

Yeah, they should have made it less profitable and positioned it to cannibalize their massively successful 5S business. That would have been way smarter than maintaining their current strategy of being the most profitable company on the planet.

gnasher729 · Mar 25, 2014

keysofanxiety said:
A failure by Apple's standards. Had another OEM had similar sales for one handset, they'd be delighted. But the 5C is overpriced for what it is, and Apple should've made it cheaper.

Apple doesn't care how the 5C is doing. And they don't care how the 5S is doing. What Apple cares about is the sum of both.

And I think there was a deliberate strategy at work here. It's like the very first MacBook Air which didn't sell well by itself, but it did get people into the stores and they ended up buying a MacBook or MacBook Pro. It didn't matter that the MBA revenue wasn't that high because it had a positive effect on total sales.

The 5C does two things: Get people into the store who then end up buying a 5S. That's excellent news for Apple. And take customers away from high-end Samsung phones. That's also excellent news for Apple.

keysofanxiety · Mar 25, 2014

proline said:
Yeah, they should have made it less profitable and positioned it to cannibalize their massively successful 5S business. That would have been way smarter than maintaining their current strategy of being the most profitable company on the planet.

So you agree with the pricing? $100 less for last year's phone, in cheaper packaging?

Honestly, some people will defend Apple to the bitter end, no matter what they do. The 5C is a great phone -- the pricing for it isn't. And if they were worried about cannibalising sales, they shouldn't have offered it as an alternative.

proline · Mar 26, 2014

keysofanxiety said:
So you agree with the pricing? $100 less for last year's phone, in cheaper packaging?

Honestly, some people will defend Apple to the bitter end, no matter what they do. The 5C is a great phone -- the pricing for it isn't. And if they were worried about cannibalising sales, they shouldn't have offered it as an alternative.

This isn't 'defending' Apple. Apple did what Apple does- make the most money possible. A cheaper 5C would have resulted in lower profits for Apple. They aren't stupid, and are quite capable of doing the math. In case you aren't, here's the math on making the 5C cheaper than it is today-

Benefit = number of people who wouldn't otherwise have bought an iPhone * the amount of profit per cheap 5C

Cost = number of people who would otherwise have bought a 5S or 'expensive' 5C * the difference in profit between said models and the cheap 5C + a lot of damage to the Apple brand's ability to command a premium price in the future

Apple knows how to optimize the price of the 5C to get the best cost/benefit ratio. You, however, do not as you lack the proper market research and sales data. So time to shut up about it.

keysofanxiety · Mar 26, 2014

proline said:
You, however, do not as you lack the proper market research and sales data. So time to shut up about it.

And I'm sure you do

So perhaps you should shut up about it as well and realise that the 5C wasn't what Apple hoped it to be.

proline · Mar 26, 2014

keysofanxiety said:
And I'm sure you do

So perhaps you should shut up about it as well and realise that the 5C wasn't what Apple hoped it to be.

Yeah, cause I'm the one assuming without a shred of evidence that experienced professionals from the most profitable US company made an elementary blunder obvious to even the most ill-informed anonymous internet posters.

Here's the facts-
-iPhone sales were up
-the 5C is the second best selling phone in the planet, second only to the 5S and ahead of rivals such as the Moto X or SGS4
-Apple has maintained their margins and increased their profits, especially when you factor in that they are setting aside more revenue for future updates
-Apple has stated they were more successful at selling the 5S than expected. They have never said that total demand was lower than expected

Now why don't you try to make a conclusion that fits the facts, instead of the other way around?

keysofanxiety · Mar 26, 2014

proline said:
Yeah, cause I'm the one assuming without a shred of evidence that experienced professionals from the most profitable US company made an elementary blunder obvious to even the most ill-informed anonymous internet posters.

Here's the facts-
-iPhone sales were up
-the 5C is the second best selling phone in the planet, second only to the 5S and ahead of rivals such as the Moto X or SGS4
-Apple has maintained their margins and increased their profits, especially when you factor in that they are setting aside more revenue for future updates
-Apple has stated they were more successful at selling the 5S than expected. They have never said that total demand was lower than expected

Now why don't you try to make a conclusion that fits the facts, instead of the other way around?

How about you read the facts. Perhaps straight from TC's mouth may be proof enough. http://appleinsider.com/articles/14...ted-says-demand-was-different-than-we-thought

proline · Mar 26, 2014

keysofanxiety said:
How about you read the facts. Perhaps straight from TC's mouth may be proof enough. http://appleinsider.com/articles/14...ted-says-demand-was-different-than-we-thought

Maybe go read your own link? The fact that the 5C drew less people away from the 5S than expected is a very, very good thing for Apple and doesn't reflect badly on the 5C pricing whatsoever. What would reflect badly is if TOTAL sales were less than expected. However, you don't know that do you? You basically have nothing to build an argument with expect drivel.

P.S. I like how you quote AppleInsider for your 'facts'.

keysofanxiety · Mar 26, 2014

proline said:
Maybe go read your own link? The fact that the 5C drew less people away from the 5S than expected is a very, very good thing for Apple and doesn't reflect badly on the 5C pricing whatsoever. What would reflect badly is if TOTAL sales were less than expected. However, you don't know that do you? You basically have nothing to build an argument with expect drivel.

P.S. I like how you quote AppleInsider for your 'facts'.

P.S: I like how you quote nothing for your facts. Apple thought the 5C would sell better. It hasn't.

proline · Mar 26, 2014

keysofanxiety said:
P.S: I like how you quote nothing for your facts. Apple thought the 5C would sell better. It hasn't.

I love how you continue to fixate on a deliberate distortion of one irrelevant data point- that Apple expected to lose more 5S sales than they did. The goal wasn't to destroy the 5S and Apple's margins. The goal was to make more money than they would have had they kept selling the iPhone 5. You don't have a shred of evidence that the 5C failed to achieve that goal.

Apple Manufacturer Pegatron Reports Quarterly Earnings Increase of 22%

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