Apple Reports Best Quarterly Results Ever in Q1 2013: $13.1 Billion Profit on $54.5 Billion in Revenue [Call Ended]

SuperMatt · Jan 23, 2013

AHDuke99 said:
Bingo. The selloff is not because Apple is losing money or is a bad company. It's because these earnings misses are becoming a trend, missing expectations, numbers, etc, that Apple used to crush in years past. People are also still having their Steve Jobs moments where they are unsure where Apple's next revenue branch is going to come from. Will it be an Apple TV? The iPhone can grow in China, but it is reaching market saturation everywhere else. Apple can make a low cost iPhone, but then margins are driven even lower, causing the stock to drop more.

In short, Apple needs another new product to drive growth, or they are heading towards simply being a cash cow, meeting expectations most quarters and growing slowly.

AAPL almost always beats its own estimates by the same amount each quarter. After analysts aimed way low for something like 10 quarters (or more) in a row, they finally decided to aim really high in hopes to finally not look like morons getting it so wrong. When they did that, they aimed too high. So, although AAPL is making more money than any other company, and growing at a ridiculous rate for a company its size, it is punished because analysts have no clue how to predict quarterly results? Wall St. analysts are given way too much credence.

HobeSoundDarryl · Jan 23, 2013

Liquorpuki said:
Internet technology has disrupted pretty much every form of media distribution over the past couple decades. Any type of content that could be delivered for cheaper through the internet has had its distribution channel radically altered. Netflix killed off Blockbuster, Apple killed off Tower Records, Amazon killed off Borders, newspapers are dying, videogame distribution is migrating to eShops, etc. TV is one of the last ones left and eventually it will go. I don't know if Apple is gonna do it and yeah the cable companies are gonna fight it, but TV shows are essentially content that can be delivered at cheaper cost through the internet. All it needs is for a company to fight the cable companies and give a better value proposition to consumers than having to pay them $50-100 to watch ESPN when its per sub fee is only around $5.

Yes. But unlike Blockbuster, Tower, Borders, etc, in this particular form the company that like cable TV "as is" is also the company that owns the broadband pipe through which a cable TV replacement must flow. We dreamers just keep ignoring this problem by imagining Apple in the role of new cable TV provider and somehow we will end up with a much cheaper cable TV bill.

First off, when has Apple every disrupted any major business model by plugging itself in and it resulting in us paying a lot less than we did before. For example, did Apple's iPhone result in super cheap cell phone plans? Did iPad result in super cheap books? Did iPod result in super cheap music? But an Apple Television is going to result in super cheap cable TV bills?

Second, my local cable TV provider is Comcast. They're also the only real game in town for broadband. I could go slower DSL with AT&T but they are also in the cable TV business with U-verse. I can't possibly picture either just rolling over and letting Apple take their cable TV business when Apple's replacement must flow through their broadband pipes. There are no other choices for broadband (Apple can't bypass that link in the chain with an innovative new cable TV replacement solution) so I would have to keep them in the mix. I can't imagine broadband cost staying the same if either started losing money on cable TV to Apple's replacement. And I'm lucky enough to have 2 choices of broadband. Most have 1 option (which is very likely in the cable TV business too).

For reasons like these, I just can't see the whole dream of the television being the iPhone and iPad-like driver of "next big thing" (from Apple) growth. Would I like to see an Apple television. Sure. I bet it would be a beautiful device with some very smart benefits. Would I likely buy an Apple Television. Not if I could get much of the same software experience on my perfect size (for me), quality Samsung screen via a $99 :apple:

TV.

flux73 · Jan 23, 2013

alent1234 said:
7% growth, back that truck up
Microsoft had higher growth for most of the last decade

Apple had much more new product this year than last - new iPhone, new iPad mini, new iMacs. New products have lower yields and higher supply costs at the beginning. Thus, over time, the profit margin will grow. Last year's iPhone 4S simply swapped out a few internal parts but otherwise remained the same as the iPhone 4. 7%'s pretty good when you look at the picture as a whole and consider that their push into China has only just started.

johnqh · Jan 23, 2013

AHDuke99 said:
Yes, but that margins dropping remain a huge concern for investors. The iPad Mini is cannibalizing iPad sales, and the rumors of a low cost iPhone will only hurt margins even more if they become a reality. We've seen them drop from a 44% number to 38% and continuing to decline.

I remember that several years ago, 38% was the norm for Apple. The 44% was the abnormality because 4S is just a revised iPhone 4, so the cost was low.

iPhone 5, although has the similar design language, has a new internal. iPad mini and new iMac didn't help either. But overall, I believe the lower gross margin is the result of product revision (the cost side) instead of discounted pricing (demand side).

I expect Apple to do complete re-design every two to three years, and face lift every year. So, the margin will be great for late 2013 and most of 2014, back to 40%+. Then back to 38% for late 2014/early 2015.

Time will tell.

jm001 · Jan 23, 2013

abhishake said:
Ouch. For a regular company this would be great, but Apple used to be far from the norm.

The simple fact is they are no longer creating the trend, but trying to keep up with it. It's simple, they need to step their game up. Samsung is killing them.

Apple USED to have the best Ads.
Apple USED to have the best OS, iOS.
Apple USED to have the best phone.
Apple USED to have the best innovation.

This is no longer the case. Straighten up fellas, begin acting like you're part of the company Steve Jobs resurrected.

What's with the doom and gloom attitude. They made their best profits EVER. What's bringing the stocks down ISN'T Apple, it's the fncking ANALYSTS. Morons who can make or break a company because they know how to juggle imaginary numbers. Whatever happened to the days where stocks would rise and fall according to the ACTUAL success (or failure) of a company?

"Well your company made a GAZILLION $$$ this 1st quarter which is a 300% increase than last years 1st quarter, BUT we were expecting your company to make a BAGAZILLION $$$ or 400% increase, so your stock will have to tank."

When did we start to penalize business for being successful, but not as successful as people want them to be?

skaertus · Jan 23, 2013

-jc said:
Like every company, they have some products that are more popular than others. Apple is not abandoning the Mac. It's still a massive business, even if the sales are declining.

Macs are still a massive business. But a declining business nonetheless. Apple may put less effort on the Macs if it feels that it is declining. We're already seeing some of this trend: for instance, all substantial upgrades for the iWork suite in the last few years were released for iOS, and no upgrade for OS X added any new feature.

I'm not saying Apple will abandon the Mac right now. But it may abandon the Mac within a decade or even less if its share of revenue keeps declining year after year.

cappadonna · Jan 23, 2013

isoft7 said:
Apple stock is getting the CORRECTION if fully deserves.

YES Apple is a solid company with little risk going forward, but to value them as the worlds single largest company in history has and remains complete nonsense.

In September last year I posted on this forum several times how I was certain, when digging deeper into the actual numbers behind Apples recent success, that within 12 months time their shares would be worth half what they had been trading for.

Everyone attacked me and called me crazy, insisting they'd be $2000.00 or more within a year.

Well, hate to say I told you so... but well, we're getting close.

Don't believe me, then search my user name and ready my posts.

In September last year, everyone said they'd be at 2000 in a year?

No one said that.

SuperMatt · Jan 23, 2013

One other thing: why do I keep reading that the results "disappointed" analysts, while BEATING the analyst estimates of EPS? How is that disappointing? Wall St. analysts are like Homer Simpson:

Salesman: "This thing will deep fry a Buffalo in 45 seconds!"

Homer: "Aww... but I want it NOW."

skaertus · Jan 23, 2013

Plutonius said:
I'm not sure what you are talking about ? Are you afraid that Apple will stop repairing the computers they have sold ?

No. I am afraid to commit myself to proprietary software and file formats that only run on OS X, and that Apple may one day stop development of OS X. In that event, I will be forced to move to Windows or iOS or whatever, and I will have to buy software all over again and find a way to convert my files to a new format that can be read in another OS. Just that.

Mackan · Jan 23, 2013

So Tim Cook will not comment on Apple's pricing strategy. In other words, they'll continue to set the price as high as they can for all products.

FrozenDarkness · Jan 23, 2013

mac666er said:
I know these forums are to express one's opinion, and as such, can't be stricken down as not being fact. Fair enough. But stock market in general and Apple stock in particular, have investor interest that is FAR from fair, analytical or objective.

It is really difficult to make a case that the price reflects objective behavior be it to sell it or to buy it. Let alone, that future, discounted cash flows, expectations of growth or other financial theories one may be tempted to advocate are to explain it. For example:

As of today:

P/E (Price over Earnings)
Apple trades at 11.64
Google trades at 23.24
Facebook trades at 159.69

Which, means at face value, that a future dollar to be made by Facebook is more valuable than a future dollar to be made by Google, and one to be made by Apple.

Apple's profit (NOT earnings, NOT income, but pure profit):

Q1 2011 (13 weeks) 5.99 billion (460 millions per week)
Q2 2011 (13 weeks) 7.31 billion (562 millions per week)
Q3 2011 (13 weeks) 6.62 billion (509 millions per week)
Q4 2011 (14 weeks) 13.1 billion (935 millions per week)
Q1 2012 (13 weeks) 11.6 billion (892 millions per week) 93% Year over Year growth
Q2 2012 (13 weeks) 8.8 billion (676 millions per week) 20%
Q3 2012 (13 weeks) 8.2 billion (630 millions per week) 6.7%
Q4 2012 (13 weeks) 13.06 billion (1,004 millions per week) 7.3%

Meanwhile Google (granted, I don't know when they would count the 14 week quarter, which only means one weekly number is lower and could show 2012 as having better growth):

Q1 2011 (13 weeks) 1.8 billion (138 millions per week)
Q2 2011 (13 weeks) 2.51 billion (193 millions per week)
Q3 2011 (13 weeks) 2.73 billion (210 millions per week)
Q4 2011 (13 weeks) 2.71 billion (208 millions per week)
Q1 2012 (13 weeks) 2.89 billion (222 millions per week) 60%
Q2 2012 (13 weeks) 2.79 billion (214 millions per week) 10%
Q3 2012 (13 weeks) 2.18 billion (167 millions per week) 79%
Q4 2012 (13 weeks) 2.89 billion (222 millions per week) 6.7%

Meanwhile Facebook:

Q2 2012 (13 weeks) 157 million LOSS
Q3 2012 (13 weeks) 59 million LOSS

Since Apple has around 72,000 employees, Google has 53,000 and Facebook has 4,000 or so, you could even make the case that Apple makes more PROFIT dollars per employee, which is almost double what Google would be for this quarter.

Facebook, would have to earn around 1.5 billion per quarter without adding employees and Google and Apple not to grow to justify that share price going forward. They might do it for a couple of quarters, but they would have to maintain it for years to come in order just to maintain the price, let alone grow it.

I find it hard to swallow that an investor should own stock of Facebook, over Google, over Apple. Especially since this is profit that no one, and I do mean NO ONE knows if it will come to pass. But that is what the market is saying right now...

So again, you're thinking fundamentals. What happens is everybody knows Apple's growth will slow, and apple is not like google or facebook where there are known opportunities for growth and, in reality, lack of any real competition. Looking at this objectively, we know apple won't continue to dominate without a new product. they're hardware based and eventually, the market will just be too flooded for anybody to make a huge profit. Will you be the first to see this and flee or the last, that's the question investors ask themselves. The question isn't, hmm my dollar is more valuable here than there, it's how can i be the first to buy and first to sell

trends my friend trends

HobeSoundDarryl · Jan 23, 2013

mac666er said:
As of today:
P/E (Price over Earnings)
Apple trades at 11.64
Google trades at 23.24
Facebook trades at 159.69

Which, means at face value, that a future dollar to be made by Facebook is more valuable than a future dollar to be made by Google, and one to be made by Apple.

You're trying to apply logic to the stock market by rationalizing against some extremes. Here's some other ways of viewing it...

For Apple to yield a 100% profit for a buyer at $500 per share, it has to beat it's all time record price by almost $300. For Facebook to deliver a 100% profit for a buyer at $30 per share means it has to beat it's all time record high by only $20 per share. Setting aside a blind love & devotion for Apple products, which seems more doable in the next few months or year?

For APPL to double, it has to rise $500. For FB to double, it has to rise only $30.

An investor could buy 100 shares of AAPL for about $50K or he could buy about 1667 shares of FB for the same $50K.

A diversification-minded investor aiming for doubles, could lock up a good number of shares of FB in a diversified portfolio for the cost of as little as a few shares of AAPL.

A small investor might not be able to afford 10 shares of AAPL at $500/share, but 10 shares of FB is only $300 for all 10.

And on and on.

Lastly, if P/E was the main driver in answer to "which stock should I invest in?" there are plenty with P/Es lower than APPL now. Why overpay for the "high" P/E of APPL when one could buy into lots of companies with better "bargains" of P/E on other stocks?

I realize this is an Apple site and Apple must be defended against all attacks/setbacks but AAPL is not like Apple products. It's just a stock... like FB or any other. It's been puffed up to an all-time record in a very brief time. The company is trying to roll out refinement and refinements on "thinner" & "lighter" rather than rolling out genuine next big things. And because it has grown so much, so fast, it now has to roll out to the whole world much faster than it used to, pressuring it to roll out newer models of everything even faster to try to keep up with the growth pressures. It just consolidated decision-making down to an even fewer number of players at the top, yet what it really needs is to be delegating decision-making to lots of mini-Steves to be ready with a good stream of "next big things". How can- say- Ive give half the attention to hardware so that he can now give half attention to his new software responsibilities and still crank out the quality and accelerated volume of Apple goodness that is needed?

AAPL is taking a breather. Move along. When the crowd is thoroughly bearish on AAPL, that might be the time to jump back in in a big way. Once all the sellers have sold, even a little buying will drive the stock back up. When you have lots of bulls calling a bottom and seeing a "fantastic buying opportunity", it's typically not a bottom yet.

skaertus · Jan 23, 2013

coolfactor said:
Just remind yourself of these points:
- Apple would not settle for designing and building their own products using Windows.
- Apple will not bring Xcode to Windows.
- Apple will not lower their own internal standards.
- 4 million Macs sold in 3 MONTHS. That's a lot, even if it was a decline from the same quarter last year. It's not a trend, just a result of release delays/manufacturing issues.

I am not fully convinced that the decline is a result of manufacturing issues with the iMac. Even Tim Cook mentioned that the decrease of Mac sales was in line with the PC industry estimates. That seems to be a trend for me. Macs still sell reasonably well, but if it keeps declining, there will be a point where it won't be worth it for Apple anymore.

Rogifan · Jan 23, 2013

johnqh said:
I remember that several years ago, 38% was the norm for Apple. The 44% was the abnormality because 4S is just a revised iPhone 4, so the cost was low.

iPhone 5, although has the similar design language, has a new internal. iPad mini and new iMac didn't help either. But overall, I believe the lower gross margin is the result of product revision (the cost side) instead of discounted pricing (demand side).

I expect Apple to do complete re-design every two to three years, and face lift every year. So, the margin will be great for late 2013 and most of 2014, back to 40%+. Then back to 38% for late 2014/early 2015.

Time will tell.

How is aluminum smilar to glass and stainless steel? The end product may look similar to the previous model but it doesn't mean the manufacturing processes are similar.

Liquorpuki · Jan 23, 2013

HobeSoundDarryl said:
First off, when has Apple every disrupted any major business model by plugging itself in and it resulting in us paying a lot less than we did before. For example, did Apple's iPhone result in super cheap cell phone plans? Did iPad result in super cheap books? Did iPod result in super cheap music? But an Apple Television is going to result in super cheap cable TV bills?

Smartphones: cell phone plans stayed a premium, but I'm talking media distribution, not cell plans or hardware. The internet has become a disruptive tech for media distribution

Music: Singles were $2-3. CD were $15. Now an MP3 single = $1.29, an MP3 album = $10. So yeah, cheaper.

Books - You can go to Amazon and check out a Kindle version vs a Hard copy. The difference can be as much as 50%. So yeah.

Far as TV, compare the per sub fee for a channel vs what you pay for a bundle. You're getting ripped off

I agree the cable companies have a stranglehold. But all it takes is a better value proposition getting to market. I was hoping Apple could provide that but I honestly have no clue what they're doing on the TV end or when they're ever gonna enter the market. And if all they're bringing to market is literally a branded TV, they will fail

Bubba Satori · Jan 23, 2013

cappadonna said:
In September last year, everyone said they'd be at 2000 in a year?

No one said that.

Not in a year. In three.

http://macdailynews.com/2012/05/09/andy-zaky-how-apples-stock-price-gets-to-2000/

What do I win?

Rogifan · Jan 23, 2013

Since the stock has been on a downward trend for several months wouldn't these results already be priced into the stock? I mean what did Apple announce on this call that was really a surprise and that would call for another 10% drop?

Bubba Satori · Jan 23, 2013

flux73 said:
It did drop but I think it's short sighted. There were a lot of new products this quarter. Profit margins are always smallest in the first quarter due to yields usually improving over time. Revenue being so high tells us that the profit has room to grow as yields improve (or Apple finds suppliers with better prices).

Ok, say it's shorted sighted and everything else you say is spot on.

What's the difference between a long sighted $40 billion one hour haircut
and a short sighted $40 billion one hour haircut?

FrozenDarkness · Jan 23, 2013

Rogifan said:
Since the stock has been on a downward trend for several months wouldn't these results already be priced into the stock? I mean what did Apple announce on this call that was really a surprise and that would call for another 10% drop?

nothing,

just nobody wants to be the last one to hold the hot potato

people also have to realize most of this **** is apple's own fault. Tim Cook just does not give a **** about shareholders. they don't want to split the stock to attract more individual investors, they don't want to buyback shares, they don't want to increase dividend. It's not like companies are helpless to investor greed.

HobeSoundDarryl · Jan 23, 2013

Liquorpuki said:
I agree the cable companies have a stranglehold. But all it takes is a better value proposition getting to market. I was hoping Apple could provide that but I honestly have no clue what they're doing on the TV end or when they're ever gonna enter the market. And if all they're bringing to market is literally a branded TV, they will fail

Describe how to replace the cable TV company with Apple and we end up with a better value proposition without killing those who create the content we want to buy (they're going to need Apple to show them how they are going to make more money in this new model, not less)? Then, tell me why the broadband tollmasters who are also our cable companies would not raise the price of broadband to make up for any losses of cable TV to Apple's replacement solution? Then, explain again how we end up with a better value proposition if the content creators are making more money, Apple has replaced the cable TV distributor and taking the Apple cut, and we are paying the money lost by the old distributor in higher broadband rates?

And in this dream, how much are we consumer's paying on average for this new cable TV replacement solution?

IJ Reilly · Jan 23, 2013

SuperMatt said:
One other thing: why do I keep reading that the results "disappointed" analysts, while BEATING the analyst estimates of EPS?

It isn't the analysts who are "disappointed," it's the markets. Investors know that the analysts are conservative. Companies are expected to beat their numbers, and by more than just a little.

cappadonna · Jan 23, 2013

Bubba Satori said:
Not in a year. In three.

http://macdailynews.com/2012/05/09/andy-zaky-how-apples-stock-price-gets-to-2000/

What do I win?

Nothing, I was disputing the guy who said they would be at 2000 in a year.

No one said that.

Bubba Satori · Jan 23, 2013

Rogifan said:
Since the stock has been on a downward trend for several months wouldn't these results already be priced into the stock? I mean what did Apple announce on this call that was really a surprise and that would call for another 10% drop?

A lot of it is expectations about future rates of growth and how they compare to past
rates of growth when the stock quadrupled in a few years.
The market is basically saying that that party is over. Apple will still do well,
but not at the incredible rate that it has over the last four years.

The market is providing a brutal example of the law of large numbers.

Rogifan · Jan 23, 2013

IJ Reilly said:
It isn't the analysts who are "disappointed," it's the markets. Investors know that the analysts are conservative. Companies are expected to beat their numbers, and by more than just a little.

But I thought analysts were predicting a 2% profit decline. Flat beats -2% doesn't it?

IJ Reilly · Jan 23, 2013

Rogifan said:
Since the stock has been on a downward trend for several months wouldn't these results already be priced into the stock? I mean what did Apple announce on this call that was really a surprise and that would call for another 10% drop?

One would think so, and I suspect the stock is going to start looking pretty cheap to investors over the next week or two, unless the analysts start piling on with downgrades or reduced one-year targets. That could happen too.

Apple Reports Best Quarterly Results Ever in Q1 2013: $13.1 Billion Profit on $54.5 Billion in Revenue [Call Ended]

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