Apple Posts $1 Billion in Profit

[Evangelion]

BRLawyer & Evangelion - I think this might be of interest:

http://appleinsider.com/article.php?id=2413

Market share drops - stock price drops.

Anyone who does comparisons like that based on the previous quarter, is an idiot. What they should be doing is to do the comparison on the same quarter in the previous year. As that piece of news said, Apple's market-share has gone UP, even though it has gone slightly down when compared to previous year.

It's like when Apple sells zillion iPod in the christmas-quarter, and then sells somewhat less in the next quarter (as is to be expected). Does that mean that sales of iPods are going down? No.

 

[jessep28]

Yeah, I don't understand this either. They exceed expectations and now the stock drops... Or is this a correction for the ~+10% surrounding the iPhone hype?

Here's why the stock dropped nearly $6. From the Wall Street Journal Jan 19, 2007 (C6)

Apple lost $5.88, or 6.2%, to 89.07. The consumer-electronics company reported Macintosh computer shipments were flat with the previous quarter and offered a muted second-quarter outlook.

Stock price is naturally based a good deal on future performance. Why would I want to invest in a company that did awesome yesterday?

 

[Evangelion]

As for the numbers, they either refer to previous periods or the whole world...the article is not that clear at all. Other than that, a growth of 30% against 3% of the rest of industry just blows these conclusions out of the water

I don't think there's anything wrong with their numbers as such, what they are doing wrong is the methods. They are making headlines by saying that Apple's market-share has gone down when compared to the PREVIOUS QUARTER. But that's totally wrong way to measure these things. What they should be doing is to compare market-share to the same quarter in the previous year. that way they eliminate all kinds of seasonal variations (christmas vs. no christmas, back-to-school vs. middle of school-year etc.).

 

[IJ Reilly]

Stock price is naturally based a good deal on future performance. Why would I want to invest in a company that did awesome yesterday?

Because that's the best predictor you will ever have for how they will do tomorrow.

 

[jessep28]

I don't think there's anything wrong with their numbers as such, what they are doing wrong is the methods. They are making headlines by saying that Apple's market-share has gone down when compared to the PREVIOUS QUARTER. But that's totally wrong way to measure these things. What they should be doing is to compare market-share to the same quarter in the previous year. that way they eliminate all kinds of seasonal variations (christmas vs. no christmas, back-to-school vs. middle of school-year etc.).

Exactly. Everyone's all yipee that Apple posted $1bn in profit. It doesn't mean squat if you can't compare it to something. I pulled up Apple's 10k for FY ended September 30th and the profit margin was only 10.3% on approx. 19bn in revenue and 1.9bn in net income.

In analyzing a company the user should also use common sized financial statements and financial ratios. This removes the size factor when comparing companies.

With the income statement, you simply take all income statement items divided by revenue (revenue will always = 100%). Balance sheet items should be compared to total assets.