Doctor Q said:
For those who don't catch the irony of this, it was former CEO Scully who ousted Steve Jobs. He was CEO of Pepsi, and then became CEO of Apple where he ousted Jobs.
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Apple Q3 Conference Call Results
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For those who don't catch the irony of this, it was former CEO Scully who ousted Steve Jobs. He was CEO of Pepsi, and then became CEO of Apple where he ousted Jobs.
Apple is doing just well, thank you.
One thing is you have to be careful how you compare one business' profitability with another. Apple is rather unique in that they are both a hardware and software company. In terms of percentage of their annual revenue, they spend more on R&D than practically any company in the computer business, and that is a major drag on profits.
Apple made a choice a couple years ago. They could have continued to go the Amelio route by cutting expenses to the bone and praying that Mac customers will keep coming back. We saw some truly awful products during this period - anyone remember the Performas? The exploding PowerBooks?
Jobs came back, and he said, "Have you no pride? We're going to INNOVATE our way into growth and profitability" and that's exactly what Apple has done. Sure, that means less quartly profits, but hell, I'd rather take the kind of innovation that leads to long-term financial health than something that looks good in a press release.
Plus, profitability is just a piece of the whole picture.
Anyway, my point is that profitability isn't the most important figure in the financial health of a company. As a AAPL shareholder, I think Peter Oppenheimer is making great decisions about Apple's finances, and I'm very happy with the latest results despite the iMac G5 debacle.
Just my $0.02!
One thing is you have to be careful how you compare one business' profitability with another. Apple is rather unique in that they are both a hardware and software company. In terms of percentage of their annual revenue, they spend more on R&D than practically any company in the computer business, and that is a major drag on profits.
Apple made a choice a couple years ago. They could have continued to go the Amelio route by cutting expenses to the bone and praying that Mac customers will keep coming back. We saw some truly awful products during this period - anyone remember the Performas? The exploding PowerBooks?
Jobs came back, and he said, "Have you no pride? We're going to INNOVATE our way into growth and profitability" and that's exactly what Apple has done. Sure, that means less quartly profits, but hell, I'd rather take the kind of innovation that leads to long-term financial health than something that looks good in a press release.
Plus, profitability is just a piece of the whole picture.
- Apple has nearly $5 billion in cash, up from $4 billion a year ago, thanks to smart cash-flow management. In comparison, Dell has $5.26 billion in cash, and they have 5 times more revenue than Apple. This is especially amazing when you consider Apple's total revenue for 2004 will probably be a little north of $8 billion. I say this leaves Apple a cash horde for a rainy day or a timely acquisition.
- Revenues grew by 30% year-over-year. Some companies are shrinking but manage to report record profits through the use of deep cost cutting and layoffs. Apple is growing at a healthy clip, and that's very important.
- Gross margins were slightly improved to about 28%. This is a very, very healthy figure and it is the actual profit Apple makes on sales, not the 4% "profitability" figure that was thrown around earlier. Naturally, the gross margin profits are reduced by expenses such as advertising and R&D, resulting in a net profit of $61 million for the quarter, but it's the gross profit that allows Apple to continue to pay for all that innovation, not the net profit.
Anyway, my point is that profitability isn't the most important figure in the financial health of a company. As a AAPL shareholder, I think Peter Oppenheimer is making great decisions about Apple's finances, and I'm very happy with the latest results despite the iMac G5 debacle.
Just my $0.02!
tmornini said:
I agree with you on the likely pricing of the G5 iMacs, but I'm hoping the 1.8 to 2 GHz specs people are expecting aren't overly optimistic, considering the challenge of dissipating heat from a PPC 970FX in a stylish prosumer Apple box...dongmin said:
It is a lot of money, and a question was brought up at the conference call. Why doesn't Apple use some of that money to buy back shares so as to boost the stock price?
Apple's answer was that it wants the money around just in case. It could be an acquisition. It could also be for outside investment. Apple at one time was a major shareholder of ARM, and would regularly sell of millions of ARM shares per quarter, allowing Apple to record artificially large profits during those quarters.
But just because Apple has $5 billion doesn't mean you'd want to spend it all. Having that much cash simply gives you a lot of flexibility.
Besides, as interest rates rise, Apple will make proportionally more income from its growing cash pile. Some analysts have criticized this type of practice by saying Apple isn't a credit union, but given that Apple isn't building up its cash horde at the expense of R&D and product development, I think it's okay.
It's pretty clear Apple is more interested in small, innovative companies in terms of acquisitions, namely because there's a much more immediate payoff. These types of smart acquisitions have led directly to products like Final Cut Pro, iTunes, GarageBand, and Motion. I seriously doubt Apple would spend more than a few hundreds million to acquire anyone, since swallowing a big company has issues all its own (like dealing with clashing corporate cultures, merging corp charts, eliminating redundancies, etc.). Hey, the last big acquisition Apple made was for NeXT for $400 million, and that directly resulted in all the top execs losing their jobs (thank God).
But who knows, maybe Apple is building up enough cash to be able to buy out Adobe at some point in the future, if necessary! Let's just see how committed Adobe is to the Mac! (Thus, Jobs' comment during WWDC that he wants to see Adobe adopt CoreImage in the next version of Photoshop may actually have been a threat, not simple enthusiasm!)
Apple's answer was that it wants the money around just in case. It could be an acquisition. It could also be for outside investment. Apple at one time was a major shareholder of ARM, and would regularly sell of millions of ARM shares per quarter, allowing Apple to record artificially large profits during those quarters.
But just because Apple has $5 billion doesn't mean you'd want to spend it all. Having that much cash simply gives you a lot of flexibility.
Besides, as interest rates rise, Apple will make proportionally more income from its growing cash pile. Some analysts have criticized this type of practice by saying Apple isn't a credit union, but given that Apple isn't building up its cash horde at the expense of R&D and product development, I think it's okay.
It's pretty clear Apple is more interested in small, innovative companies in terms of acquisitions, namely because there's a much more immediate payoff. These types of smart acquisitions have led directly to products like Final Cut Pro, iTunes, GarageBand, and Motion. I seriously doubt Apple would spend more than a few hundreds million to acquire anyone, since swallowing a big company has issues all its own (like dealing with clashing corporate cultures, merging corp charts, eliminating redundancies, etc.). Hey, the last big acquisition Apple made was for NeXT for $400 million, and that directly resulted in all the top execs losing their jobs (thank God).
But who knows, maybe Apple is building up enough cash to be able to buy out Adobe at some point in the future, if necessary! Let's just see how committed Adobe is to the Mac! (Thus, Jobs' comment during WWDC that he wants to see Adobe adopt CoreImage in the next version of Photoshop may actually have been a threat, not simple enthusiasm!)
fartheststar said:So, they leave money around for possible aquisitions. Who do you think (other than google) would Apple be interested in aquiring? That's a LOT of money to spend. What do you all think?
vitaboy said:
Buying Adobe would be a huge undertaking. They do $1.6 B/yr and are capped at $10B...
http://finance.lycos.com/qc/stocks/quotes.aspx?symbols=ADBE
By some measures, they're at least as big as Apple....not that it couldn't be done, but it seems unlikely.
OTOH, how much would teh Steve like to announce that PhotoShop was MAc only.....
hmm... apple is acting very un appple like or are they?jxyama said:wow, this is very un-apple like. announcing that G5 will be in the iMac come sept...
i can't wait to see what the design will look like.
P.S. yeah, quit the FP crap...
apple is known to hold a grudge and when ibms delays messed up xserve releases then powermac releases apple mustve been angry.
so when ibm says uhh look you know those g5 imacs that were going to blow everyone away welll uhh we dont have the chips apple gets revenge by announcing the imac early then knowing the question will inevisdebly be asked set up to blame ibm publically
jouster said:
Which is why I said "rather unique," which in the vernacular can be inferred to mean, "almost one of the only ones."
But I would rather not quibble about usage. My point was that few companies do what Apple does. Sure, IBM and Sun do both hardware and software, but neither one is a consumer-oriented company. Neither is fast becoming a media powerhouse, either. So, for all intent and purpose, Apple IS unique in that no other company does all of what Apple does, and it IS one of the few companies that does major development in both hardware and software. Rather unique, I still say.
vitaboy said:Which is why I said "rather unique," which in the vernacular can be inferred to mean, "almost one of the only ones."
But I would rather not quibble about usage. My point was that few companies do what Apple does. Sure, IBM and Sun do both hardware and software, but neither one is a consumer-oriented company. Neither is fast becoming a media powerhouse, either. So, for all intent and purpose, Apple IS unique in that no other company does all of what Apple does, and it IS one of the few companies that does major development in both hardware and software. Rather unique, I still say.
Heh, I bow to that explanation!!
jouster said:
Yes, of course I don't seriously take the idea that Apple would/could buy out Adobe. It was meant as a humorous explanation for why Apple keeps on building that cash pile - $4 billion last year, $5 billion today, who knows, $6 billion sometime next year! Maybe Steve secretly is competing with Bill to see whose company has a bigger bank account!
(hint: I know how much Microsoft has in the bank, so please, I'm aware of how ridiculous the preceding idea is!
)Business is Business
Apple "announces" the new iMac in a "normal" way. It also owns up to a setback in launching its best-known product. Does Apple, or more importantly, do we, finally realize that Apple is turning into a mature business?
Mike LaRiviere
P.S. I think this maturity will end up benefitting the user greatly.
Apple "announces" the new iMac in a "normal" way. It also owns up to a setback in launching its best-known product. Does Apple, or more importantly, do we, finally realize that Apple is turning into a mature business?
Mike LaRiviere
P.S. I think this maturity will end up benefitting the user greatly.
vitaboy said:
A lot of what you said made sense but you are missing something with the analysis above. The net profit actually comes from taking the gross profit and subtracting a lot more than just advertising and R&D. The following items also help make the difference between gross and net profits:
1) Employee salaries
2) Real estate costs
3) Utilities
4) Benefits
5) R&D
6) Advertising
Later, Frank
macnews said:
My prediction is that it'll have a 1.6 GHz G5. It's a leap up from the now-obsoleted iMac's 1.25 Ghz G5, but not too big of a leap (makes sense if you look at it from a marketing perspective). Also, at 1.6 GHz, there is no way it could cannibalize PowerMac sales.
Still, a 1.6 Ghz G5 would represent a very, very nice performance boost for the consumer line, particularly since the CPU would be running on an 800 Mhz bus.
As to how it will look, it's hard to imagine, but only because I think the current iMac design is so elegant. It would almost seem like a shame were Apple to revert to a more conventional 20th Anniversary Mac-type design, or something along the lines of a more refined Gateway Profile 4.
frankly said:
Ummm, I did say, "expenses such as advertising and R&D...."
But yes, which leads to the point that it's probably way more expensive for Apple to do business simply because they are located in California, which is infamous for stratospheric worker's comp costs, energy prices, and real estate value (meaning you have to pay employees a lot more on average so they can actually afford to live here). That adds up pretty fast when you have some 10k employees, whereas I'm sure Dell's cost of doing business is significantly lower on a per capita basis by being headquartered in Austin.
MacsRgr8 said:
just wait. ives is gonna drop the ball. for some reason, i dont think the flat panel with a cpu slapped on the back is going to look good at all. plus, though i can't remember where i saw it, but it has been done before.
vitaboy said:
The reason for my response is because in your original post you acted as though gross profits were a more real profit than the net profits. If you ever ran a business you would know that this is simply untrue. The definition of profit is as follows:
dictionary said:
This is talking about the NET profit. It is fine to discuss gross profits when you are deciding if a business is being run in an efficient manner but they are NOT the profits of the company.
Later, Frank
I wouldn't count on this announcement being a normal practice for Apple. They goofed; they're out of stock on a particular product and the replacement is months away. It's not so much an announcement as it is an admission of poor management/scheduling. Apple does not announce products simply because they want to get rid of the old stock before the new comes in. In this case, the old stock was basically depleted, so no harm in 'announcing' the next arrival. A special case.MikeLaRiviere said:
jouster said:
I realize you guys are joking around, but Pepsi Bottling Group (PBG) is not PepsiCo (PEP), it's just a bottling company!
PepsiCo has a market cap of 91,170,000,000.00, and has nothing to fear from Apple.
[/offtopic]
Great results Apple, and keep those great products coming!
Also, another reason for hanging on to their cash reserves might be an (unlikely but possible) contingency for dealing with the lawsuits currently filed against them (Apple Records, The Open Group). No, they wouldn't need anything close to the whole amount, but it is a possible concern.
The idea is not to simply slap the cpu on the back on the display. The idea is to make the cpu disappear altogether, to reduce the computer to the actual components that a user interacts with: display, keyboard, and mouse. Imagine opening up the box of the iMac and taking out just one thin rectangular box with just a single cable for power. The keyboard and mouse are wireless. Networking is wireless via Airport Express. No set up required. All you need to do is simply mount the box on the wall (or set it on a desktop), connect the power cable, and hit the power button. No hassle. No clutter. The ultimate in minimalist computing.Wonder Boy said:
Of course, how well Apple pulls this off depends entirely on how thin Apple can make a G5-based system. (This should provide some hints on the feasibility of a G5 PowerBook.) I assume Apple has an elegant solution if they decided to go this route. Think of the new cinema displays but slightly thicker.
I'd say there is more than a good chance. The 23" HDTV iMac will be the ultimate in upscale digital hubs. It would be amazing if Apple build in a HDTV tuner, but I doubt it given their history. Perhaps, it'll include optical digital stereo out so that we can play DVDs on it in surround sound.DavidCar said:
xsnightclub said:"Apple remains a debt-free company with $4.96 billion in cash." from conference call
"Google has filed their IPO. Seeking $2.7B" Morgan Stanley and Credit Suisse First Boston.
With Apples cash on hand, they could buy Google twice.
Google is IPO'ing a small number of their shares, a third maybe? (Don't remember the exact number).
Apple has stock too, of course.
hub bub
how is the new imac going to be more of a digital hub for the average, mac-buying consumer than the last imac? the G5 imac can use airport express to power speakers and to print, obviously; but what new feature will apple add to enhance its authority as a digital hub?
how is the new imac going to be more of a digital hub for the average, mac-buying consumer than the last imac? the G5 imac can use airport express to power speakers and to print, obviously; but what new feature will apple add to enhance its authority as a digital hub?