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Apple Reports Best Quarter Ever in Q1 2012: $13.06 Billion Profit on $46.33 Billion in Revenue
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How on earth can you describe $100 billion as "worthless"? It's one of the most valuable assets Apple has, and they're using it very very wisely.
Apple are about to build a new HQ and probably another data centre in 2013. Just about every company on the planet, other than Apple, would have to borrow the money to do these two projects. Even at historically low interest rates, that would inevitably cost money, money Apple will not have to spend.
Knowing they have the cash to pay contractors, they are in a very favourable position to dictate the terms. In turn, the contractor knows they are bound to get paid - Apple will not lose their line of credit or go bust during the project.
But that's only the infrastructure story. Apple are able to do the same when it comes to buying materials and components. So what? you might say, surely every company has to do that. True, but when you're Apple using a new resource such as NAND Flash, and there's a world shortage - which is due to last for several months, imagine the advantage Apple have if they could approach the only supplier and agree - in advance, to buy 50% of their stock... for 12 months - for cash! Apple is going to get all of this recourse they need, and do so at a healthy 40% discount!
The result is that Apple has the lion's share, leaving every other one of their competitors to fight over the remaining 50% - for which the supplier can of course charge a premium, meaning in turn Apple's competitors all have to charge more for their products, making them less competitive!
The lesson here is that you make your first profit at the buying stage. There is therefore no greater asset than cash in the bank.
You need to think laterally, and learn to trade your stock to make a profit. It's not Apple's job to make you rich!
Very unlikely. You can't find an American manufacturer that responds as fast as Asian. USA companies can't call their employees in the middle of the night and have them come into work to fill a customer need. They also can't hire or fire thousands of workers within a few days to adjust to customer demand. Unions and the American mindset won't allow USA companies to have the flexibility needed to adequately provide Apple with what they need - ultra quick response. Apple will only use suppliers that can meet or exceed their expectations.
You are not replying to what I said in my post, my friend. I was talking about cash held overseas.
On the other hand I am VERY impressed with how quickly you took the NYTimes article and regurgitated it to me.
I think people misunderestimate the value of having cash when you have sales increases of 60-120% in a large scale like the $46B in revenue for the quarter. I suspect they are using their own cash for short-term and medium term supply pre-purchases and inventory float. They have an inventory target of 4-8 weeks and are really trying hard to get UP to that. 8 weeks is 2/3 of the 12-13 weeks in the quarter. That's $30B right there!
No, they need the cash. They should continue to hold cash until European melt-down is behind us and their growth rate drops below 20-40%. This is the biggest of big cap stocks with literally a world record scale factored growth rate. That's a thing.
They literally need the capital right now. A stock buy-back at these elevated values would be brain dead. Some day they could issue a one-time non-recurring dividend and expose their stockholders to a taxable event.
They could do more acquisitions, but lest we forget, they have products in the pipeline and so far the ones they have released for the past decade have been increasingly capital intensive. At some point I would not be surprised to see them offer a product that is twice as capital intensive, made possible only because they have a cash hoard.
I could be wrong, but rarely have been in the past and I am betting on that in the firm's portfolio. Thanks to AAPL we now make more in investments than in sales.
Rocketman
No, they need the cash. They should continue to hold cash until European melt-down is behind us and their growth rate drops below 20-40%. This is the biggest of big cap stocks with literally a world record scale factored growth rate. That's a thing.
They literally need the capital right now. A stock buy-back at these elevated values would be brain dead. Some day they could issue a one-time non-recurring dividend and expose their stockholders to a taxable event.
They could do more acquisitions, but lest we forget, they have products in the pipeline and so far the ones they have released for the past decade have been increasingly capital intensive. At some point I would not be surprised to see them offer a product that is twice as capital intensive, made possible only because they have a cash hoard.
I could be wrong, but rarely have been in the past and I am betting on that in the firm's portfolio. Thanks to AAPL we now make more in investments than in sales.
Rocketman
All this hype about the iPhone 5 -- and then they release the 4S, and "everyone and their dog" has gotta get one for Christmas anyways, cause it is is the "new" iPhone, even if you just got an iPhone 4 two months ago.
I think people misunderestimate the value of having cash when you have sales increases of 60-120% in a large scale like the $46B in revenue for the quarter. I suspect they are using their own cash for short-term and medium term supply pre-purchases and inventory float. They have an inventory target of 4-8 weeks and are really trying hard to get UP to that. 8 weeks is 2/3 of the 12-13 weeks in the quarter. That's $30B right there!
No, they need the cash. They should continue to hold cash until European melt-down is behind us and their growth rate drops below 20-40%. This is the biggest of big cap stocks with literally a world record scale factored growth rate. That's a thing.
They literally need the capital right now. A stock buy-back at these elevated values would be brain dead. Some day they could issue a one-time non-recurring dividend and expose their stockholders to a taxable event.
They could do more acquisitions, but lest we forget, they have products in the pipeline and so far the ones they have released for the past decade have been increasingly capital intensive. At some point I would not be surprised to see them offer a product that is twice as capital intensive, made possible only because they have a cash hoard.
I could be wrong, but rarely have been in the past and I am betting on that in the firm's portfolio. Thanks to AAPL we now make more in investments than in sales.
Rocketman
The cash doesn't get used to buy inventory. Every product Apple sells is profitable - the cash that flows in (that's why they call it that) is plenty to pay for all purchases and more. Look at their gross margin.
Unfortunately you're on the side of the amateur Apple fans and against the economists and students (and teachers) of corporate finance.
I'd love someone to explain how Apple has these blow out numbers when we're told other phones are better because they have larger screens, 4G LTE, NFC, that iPhones break/scratch too easily, iPads don't support flash, iOS doesn't support true multitasking, widgets, etc
Seems to me the public doesn't care about those things that competitors want you to care about. People just want a beautiful phone with a phenominal display that is easy to use, just works and has some of the best apps out there. I do wonder though with the large number of jailbreaks, will some of those things get incorporated into iOS 6?
Seems to me the public doesn't care about those things that competitors want you to care about. People just want a beautiful phone with a phenominal display that is easy to use, just works and has some of the best apps out there. I do wonder though with the large number of jailbreaks, will some of those things get incorporated into iOS 6?
Apple always incorporates features of jailbreaks into iOS releases. Not necessarily because they are copying, but because people jailbreak to get a feature Apple could have reasonably assumed they wanted and thus planned for in a subsequent iOS release.
As for the fanboy remarks, those are a vocal minority. Still, some average consumers will still want those features. It would make sense for apple to include them eventually, particularly LTE.
Thanks to Apple & Steve Jobs
I've been a longtime believer and fanboi.
Holding over 7000 shares of AAPL, at an average price of $17, in my IRA.
Sold it all out today at $459 (in the aftermarket). While I believe it's still going up long-term, the biggest growth is now over and I'm getting closer to retirement age.
Thanks to Steve Jobs, and my fortitude in holding on thru ups and downs, I've gone from a nice retirement to a spectacular retirement.
I've been a longtime believer and fanboi.
Holding over 7000 shares of AAPL, at an average price of $17, in my IRA.
Sold it all out today at $459 (in the aftermarket). While I believe it's still going up long-term, the biggest growth is now over and I'm getting closer to retirement age.
Thanks to Steve Jobs, and my fortitude in holding on thru ups and downs, I've gone from a nice retirement to a spectacular retirement.
I'm sure that you are making some point - but I don't get it.
What does Cook's statement have to do with Job's wife sitting with thew first lady???
Oh, that is crazy earnings.
Should have bought some AAPL stocks when iphone 4S is announced. I do think apple stock still being undervalued. However, the rapid growth is close to over I think. After phones reach certain speed, they will just like computers, digital cameras, selling cheap and won't be as profitable and rapid growth like today.
Should have bought some AAPL stocks when iphone 4S is announced. I do think apple stock still being undervalued. However, the rapid growth is close to over I think. After phones reach certain speed, they will just like computers, digital cameras, selling cheap and won't be as profitable and rapid growth like today.
Oh sure I don't doubt people want features like LTE but I think the competition is over estimating the significance, especially bigger screens.
Of course they are. Things like Lte and big screens have proven just to be "gimmicky" things so far that have no correlation with sales. Its a good way for android fanatics to say their phone is "better" but that's fourth grade crap. As it stands now, no one cares about that stuff and the almost 40million iPhones sold in the fourth quarter is evidence of that.
I think a lot of enthusiasts want bigger screens (including me), but a lot of those people buy apple anyway, so there isn't necessarily a huge incentive to do so. Something like NFC or LTE is pretty clear though because it's adding features and functionality without making the device change form factor. Also, with the option to use them, there isn't a necessary hit on battery.
I don't agree with your comment on growth but I 100% agree on your decision to sell if you are that close to retirement, especially given the total price you made on that.
I do think that Apple is now under enormous pressure to produce an iPhone 5 that will really extend its lead in smartphones as a single manufacturer.
If Apple can deliver on these features on the iPhone 5:
a. At least 4" (diagonal) screen
b. Faster CPU/GPU
c. 1 GB RAM
d. 3GPP LTE support
e. NFC support compatible with FeliCa and Isis mobile payment standards
f. 32 and 64 GB of flash memory storage
Their stock could rocket past US$500 per share easily.
If Apple can deliver on these features on the iPhone 5:
a. At least 4" (diagonal) screen
b. Faster CPU/GPU
c. 1 GB RAM
d. 3GPP LTE support
e. NFC support compatible with FeliCa and Isis mobile payment standards
f. 32 and 64 GB of flash memory storage
Their stock could rocket past US$500 per share easily.
Amazing!
Simply amazing. Simply amazing. Whenever you begin to think there's no way they can keep outdoing themselves, this happens. Year after year.
It's interesting to read Tim Cook's way of answering questions and discussing Apple's strategy. It's quite a contrast to the style of the former co-CEOs of RIM.
Simply amazing. Simply amazing. Whenever you begin to think there's no way they can keep outdoing themselves, this happens. Year after year.
It's interesting to read Tim Cook's way of answering questions and discussing Apple's strategy. It's quite a contrast to the style of the former co-CEOs of RIM.
Actually, I understood that they do try to account for some of these things. But it comes down to their strategy for receiving a return on their investment. Sell fewer units for more, or sell more units for less.
Apple's competitors typically seem to go for the latter, so they have to sell more units to cover the investment. This is weird, because this is compounded by the fact that at the same time they typically produce more models which both divides their customers' attention and requires the extra efforts in design, engineering and retooling which all adds up.
In contrast, Apple aims to reach profitability on a product within a certain, much smaller number of sales. And Apple can sustain a higher price per unit because of all the added value (software, ecosystem, quality, support, user satisfaction, etc.).
Creating only one new model per year actually means people have the confidence that their iPhone isn't going to be immediately outdated and obsoleted -- in fact, quite the opposite: it will gain further utility and longevity through software updates. So demand tends to remain quite high even for older models that people perceive to be at the end of a cycle.
But high satisfaction among consumers leads to even more demand for the next model, so there is a virtuous cycle in effect.
Also, by producing one annual model Apple has longer to recoup its investment, when it was already priced to do that fairly quickly anyway. Using the same case design only multiplies this effect, so transitioning from 4 to 4S using essentially the same case allows minimal extra investment that can be used to make real improvements to the phone (vs changing color or throwing the latest component in it as most competitors do). Apple know where to spend its money effectively because they aren't producing loads of models to throw at the wall just to see what sticks. I think they invest far more wisely, accurately and efficiently than anyone else, so they do achieve very high margins time after time.
And of course, they continue to sell the 4, so the margin on that continues to go up and up with every sale. Now remember that the 3GS case design is in about its third or fourth year, so as that continues to sell you realize that anything above actual costs of components is just about pure profit and has been for a couple of years! Who else can make one product cycle last 12 - 18 months, let alone continue to sell "old" models year after year?
So, I don't think, as you imply, that there is a hole for each product program which needs to constantly get filled in. By careful planning, I think Apple frees up a lot of cash that it can continue to use effectively elsewhere. And we know that for its size and all its great products, Apple's R&D budget is actually comparatively quite small. In fact, with hype about new design and capabilities for iPhone 5, with China market coming along, and given that 4S achieved 4 million sales in first weekend, I could imagine iPhone 5 reaching profitability within a month of its launch, regardless how much Apple may have spent on its "program" over the last year or two.
But, yeah, in one sense it's not like Apple chooses to have a certain gross margin that they could lower if they wanted to... it's all in the original bet they made: can we sell X number of phones at X amount in order to reach profitability, and how long will that take? And of course they sell many more than that far quicker than even they imagine. So, in fact, they do lower the price (on the previous model). Then depending on the mix of phones and their capacities, they make a varying amount of margin each quarter.
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Can I ask a simply question without anyone flaming me?
Why is this a good thing? They are just grossly overcharging their customers (in my opinion). All this talk in the media about companies making tons of money while workers get pennies. And most of their money sits in the bank (or in other countries because they do not want to pay the tax on it) where it really does not help anyone.
Yes other companies overcharge too but I'm not saying that they are doing the right thing either.
Don't you as customers feel that it would be better if you payed 10% less and apple made only 20% profit and not 30%? This is an honest question, I am not trolling.
I'm just looking for an answer, not flaming.
Why is this a good thing? They are just grossly overcharging their customers (in my opinion). All this talk in the media about companies making tons of money while workers get pennies. And most of their money sits in the bank (or in other countries because they do not want to pay the tax on it) where it really does not help anyone.
Yes other companies overcharge too but I'm not saying that they are doing the right thing either.
Don't you as customers feel that it would be better if you payed 10% less and apple made only 20% profit and not 30%? This is an honest question, I am not trolling.
I'm just looking for an answer, not flaming.
Impressed with the numbers, but hope that the PC doesn't get ignored moving forward. Looking at that pretty graph, it would be easy for Apple to almost call the PC a niche product for them. Sure hope not, my Late 2006 (2,1) MacBook needs replacing and the current offerings are just okay.