Apple Reports Q2 2013 Quarterly Results: $9.5 Billion Profit on $43.6 Billion in Revenue, Increases Dividend and Share Repurchases

[tryfaster.net]

Are these doom-and-gloomers serious?

What the hell is the deal with all of these market drones? Have you people taken a second lately to think about the fact that the market represents real, underlying products and processes that are produced and occur in the world? You are forgetting that there is a CONTEXT to these numbers.

Apple makes the best products. The other brands, even Samsung, don't matter. They're generic fads. Just because so many of you analysts and wannabes would like to "ingeniously" predict a common visual trend to continue doesn't mean that it should and will happen.

Apple is floating in a market of water-logged corpses. They deserve some credit, and as soon as the dramatic media and Wall-Street followers get their heads out of their [gutters] this stock will correct to $500 before the end of the next quarter.

+/-guidance profit. +revenue. +stockholder goodies. +brandowner's expectations who will reluctantly buy those ipads right now. ++mid-term stock price, for sure.

 

[BigEm]

Is he talking about a potential Apple Credit Card ?

Are you talking about the "Debt Market" thing?
By that he means that they are also considering issuing debt instruments like bonds. In a stock market, there are equity instruments which pay dividends to an investor. In a debt market, there are debt instruments which pay interests to an investor. In short, Apple is now considering borrowing if needed and most probably to buyback the stocks.

 

[kudukudu]

I still don't cease to be amazed at how much IOS related hardware and software contributes to their revenues. If you include itunes, ipad, ipod and iphone this is 85% of Apple's revenues.

Like every company out there Apple is following the $$$$. I wish their computer sales were closer to 25% of Apples revenues so those of us using Apple desktops could get a little more love.

Given the importance of the overall ecosystem for Apple and Google, I am surprised the global love for IOS hasn't translated into even more sales for Apple computers.

 

[TallManNY]

Maybe, but I was having in mind Euro prices in Greece.

base iMac 27" EUR 2009 / USD 2729 | US PRICE USD 1799
base rMBP 15" EUR 2369 / USD 3080 | US PRICE USD 2199
16GB iPhone 5 EUR 739 / USD 960 | US PRICE USD 649 (unlocked)
16Gb iPad 4 EUR 529/ USD 687 | US PRICE USD 499 (cellular)

Crazy

if only I had Timmy's email address

Talk to your government. This constant complaint about Apple prices in foreign countries is getting lame. It isn't a plot against you. It is a combination of the cost of doing business in your country and the cost of shipping the products there and setting up the sales and support services.

----------

Honestly, I think Windows Phone 8 is a better interface than Android. I'd like to see iOS a bit more customizable, and be able to hide the icons or at least do something different on a screen or two. And personally I would prefer a bigger screen. I'm not always in the thinner is better camp. I like something that is easy to hold and not so slipper or thin that I have to be constantly conscious about holding it securely. I personally find the iPhone 5 to be slippery.

I realize all of this is subjective and a matter of personal preference. I like the two forward facing speakers on the HTC One. I like the curved back, as I did one of the rumored iPhone designs pictured here a while back. There was a rumor of a curved iPhone design and I liked the mock up.

Yeah, we are on the same page. The iPhone is a miracle of thinness. And that is nice when it is in the pocket. But it doesn't help when holding it. It is luxury feeling, but a rubberized body is easier to hold. I go back and forth between putting mine in case which gives it a softer more secure grip, but adds bulk and going naked, which is sleek and cool looking but leaves the phone harder to hold (not to mention more vulnerable to drops).

The Lumia's look very nice in the store, but I have no faith in the OS. The Blackberry Q10, which is not out in the US yet, looks very nice, if one wants to go retro with a qwerty keyboard. And it seems like would be easy to hold and rugged enough that you would never consider putting it in a case.

 

[Dmunjal]

Stock went from +22 in after hours trading to -2.27 in just the last half an hour. Stock manipulation, anyone?

I was listening to the earnings call the stock seemed to drop when Tim Cook said there were no plans for a larger phone anytime soon.

I don't know if that's manipulation.

 

[TallManNY]

Are you talking about the "Debt Market" thing?
By that he means that they are also considering issuing debt instruments like bonds. In a stock market, there are equity instruments which pay dividends to an investor. In a debt market, there are debt instruments which pay interests to an investor. In short, Apple is now considering borrowing if needed and most probably to buyback the stocks.

Yes, Apple is considering borrowing. It might be able to borrower at 2.5%, which is less than inflation. It wouldn't have to use its case, so that can be conservatively invested and make 1%, making the initial cost 1.5%, or after 3% inflation a cost of negative 1.5%. And it can buy its shares to indirectly provide value to its shareholders. Also the entire 2.5% interest on the borrowing is a tax deduction. There is another win, call it another 1% win. And it doesn't have to bring back cash from overseas (thereby avoiding the one time 35% tax hit if brought that money back).

----------

I was listening to the earnings call the stock seemed to drop when Tim Cook said there were no plans for a larger phone anytime soon.

I don't know if that's manipulation.

You are right, that is the market reacting to new information.

 

[Dmunjal]

Android's growth can partly be attributed to phones you can pick up for under $100 in some countries... where iPhones cost at least $500

If you only have $100 to spend on a smartphone... guess which platform you will get...

Micromax is the #2 smartphone seller in India... a country of over a billion people. Low-priced phones are the reason.

And we wonder why Android is "beating" Apple in market share.

And we wonder why Apple is planning on a low-cost phone to "beat" Android in emerging markets.

 

[needfx]

Talk to your government. This constant complaint about Apple prices in foreign countries is getting lame. It isn't a plot against you. It is a combination of the cost of doing business in your country and the cost of shipping the products there and setting up the sales and support services.

never said it is a plot against us, but given the push apple can have with governments & intermediaries, they can do something to level it out.

moreover, products are not shipped to the US first to reach Greece, it's just not efficient. They are shipped directly from China for example. We are becoming a major transit hub and Cosco is buying ports, airports & railways. So yes, prices SHOULD be reduced.

--edit

don't you think that a 1000usd difference is a tad too much for "the cost of doing business"?

 

[Dmunjal]

You're talking to a finance major here so no need for the condescension nor the lesson on what revenue and earnings are. I'm just saying earnings would logically go up proportionality to the increase in revenue.

I'm surprised a finance major would make this comment about earnings going up proportionally to revenues. That is exactly what is NOT happening because margins are going down. Therefore there is less profit per revenue dollar. Hence, the stock is down.

 

[TallManNY]

Talk to your government. This constant complaint about Apple prices in foreign countries is getting lame. It isn't a plot against you. It is a combination of the cost of doing business in your country and the cost of shipping the products there and setting up the sales and support services.

never said it is a plot against us, but given the push apple can have with governments & intermediaries, they can do something to level it out.

moreover, products are not shipped to the US first to reach Greece, it's just not efficient. They are shipped directly from China for example. We are becoming a major transit hub and Cosco is buying ports, airports & railways. So yes, prices SHOULD be reduced.

--edit

don't you think that a 1000usd difference is a tad too much for "the cost of doing business"?

it seems like a huge difference. but I have no explanation for these cost.differences except cost of.doing business. it isn't because apple doesn't like you.

 

[DisMyMac]

Is there any precedent for product updates right now?

 

[Newton70]

I was listening to the earnings call the stock seemed to drop when Tim Cook said there were no plans for a larger phone anytime soon.

I don't know if that's manipulation.

Unlikely, but I'm sure Apple wouldn't mind buying shares back at a lower price.

 

[Dmunjal]

Unlikely, but I'm sure Apple wouldn't mind buying shares back at a lower price.

Wouldn't that be manipulation by Apple? Also, they've been buying shares for some time now at much higher prices. Don't think that strategy has been working. If this is the bottom, then it will work out in the long run.

 

[MarcelV]

never said it is a plot against us, but given the push apple can have with governments & intermediaries, they can do something to level it out.

moreover, products are not shipped to the US first to reach Greece, it's just not efficient. They are shipped directly from China for example. We are becoming a major transit hub and Cosco is buying ports, airports & railways. So yes, prices SHOULD be reduced.

don't you think that a 1000usd difference is a tad too much for "the cost of doing business"?

The difference is less then you think. Let's take the iPhone. You stated it is 739.00 in Greece. Your VAT is 23.00 percent I believe. So, the comparable price with the US is 600 Euro vs 649 dollar. When you see US prices, always remember that the VAT is not included because the sales tax rate is different between the individual states. Plus retailers like it because it gives the consumer a feeling that products are cheaper then they really are. Yes, when you are used to the European system where VAT is always included in the store prices but you go shopping in the US, you really need to keep that in mind because at the register you pay more than is labeled on the shelf and it really takes some time to get used to.

 

[IJ Reilly]

Wall Street doesn't care about market share? Yeah right. If they didn't care about market share why were they screaming for a cheaper iPad last year and a cheaper iPhone this year? What's the point of a cheaper iPhone other than to increase market share in places like China and India. What Wall Street seems to want is Apple to increase its market share AND maintain absurdly high profit margins. As far as regular release of breakout products, I'm not sure how you're defining regular but it was 3 years between iMac and iPod, 6 years between iPod and iPhone and 3 years between iPhone and iPad. So one would assume that late 2013 or more likely 2014 is when we'll see a new product category or game changer from Apple.

No, market share is not the issue. Profits are always the issue. I don't know who these mythical "they" are, but the only "they" driving Apple towards less expensive products is the competition. These are defensive moves of a kind that Apple hasn't been forced to make in a long time. They are taking them not to defend their share of the market, but to protect their unit sales growth, which if you think about it, is not necessarily the same thing.

Margins are only "absurdly high" if the competition prevents you from maintaining them. That's where Apple is now, at least in the markets they are in already. Which is why they have to find another soon, or see their earnings growth flatten (and the stock flatline).

Maybe it isn't quite as long as it seems since Apple released something really new. But the reality is, the competition in the smart phone market is fierce now, and Apple had even less time than with phones to exploit the tablet market without serious challengers appearing. They have to move more quickly. The worry being expressed by investors is that they aren't moving quickly enough.

As for AMZN, I can only repeat what was often said about AAPL until recently -- that the stock is priced for perfection.

 

[JoEw]

Only make great products. Won't make cheap ones.

This is why I love Apple.

 

[Virinprew]

There are plenty of nice phones out there.

But iPhones are the only phones that run iOS.

Surprise... some people like the iPhone's operating system, apps and ecosystem.

Yeah. But that should be used only as a last resort.

 

[the8thark]

What exactly are they supposed to do with $150 billion in cash? Fill a giant swimming pool with gold coins to swim in a la Scrooge McDuck?

Like this you mean?

 

[synp]

“Overvalued”? Now, at the $400 level? HOW?

An AAPL stock is something that represents $44 in profit a year. That sum wil eventually be either distributed to shareholders (through dividends or buybacks) or invested in making future profits even larger. So for the sake of argument, let's assume that as a shareholder, you get $44 a year.

Apple is working in a very competitive market with relatively low margins. It is entirely conceivable that its profits will plunge at some point in the future. This is not peculiar for Apple. It's true to all companies in the same business.

So how much is a financial instrument worth, that generates some cash each year, $44 in the past year, is not likely to grow much, but has a non-trivial chance of falling? The current price represents a 9.2 multiplier, or an 11% annual return. That's about the same as Ford, lower than software companies like MSFT and GOOG, and slightly lower than Cisco, but Cisco has a much tighter lock on some markets than Apple does.

AAPL seems to be priced about right.

 

[MrMickS]

Maybe it isn't quite as long as it seems since Apple released something really new. But the reality is, the competition in the smart phone market is fierce now, and Apple had even less time than with phones to exploit the tablet market without serious challengers appearing. They have to move more quickly. The worry being expressed by investors is that they aren't moving quickly enough.

If APPL were driven by what the investors wanted then they'd be in trouble. As a publicly traded company they need to keep an eye on things like share price etc but it shouldn't be the driver. As stated in the call APPL continue to focus on the long term, unlike the short market which often looks for short term opportunities.

On the not moving quickly enough. Cook referred to how well the iPhone 4 was doing in emerging markets. That's a 2.5 year old phone and its still selling well. Maybe this SKU/product churn isn't necessary if you make good product in the first place.

We saw the impact of APPL rushing things last year. iOS 6 Maps got them worldwide coverage, for all the wrong reasons. The short life of the iPad 3rd gen had people criticising for that. They will release when the products are ready and they have sufficient inventory to match the demand. Isn't that the way that a responsible company should behave?

 

[69650]

Apple's guidance for the third quarter of fiscal 2013 includes expected revenue of $33.5-35.5 billion and gross margin between 36 and 37 percent.

They highlighted this on Bloomberg last night. Essentially they are saying that in the next quarter sales will be flat or may even decline. I think that pretty much confirms that there will be no big announcements or product launches between now and June when their third quarter ends.

It will be interesting to see if that means the shares will continue to stay flat or slide as they have done recently. Bloomberg even speculated that it was in Apple's interest for the shares to continue to fall so they could buy back a lot more shares for the same money. That way when all the new products start flowing later in the year the shares will hopefully go back up again.

I wonder what happens to those shares that Apple buy back. Do they go out of circulation or can Apple sell them again if the price goes up and make a tidy profit? I don't know if that's allowed.

 

[adnbek]

I'm surprised a finance major would make this comment about earnings going up proportionally to revenues. That is exactly what is NOT happening because margins are going down. Therefore there is less profit per revenue dollar. Hence, the stock is down.

When I read the article I realized that part. But again, I'm not surprised. They introduced a bunch of new product lines with new manufacturing processes, they've been building more data centres and other infrastructure and probably spending more money to improve overall worker conditions at Foxconn and other factories.

Their expenses have gone up, that's for sure. Again, no cause for concern. Their revenues and sales are still seeing growth, which tells me they're still pushing out product and more of it year over year. If they're spending more, it's not necessarily a bad thing.

Again, no need for the "Apple is doomed" predictions. Far from it.

----------

That way when all the new products start flowing later in the year the shares will hopefully go back up again.

A stock buyback wouldn't be a bad idea, which would explain them holding back on product launches till Q3 or 4.

But in general, I don't like the idea of a concentration of product launches within the same quarter like we saw in 2012. I hope in 2014, they'll go back to spreading them out like they used to. From a public's perception point of view and from a market perspective, it seems like a better idea to churn out new products throughout the year.

 

[Rogifan]

No, market share is not the issue. Profits are always the issue. I don't know who these mythical "they" are, but the only "they" driving Apple towards less expensive products is the competition. These are defensive moves of a kind that Apple hasn't been forced to make in a long time. They are taking them not to defend their share of the market, but to protect their unit sales growth, which if you think about it, is not necessarily the same thing.

Margins are only "absurdly high" if the competition prevents you from maintaining them. That's where Apple is now, at least in the markets they are in already. Which is why they have to find another soon, or see their earnings growth flatten (and the stock flatline).

Maybe it isn't quite as long as it seems since Apple released something really new. But the reality is, the competition in the smart phone market is fierce now, and Apple had even less time than with phones to exploit the tablet market without serious challengers appearing. They have to move more quickly. The worry being expressed by investors is that they aren't moving quickly enough.

As for AMZN, I can only repeat what was often said about AAPL until recently -- that the stock is priced for perfection.

Let investors worry then. Other companies will always be releasing stuff for the sake of releasing stuff. Samsung just added a bunch of gimmicks to their new phone so they have something to rattle off on a spec/feature list. Even though most people will probably rarely use these "features" lets throw them in there so maybe the press will talk about that instead of the narrative being 'ho hum, it's just spec bump with a faster processor and better camera'. HTC completely redesigned their phone (hmm...I thought everyone loved the design of the One X) because they needed something to get people talking about them. And if you read most reviews of the One vs. S4 its basically buy the One if you care about premium design, buy S4 if you don't.

I think it would be a disaster for Apple to basically carbon copy Samsung. There have been many times over in Apple's history that they were considered doomed because they didn't follow a certain strategy and that some other product would be a Apple "killer". Now is no different than all those other times.

----------

I was listening to the earnings call the stock seemed to drop when Tim Cook said there were no plans for a larger phone anytime soon.

I don't know if that's manipulation.

And yet iPhone 4 and 4S continue to sell very well. This media meme that everyone wants a larger screen phone is bunk. I'm sure there are some people who do but I'll bet the percentage of people leaving iPhone (or never coming in the first place) because of screen size is a very small percentage. Otherwise why would the 4 and 4S continue to sell so well? Where are the factual data points to suggest Apple is losing meaningful iPhones sales because the screen isn't 5"?

 

[salmon]

As a long-time (and term) investor, I'm pretty happy. The dividend increase is nice, and helps weather the current patch, while the buyback should drive up share value and IMO is the best use of the stockpile of cash.

On the stuff that matters, Tim Cook said pretty much all the right things: number one focus is not stock price, but building great products. The products are everything, so don't get distracted from that. I interpreted his "new products in fall and 2014" not to mean nothing will get updated, but that's when we'd start to see entirely new product lines. Take the time to get it right; I'm sure he learned from Maps, although I think there were outside pressures there IIRC.

They need to move the OS back to being a bit cleaner and focused on being useful (skeuomorphic changes sucked), and I'm confident in Ive for that.

iOS can use some updating, so I'm looking forward to iOS 7 to see what they've been doing in that space.

They really do need to hit the ball out of the park for the Pro market (soon!), even if it's not a huge revenue source. That one is about respect.

TV is just a massive, massive opportunity if done correctly. I think they could kill Nintendo as well (i.e. the more casual gaming market).

iPads are awesome. Hard for me to imagine how they can make them better, besides improving software. That market segment is going to be around for a long time, and they're doing great in it.

iWatch sounds neat, but more importantly it shows they are imagining what comes after phones.

So, my areas of "concern" are around keeping the OS awesome. Everything else is looking great, IMO.

 

[derek4484]

After looking at that chart

It's easy to see why Apple isn't putting many new resources into their PC development teams. PC revenues make up such a small portion of their total revenues. iPhones and iPads are their bread and butter. We may never see a new Mac Pro.