Apple Reports Q4 2014 Year-End Results: $8.5 Billion Profit on $42.1 Billion in Revenue [Call Concluded]

[Glideslope]

“Being the richest man in the cemetery doesn't matter to me. Going to bed at night saying we've done something wonderful... that's what matters to me.” - SJ

True. However SJ is now gone, Tim has shareholders, profit margins do matter in reality, and Apple shows no signs of needing to reduce it.

 

[TallManNY]

It's only hidden for people like "Math is Hard" Kevin from The Office (U.S. version). Everyone else knows how to subtract iPod sales based on this Qs #s to get an idea. Also guessing Apple will do its usual sales announcement the weekend after launch. Apple can't hide the sales number. The Apple Watch just isn't mature yet for its own category and doesn't fit the others since it's an accessory, not a stand-alone product.

Hmm, maybe Apple doesn't announce Watch sales right off the gate. I think the numbers are going to be tricky because the price spread from low to high is going to be well more than a factor of ten. They won't tell you how many sales are the gold Edition watch. Of that I'm pretty sure. And if that watch is selling for $5,000 while the sporty one goes for $349, then what is the point about talking Units sold?

 

[Apple Corps]

The buybacks will allow the dividend to be increased over time since there will be less shares outstanding to split the dividend payments between. But I know what you mean. A sudden and unanticipated "special dividend" of $50 billion would be nice in some ways. Sure it would be a huge tax hit for investors, but you don't have to reinvest every dividend, you could take some of it in cash to pay the taxes on it.

It won't happen because buybacks are more tax efficient and there isn't enough Apple money in the US to pay such a large dividend.

Tax efficiency is kind of irrelevant when we are not seeing any gains to be taxed on for heavens sake. I'd much rather get vastly increased dividend payments - pay the taxes - and have REAL CASH in hand. Right now we wait and wait - two years of NO Capital gains - poor investment performance. I know the theory - but it is not working - boost the dividend.

 

[ksuyen]

Hmm, maybe Apple doesn't announce Watch sales right off the gate. I think the numbers are going to be tricky because the price spread from low to high is going to be well more than a factor of ten. They won't tell you how many sales are the gold Edition watch. Of that I'm pretty sure. And if that watch is selling for $5,000 while the sporty one goes for $349, then what is the point about talking Units sold?

That makes sense, plus Watch being accessories and its market is not mature enough. With Watch we probably are going to see (initially) low units sold but with high profits. Imagine how competitors going to spin that only unit numbers mattered (which works for homogeneous Android devices) and Apple is doomed OR that Apple overpriced their watch (gold) while using the image of the $349 version. It's smarter to just show a general numbers of all accessories, although I am pretty sure Watch will sell like crazy.

 

[Chupa Chupa]

Hmm, maybe Apple doesn't announce Watch sales right off the gate. I think the numbers are going to be tricky because the price spread from low to high is going to be well more than a factor of ten. They won't tell you how many sales are the gold Edition watch. Of that I'm pretty sure. And if that watch is selling for $5,000 while the sporty one goes for $349, then what is the point about talking Units sold?

Sure, that's no different than how Apple reports Macs which sell from $499 to well over $10K. Apple still reports total units sold along w/ category revenue.

As for sales number I don't see how Apple avoids that, having promoted it so much, for months before a vague launch period. If Apple is silent it's akin to a suspect claiming the 5th. He might well be innocent but sure doesn't appear that way. Similarly, silence would make the Apple Watch look like a bust.

 

[Braniff747SP]

I just wish they'd put as much effort into delivering on phone orders in the US as they are rolling them out in other counties. I ordered my 6+ opening weekend, and I'm still a couple of weeks away.

My wife wants to order a 6 tonight, she'll be lucky to have it by Thanksgiving.
But some guy in India will have his phone before I do.

Or you buy it in the store and have it immediately?

The 'guy in India', by the way, has as much right to an iPhone as you do.

Supply chain considerations are not dictated by the fact that you ordered your phone late.

 

[CEmajr]

Pretty amazing. Never thought I would see that happen.

I'm willing to bet the Apple halo effect is at play here and we are seeing the stickiness of iOS at work. Once you get any iOS device in your hand, you start investigating OSX and the ecosystem to a greater extent, which fuels Mac sales.

This is very true. Got the iPod in 2005, iPhone 3G in 2008. Never even considered a Mac as an option until I used iPhones for a while and became impressed with their quality and Apple's service.

Fast forward to today and I have iPhone/iPad/Mac

Now also have several of my friends and relatives using iPhones and/or iPads and considering Macs.

 

[Technarchy]

This is very true. Got the iPod in 2005, iPhone 3G in 2008. Never even considered a Mac as an option until I used iPhones for a while and became impressed with their quality and Apple's service.

Fast forward to today and I have iPhone/iPad/Mac

Now also have several of my friends and relatives using iPhones and/or iPads and considering Macs.

That's how it was in my house.

Started with a couple of iPods, then and iPhone 4S, then a iPad 3, then a Macbook Air.

We went from having no Apple products to being a full Apple house in a handful of years, and it's mostly because of the iPhone.

 

[TallManNY]

Sure, that's no different than how Apple reports Macs which sell from $499 to well over $10K. Apple still reports total units sold along w/ category revenue.

As for sales number I don't see how Apple avoids that, having promoted it so much, for months before a vague launch period. If Apple is silent it's akin to a suspect claiming the 5th. He might well be innocent but sure doesn't appear that way. Similarly, silence would make the Apple Watch look like a bust.

Good point about the Macs.
We shall see about the sales. I think if there are lines for the Apple Watch and orders that can't be filled, it will be tough to call it a bust. Though we will have to listen to the old intentional supply constraint theory if numbers aren't announced. At least with the iPhone you only need to hear those theories for a weekend and then apple delivers the astronomical numbers.
I'm not sure about sales for this first generation device. It will oursell the original launch of the iPod. And perhaps the original launch of the iPhone. But will it outsell the original launch of the iPad? Hmmm. I don't know.

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This is very true. Got the iPod in 2005, iPhone 3G in 2008. Never even considered a Mac as an option until I used iPhones for a while and became impressed with their quality and Apple's service.

Fast forward to today and I have iPhone/iPad/Mac

Now also have several of my friends and relatives using iPhones and/or iPads and considering Macs.

I don't think it is just halo effect. The MacBook Air and Pro really are the best bit of hardware in their category for their price. So is the Mac pro I guess.

 

[kazmac]

Holy smokes... 8 billion...

cranky rant on:

I hope Apple do not use that money toward more <cough> musical <cough> acquisitions.

I hope Apple do use some of this profit toward QC in their software & hardware and start being less stingy with RAM.

cranky rant off//

 

[IJ Reilly]

Tax efficiency is kind of irrelevant when we are not seeing any gains to be taxed on for heavens sake. I'd much rather get vastly increased dividend payments - pay the taxes - and have REAL CASH in hand. Right now we wait and wait - two years of NO Capital gains - poor investment performance. I know the theory - but it is not working - boost the dividend.

This is true, and I don't buy the tax efficiency argument. Long term capital gains and dividends are taxed at the same rate, for most people. Dividends are real money, now. Buybacks produce theoretical gains, later. Some investors are going to prefer deferring their gains, but not because it necessarily saves them in taxes. Though for the record I think they need to both increase the buybacks and the dividend.

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Hmm, maybe Apple doesn't announce Watch sales right off the gate. I think the numbers are going to be tricky because the price spread from low to high is going to be well more than a factor of ten. They won't tell you how many sales are the gold Edition watch. Of that I'm pretty sure. And if that watch is selling for $5,000 while the sporty one goes for $349, then what is the point about talking Units sold?

If we get this sales data, it probably won't mean very much.

 

[kahkityoong]

This year's releases:

• A new Mac Mini that's actually worse than the older one.
  
• A "new" iPad Mini that is basically last year's model with a half-assed gold paintjob.
  
• A new iPad Noob (where is the iPad Pro, Apple?).
  
• A phablet.
  
• The iPhone 6, which is actually nice, but marred by tons of quality control issues (call gate, bend gate, and so on).

Yep, a truly exciting year!

But hey, Apple has bought Beats! Now they have a woman beater on the staff! Surely that's a recipe for success!

Sarcasm or gullibility?

 

[Chupa Chupa]

I'm not sure about sales for this first generation device. It will oursell the original launch of the iPod. And perhaps the original launch of the iPhone. But will it outsell the original launch of the iPad? Hmmm. I don't know.

Definitely hard to get a handle on how to gauge sales. Many analysts have some wild unbelievable numbers. Easy to outsell the original iPod; few even knew it existed on launch day and it was expensive. I remember going into the Apple Store and the sales guy was so excited I even knew about it.

I think the original iPad is a fair metric. Both polarizing a launch with detractors with a "what would I use it for?" attitude as well as people who love the concept and can't wait to buy. Also both launched in calendar year 1Q. IIRC the original iPad 1st weekend sales was not a barn burner, but respectable -- it was Easter though and also many were waiting for the cellular model to be released.

 

[MMANN113]

Of course, now the question is going to be what Apple does for an encore. It is very dependent upon the iPhone right now, perhaps too dependent. iPad is turning out to be a very mature product (sales are down again this quarter). It, as well as the Mac, will produce respectable and relatively reliable profits, but not much, if any growth. The Watch is an unknown, except that it is limited to the existing iPhone market.

iPhone 6 and 6 Plus does seem to be prompting the "mother of all upgrades." The issue will be whether Apple can grow that more, or whether the iPhone settles into a steady pattern of annual and biennial upgrades of existing users. A faster A9 in the 6S alone isn't likely to prompt many upgrades from the 6 or "switchers" from Android the way that the larger screen of the 6 and 6 Plus did this/will do year.

I think we're seeing SO MANY iPhone 6 orders because there is a LOT of people who did not find a compelling enough reason to upgrade from the 4/4S to the 5/5S. If the next generation of iPhones don't offer anything additionally amazing, they may have a lot of people on this wave of iPhone 6's for the next few years.

Though I'm never a fan of the "they JUST released this product, but the next one better be amazing" narrative.

 

[rGiskard]

Cook: Mac sales are looking sorta flat. What do you guys think?

Executive Geniuses: Let's gimp the Mac Mini to force people to buy more Macs!

Cook: That's a really great idea!

Cue: Make it worse to make it better! F cking brilliant!


-------------------
Warning: No satire was used in this post.

 

[KPOM]

I didn't claim that anyone said it was innovating. I just know what the reaction here would be if any other company touted it as a feature during a new product introduction.

It's a gimmick but it isn't as if Apple is saying it's a fundamental feature of the Watch. It's more of a "we thought of that" feature. What Apple got right with the Watch is getting the fashion industry on board.

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That's the danger with year-over-year reporting. It seems to me that Q4-14 is being compared to a very weak Q3-13. In the long run, this product category doesn't seem to be going anywhere - and that's despite a particularly weak competition in the form of Win 8. Could be a price issue: If they limited the premium vs. a comparable PC (hardware-wise) to 20%, they might be able to sell many more Macs and (finally!) expand the platform. That said, they're obviously never going to make it in the business customer arena - not enough choice and flexibility.

5.5 million Macs is a record for any quarter.

 

[the8thark]

I just wish they'd put as much effort into delivering on phone orders in the US as they are rolling them out in other counties. I ordered my 6+ opening weekend, and I'm still a couple of weeks away.

My wife wants to order a 6 tonight, she'll be lucky to have it by Thanksgiving.
But some guy in India will have his phone before I do.

60% of sales roughly are outside the USA. Apple respect their international customers as much as their US customers. Seems like you are yet to deal with this fact.

 

[pauliaK]

Apple needs to diversify.

Poor iPod sales. We had a good run.

Sales are poor in comparison to other Apple products which is no surprise I guess. Yet, most other companies would be very happy to have this product in their lineup selling as many units as Apple does simply because it would be a whole lot more than just 1% of their revenue .

 

[samiznaetekto]

The graph looks like Jaws. Has become a predator?!

 

[Yebubbleman]

I can't help but notice that the part of the pie that's red keeps getting bigger...

Soon this site will have to change its name to iPhoneRumors.com

 

[joesuburb]

I wonder what their profits would be like if they didn't have Chinese slaves making their products.

 

[827538]

Or just spend .001% of those billions and give better software QC.

I'd like to see that too.

 

[k4rrjin]

Doomed!

Well, the Apple haters and Samsung boot-lickers were right yet again - Apple is absolutely DOOOOMED, again!

 

[johnnyturbouk]

$150bn cash!
hey should build an island, and begin a new age in society!

 

[Isamilis]

Revenue not same with quantity sold

I think, we need more data, instead of revenue here. Highest revenue from iPhone could mean:
1. Apple got most profit from every single iPhone sales (iPhone has biggest profit margin), or
2. Number of iPhone sold is outperformed the others such that it contributes the biggest revenue.

So, which one? I am actually tend to agree on no. 1.