Apple Reports Record Earnings and iPhone Sales: $18B Profit on $74.6B in Revenue for Q1 2015

[gnasher729]

Can someone with more understanding than me comment on the fact that with the largest profit in history, not only for Apple but any other company, they didnt raise the dividend paid to stock owners?

I am not asking for inflamatory purposes. I am a stock holder but dont have a lot of experience following companies dividend activities. So maybe keeping the dividends the same even on record breaking quarters is normal. Maybe it isn't. Or maybe dividend changes tend to lag behind quarterly performance.

1. You realise that with this 47 cent dividend, Apple is losing 47 cents from its bank account for every share, so each share is effectively worth 47 cents less, right? What you get in dividend payment, you lose in share price.

2. Apple (and several other companies) are in a continuing fight with the US government about taxation of profits made outside the USA, which is currently probably 2/3rds of all profits. As soon as they bring the money into the USA, they have to pay huge taxes on it (unless the US government gives in). To pay dividends, Apple has to use money that is in the USA. So they can only pay dividends from money they made in the USA or they have to pay tax on that money.

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If Apple sells 60,000,000 ApplePay enabled iPhones which has the potential to generate $6,000 in fees per user over a 2 year contract of the phone that gives ApplePay the upward potential of $45 billion in pure profit per quarter or more than double Apple's current record profits.

ApplePay could see Apples profit per quarter jump to $60 billion per quarter once ApplePay reaches market saturation.

$6,000 fees per user? Apple's share is 0.15%. Apple only gets $6,000 fees from a user who spends FOUR MILLION dollars using Apple Pay.

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The iPhone 5s had a number of threads about it getting bent, presumably Apple must received reports of it bending, yet they made the iPhone 6 even thinner.

Regardless of the YT videos, there are people who have their phones bent. Given Apple's attention to detail, it should not have been prone to bending.

Given the fact that in the last month we heard _nothing_ about bending iPhones, I think the problem is highly exaggerated.

 

[Mildredop]

Here's the thing, while I don't disagree with you, it's also up to the customer to vote with their wallets. Not only are people paying the higher prices, but obviously not enough people are returning their products so either they are accepting the problems or they aren't experiencing them as some do. Either way the fault lies on the consumer if they buy it and accept it. That's just telling the company, "Keep doing what you're doing because I'm perfectly okay with it".

I agree with you, but the rest of the industry doesn't make it easy.

I recently bought a new MacBook Pro. It cost me £1,000 and kind of sucks.

But before buying, I considered alternatives. I tried a Chromebook which was utter guff and nothing more than a toy. But I couldn't take it back so I had to sell it on eBay and lodt £150.

So I dare not then try the same with Windows. Although I haven't used Windows for a decade, there's no easy way for me to try it. It still amazes me Microsoft haven't created some sort of Windows Website where I can comprehensively 'try' Windows before I buy (maybe it's not possible).

I'd love to break free of Apple (and have done with my mobile gadgets), but the industry needs to step-up and take serious advantage of Apple's laziness.

 

[Vtwo]

If people are prepared to pay it, then I guess more fool Apple customers (I include myself there, although I have partly broken away by switching to android a few years ago).

But Apple's massive profit margins coupled with their tax avoidance, utilisation of cheap labour and growing cash pile (that they can't actually use), is appalling.

At least companies like Google and Microsoft use their profits to further the industry as a whole. Apple have purely selfish interests.

You mean the profit that Google got from selling your information to advertisers? nexus tablets and phones, Microsoft phones use the same 'cheap' labour. Is that not appalling as well?

Apple, Google, Microsoft are all businesses. They are for profit organizations that are legally binded to produce the best return for their shareholders (can be short term or long term). Let's not paint some as 'evil' while the others as 'good'.

 

[samcraig]

You mean the profit that Google got from selling your information to advertisers? nexus tablets and phones, Microsoft phones use the same 'cheap' labour. Is that not appalling as well?

Apple, Google, Microsoft are all businesses. They are for profit organizations that are legally binded to produce the best return for their shareholders (can be short term or long term). Let's not paint some as 'evil' while the others as 'good'.

Let's not confuse selling targeted advertising with selling personal information about its users. They are not the same.

 

[HenryDJP]

e I buy (maybe it's not possible).

I'd love to break free of Apple (and have done with my mobile gadgets), but the industry needs to step-up and take serious advantage of Apple's laziness.

I'm not sure how you're considering Apple to be lazy when you're saying the rest of the industry isn't stepping up enough to get you ditch Apple for them. Seems like Apple's competitors are the lazy ones. Because honestly, what's the incentive for Apple to do more when their competitors are still behind them?

 

[linuxcooldude]

But Apple's massive profit margins coupled with their tax avoidance, utilization of cheap labour and growing cash pile (that they can't actually use), is appalling.

Avoidance of tax the same way we take advantage of tax laws such as personal exemptions, tax incentives when we do our own? Apple taking advantage of the legal tax laws is not much different when we do our own taxes.

Its not only about cheap labour, but the logistics in the supply chain. It is simply better when its located in the same place where the majority of the parts are fabricated.

 

[JAQ]

Is the 30% overhead that Apple takes from their app and music stores under "Services" or "Other" for these graphs?

Services.

 

[Mildredop]

I'm not sure how you're considering Apple to be lazy when you're saying the rest of the industry isn't stepping up enough to get you ditch Apple for them. Seems like Apple's competitors are the lazy ones. Because honestly, what's the incentive for Apple to do more when their competitors are still behind them?

All very true.

 

[NT1440]

Avoidance of tax the same way we take advantage of tax laws such as personal exemptions, tax incentives when we do our own? Apple taking advantage of the legal tax laws is not much different when we do our own taxes.

Its not only about cheap labour, but the logistics in the supply chain. It is simply better when its located in the same place where the majority of the parts are fabricated.

I had no idea that you had moved your residence to Ireland or the Cayman islands while still living in the USA.

Yea....its exactly the same.

 

[ani4ani]

Can someone with more understanding than me comment on the fact that with the largest profit in history, not only for Apple but any other company, they didnt raise the dividend paid to stock owners?

I am not asking for inflamatory purposes. I am a stock holder but dont have a lot of experience following companies dividend activities. So maybe keeping the dividends the same even on record breaking quarters is normal. Maybe it isn't. Or maybe dividend changes tend to lag behind quarterly performance.

Well one reason could be the fact that to pay a higher dividend, they would need to repatriate much of their cash pile, which would trigger tax liabilities in the US and the donor country. Just my view, but they should start returning this money to shareholders or make use of it. It is our money they sit on; imagine if your employer thought it was in your best interest to sit on half your salary?

 

[rmsanger]

what a great quarter and year.... iPad stagnation is a concern and I hope their new product pipeline is strong to market this next year but I have conservative expectations.

Really it's clear that 6S will make or break '15.

 

[LordVic]

Avoidance of tax the same way we take advantage of tax laws such as personal exemptions, tax incentives when we do our own? Apple taking advantage of the legal tax laws is not much different when we do our own taxes.

Its not only about cheap labour, but the logistics in the supply chain. It is simply better when its located in the same place where the majority of the parts are fabricated.

not really the same. most of the time when you claim items on taxes you are claiming allowances that the government makes to award you refund based on specific living condition.

What corporations are doing is using their international power and clout to hide money in foreign places to prevent the US government from being able to tax that money at the correct rates.

it doesn't help facts that you can't do this on a personal level because of FATCA, yet corporations don't tend to be held up to this same scrutiny. this has to change. Corporations should be held up to the same scrutiny and regulations that all individuals have.


And the worst thing for any economy is to have a small numver of people hording vast sums of money. Hoarded money isn't being circulated in the economoy, Just think about those profits. if 18billion in profits is being shoved into cash holdings, that means 18billion dollars has now been removed from circulation. (i know they won't put all 18billion into cash, it's for example purposes)

 

[gnasher729]

Is the 30% overhead that Apple takes from their app and music stores under "Services" or "Other" for these graphs?

It's unfortunately not very clear what many of these numbers mean.

Say I buy a MacBook for $999 plus tax at an Apple Store, and you buy the exact same MacBook for $999 plus tax from PCWorld. Clearly PCWorld isn't handing over $999 to Apple because they need to make some profit. So how much revenue is counted in both cases? Does the Apple Store MacBook count as $999 revenue and the PCWorld one as less?

With apps, books, music, and movies we don't even know if for every dollar I pay Apple counts one dollar revenue (with 70 cents going to the developer, plus any cost, so the margin is quite thin), or whether Apple counts 30 cents (so much lower revenue and much bigger margin).

What corporations are doing is using their international power and clout to hide money in foreign places to prevent the US government from being able to tax that money at the correct rates.

Living in the UK, I don't mind one bit if Apple "hides" money to prevent the US government from taxing it. I do however mind if profits made in the UK are "hidden" from HMRC (Her Majesty's Revenue and Customs). "Hidden" because the money isn't exactly hidden, everyone knows where it is.

 

[AdonisSMU]

Apple is too highly concentrated on iPhones. They need to get the Mac Sales and Tablet sales up so they aren't overly reliant on iPhones for revenue.

 

[AFEPPL]

Share the love tim - reduce the product prices and spend more on getting the software right (once you've fixed all the bugs).

 

[ssspinball]

I'm concerned about the fact that the iPhone makes up nearly 70% of Apple's revenue. If somebody makes a better phone, Apple crashes. I know that's unlikely given that people have been trying quite hard even since the first iPhone and haven't managed it yet, but still, talk about putting all your eggs in one basket.

You should be more concerned about Google, since they are far less diversified than Apple and their income depends on people not "finding religion" about privacy issues--Something which seems to be coming up a lot in the news in the post-Snowden era!

 

[jdbr]

Give something back to your loyal customers

With such massive profits, maybe it is time for Apple to reward loyal customers who keep returning to buy their products at what is obviously an unfairly large mark-up!

 

[BuddyTronic]

Well, personally, I think it's shameful that a company chooses to make so much profit. And even more disgusting that they choose to build further on their $180bn (is that right?) cash pile and continue to employ tax avoidance schemes.

It makes me ashamed to own a Mac knowing that I've added to it.

You shoulda bought a Dell dude. I do not like your comment, so I thought I would reply to it.

Actually, do you think there are any companies who "choose" to make less profit? Are there "better" companies out there you'd like to mention that Apple could learn from with regards to your point?

Profit is one of the incentives bringing innovation.

Apple is following tax laws. What do you mean when you say "tax avoidance schemes?" If you do not like the tax laws, get those who make the laws to change them to the way you would like it by voting etc. All anyone can ever do is play by the rules, ethically speaking. Are you accusing Apple of breaking the law?

If you would like Apple to donate their profits to charity, I can respect that idea, but you don't have to be ashamed, you can just ask them to do what you want.

 

[rmsanger]

Apple is too highly concentrated on iPhones. They need to get the Mac Sales and Tablet sales up so they aren't overly reliant on iPhones for revenue.

easier said than done... PCs are an extremely mature market and apple in their wildest dreams could capture +10% mkt share and would barely move the needle.

What they need is a new product line to redefine a market demand. Then they can hold price and capture margin. Somehow I don't believe watches are going to be the ticket. A new definition of home theather solutions could be it though.

 

[firewood]

And the worst thing for any economy is to have a small numver of people hording vast sums of money. Hoarded money isn't being circulated in the economoy,

If it's in pure cash in the vault, perhaps true.

But if it's in bank accounts, then the bank circulates most of the money by loaning it out (perhaps for your neighbors house or business). If it's in government bonds, then the government uses it to employ people (maybe your neighbors) to repair streets and manufacture weapons, etc. If it's in corporate bonds, the corporations use it to pay money to their employees (as well as make their CEO filthy rich, who then employ your countrymen to manufacture their yachts, & etc.). Thus a good portion is well circulated.

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Apple is too highly concentrated on iPhones.

Most businesses concentrate on whatever brings in or will bring in the most profit. And Apple is a very focused company.

 

[AFEPPL]

You shoulda bought a Dell dude. I do not like your comment, so I thought I would reply to it.

Actually, do you think there are any companies who "choose" to make less profit? Are there "better" companies out there you'd like to mention that Apple could learn from with regards to your point?

Profit is one of the incentives bringing innovation.

Apple is following tax laws. What do you mean when you say "tax avoidance schemes?" If you do not like the tax laws, get those who make the laws to change them to the way you would like it by voting etc. All anyone can ever do is play by the rules, ethically speaking. Are you accusing Apple of breaking the law?

If you would like Apple to donate their profits to charity, I can respect that idea, but you don't have to be ashamed, you can just ask them to do what you want.

Apple actively do avoid paying tax in some countries it would seem.
Around 1% was paid for sales in the UK and thats wrong by any measure.

I don't believe anyone for a moment thinks apple are in business to make people lives better, they exist to make money for the shareholders. But they should also have a social responsibility as well.

And apple are actually being investigated around its tax affairs by the EU.
Are they guilty? Thats not for me to say. but 1% tax... i'd like to see my tax code the same is all I'm going to say.

 

[nick42983]

Great news, but the stock is still lower than its high exactly two months ago. For being the most profitable company in human history its shocking that the stock isn't at $120+ right now. (ha it just dropped $1 since I wrote this) Guess being the best all time means that this must be at the peak and Apple will collapse any quarter now.

 

[linuxcooldude]

It doesn't help facts that you can't do this on a personal level because of FATCA, yet corporations don't tend to be held up to this same scrutiny. this has to change. Corporations should be held up to the same scrutiny and regulations that all individuals have.

But yet the corporate tax is one of the highest in the world. If we want to abide by scrutiny by an individual standard its way too high. The only way to change bringing back the money to US is either change the laws and/or lower tax rate to make it more attractive for businesses. Either way Apple still complies to all the tax laws similar to how individuals are suppose to do it.

And the worst thing for any economy is to have a small numver of people hording vast sums of money. Hoarded money isn't being circulated in the economoy, Just think about those profits. if 18billion in profits is being shoved into cash holdings, that means 18billion dollars has now been removed from circulation. (i know they won't put all 18billion into cash, it's for example purposes)

How they use their money legally is up to them.

 

[firewood]

I'd also like to see Apple do more blue sky type research.

Long gone are the days when the likes of Bell Labs, Xerox PARC, TJ Watson Labs, et.al., would publish a large amounts of their (sometime Nobel award winning) research results, and then widely license out those inventions.

One of those past Bell Labs publications may have been instrumental to Apple's founding (hints on how to hack the phone system

I wish the tax code and patent laws were changed to encourage a lot more of that type of blue sky corporate research once again, which occasionally leads to products that change the way we live for the better.

 

[Michael Scrip]

Apple is too highly concentrated on iPhones. They need to get the Mac Sales and Tablet sales up so they aren't overly reliant on iPhones for revenue.

Apple is selling more Macs now than they ever have before in their 30 year history.

It's just that more people are buying iPhones than Macs these days. Face it... smartphones sell in higher volume than traditional computers.

I agree that iPad sales have slumped compared to previous quarters... but they still sold 21 million of these rather expensive, non-essential, high-margin items.

Any other company would be thrilled to make the money Apple makes from just the iPad and the Mac.

So... what is the proper revenue mix?

Google's makes 98% of their revenue from advertising... aren't they overly reliant on that?

Doesn't Honda make most of their revenue from automobiles versus lawnmowers and snowblowers?

I don't know what you want them to do...