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

[kironin]

Actually, most people I know (let me correct it, everyone I know) have never bought an app.
I, meanwhile, am an exception, since I probably have hundreds of dollars' worth in paid (and paid-downloaded-for-free) apps. But then, I'm the only one reading MacRumors everyday

Well, that may true where you are in Portugal, but I'm in Texas and we actually can afford to spend a 1$, 5$, or even 20$ for an app here or there. Someone has to be spending money on apps or developers would be as a rule developing for Android first and they aren't. There are some really good free apps but there is also a lot for crap apps and in some areas the only decent apps are not free. Business mileage app is worth every penny of the few dollars I paid for it, since the tax write-offs in the thousands.

 

[Mildredop]

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

Are Dell better than Apple? I wouldn't think so.

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?

Yes, a lot of companies choose to make less profit. They pay their staff better, they pay more for ethically sourced raw materials and choose manufacturing companies that have improved pay levels and better H&S etc. etc., they pay more in taxes, they invest more in R&D. I'm not too up on the tech industry, but just take a look at the John Lewis Partnership. I'm sure they're not faultless, but they appear to be trying. Imagine if Apple took this approach.

Profit is one of the incentives bringing innovation.

Absolutely. Are Apple truly innovating? Google are looking at balloons to allow 3rd world countries to get online. Increasing their potential customer base, yes. But also allowing those countries to get online and join the rest of the developed world. Albeit virtually.

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?

Tax avoidance, not tax evasion. They're avoiding paying the tax they should - not necessarily illegal, but not ethical. Their cash pile is stashed in other countries and actually untouchable and unspendable. If they repatriate it, it'll cost them billions in taxes. Apple only have a cash pile to prevent them paying tax and at the same time increase the value/stock value of the company.

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.

Don't get me wrong - all companies are 'bad'. In fact, I think most charities are a bit evil, too. Go far enough to the top, and you'll find a fat bloke driving an expensive car living in a big house. It's human nature to look after number 1. Greed is in our blood. All of us.

But Apple (and these forums) are celebrating these massive profits. I think earning 40% profit on each iPhone is hideous. And shameful. Force Foxconn to give each employee a bonus. Go and build a town there. Or some schools. or a hospital.

But don't just sit on it. Pay it back.

 

[paulsdenton]

Judge Learned Hand...

Judge Hand issued an opinion that it is neither required nor patriotic to pay taxes when it is not required to do so. Apple is simply following tax law and "arranging its affairs" so that its taxes are as low as possible. All other businesses do, or try to do, the same.

"Any one may so arrange his affairs that his taxes shall be as low as possible; he is not bound to choose that pattern which will best pay the Treasury; there is not even a patriotic duty to increase one's taxes." Helvering v. Gregory, 69 F.2d 809, 810-11 (2d Cir. 1934).

 

[redman042]

But Apple (and these forums) are celebrating these massive profits. I think earning 40% profit on each iPhone is hideous. And shameful. Force Foxconn to give each employee a bonus. Go and build a town there. Or some schools. or a hospital.

But don't just sit on it. Pay it back.

You don't understand how public companies work, do you? They CAN'T just "pay it back", not at the level you are implying anyway. Every person who has invested their own personal money into Apple stock expects and deserves the best possible financial result out of that company. Part of the reason I hold Apple shares is because of that cash reserve. It serves as leverage and insurance. If a new player suddenly disrupts the smartphone market, for example, Apple's huge cash reserve gives them a massive amount of leverage and time to adjust and conquer that threat. Given how fast things move in technology, that means a lot to me as an investor.

However I am glad they are paying some of the money back to investors, which also helps move their share price up, and helps them retain the best employees who get some of their compensation in company stock.

 

[Mildredop]

Judge Hand issued an opinion that it is neither required nor patriotic to pay taxes when it is not required to do so. Apple is simply following tax law and "arranging its affairs" so that its taxes are as low as possible. All other businesses do, or try to do, the same.

"Any one may so arrange his affairs that his taxes shall be as low as possible; he is not bound to choose that pattern which will best pay the Treasury; there is not even a patriotic duty to increase one's taxes." Helvering v. Gregory, 69 F.2d 809, 810-11 (2d Cir. 1934).

This is true. No-one should pay more tax than they have to.

But what a shame that the US's investment in educating all the bright people that work at Apple isn't resulting in a massive repayment. Bumper profits but minimal tax payments. And how many people do Apple actually employ in the US? Most of the people earning from Apple and paying tax on their earnings live elsewhere.

I'd be amazed if any American is truly happy with this set-up (apart from any Apple shareholders, of course).

 

[Rocketman]

$75B quarterly revenue, with not yet major updates to either the installed base or the Android base. Plus the annuity of perpetual updates. I am looking forward to $100B quarterly then $200B. Buy APPL. Oh wait, that's what happened today.

 

[Rocketman]

This is true. No-one should pay more tax than they have to.

But what a shame that the US's investment in educating all the bright people that work at Apple isn't resulting in a massive repayment. Bumper profits but minimal tax payments. And how many people do Apple actually employ in the US? Most of the people earning from Apple and paying tax on their earnings live elsewhere.

I'd be amazed if any American is truly happy with this set-up (apart from any Apple shareholders, of course).

Every aspect of what you mentioned is a result of IRS rules and FEDGOV fiscal policy. Stroke of the pen(s). What say we change that? Apple is the canary in the coal mine.

 

[technosix]

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 share the same sentiment.

It's well known that amongst the vast number of consumers that buy Apple products, there are those that only use a very small fraction of the phones capabilities, and either fail to notice the buggy aspects of iOS 8 or simply don't care. Settling for a mediocre experience not knowing any better and being drawn in by the Apple logo is all they care about.

That's the power of Apples convincing marketing and carefully crafted image.

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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!

We're already being rewarded with buggy software... Oh wait

 

[IJ Reilly]

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.

All companies actively avoid paying taxes. Since this is to be expected, it seems the real issue is countries creating tax havens for the purpose of abetting tax avoidance. Perhaps the EU should be investigating Ireland, not Apple.

 

[IJ Reilly]

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.

It means the stock markets have sucked all month for some pretty good reasons, and few companies are going to be making all-time highs in this environment. Besides, the markets don't grade on a curve. Apple doesn't get extra credit for being the biggest or most of anything.

 

[StyxMaker]

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.

Besides making a better phone, they also have to put together a better marketing team. Both are important.

 

[redman042]

I share the same sentiment.

It's well known that amongst the vast number of consumers that buy Apple products, there are those that only use a very small fraction of the phones capabilities, and either fail to notice the buggy aspects of iOS 8 or simply don't care. Settling for a mediocre experience not knowing any better and being drawn in by the Apple logo is all they care about.

That's the power of Apples convincing marketing and carefully crafted image.

----------



We're already being rewarded with buggy software... Oh wait

I'd argue the typical Apple customer is smarter than you give them credit for, and also that, while iOS 8 is buggier than prior versions, it is also MUCH more complex and feature rich (which is why Apple is having a harder time squashing them). And I really, really doubt that the typical Android phone is less buggy than iOS 8. So before you say people are "settling" for Apple because of the logo, let's look at how their products are doing relative to the rest of the industry. Apple could definitely do better, but I think we will find that even with the bugs there are many advantages over the competition.

 

[winston1236]

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.

Agreed, thats a pretty terrifying pie graph for a tech company.

 

[toke lahti]

I think current gross margin and profits will be all time highs for a long time. What else feature as important as big screen, they can hold for years and then release the floods?
Next might be wireless charging, but all is so insignificant compared to screen size.
More people will use phones than watches or smart glasses or holo projection or what ever be future's favorite gadgets.
What could be bigger than communication device, where you can get most value from software? Solar panels or robot cars can't compete with gross margins...

When macs will die? Are Apple screens and airport express going the way of LaserWriter?

 

[Bacong]

so, lol @ anyone who complained about Apple not being able to make enough iPhones and that they were failing. nobody else could have even come half as close to Apple at the speed they were churning them out.

 

[Trapezoid]

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.

I'm sorry, but..what? Do you have examples of companies they willingly forego profit?

 

[StyxMaker]

So people did want bigger phones after all

Or, were willing to buy them even if they didn't want a bigger phone.

 

[Michael Scrip]

Agreed, thats a pretty terrifying pie graph for a tech company.

What do you want Apple to do?

They make a phone that happens to have high margins... and they sell a ton of them.

At least Apple's smartphone business is profitable. I'd love to the see the pie charts for other smartphone OEMs.

Can you have a pie chart with negative numbers?

 

[AppleWarMachine]

Well, it looks like that new tier of 16, 64 and 128GB for the iPhone worked out for Apple (everyone paid the extra $100 for the 64GB)

 

[apolloa]

Wow, Apple fans have at last realised the benefits of a phablet and ditched their iPads

Interesting how most of the sales boosts came from China which is the market Apple have only just entered into, and yeap, pretty much as posters have said on here, Apple is just an iOS phone company and nothing else now.

 

[linuxcooldude]

I think earning 40% profit on each iPhone is hideous. And shameful.

Typically most products are marked up 100% If its 40% that should be a bargan.

 

[technosix]

1) I'd argue the typical Apple customer is smarter than you give them credit for, and also that, while iOS 8 is buggier than prior versions, it is also MUCH more complex and feature rich (which is why Apple is having a harder time squashing them).

2) And I really, really doubt that the typical Android phone is less buggy than iOS 8. So before you say people are "settling" for Apple because of the logo, let's look at how their products are doing relative to the rest of the industry. Apple could definitely do better, but I think we will find that even with the bugs there are many advantages over the competition.

1a) Please read my post carefully. I said there are _some_customers ... I did not say the typical Apple customer.

And yes I agree iOS 8 feature rich yet that's no excuse for not doing a better job of debugging it before its shipped. Apple is highly skilled and very capable.

2a) It's an old tired excuse to bring Android into a conversation as a diversion. At no time did I speak of Android it's irrelevant as you cannot compare a different platform when we're talking specifically about Apple.

I use and have been using every version of iOS and Android concurrently since 1998. I happen to enjoy both, each for its respective strengths.
I have no interest in comparison and picking a winner. They are different enough to justify their own place in the market.

Everyone had their own preferences, mine are variety and choice. That's another reason I always have current top of the line phones from each platform.

 

[firewood]

I think earning 40% profit on each iPhone is hideous. And shameful. Force Foxconn to give each employee a bonus. Go and build a town there. Or some schools. or a hospital.

Didn't the Soviet Union and China, around 5 or 7 decades ago, force factory owners to give all their profits back? IIRC, 10's of millions in those regions died of starvation during that forced "give back". (Far more than in the U.S. during that same period.) And you want to try that again?

 

[dec.]

I share the same sentiment.

It's well known that amongst the vast number of consumers that buy Apple products, there are those that only use a very small fraction of the phones capabilities, and either fail to notice the buggy aspects of iOS 8 or simply don't care. Settling for a mediocre experience not knowing any better and being drawn in by the Apple logo is all they care about.

That's the power of Apples convincing marketing and carefully crafted image.

Yeah and on the other side you have over a billion tech geeks that buy android. Congratulations on your own personal reality distortion field .

 

[ShinySteelRobot]

So, looking at the percentages, it turns out that Apple is a mobile phone and tablet company (81%) that happens to sell computers on the side (9%).

Or they're just, you know, a technology company that sells technology.....

Why are people still so butt hurt about this whole "they're not selling computers anymore!!!!"

The iPhone is a computer. The iPad is a computer.

The iPad is more powerful than this POS Dell I use at work.

People need to rethink their definition of "computer" - because its changing.

You mis-interpret me. I'm not butt hurt about it at all. In fact my butt feels just dandy. Please leave my butt out of this discussion.

My original comment was simply an insightful observation about the changing nature of Apple's sales and financials.

My comment was similar to how Ford and GM are primarily pension companies with an auto business on the side. After many decades giving out fat pensions to union workers, each year the Detroit automakers pay out more money to retired worker pensions than they spend in capital investment to build factories, design products, etc, combined. For example, in 2013 Ford's worldwide net income was $5.5 Billion, and last year Ford's pension fund was under-funded by $18.7 Billion.