Apple's Record 4Q 2015 Results: $11.1 Billion Profit on $51.5 Billion Revenue

[Black Magic]

So to summarize, the real star is iOS not iPhone.

No. The real star is profit. Apple sells all their devices with a nice profit margin. They don't make cheap stuff and leave that for the other vendors to get the scraps. Apple doesn't sell a higher percentage of phones versus Android, but Apple takes in the most profits in the smartphone market than all the other vendors combined.

Apple isn't starving.

 

[Palladium SG]

Whole market is in a decline, sometimes even record profits can't make your stock jump.

How about the market is simply delusional? As seem by how hyping a vaporware blood test is worth $9 billion or any tech startup is immediately worth $1 billion by the time they register the name.

 

[Mac 128]

Presumably iPod sales are also now bundled into 'Other'. Take iPod sales from the previous quarter, decrease them a bit more, then subtract that figure from the 'Other' sales. Then you have an idea about the revenue from the watch and accessories.

Other includes iPods, Apple TV, and Beats, as well as the Watch, and accessories.

Presumably the 1% growth year over year is due to the Watch. At least for 3Q. The 4th quarter is a bit more complicated as they released the new iPod Touch, which probably had a lot of pent up demand, and they lowered the price on the TV, so people probably grabbed them up. Also, Beats had several new releases during the last quarter. And keep in mind, the 6S came out during this quarter which likely spiked the accessory income. So it's entirely possible revenue grew without the watch particularly growing in sales. I'm not saying it's the most likely, just a definite possibility.

Either way, the 3Q was up 1% over a year ago, which is presumably entirely attributable to the watch. The 4Q grew by 1% over 3Q, and 2% over a year ago, and some of that is definitely the watch, though it's hard to say how much. I wouldn't expect to see any declines in any other products except the TV following the announcement of the ATV4, so it's entirely possible the watch sales were flat this quarter.

 

[CB1234]

Whole market is in a decline, sometimes even record profits can't make your stock jump.

I understand that.... but why would VW shares go up with markets in decline and also record payouts they will have to incur over coming years....

 

[RenoG]

$11.1 billion in profits in three months... While the global distribution of money and wealth remains in shambles.

Smh.

That's a capitalist society for ya.

 

[I7guy]

I understand that.... but why would VW shares go up with markets in decline and also record payouts they will have to incur over coming years....

These illogical things happen all over the market.

 

[whiteboytrash]

Volkswagen who are being sued and are going to shell out billions in fines, have their share prices jump up 4% !!

Apple which has announced record profits, have their share value decline !!

So how does this work?

Because share price is not solely reflective of P&L. Its made up a number of factors, most of all opportunity for investors to make money from the stock.

For many Apple is not a great investment, not because they believe the company won't be successful but mainly due the fact that its a high price stock which may not have significant gain in stock price value. Apple is now a bluechip stock like people used to see IBM, invest and hold for long periods of time.

You'll also see investors selling Apple as they have made their gains and believe it is "topping out" with its latest results, the sell flow reduces stock value.

It is very normal scenario for holders of a stock to sell when good results are released. The sale creates a sell flow and often their is more sellers than buyers which drops the value of the stock.

There is more opportunity in lower priced stock or in a company like VW who will take a hit on stock price but there will be future gains when they get themselves out the mess they are in today. Twitter is similar, its ripe for investment.

 

[CB1234]

Because share price is not solely reflective of P&L. Its made up a number of factors, most of all opportunity for investors to make money from the stock.

For many Apple is not a great investment, not because they believe the company won't be successful but mainly due the fact that its a high price stock which may not have significant gain in stock price value. Apple is now a bluechip stock like people used to see IBM, invest and hold for long periods of time.

You'll also see investors selling Apple as they have made their gains and believe it is "topping out" with its latest results, the sell flow reduces stock value.

It is very normal scenario for holders of a stock to sell when good results are released. The sale creates a sell flow and often their is more sellers than buyers which drops the value of the stock.

There is more opportunity in lower priced stock or in a company like VW who will take a hit on stock price but there will be future gains when they get themselves out the mess they are in today. Twitter is similar, its ripe for investment.

Thanks - very well explained.... I guess that's why I never invest in shares....

 

[dotnet]

The stock market these days is not like the stock market of old (150 years ago), which was based on economic performance and promise of dividend. It is now almost entirely populated by gamblers and controlled (and manipulated) by the high-rollers among them.

 

[whiteboytrash]

Thanks - very well explained.... I guess that's why I never invest in shares....

No problems.


Pre-internet and CNBC 24x7 the only information of a company was its quarterly results and any newsworthy news that made the morning papers. Therefore those results deemed whether stock would go up or down. Additionally buying stock, you’d have to pick up the phone to a broker and he’d (she) would buy stock on your behalf at a set range or price, the process was long.

With globalisation, high frequency & first / direct market access trading, along with the internet, 24 x 7 business news channels reporting every “blip” in a company’s life brought traders of all shapes and sizes to the exchange. Many who have little interest if Apple makes iPhones, cars or actual Apples or if VW was caught being very naughty with its diesel engines. They only work on the stock, its price and any movements its makes. Many algorithmic trading systems are not based to ‘buy’ or ‘sell’ on quarterly results but purely on the ebb and flows of the stock volume, its price and the timings of such flows. All of this occurs in sub-second timeframes. There is no human thought process in 60% of the share market, its conducted purely on pre-set values and movements. In more simple terms – IF THEN ELSE is now prevalent with stocks. Not “wow that’s a great balance sheet, lets invest because they make lots of money” – see ENRON as a good example of how a stock went up based on traders pushing it in a certain direction against all natural human logic.

 

[iOrbit]

What i will say is - Tim Cook is the best apple can do for now - Johnny may be the chance of a creative successor and director for apple in jobs place. But he's not ready for such responsibility, or necessarily hungry for it?

Tim is Proving he can take care of apple just fine in his own hands - he cannot control or help the loss of steve jobs. Apple is still as great, the lack of curator (Jobs) does show though. And as someone else pointed out, sculley made more money for apple than jobs did at one time, yet he wasn't what apple needed so it went downhill. I think jobs has succeeded at building something that can maintain itself (and its direction) much better than when he left apple the first time.

Its simple for Tim Cook to capitalise on steve jobs work - what Tim Cook cannot do (or is yet to be proven) is direct and curate apple. if Tim Cook was put into a new company to build up from scratch, do you think he could build what steve did?

i'm not saying he's a bad CEO, I'm just saying - people shouldn't be looking at profits to judge how well tim cook will keep the company thriving - he is for the most part, keep it it as surviving.

 

[megadon]

Ok but that's not what you said, you said the stock tanked. Btw, this is what CNBC's Jim Cramer tweeted:



I think the whole lower than expected guidance is BS. And honestly I think Apple is sandbagging a bit so next quarter will be a blowout. Of course it doesn't matter because Wall Street thinks Apple's best days are behind it and have felt that way since 2012. In FY2015 Apple reported more profit than any company in history. The YOY revenue growth of $50B+ was larger than the FULL YEAR revenues of 90% of Fortune 500 companies. Apple has over $200B in cash. Yet Wall Street treats them as one bad quarter away from extinction.

K - wait a sec here.

For the next Quarter, Q1 December, Apple expects gross margin of between 39% and 40%, and it sees revenue of between $75.5 billion and $77.5 billion. Analysts had penciled in 39.8% and $77.14 billion

Last year, Q1 December quarter Apple had gave a blowout quarterly report that was mind blowing.

This year according to today's report Apples own guidance was that they will set a record in this coming Q1 December.

So they will sell more the 74 Million iPhones in the next quarter! Wow.

When has Apple missed their own guidance really badly? not too often.

You are worried that they will be short or something? Haha.

Just to give more info on the topic I'll add this stuff:
The games of this stock being held back are the only thing that will be "doomed" eventually. At some point Apple is going to be buying back all the shares you want to sell. You need to have over 60 Billion dollars to fight Apple's buyback program presently. You sell, and Apple buys back the stock. This does (somewhat artificially I'll admit), prevent AAPL stock from "tanking".

AAPL is the safest haven investment as I see it. Even if the entire stock market crashes, I think AAPL will be reasonably OK, you might have to weather out some severe armageddon stock market crash - but that's the worst case scenario. Aside from doomsday, AAPL is the best stock to buy - I'm really saying that. By all measures.

China DOUBLED year over year iPhone sales. What China slowdown?

The Fed is going to do what? Who cares.

Greece? huh?

So when they are off by 0.6% on some statistic, all the western media no minds are telling the audience that the sky is falling.

It's now getting plainly obvious that you can simply follow the money and if you have patience, you absolutely have to be in AAPL, the stock can't be held back forever. I guess the proof of that will come when Apple buys it's own stock back - billions of dollars at a time - because it is the best investment. Wow. Powerful stuff.

Apple will issue their own guidance, and the market will have their own numbers.
So if Apple says 75 billion, and market expects 77 and apple beats its own estimate by 1 billion, the stock will still decline.

As far as what's a good investment, that's for people to decide for themselves.

Again, I love apple products and already stated the quarter was amazing. I was just pointing out that the reason the stock didn't pop was not because people thought the quarter was lacklustre, just because apples low end of the guidance worried investors about some possible headwinds that they're not aware of.

Apple is still a cheap stock trading at 14 times next years earnings, especially when compared to its peers. It's basically a value stock that's in the tech industry.

 

[JackANSI]

That 63% there? That is a good part of the reason Apple stock doesn't soar like everyone thinks it should.

 

[dotnet]

That 63% there? That is a good part of the reason Apple stock doesn't soar like everyone thinks it should.

Because mobile phones could go out of fashion any day now?

 

[the8thark]

Apple can't get any traction outside the phone. There really isn't a halo affect represented in that graph. Phones, phones and more phones. Still, as a company, I'd take it all day long!

Apple has mentioned that the Mac business alone is still a fortune 500 company. Just because the iPhone business is huge, that does not take away from the huge business of the Mac.

 

[Dmunjal]

That's a capitalist society for ya.

Apple wouldn't exist without that capitalist society.

 

[the8thark]

Impressive.

I am still surprised that Apple does't focus more on Mac, since it is the 2nd biggest, and rock-solid, earning sector on the pie chart. Where is a new monitor? Where are new MacPros every year? They should be updating the processors every moment possible. Get moving, Apple.

No one would buy a new Mac Pro every year. As lonmg as you have a new Mac around the time most people are looking at new Macs then you're good. Also there is the intel factor there too slowing down the release cycle of Macs.

 

[the8thark]

Didn't Scully, Spindler and Amelio try that tactic? The huge and vastly expanding Mac product line from that era lost quite a bit of money.

It's almost like Apple's idea is to produce the smallest number of total and new SKUs that will keep the overall bottom-line profitable.

The massive number of iOS device, Apple watch accessory and other SKU mountains disagree with you.

 

[whiteboytrash]

What i will say is - Tim Cook is the best apple can do for now - Johnny may be the chance of a creative successor and director for apple in jobs place. But he's not ready for such responsibility, or necessarily hungry for it?

Tim is Proving he can take care of apple just fine in his own hands - he cannot control or help the loss of steve jobs. Apple is still as great, the lack of curator (Jobs) does show though. And as someone else pointed out, sculley made more money for apple than jobs did at one time, yet he wasn't what apple needed so it went downhill. I think jobs has succeeded at building something that can maintain itself (and its direction) much better than when he left apple the first time.

Its simple for Tim Cook to capitalise on steve jobs work - what Tim Cook cannot do (or is yet to be proven) is direct and curate apple. if Tim Cook was put into a new company to build up from scratch, do you think he could build what steve did?

i'm not saying he's a bad CEO, I'm just saying - people shouldn't be looking at profits to judge how well tim cook will keep the company thriving - he is for the most part, keep it it as surviving.

Cook for the most part is doing a better job than Jobs as a CEO. Jobs was never a great CEO he was more of an evangelist. Jobs became successful as a CEO because Cook reigned in his spending habits and got him to see the benefit of offshoring production and keep inventory low. Jobs was good at negotiating a deal but terrible at running a company. Cook completed that circle for Jobs.

Jobs's distortion field worked really well when the company was dying because he was the only one who believed it wouldn't actually die. A normal CEO would probably have done as Michael Dell had suggested and found a way to break up the company and sell it off.

In terms of innovation without Jobs it may begin to peter out in years to come. But I've seen innovation now at Apple which has been less restrictive than Jobs would ever allow. The Apple Pencil and the IBM wouldn't occur under Jobs. The App Store on iPhone Jobs was against but its what has made the iphone what it is today.

I think Cook is fine will keep it ticking for the next 10-15 years.

 

[the-msa]

Only if you buy one.

Apple positions itself as a premium luxury brand.
Offering 5400rpm drives or 16gb options is inappropriate.

 

[MacBH928]

I am really surprised services is only 10%. I thought those movies, series, songs, and all the app downloads worldwide bring in a lot of money.

 

[Dmunjal]

I am really surprised services is only 10%. I thought those movies, series, songs, and all the app downloads worldwide bring in a lot of money.

They do. But not relative to the behemoth that is the iPhone.

 

[firewood]

I am really surprised services is only 10%. I thought those movies, series, songs, and all the app downloads worldwide bring in a lot of money.

$5.1B (comprised of mostly $0.99 purchases) IS a lot of money. More than half of the companies in the Fortune 500 don't come close to selling that much stuff.

 

[Carnegie]

I am really surprised services is only 10%. I thought those movies, series, songs, and all the app downloads worldwide bring in a lot of money.

As others have already pointed out, the Services category does account for a lot of revenue for Apple - nearly $20 billion worth this past fiscal year. It's just that Apple's total revenue is so large, mainly due to the success of iPhones, that the Services category looks fairly small when considered as a portion of that total revenue.

That said, we should keep in mind that for much of that Services revenue Apple is only counting the portion that it keeps. It is not counting the full sales price of, e.g., third-party apps which are sold through its App Store. Generally speaking that's how it, for accounting purposes, treats digital content sold using the agency model. If the content owner or app developer sets the price, Apple counts the net revenue rather than the gross revenue - the amount it keeps after paying the owner or developer rather than the total amount it takes in. So the App Store might take in $15 billion in sales in a given year, but only $5 billion or so of that might be counted as revenue for Apple.

 

[Rogifan]

Hmm...according to Apple's 10-K filing capital expenditures will increase almost $4B next year to $15B. Go back 5 years and this number was only $4.6B. Wow.