Sidebar Sidebar
Become a MacRumors Supporter for $50/year with no ads, ability to filter front page stories, and private forums.

Apple's Second Quarter 2007 Financial Results: $770 Million Profit

IJ Reilly said:
And to whom is it bad news? ;)
Click to expand...

Consumers who pay excess prices for the 35% margin.

There is a notion of "excessive profit margins".

Normally this occurs as a result of price fixing, or monopolies et al... but Apple is far from that ( monopoly ).

--
Nice results, btw.
 
iPod revenue is down 1 % year over year, from $1714 to $1689. Nobody worried about that?

The average iPod price keeps going down all the time and is now at $160.11. It's $40.95 down compared to the March 2006 quarter (which can be explained with the cheaper iPod and iPod shuffle) but it's also $2.59 down compared to the December 2006 quarter.

The iPod seems to be slowing down. But who am I to count out Apple's engineers? Let's hope for some nice new models reigniting consumer interest this year. Otherwise there are going to be a lot of people who can't get the iPhone because it's tied to certain carriers and who won't buy another iPod so soon because they pale in comparison.

Great Mac unit growth in Retail (79 % year over year) and Europe (37 %). Desktops are flat, Portables up 79 %.
 
Four gigabytes of flash goes for maybe... $50? If each Santa Rosa based laptop needs that much, and Apple sells 800,000 units per quarter, that's $40 million. If Apple sells 40 million gigabytes worth of flash based iPods, that's another $500 million... yeah, Apple will still have a lot of money to spare after they prepay for all that flash memory.

I'd rather it go back into R&D. The MacBook Pro industrial design dates from late 2003 (or even early 2003 for the 17"), and has been around longer than any other Apple "look" in recent memory.

The MacBook has quality control issues that still haven't been fully ironed out (my black C2D occasionally shuts down when I try to put it to sleep, for example).

I'm waiting on a 12" PowerBook replacement (my other machine).

A value oriented 20" PVA display for the Mac Mini, HDMI across the board, and a new iSight wouldn't hurt.

Oh yeah, maybe a full screen iPod... the one that everyone's been thinking about for 2-3 years...
 
Stella said:
Consumers who pay excess prices for the 35% margin.

There is a notion of "excessive profit margins".
Click to expand...

Yeah, but not at 35%; manufacturing, you start at 15-20% for mere survival, you cycle between 28 and 35% to be healthy and you can go as high as 45% AS AN AVERAGE in some industries.

I think a lot of people around don't have a good feel for real world economics.
 
iPod is serving its purpose

reverie said:
iPod revenue is down 1 % year over year, from $1714 to $1689. Nobody worried about that?
Click to expand...

When history is made, the iPod will be looked at as the device that helped Apple gain consumer mindshare to sell computers, software, phones, speakers, and other household electronics. It will be a trusted and familiar brand like Sony. Overall, they will do well.

The Fan Boy Windows users will be wiped out like the Jedi and you won't hear much about them.
 
No.

Apple cannot be expect continued rises of iPod in every quarter.

Its been a long time since the last significant iPod change,that was 5G - a long time ago. iPod 5.5 was minor upgrade. Apple have milked the 5G ( and 5.5 ) for a long time.

When the 6G is released you can pretty sure that sales will be on the up.

Alternatively, maybe this quarter was just a blip.

reverie said:
iPod revenue is down 1 % year over year, from $1714 to $1689. Nobody worried about that?
Click to expand...
 
BornAgainMac said:
When history is made, the iPod will be looked at as the device that helped Apple gain consumer mindshare to sell computers, software, phones, speakers, and other household electronics. It will be a trusted and familiar brand like Sony. Overall, they will do well.
Click to expand...

This is true. Those iPod owners I mentioned who can't get the iPhone because of carrier restrictions but have serious techlust might just get an Apple TV this season.

The iTS does have little video content (especially outside the US), but didn't those same people buy the 5G iPod mostly for video back when there was even less video content? I hope Apple will show us Apple TV figures next quarter and I hope they're over a million (life to date). More movie content providers following MGM (Fox?) should help as well.

However, the problem is this: Apple's new mojo is in the iPod. They've always been making good product, but it's just now with the success of the iPod that they are recognized for it. A faltering iPod business would mean less consumer confidence in the new product lines.
 
Mac OSX Costs

Rocketman said:
It seems to me one of the consequences is a very large portion of OSX development costs are going to be (or are already) ascribed to these new programs, thus, for accounting purposes, increasing the margins on traditional Macs.
Rocketman
Click to expand...

OSX development must already be capitalized - or at least some of it, or they wouldn't have had that problem with having to charge for that N network upgrade because the the expense would be already be realized ... wait that was on a driver not really part of OSX perhaps.

Any way, I cannot believe that Apple doesn't capitalize their OSX development, (spreading the recognition of the cost out over 3 or 5 years, "depreciating" the cost as it were). OSX is the kind of thing they wrote the software capitalization rules for in the first place.

I can see the iPhone absorbing some of the cost - but it should if it is sucking in a bunch of OSX people. I don't think that is burying the cost, just spreading it to all functions that use OSX, so the net cost per Mac should be lower if the expenses aren't proportionally higher - more devices would use OSX. It would be interesting to know how Apple divides things, internally does every computer get assigned an OSX cost or do they just keep it all as a bunch as a separate Entity with just high expenses.
 
I'm glad for this news, as it means Macs will be around much longer, and that they[Apple] will not quite simply abandon them. This certainly should shut up those pundits that think Apple should license out its OS and abandon the hardware ventures al la Microsoft.

I hope Apple doesn't get too big. To tell you the truth, I think they'll keep doing much better while they stay the relatively smaller corporation. I think getting too large will make them get lazy, and eventually just push out one product after the other, and none are noteworthy and valuable in the long run, but generate some dough in the short term. Maybe I'm wrong and they're an exception that can handle massive growth, but it's just a feeling I get. But anyway, at their current market position they do extremely well, despite these vague marketshare percentage discussions. 3-5% my left.....:rolleyes:
 
While desktop units sales only saw a 2 percent increase from the year-ago quarter, unit sales of Mac portables surged 79 percent and unit sales of the iPod surged 24 percent to more than 10.5 million.
Click to expand...

If that isn't a sign that Apple seriously needs to re-think keeping the Mac Pro updated with new components, I don't know what is. They would have realized a larger than 2 percent increase if they offered components that were actually made in 2007, instead of keeping old tech in there (1900XT anyone?)

But, since ATI just announced the 2900XT in Tunisia, perhaps we can look forward to new components in the Mac Pro in the future. Apple need to move away from the old PPC schedule of updating their platforms.
 
Wild-Bill said:
If that isn't a sign that Apple seriously needs to re-think keeping the Mac Pro updated with new components, I don't know what is. They would have realized a larger than 2 percent increase if they offered components that were actually made in 2007, instead of keeping old tech in there (1900XT anyone?)

But, since ATI just announced the 2900XT in Tunisia, perhaps we can look forward to new components in the Mac Pro in the future. Apple need to move away from the old PPC schedule of updating their platforms.
Click to expand...

I think it may have more to do with the fact that Apple has no real middle ground desktop machine besides the iMac. While this is a good computer, I think a great deal of people would rather have a good midrange headless system. All they have is the mac mini, which may be too minimalist for many users' tastes, and the mac pro, which is overkill for the average prosumer/consumer alike.
 
"The Mac is clearly gaining market share, with sales growing 36 percent -- more than three times the industry growth rate," said Steve Jobs, Apple's CEO. "We're very excited about the upcoming launch of iPhone in late June, and are also hard at work on some other amazing new products in our pipeline."

Seems to be a blockage in that pipeline. . .
 
Maccus Aurelius said:
I think it may have more to do with the fact that Apple has no real middle ground desktop machine besides the iMac. While this is a good computer, I think a great deal of people would rather have a good midrange headless system. All they have is the mac mini, which may be too minimalist for many users' tastes, and the mac pro, which is overkill for the average prosumer/consumer alike.
Click to expand...

Or the fact that the desktop is dying. Why use a desktop when you can have nearly as much computing power in a portable? Desktops are making less and less sense for most computer users. Pro users will benefit from the power of the MacPro, but there aren't many Pro users compared to everyday Joes.
 
While the desktop appeal may be dwindling, it'll be a long long way until we see the last of those.

I will say this though. The current Mac Mini is not as powerful as my macbook, while the 'book has easier access to the RAM and hard disk. In desktop mode my laptop is just as competent, despite having fewer ports on the side (which is solved with an Apple Cinema Display :D )
 
Microsoft's Third Quarter Financial Results: $4.9 Billion Profit

Headline numbers
EPS $0.49
Sales $14.4B ^32%
Profit $4.9 Billion ^65.5% (6.36x Apple's profit)

Vista sales better than forecasted.

http://www.microsoft.com/presspass/press/2007/apr07/04-26Q3FY07ERPR.mspx

Microsoft Reports Record Profits
Robust demand for Windows Vista and the 2007 Microsoft Office system drives 72% growth in earnings per share
Related Links
Microsoft Resources:
•
Microsoft Investor Relations
REDMOND, Wash. — Apr. 26, 2007 — Microsoft Corp. today announced revenue of $14.40 billion for the quarter ended March 31, 2007, a 32% increase over the same period of the prior year. This revenue drove record profits with operating income of $6.59 billion and net income of $4.93 billion. Diluted earnings per share for the quarter grew 72% to $0.50, and included $0.02 in tax benefits and $0.01 in legal charges.
These results reflect $1.67 billion of revenue and operating income, $1.14 billion of net income and $0.12 of diluted earnings per share that were previously deferred primarily related to the technology guarantee programs for Windows Vista™ and the 2007 Microsoft® Office release.
“I am extremely pleased that we delivered a quarter of strong double-digit growth for revenue, operating income and EPS,” said Chris Liddell, chief financial officer at Microsoft. “And I am looking forward to a very good finish to this fiscal year with strength continuing into fiscal 2008.”
Net cash flow from operations was $7.29 billion and Microsoft returned $7.72 billion in cash to shareholders through share buybacks and dividends this quarter.
“This quarter marked the consumer launches of Windows Vista and the 2007 Microsoft Office system, and we are delighted with the positive customer response these products have received,” said Kevin Turner, chief operating officer at Microsoft. “We continue to deliver on our compelling product cycle and build upon strong field sales and marketing execution in order to drive revenue and profit growth for the company.”
Business Outlook
Microsoft management offers the following guidance for the quarter ending June 30, 2007:
•
Revenue is expected to be in the range of $13.1 billion to $13.4 billion.
•
Operating income is expected to be in the range of $5.0 billion to $5.2 billion.
•
Diluted earnings per share are expected to be $0.37 to $0.39.
Management offers the following preliminary guidance for the full fiscal year ending June 30, 2008:
•
Revenue is expected to be in the range of $56.5 billion to $57.5 billion.
•
Operating income is expected to be in the range of $22.0 billion to $22.5 billion.
•
Diluted earnings per share are expected to be in the range of $1.68 to $1.72.
Additional details on fiscal year 2008 guidance will be provided in the fourth quarter earnings announcement and during the company’s Financial Analyst Meeting on the 26th of July.
Webcast Details
Microsoft will hold an audio webcast at 2:30 p.m. PDT (5:30 p.m. EDT) today with Chris Liddell, senior vice president and chief financial officer, Frank Brod, corporate vice president and chief accounting officer, and Colleen Healy, general manager of Investor Relations, to discuss details of the company’s performance for the quarter and certain forward-looking information. The session may be accessed at http://www.microsoft.com/msft. The webcast will be available for replay through the close of business on April 26, 2008.
About Microsoft
Founded in 1975, Microsoft (Nasdaq “MSFT”) is the worldwide leader in software, services and solutions that help people and businesses realize their full potential.
Forward-Looking Statements
Statements in this release that are "forward-looking statements" are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could differ materially because of factors such as:
•
challenges to Microsoft’s business model;
•
intense competition in all of Microsoft’s markets;
•
Microsoft’s continued ability to protect its intellectual property rights;
•
claims that Microsoft has infringed the intellectual property rights of others;
•
the possibility of unauthorized disclosure of significant portions of Microsoft’s source code;
•
actual or perceived security vulnerabilities in Microsoft products that could reduce revenue or lead to liability;
•
government litigation and regulation affecting how Microsoft designs and markets its products;
•
Microsoft’s ability to attract and retain talented employees;
•
delays in product development and related product release schedules;
•
significant business investments that may not produce offsetting increases in revenue;
•
the level of corporate spending and changes in general economic conditions that affect demand for computer hardware or software;
•
adverse results in legal disputes;
•
unanticipated tax liabilities;
•
key component shortages and delays in Xbox 360 product delivery;
•
impairment of goodwill or amortizable intangible assets causing a charge to earnings;
•
changes in accounting that may affect Microsoft’s reported earnings and operating income;
•
exposure to increased economic and regulatory uncertainties from operating a global business;
•
general economic and geo-political conditions;
•
natural disaster, cyber-attack or other catastrophic event disrupting Microsoft’s business;
•
acquisitions and joint ventures that adversely affect the business;
•
limitations on the availability of insurance and resulting uninsured losses;
•
improper disclosure of personal data could result in liability and harm Microsoft’s reputation
•
sales channel disruption such as the bankruptcy of a major distributor;
•
implementation of operating cost structures that align with revenue growth;
•
continued access to third party distribution channels for MSN® and other online offerings;
•
disruption to Microsoft’s operations as a result of weather-related events; and
•
foreign currency, interest rate, fixed income, equity and commodity price risks.
For further information regarding risks and uncertainties associated with Microsoft’s business, please refer to the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” sections of Microsoft’s SEC filings, including, but not limited to, its annual report on Form 10-K and quarterly reports on Form 10-Q, copies of which may be obtained by contacting Microsoft’s Investor Relations department at (800) 285-7772 or at Microsoft’s Investor Relations website at http://www.microsoft.com/msft.
All information in this release is as of April 26, 2007. The company undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in the company’s expectations.
Note to editors: If you are interested in viewing additional information on Microsoft, please visit the Microsoft web page at http://www.microsoft.com/presspass on Microsoft’s corporate information pages. Web links, telephone numbers and titles were correct at time of publication, but may since have changed. Shareholder and financial information, as well as today’s 2:30 p.m. PDT conference call with investors and analysts, are available at http://www.microsoft.com/msft.
 
dejo said:
IJ Reilly, how are you getting 44% lower? The press release states "Diluted earnings per share for the quarter grew 72% to $0.50". What am I missing? :confused:
Click to expand...

Rocketman was comparing Apple's profits with Microsoft's profits, indicating that Microsoft's profits are more than six times higher. I was pointing out that on an EPS basis, Microsoft's profits are 44% lower than Apple's. Sorry, I failed to make that clear.
 
You must log in or register to reply here.
Register on MacRumors! This sidebar will go away, and you'll see fewer ads.
Top Bottom
Back