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Research Firms Offer Conflicting Views of Apple's Second Quarter Mac Shipments
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A few things going on:
1. Apple's prices are about 10% too high on all computing products, but Apple doesn't care since its profits are coming from the iPhone and iPod. So the pain hasn't set in yet. Eventually, these sales will stabilize.
2. M$ Vista is stabilizing a bit since the newer hardware has dropped in price and the patches to it make it a little bit better.
3. Once Windows 7 comes out, I expect Apple's market share to drop to 5%. Windows 7 is much better than Vista and the corporate world using XP will migrate to it. Thus making it more stable with better written drivers.
1. Apple's prices are about 10% too high on all computing products, but Apple doesn't care since its profits are coming from the iPhone and iPod. So the pain hasn't set in yet. Eventually, these sales will stabilize.
2. M$ Vista is stabilizing a bit since the newer hardware has dropped in price and the patches to it make it a little bit better.
3. Once Windows 7 comes out, I expect Apple's market share to drop to 5%. Windows 7 is much better than Vista and the corporate world using XP will migrate to it. Thus making it more stable with better written drivers.
So long as they are selling them for some profit... even if it is $5... it will translate into some kind of profit eventually. Somtimes the market share % looks better as it easier for the average person to understand. Asking someone to translate a financial report will probably lead to lots of blank faces from lots of people.
Since when did market share equal profitability in the PC space? I'm pretty sure e-machines, Packard Bell and others would tell you it doesn't. Market share is important, but profitability is more important.
It depends...
Clearly it depends on whether the analysts firm is shorting Apple's stock or not. This crap seems to happen every quarter, particularly with negative news. It's not just the numbers are bad, it's the SEC may investigate reporting of SJ's health, it's executives might be poached by other companies, etc...
While Gartner and IDC do typically differ somewhat in their quarterly shipment estimates, the two firms diverge rather significantly in their analyses of Apple's performance for the second quarter of 2009. The reasons for the difference are not yet known at this time, although we can expect to gain a much clearer picture of Apple's performance next week at the company's earnings release and conference call.
Article Link: Research Firms Offer Conflicting Views of Apple's Second Quarter Mac Shipments
Clearly it depends on whether the analysts firm is shorting Apple's stock or not. This crap seems to happen every quarter, particularly with negative news. It's not just the numbers are bad, it's the SEC may investigate reporting of SJ's health, it's executives might be poached by other companies, etc...
Business week article re: Acer. Sells lots - earns little
Acer's disappointing Q1 earnings
By Bruce Einhorn, BusinessWeek
Thursday, April 30, 2009 11:20 AM
news analysisTaiwanese PC maker Acer reported Wednesday that profits for the first quarter were down 31 percent, to US$60 million.
As Bloomberg points out, that was below expectations; analysts were expecting US$64 million. Acer came out with the news after the end of trading Wednesday in Taipei, so you won't see what investors think about the results till tomorrow. Till now, Acer has been a favorite of investors, with the stock up 39 percent so far this year.
As written earlier, the company's been a leader in netbooks, the only hot part of the computer business these days, and that's helped Acer make impressive gains in market share: The company is now a solid No. 3 worldwide and is probably going to pass Dell for the No. 2 spot soon.
Problem is, Acer is relying largely on netbooks to do that. And since the whole point of netbooks is their low cost, it's not surprising that Acer is taking an earnings hit. When Acer CEO Gianfranco Lanci was interviewed early this month, he denied netbooks were a drain on profits but did concede that they're not as lucrative as other products. Notebook PCs, for instance, are "a little bit more profitable" than netbooks, he said.
It will be interesting to see next month--when HP and Dell announce their Numbers--if they are suffering from the netbook effect, too.
Lanci also took umbrage at suggestions Acer's low-cost strategy was ruining the PC industry for everybody by driving down average selling prices, or ASPs. Falling ASPs, Lanci said, are "part of this industry; if it's not Acer, then it's somebody else."
Wednesday's numbers provide further evidence to those who say Acer is making it harder for anyone to make money in PCs. But with Acer accustomed to squeezing out earnings on much tighter margins than its bigger U.S. rivals, the low-profit game is probably one Lanci and other Acer execs believe they can win.
This article was first published as a blog post on BusinessWeek.com.
Acer's disappointing Q1 earnings
By Bruce Einhorn, BusinessWeek
Thursday, April 30, 2009 11:20 AM
news analysisTaiwanese PC maker Acer reported Wednesday that profits for the first quarter were down 31 percent, to US$60 million.
As Bloomberg points out, that was below expectations; analysts were expecting US$64 million. Acer came out with the news after the end of trading Wednesday in Taipei, so you won't see what investors think about the results till tomorrow. Till now, Acer has been a favorite of investors, with the stock up 39 percent so far this year.
As written earlier, the company's been a leader in netbooks, the only hot part of the computer business these days, and that's helped Acer make impressive gains in market share: The company is now a solid No. 3 worldwide and is probably going to pass Dell for the No. 2 spot soon.
Problem is, Acer is relying largely on netbooks to do that. And since the whole point of netbooks is their low cost, it's not surprising that Acer is taking an earnings hit. When Acer CEO Gianfranco Lanci was interviewed early this month, he denied netbooks were a drain on profits but did concede that they're not as lucrative as other products. Notebook PCs, for instance, are "a little bit more profitable" than netbooks, he said.
It will be interesting to see next month--when HP and Dell announce their Numbers--if they are suffering from the netbook effect, too.
Lanci also took umbrage at suggestions Acer's low-cost strategy was ruining the PC industry for everybody by driving down average selling prices, or ASPs. Falling ASPs, Lanci said, are "part of this industry; if it's not Acer, then it's somebody else."
Wednesday's numbers provide further evidence to those who say Acer is making it harder for anyone to make money in PCs. But with Acer accustomed to squeezing out earnings on much tighter margins than its bigger U.S. rivals, the low-profit game is probably one Lanci and other Acer execs believe they can win.
This article was first published as a blog post on BusinessWeek.com.
Interesting read. It's incredible that any company could increase its marketshare so quickly and actually lose money at the same time. The funny thing is that Acer is forcing all these other manufacturers to compete at their price points and they will lose money as well. It looks on the face of it that netbooks are bad for everyone involved.
Of course Apple market share is important.. if Apple had a significant percentage , they'd would be crowing about it like they do with iPod and iTunes market share at WWDC.
It suites Apple to put an importance on marketshare when it makes them look very good... SJ is not going to stand up at WWDC "Wow, we've got a worldwide PC marketshare of *5%"... it doesn't sound very good, unlike the iTunes marketshare.
The real reason Apple say they don't care about PC marketshare is because its *too low*. Marketshare is very important.. the more PC marketshare, decreased manufacturing costs, more revenue, profits ( for Apple ) .. more 3rd party support etc etc...
*correct as appropriate.
I agree that profitability is important. They are running businesses after all. High market share doesn't necessarily mean high profit margins but it does mean that a bigger proportion of the public are using your goods which may help to generate future profit.
Really?
Is selling a $250 netbook and making $20 profit really the same as selling a $1500 dollar laptop and making a $300 profit?
Because if I were selling these things, I'd much rather sell a hundred Apple computers than sell two hundred Acers.
C.
Absolutely.
Acer sells 2.3 Million Computers and makes $60M profit!
Do the math, and we get $26 profit per sale.
$26!
They manufacture a computer, box it up, pay for an OS and end up with a computer that makes less profit than a couple of pizzas. What a waste of time.
Apple makes ten times that profit on a single iPhone sale. And that is before it starts making aftersales money on iTunes.
I wish these analyst clowns would tear these figures apart before regurgitating them like this.
C.
That thinking doesn't really apply to the PC market. The PC market is generally, at best, a break even proposition. This is because PC pricing has been a race to the bottom. Good for consumers, but terrible for manufacturers.
The reason IBM sold its PC business to Lenovo is because it never made money at it. HP doesn't make money from PC sales, it makes its money from servers, printers, and services. About the only two companies that consistently make money from computer sales is Apple and Dell. Apple does it by creating a value-added proposition to allow higher pricing. Dell did it by using a direct sales model and tightly controlling costs. Even then, Dell margins are razor thin. And most of Dell profits come from server sales. There are a whole slew of companies that sold a lot of computers and had big market share and went nowhere. Packard Bell, e-machines, and Gateway, just to name a few. The allure of PC sales is cash flow. There's a lot of it. Unfortunately, it rarely translates to profits.
And current market share doesn't mean future profits. Due to the nature of the PC industry, Windows computers are commodities. People buy on price. They don't have any sort of brand loyalty anymore.
true you might, but then again given the Acer's are priced closer to the disposable item level and the Apple's are more in the it better last a while pricing, you are more likely to find Acer selling many multiples more than Apple which will even things out about. Acer aims for volume, Apple aims for quality. At least one of them has their pricing set well.
The numbers are in the table.
Apple sold 1.4M computers, sold Acer 2.3M
Acer made $26 dollars profit per sale. Netting them a feeble $60M profit.
In the same period Apple made $1660M profit (divided between Phones, iPods and computers). A reasonable guess is that Mac sales netted them at least $600M profit. Ten times what Acer made out of their disposable computers.
Someone has got a problem with pricing all right.
C.
I wish they would stop selling so many
I want the days when you could stroll into the Apple store and talk with the Genius bar WITHOUT an appointment back.
I want the days when you could stroll into the Apple store and talk with the Genius bar WITHOUT an appointment back.
Last time I stopped at an apple store I was able to talk to a genius within a few minutes (there was a line). Having an appointment though is really good since it insures that I will get service rather than gambling that there won't be a line when I go there.
Interesting. I guess we'll find out next week although I'm more inclined to go with Gartner at the moment.
All that ******** is consumerism at a glance!!!!!!
It tells the stock holders what's up. Period. Besides, we all know the pc sells well because it is cheap due to the fact not one of them pc vendors do their own OS. Apple has in house everything from mechanical engineers to software engineers. Dell on the other hands does aggressive marketing for their pimp in Redmond. Think about it. Dell moves tons of pc trash just to get MS its royalty money.
What this trend also tells you is that Apple's products are superior and last a long time so they sell, but slower(I'm partial to Apple!). However, Dell's stuff moves nearly 5 times as much. But why? IMHO, it is because their pc is so freaking devalued that it is nearly disposable. MS does all the work and Dell just has to find the cheapest parts.
And the only way for Apple to increase it's market share is to devalue the Mac. Yet, who but the stock holders and them greedy money hungry bastards on Wallstreet would that benefit?
It tells the stock holders what's up. Period. Besides, we all know the pc sells well because it is cheap due to the fact not one of them pc vendors do their own OS. Apple has in house everything from mechanical engineers to software engineers. Dell on the other hands does aggressive marketing for their pimp in Redmond. Think about it. Dell moves tons of pc trash just to get MS its royalty money.
What this trend also tells you is that Apple's products are superior and last a long time so they sell, but slower(I'm partial to Apple!). However, Dell's stuff moves nearly 5 times as much. But why? IMHO, it is because their pc is so freaking devalued that it is nearly disposable. MS does all the work and Dell just has to find the cheapest parts.
And the only way for Apple to increase it's market share is to devalue the Mac. Yet, who but the stock holders and them greedy money hungry bastards on Wallstreet would that benefit?
Damn! What kind of pizza do you eat if there is $13 of pure profit on each pie? Even with a 10% net margin that's $130 a pop!