
Apple reports $9.5 billion second quarter profit - shawndumas
http://www.loopinsight.com/2013/04/23/apple-reports-9-5-billion-second-quarter-profit/
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Samuel_Michon
Official Apple press release:
[http://www.apple.com/pr/library/2013/04/23Apple-Reports-
Seco...](http://www.apple.com/pr/library/2013/04/23Apple-Reports-Second-
Quarter-Results.html)

65% more iPads sold and 7% more iPhones sold than in last year’s FQ2. Mac
sales remain stable, while the rest of the PC market continues to shrink.

Profit margin decreases as Apple offers cheaper tablets (iPad mini) and phones
(iPhone 4 & 4S). Profit margin on Macs is also lower because of retina
screens, but Mac sales represent only a small part of Apple's income, it’s not
significant on the whole.

~~~
sinnerswing
it's actually impressive that they sold 37.4M iPhones this quarter considering
they sold an amazing 47.8M iPhones last quarter. Compare that to last years
numbers.

Q1 2012 = 37M iPhone, 15.4M iPads

Q2 2012 = 35.1M iPhones, 11.8M iPads

Q1 2013 = 47.8M iPhones, 22.9M iPads

Q2. 2013 = 37.4M iPhones, 19.5M iPads

~~~
loceng
Really just mind-boggling numbers. Just the ability to ship that many. Mind
you they are smaller-sized consumer products, still need a lot of factories
making them though.

~~~
cooldeal
I don't see how it is all that impressive. Nokia has been shipping a million
plus phones a day from a long time ago.

~~~
georgespencer
A few things here are impressive.

You have cleverly made the distinction of phones, rather than smartphones, in
your assertion that Apple's supply chain isn't impressive in the act of
shipping 0.6m iPhone/iPad devices each day for a quarter.

When all unit shipments are considered Nokia actually ships slightly fewer
than 1m phones per day (2012 it was approx 340m units shipped) or 0.93m per
day.

Apple doesn't manufacture phones, they manufacture smartphones. Same for a
huge portion of Samsung's unit shipments. Same for a small portion of Nokia's
shipment, but the real grist here is in how much easier it is to make a
dumbphone than a smartphone. It's practically prefabbed for you.

Here's a dumbphone teardown:
<http://www.formymobile.co.uk/3310disassembly.php>

Here's an S5 teardown:
[http://www.ifixit.com/Teardown/Samsung+Galaxy+S+4G+Teardown/...](http://www.ifixit.com/Teardown/Samsung+Galaxy+S+4G+Teardown/4977/1)

Manufacturing and assembling a dumbphone is easy, comparatively. Fewer
components overall. Nothing fragile or fiddly requiring human QA (wifi).
Nothing expensive (gorilla glass, capacitive screen) which hasn't had 20 years
of mass-production driving its margins up.

So that's impressive.

Also impressive is shipping different devices in these quantities each year.
Apple currently manufactures and sells iPhone 5 (16, 32, 64GB), iPhone 4S (16,
32, 64GB), iPod Touch (16, 32, 64GB), iPad (16, 32, 64, 128GB) and iPad Mini
(16, 32, 64GB). Judging by revenue ($180 per iPod sold), a big portion of the
5m iPods sold in the quarter were iPod Touch.

Also impressive, I think, is that every two years, Apple ignores what its
supply chain can do and goes back to the same 10-15 people to ask what they
can do to improve on an already high quality device. Then they gut the supply
chain and build it again from the ground up to make the better device.

They're in a tock rather than tick year for a new iPhone, but that just means
that their supply chain managers and fabrication designers are in a tick year,
preparing factories for what it will take to build iPhone 6 _whilst iPhone 5.1
is still being shipped to 37 million people each quarter_.

In brief, the impressiveness here is in the complexity of the devices; the
breadth of different devices being manufactured; and the philosophy that leads
to innovation not just in design but manufacture.

This is also true of Samsung. They are accomplishing astonishing things with
their supply chain and, unlike Nokia, genuinely do ship well over 1m phones a
day, of many more varieties than Apple.

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xpose2000
It feels like Apple is now on the defensive by announcing a buyback initiative
and a higher dividend. They realized their growth peaked from insane highs and
they have no new product to give it another boost in the short term. Very
smart move.

However, I will say that they really need a killer new product by 2015, which
is when their stock buyback initiative ends. Repurposing the iOS in various
form factors such as the iPhone, iPod, and iPad has run its course.

~~~
r00k
What do you mean by "they really need a killer new product"?

They're the most profitable company in the world. What pressure are they
under?

~~~
recoiledsnake
The issue is that they don't have a big moat like Google, Facebook and Amazon
do. Competitors are nipping at their heels(the big decline in margin from a
year ago shows it) and one bad iteration of their products is enough to turn
the tide against them.

~~~
aNoob7000
I would not use Facebook and Amazon when comparing margins and profit. Both of
these two companies aren't even in the same universe right now with Apple.
Google is the only company that can play with Apple and Microsoft.

Last time I checked, Amazon posted in Q4 of 2012 around $90M (Million) in net
income while Facebook did about $60M in Q1 of 2013 compared to Apple's $9.5B
(Billion!!) in net income.

What drive me absolutely crazy is the fact that it would take Amazon/Facebook
well over a decade to even come close to what Apple makes in three months.

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mtgx
It seems they sold more iPad Mini's and their profit dropped. I imagine it
would be even worse for their profit if they ever released an "iPhone Mini" or
whatever that cheap iPhone everyone talks about would be named.

~~~
itg
It's a tough position. Do they also go after countries where subsidized plans
aren't common by making a cheaper iPhone (Europe/India/etc)? The iPhone 4
which is 2 years old is still around $400 unsubsidized. Or do they try to keep
high margins and let competition (which lets face it, is Samsung) dominate
those markets.

~~~
roc
_“The Mac user interface was a 10-year monopoly,” says Jobs. “Who ended up
running the company? Sales guys. At the critical juncture in the late ’80s,
when they should have gone for market share, they went for profits. They made
obscene profits for several years. And their products became mediocre. And
then their monopoly ended with Windows 95. They behaved like a monopoly, and
it came back to bite them, which always happens.”_

~~~
sinnerswing
nic try but..

Cook+Ive+Schiller,Cue,etc. >>> Ballmer.

~~~
scarmig
Talk about damning with faint praise.

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w1ntermute
iPhone growth has slowed: [http://www.theverge.com/2013/4/23/4258068/apple-
posts-9-5b-p...](http://www.theverge.com/2013/4/23/4258068/apple-
posts-9-5b-profit-on-43-6b-in-revenue)

~~~
umsm
I think it's because their iphone 4S was so good that most people weren't
willing to "upgrade". It's getting hard to justify buying a new phone every
year considering the great advancements made to them in the past few years.

~~~
bane
the 4s was so good, and the 5 has been very very "meh"

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robocat
What are they going to do with their massive bank account?

Maybe something in the services sector (not directly dependent on a piece of
hardware)...

Do a GE? Become a bank? Buy Disney?

~~~
Samuel_Michon
A lot of Apple’s stash can’t be spent freely, with a lot of it in Braeburn
Capital[1] and set aside in tax havens[2]. To use those funds would mean
sacrificing a lot of it in taxes. They haven’t been willing to do so in the
past, but today Apple announced it will return $100 billion to shareholders in
the next few years[3]. Last year, Apple also launched a program in which it
matches employee donations to charities, up to $25,000 a year per employee.

Of course, there will still be plenty left to build new offices, open new
retail stores, and acquire companies[4] – as they have done in the past.

[1] <http://en.wikipedia.org/wiki/Braeburn_Capital>

[2]
[http://www.telegraph.co.uk/finance/newsbysector/mediatechnol...](http://www.telegraph.co.uk/finance/newsbysector/mediatechnologyandtelecoms/9829894/Apple-
shelters-almost-1bn-a-week-from-US-tax-man.html)

[3] “Apple More than Doubles Capital Return Program – Total of $100 Billion to
be Returned to Shareholders by End of 2015”
[http://www.apple.com/pr/library/2013/04/23Apple-More-than-
Do...](http://www.apple.com/pr/library/2013/04/23Apple-More-than-Doubles-
Capital-Return-Program.html)

[4]
[https://en.wikipedia.org/wiki/List_of_mergers_and_acquisitio...](https://en.wikipedia.org/wiki/List_of_mergers_and_acquisitions_by_Apple)

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pvdm
White dwarf collapse down to a neutron star. Sad.

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recoiledsnake
The real news is that their margins seems to have shrunk dramatically from 48%
to 38% and profit is down 18% from the year ago quarter.

Looks like they're facing pressure and are dropping prices to maintain sales.

~~~
ajross
To be clear: this is _great_ news for anyone who isn't an Apple shareholder.
If you're a fan of the hardware, it's getting cheaper! If you like the other
brands, iOS's margins are shrinking and competition is working! It's a win-win
all around. The kind of profit's Apple's been making over the last half decade
really aren't a good thing, even for Apple. They can barely spend it, and that
money could be driving growth elsewhere.

~~~
MichaelApproved
I was with you until you said that amazing profits aren't a good thing, even
for Apple.

Yes, the amount of money is more than what Apple can realistically spend but
they can give that money to shareholders who could invest that money in other
ventures. That's an amazing result of great profits.

~~~
ajross
How is that different from not taking that money from consumers (or investors)
in the first place? If a consumer gives Apple $1 to hold for N months before
Apple hands it over to a shareholder, that is clearly _less effective_ than
the consumer simply giving that dollar to the investor in the first place
(e.g. by dropping it in the stock market).

I'm not saying that "Apple doesn't deserve its profits". I'm saying that past
a certain point, the marginal value to society of huge profits drops to zero,
and that Apple is past that point.

~~~
MichaelApproved
_"the marginal value to society of huge profits drops to zero, and that Apple
is past that point"_

It wasn't a discussion about value to society. It was discussion about too
much money being a bad thing for Apple, which I disputed.

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ttrreeww
Time to pay the employees more.

~~~
r00fus
Share buyback will do that for many Apple employees.

~~~
ttrreeww
If I have a penny every time I hear this...

