

Apple Reports Fourth Quarter Results - eball
http://www.apple.com/pr/library/2013/10/28Apple-Reports-Fourth-Quarter-Results.html

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ChuckMcM
No way to hide this:

    
    
       2013: Revenue $37.5B, Profit $7.5B (20%)
       2012: Revenue $36.0B, Profit $8.2B (22%)
    

Loss of 2% net profit year over year. Just under a 5% drop per share on a
diluted basis. So its becoming less profitable to be Apple which speaks to the
margin pressure they are under from credible Android phones and tablets. I
don't think the market expected that (or maybe they did, GOOG is trading over
$1000 these days)

~~~
downandout
Let's remember that everyone was anticipating the iPhone 5s for all but 10
days of the third quarter, which naturally slowed iPhone 5 sales. Then Apple
almost instantly ran into supply constraints after its release. Because of
these two factors, these results aren't that meaningful. 4th quarter results
will give a far more meaningful picture of iOS's place in the current market.

~~~
ChuckMcM
However Apple's product release schedule being as rigorous as it is tends to
make quarters more comparable. Perhaps a better indication here is the drop
from 40% gross margins to 37% gross margins. That comes right out of the
business.

Generally lower revenues but same margins is a sign so constraints in the
supply chain. Higher revenue but lower profits is a sign of margin erosion.
Lower revenue and lower profits and lower margins is perhaps one of the most
alarming situation.

It is good to push back on folks who thought he tablet was just a fad? You
know the ones who said "There isn't a 'tablet' market so much as their is an
'iPad' market." Well those folks have been shown to be mistaken.

I don't own any Apple stock (well I might in my blind 401k but I wouldn't know
if I did :-) I've been tempted to pick some up after it dropped from the 700's
into the 400's. But the thing that I keep wondering about is their ability to
execute in a contested market by a competent opponent. This coming quarter
will be an interesting one for everyone I expect.

~~~
gonzo
Chuck,

If you really think that Apple will drop like that, you should short it.

~~~
ChuckMcM
I wouldn't short a stock for a single down quarter.

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than
Apple deferred nearly a billion dollars in revenue due to the switch to free
software. [http://techcrunch.com/2013/10/28/apple-says-future-
versions-...](http://techcrunch.com/2013/10/28/apple-says-future-versions-of-
os-x-will-be-free-notes-900m-increase-in-costs-from-free-software/)

~~~
eltondegeneres
For a moment there I thought Apple was switching to FSF-endorsed free software
and I was very confused. The cost of OS X is built into the hardware so it's
not like future versions will be free as in freedom or free of cost.

~~~
than
Right. Free as in free-with-purchase.

~~~
MaysonL
Or free as in free OS X upgrade for anybody who bought a Mac in the last few
years...

------
IBM
Interesting that iPad sales were flat year over year. I would have thought it
would have contracted without new iPads launched.

Also the big increase in iPhone sales year over year jives with what Asymco
has posted about Android peaking. The easy growth from feature phones being
replaced by low-end Android devices is over.

~~~
cstrat
I have a lot of Apple devices, and I am sure there are others out there like
me who are stick using an original iPad 2. Those devices have not really
needed an upgrade unless you wanted to move to the mini. My device is almost
at its end, I have dropped it a bunch of times and the battery is struggling
to last a 10 hour day at work (I dont use it a lot during the day, only really
in meetings and on the run).

There is probably a big fleet of iPad 2 users out there who are almost ready
to upgrade when their device dies. I think Apple have done right by the
consumer by making iOS 7 work on the iPad 2... they could have chased profits
and limited iOS 7 to only the newer iPads...

~~~
shock-value
IMO the retina screen is a big reason to upgrade from the 2 (and is the reason
I waited for the 3rd gen model). I pretty much use my iPad exclusively for
reading text of some format--web pages, text-based services like Facebook and
Reddit, books, etc. (with the occasional YouTube or Netflix video thrown
in)--and having that extra clarity as compared to the first two versions is
crucial for me.

It's now that I don't really feel any compelling reason to upgrade -- even
with iOS7 the interface is plenty fast enough, and I don't use it for games so
any increases in performance wouldn't really matter to me.

~~~
cstrat
Yeah I forgot that the retina was the big selling point. For me I didn't mind
the screen the way it was - the battery life is great since the screen is
average.

So for people like you who have moved to the iPad 3 (or whatever its stupid
name was) - you have another year or two before needing a replacement...

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KaoruAoiShiho
Damn net profit of 7.5billion is now lower than samsung's 8.13billion.

~~~
recuter
Keep in mind that Apple doesn't make aircraft carriers or nuclear power
plants.

~~~
mladenkovacevic
Samsung Electronics is only a subsidiary of Samsung Group which makes all
those things. Samsung Electronics profits were $9.6 but that includes TVs and
their semiconductor division. The actual mobile division had $6.3 in profits
(about 20% growth from same time last year).

~~~
IBM
Samsung's profits are up mainly because of chips which makes sense when
they're manufacturing Apple's chips (and Apple's iPhone sales are up
significantly). Samsung's growth in high-end phone sales is slowing down.

[http://www.bloomberg.com/news/2013-10-24/samsung-profit-
surg...](http://www.bloomberg.com/news/2013-10-24/samsung-profit-surges-as-
cheaper-handsets-team-with-chips.html)

~~~
mladenkovacevic
No the $6.3B is from the mobile division alone. Their chip sales also saw
profits of about $1.9B which is double than same time last year, but the phone
sales are still their #1 business.

~~~
IBM
Yes I know, my comment doesn't dispute that. Phones are the biggest piece, but
increasingly that's coming from low-end phones, the growth in high-end phones
is slipping.

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TrainedMonkey
I wonder what percentage of HN is invested in apple, compared to the rest of
investing community. I wonder what sort of biases, deeper understanding of
technology, and/or hype trains cause that difference to arise. And above all,
I wonder if Apple can finally solve 5S supply problems and deliver a hit
Christmas quarter.

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sksk
CNBC's summary explains the negative reaction to the earnings:

 _Apple posted better than expected earnings and revenue for its fourth-
quarter on Monday, but shares still took a hit in after-hours trading._

 _The tech giant posted $8.26 a share on $37.5 billion in revenue. The street
estimated the company would post $7.96 a share on revenue of $36.93 billion.
But investors were disappointed with guidance for gross margins._

 _During the current quarter, the company expects gross margins of 36.5
percent to 37.5 percent, which missed forecasts of 37.9 percent._

[http://www.cnbc.com/id/101149511](http://www.cnbc.com/id/101149511)

------
S_A_P
I think a lot of this is expected no? The mobile market is maturing, and they
are making less profitable versions of their products. Its interesting to see
how investors react to Microsoft and Apple who are both hugely profitable, and
then some start ups(ahem, twitter, pinterest, snapchat) with no proven
business model get huge valuations. I know that investors are trying to
predict the market, but the second a hugely profitable company seems
unfashionable(for lack of a better word) any slight variation in performance
is panned in the press and the stock gets sold off.

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Touche
Sounds like the iPhone 5C slight of hand didn't work[1]. It makes sense to me,
its last-years-model with cheaper materials. There's no reason it should be
more popular than last-years-model usually are, except for the extra marketing
which in this case didn't seem to help much.

[http://www.valuewalk.com/2013/10/apple-inc-earnings-
iphone-5...](http://www.valuewalk.com/2013/10/apple-inc-earnings-
iphone-5c-activations/)

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ksk
As someone who has to buy Apple devices for work, I'm hoping they get some
pressure to drop their prices, especially on MBPros. My next one will probably
cost a bomb since the new ones don't let you stick in third party ram - though
the SSD is replacable (with considerable effort)

~~~
Domenic_S
Is replacing the SSD more effort now? It took maybe 10 minutes on my 2009 MBP
to replace the stock HDD with an SSD & yank the optical drive for a second
hdd.

~~~
MaysonL
Yes: take a look at the iFixit teardown, and the following Q&A on their site:
[http://www.ifixit.com/Answers/View/147466/Can+I+upgrade+flas...](http://www.ifixit.com/Answers/View/147466/Can+I+upgrade+flash+SSD+for+new+MacBook+Pro+13+later)

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MWinther
I thought the history of Apples profit margins were interesting. What happened
in Q3 2010 when it was last this low?

[http://ycharts.com/companies/AAPL/gross_profit_margin](http://ycharts.com/companies/AAPL/gross_profit_margin)

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Shivetya
Next quarter should be very interesting. New iMacs are out, new iPads, and of
course the new Mac Pro. So out of all quarters which tend to be Apple's
weakest?

Perhaps getting more predictable in releases softens earnings in certain
quarters?

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alttag
Markets are hammering AAPL. Down $15 (about 3%) after-hours.

[https://www.google.com/finance?q=aapl](https://www.google.com/finance?q=aapl)

~~~
giarc
Is -3% really a "hammering"? I did 5 seconds of research and found Apple has
closed with a >=2% loss 3x since July 25th.

Sept 16

Sept 10

Sept 20

EDIT "5 second" was to emphasize I could be wrong, not to be a dick.

~~~
john_b
+/-3% is a common benchmark for the market's definition of "big swing".
There's nothing really formal about it, and it's a more accurate measure when
applied to the market as a whole rather than individual stocks. For a company
like AAPL which is famous for not providing a lot of detailed information to
investors, it might not be a big swing. For a different company, say P&G, it
might be a huge swing.

~~~
bradly
Actually, there is a formal measurement of a stocks volitiliy called it's
beta.

[http://en.wikipedia.org/wiki/Beta_(finance)](http://en.wikipedia.org/wiki/Beta_\(finance\))

~~~
john_b
Beta is one of many measures of volatility. Since it's a normalized
correlation between the stock's rate of return and that of the market, it only
really has meaning in the context of a stock's performance over a long time or
in relation to the market as a whole. A stock's performance post-earnings is
about as market-independent as you can get, however.

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ffrryuu
Well, that spaceship costs a lot.

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cecilpl
Shares trading down 3% in AH.

~~~
tedunangst
Shares trading up 1% in AH.

