
Apple Reports First Quarter Results - orrsella
http://www.apple.com/pr/library/2014/01/27Apple-Reports-First-Quarter-Results.html
======
austenallred
To understand scale: Apple has given $43 Billion to investors since July 2012.
Twitter's market cap is $32 Billion. Apple's net profit of $13b over the last
3 months was more than the company made from its founding in 1977 'til the
iPhone launched in 2007.

Last night my wife and I were organizing our room, and ended up putting our
computers together, and we found three MacBooks (one is really old), two iPads
and two iPhones - about $3500 worth of product. The phones are heavily
subsidized by our phone bill, the computers are simply "must-haves," and the
iPads are our most expensive ($350 ea.) toys. We're one year out of school and
make $40,000/year.

~~~
tcdent
Not trying to one-up you, but I have at least a dozen Apple products lying
around the house. I've been using them most of my life, so some go a-ways
back.

Some are for nostalgia, like an SE, a Portable, a 12" PowerBook and my well-
worn first-gen iPhone. My G4 tower was still getting regular use as a file
server until pretty recently. Now that we just upgraded to Airs, I have a
couple MacBook Pros waiting around for something creative, too. I won't drag
on, but I definitely have a hard time letting some of these things go.

~~~
groups
I think the poster's point was that he spends a lot of money on apple
products, relative to his income. To understand apple's success, one should
look at how much money ordinary people with ordinary jobs spend
disproportionate money on products they wouldn't otherwise.

There's a graph somewhere of yearly sales figures of various cars vs the cost
of those cars. There's a general exponential decline from say the toyota
camry, which costs reasonably and sells a lot, to a Bentley, which is the
opposite. But there's an irregular data point with the BMW 3-series, because
many, many people stretch to afford it. It sells disproportionately well for
that reason.

I'm not assigning judgment on how anyone spends their money, just pointing out
that there are human reasons for business success and failure.

~~~
tcdent
I make a little more that the parent, but still don't think of Apple products
as affordable. It's almost always a stretch for me to purchase them, but I
wouldn't be happy with many of the other options.

In the case of my recent upgrade, I justified it as an investment in my
future. I don't consider the money I spent on it to be a purchase that I would
be comfortable making frequently.

Wether you are a college student of an independent developer, the technology
you use affects your success. Apple has a reputation in both industries as
being above-average, further demonstrated by the loyalty many users have.

------
georgemcbay
Phones and tablets are very close to the point that desktop/laptops got to a
few years back where unless there is some major disruptive technology
introduced (eg. batteries with 100%+ efficiency over current ones) on top of
them the one you bought this year is pretty much good enough to keep for the
next many years, until it breaks somehow.

There will still be a market of ultra-fashion-conscious buyers who really need
this years model, just like there are people who lease brand new cars every
year, but that market isn't big enough, IMO, to sustain the growth that Apple,
Samsung, etc have enjoyed thus far.

~~~
benihana
It's funny. Every year, since 2007 I've heard this argument, that the market
isn't big enough and every year: record growth and profits. No but seriously.
This year is the year that Apple's iPhone success catches up to them.

"Apple's iPhone business is finally going to fail this year" is the new "
_this_ is the year of the Linux desktop"

~~~
patrickaljord
No one says Apple products are going to fail this year, relax. Most people on
earth still don't have a smartphone and so Apple and Samsung will keep on
making record revenues and profits until either a better competitor appears or
the market gets saturated. Neither will happen any time soon but it's obvious
that no market can keep on growing that way for too long.

As for the "this is the year of the Linux desktop", this is the most annoying
straw man meme ever. I have yet to meet anyone who ever claimed so except for
a couple of articles on cnet or so a few years ago. Linux market share on the
desktop worldwide is at 1% which is pretty significant when you think that
macs, with all Apple billions are at 5% only. MS has won the desktop war. On
mobile however, linux seems to be doing pretty good and so is ios, simply
because the market is still growing and there is place for more than one
winner. Isn't that great? :)

~~~
Diamons
Anyone that thinks Linux is going to take over the consumer computer market
anytime soon needs to go outside more often.

~~~
patrickaljord
Yep, same thing for mac. Unless you consider smartphones to be computers
(which they are) and in this case both mac and linux are taking over.

------
jmduke
The magic paragraph:

 _The Company sold 51 million iPhones, an all-time quarterly record, compared
to 47.8 million in the year-ago quarter. Apple also sold 26 million iPads
during the quarter, also an all-time quarterly record, compared to 22.9
million in the year-ago quarter. The Company sold 4.8 million Macs, compared
to 4.1 million in the year-ago quarter._

If I were to play armchair quarterback, I'd say that iPhones are reaching
saturation (which, given the 5C, is relatively surprising) and the iPad is
where the majority of Apple's growth lies in the coming quarters.

EDIT: Apple's trailing twelve-month revenue (credit to Benedict Evans):
[https://pbs.twimg.com/media/BfBIdoYCEAAzNqI.jpg:large](https://pbs.twimg.com/media/BfBIdoYCEAAzNqI.jpg:large)

~~~
lstamour
I wouldn't. People have caught on that if they wait another 8 months, they'll
have two new iPhones to choose from. ;-)

~~~
swombat
To be contrasted with Android, where they only need to wait a couple of weeks
for their brand new phone to be "old". Apple buyers really have a raw deal,
getting to enjoy having the latest phone for a whole year.

~~~
lstamour
That's not what I meant. Just as sales of new Mac hardware slow before new
devices come out and surge after they do, consumers are becoming more aware of
the market with each device they buy. Personally, I went 3G, 3G S, 4, 4S with
Nexus 4 and Lumia 920 on the side, and now Nexus 5. I found that the Nexus 4
and Lumia adjusted me to larger screen sizes, and iPhone's doesn't cut it for
me right now. I love iOS 7, but I can't carry an iPad mini in my pocket, so
until they release in-between sizes (which Asset Catalogs and iOS 7 both will
help prepare devs for), I'm avoiding the iPhone until I really think I'll get
$600-900 of joy from it. So don't get me wrong, just because I don't use an
iPhone doesn't mean I don't _want_ one. I just don't want the specific
hardware they offer today, and I suspect I'm not alone.

------
sirkneeland
As with Microsoft earnings, we will get two reactions:

1) Some people will say the sheer amount of money they are making shows they
are not doomed anytime soon

2) Some people will say that making a ton of money now does not mean they will
continue to do so in the future, and could still be doomed (if not to
bankruptcy than at least irrelevance) in the future.

Both are right. Both will argue the other is wrong.

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davidwihl
Very limited growth. Profits are flat. No wonder the stock is down 6%. Apple
needs to find more competitive means in both phones and tablets - their market
share will continue to erode. They are priced as a growth stock, but they are
not growing.

~~~
mdemare
They're not priced as a growth stock. P/E is about 13, and that's including
their huge pile of cash. Average P/E for the S&P is 19.

~~~
Perceval
Not to mention that before the iPhone Apple's P/E never dropped below 20 and
was usually hovering around 40.

~~~
mdemare
Apple's cash pile is 1/3 of their market cap. That means that is they'd use it
to buy their own shares at the current price (they can't, they need to pay
taxes on most of it first) their P/E ratio would drop to about 9.

~~~
shovel
I've always been amazed that AAPL trades at such a low PE multiple. Can you
help me understand why?

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loso
Apple after hours are down 6%. Analyst do not like the short term stock growth
prospects.

~~~
nailer
Analysts were all totally bullish -
[http://www.washingtonpost.com/business/technology/apple-
shar...](http://www.washingtonpost.com/business/technology/apple-shares-up-
ahead-of-earnings-
report/2014/01/27/047cb58a-8764-11e3-a5bd-844629433ba3_story.html) and
[http://appleinsider.com/articles/14/01/27/earnings-
preview-w...](http://appleinsider.com/articles/14/01/27/earnings-preview-wall-
street-expecting-record-iphone-ipad-sales-from-apples-q1-2014) and any result
older than the last hour for 'Apple earnings' on Google.

The iPhone numbers missed expectation, and as Apple's main product it didn't
look good.
[http://www.businessinsider.com/apple-q1-earnings-2014-1](http://www.businessinsider.com/apple-q1-earnings-2014-1)

EPS, Mac and iPad all did well.

~~~
swombat
I agree with Gruber that the "missed expectations" expression is misleading.

Analysts' expectations were not in line with reality. The iPhone numbers are
what they are, irrespective of incompetent analysis.

A fairer way to state this would be that analysts, as usual, were over-
optimistic and this optimism caused a lot of investors to be overly optimistic
too, which caused an over-inflated share price, now corrected.

------
capkutay
Tim Cook can sandbag the iPhone business all he wants. While they can still
bring in a ton of cash from profits, it won't trick wall street into driving
their stock price up to a $1000. Maybe that's not his intention.

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mdemare
I wonder how well the 5C sold. I see a lot of 5Ss in the wild, but hardly any
5Cs.

~~~
brador
General consensus in China was C stood for cheap.

~~~
oneeyedpigeon
General consensus around the world was that was what it was _going_ to stand
for, then it came out at a price point not much less than the 5S.

------
squigs25
Wow, investors aren't liking these numbers.

The reason I recently purchased Apple stock is that I foresee a large number
of users coming on board once Apple launches a larger screen size for their
iPhone line up. That's the main reason I can't use an iPhone.

------
lowglow
I'm bearish on Apple. I just don't see the leadership or focus I once saw when
Jobs was still at the helm. I think they still might have a few tricks up
their sleeve, but I think we're going to see less innovation as the years go
on.

------
mdemare
Live financial result earning conference call here:
[http://events.apple.com.edgesuite.net/14pijnaefvpijbnfdbvpij...](http://events.apple.com.edgesuite.net/14pijnaefvpijbnfdbvpijnbaefgvpjbnaef01/event/)

Starts at 22:00 UTC

------
bhartzer
That's a lot of ipads and iphones sold. Can't wait to see how many Samsung
sold.

~~~
nailer
Less than expected:
[http://www.businessinsider.com/apple-q1-earnings-2014-1](http://www.businessinsider.com/apple-q1-earnings-2014-1)

~~~
psbp
We'll undoubtedly see some sort of fall for samsung. Apple is releasing larger
screen iPhones, android competitors in every market are becoming more
aggressive , etc.

~~~
dba7dba
Kinda ironic if apple does increase sales with bigger screen, because it means
apple is a follower, not a leader.

~~~
gress
Doing something at the correct time to defeat a competitor doesn't make you a
follower. It means you understand the market better.

~~~
dba7dba
I'm assuming you are saying Apple understands the market better because they
are doing something (releasing iphone with bigger screen) at correct time to
defeat samsung.

Isn't that what Samsung did by coming out with the bigger screened phones?
Samsung knew the market was ready for bigger screens when Apple didn't think
so, no?

~~~
gress
Firstly, Samsung isn't defeating anyone. Most of the devices they ship are
unprofitable low end devices. This makes for a single impressive sounding
headline, but has little to do with their competitive position.

Secondly - Samsung was forced to sell bigger screen phones because they
couldn't achieve good battery life with smaller devices.

~~~
dba7dba
First, I NEVER said Samsung was defeating anyone in my post. But come to think
of it, Samsung has defeated pretty much every other Android phone makers. But
again, I never said Samsung was defeating anyone.

Not only that, Samsung was more profitable than apple for 2 consecutive
quarters in 2013 before newer iPhones were released. Of course ton of other
profits of samsung came from non-phones.
[http://www.businessinsider.com/samsung-is-now-a-more-
profita...](http://www.businessinsider.com/samsung-is-now-a-more-profitable-
company-than-apple-2013-10)

Second, source on that battery story?

~~~
gress
You may not have said Samsung was defeating anyone in your earlier comment,
but you implied it, and now you _have_ said it.

Samsung has defeated all old brands that attempted to survive by adopt
android, but is now itself being defeated by cheaper new Chinese brands that
can steal its low end share while Apple consumes the high end.

What is the point of mentioning Samsung's temporary high profits from other
sources when we are discussing phone strategy?

~~~
dba7dba
Well I fell into the same hole as you did. IMO, you don't defeat a company.
Because a defeated company can always come back. Apple almost disappeared.
Samsung suffered seriously from the Asian financial crisis.

But any how, what's your source for this statement: Secondly - Samsung was
forced to sell bigger screen phones because they couldn't achieve good battery
life with smaller devices.

------
IBM
Another great quarter for Apple. Growth in gross margins as well as growth in
units in every product line but the iPod. China Mobile sales will end up in
next quarter.

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john_b
This and the levelling off of their revenue will probably increase shareholder
calls for share buybacks, a dividend increase, or both.

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pcurve
Carl Icahn with $3.6 billion stake isn't probably too happy about this.

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lijman
I love apple!

