

Apple’s Q1 2013: Revenue Up 17.7% to $54.5B, $13.1B In Profit - derpenxyne
http://techcrunch.com/2013/01/23/apple-q1-2013-earnings/

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pixeloution
Here's my question: Why is the stock down 5% on an announcement that beats
estimates, and is a record for the company, along with positive guidance. I do
not understand the markets as much as I thought I did.

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jonknee
They did not beat estimates and their margins took a huge hit.

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Cookingboy
They missed the revenue by less than 1% (despite stock already falling 30% in
the past 3 months) and they beat on EPS. Margin was in line with expectation
as well.

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zmmmmm
I think the the combo of increasing revenue but flat on profit is worrying:
that tells you something is eating away at the profitability of the company.
It jives with the perception that the company has "peaked" and its best days
are behind it, that competition is successfully biting into margins.

~~~
millstone
This exactly describes Google's most recent quarter - profits up 6%, revenues
up 19%. Yet investors welcomed those results.

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zmmmmm
It probably does, but Google's current stock price isn't predicated on the
same assumptions as Apples. It's seeing those assumptions threatened that is
worrying, not the raw numbers.

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ambirex
One of the more interesting parts of the call is them saying they are
abandoning their conservative guidance for a more "likely" one.

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jpxxx
TL;DR:

\-- Music players remain a shrinking niche.

\-- Mac sales have (at least) plateaued and are likely sinking in lockstep
with the rest of the classical PC industry.

\-- Apple is doing fine. 75%+ of their revenue is now from iOS.

\-- China is important.

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kryptiskt
There's one thing that has me worried here. And it has nothing to do with EPS
and profit margins and the like, let Wall Street worry about that, what I'm
worried about has little effect on Apple's bottom line these days. It is that
Apple sold just 4.1 million Macs, missing the estimates badly.

General-purpose computing is starting to look more and more like a profitable
hobby for Apple. That it is in retreat over the whole industry only makes it
worse. Maybe the day when most everybody has been herded into a walled garden
isn't too far away.

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ghshephard
Apple is going to have a problem on it's hands selling Mac's moving forward -
I have a 13" 2010 MacBook Air, that is currently running 27 applications
(including VMware w/Windows XP). I don't really feel any pressing need to
upgrade, and will likely wait another year at least.

For non-gamers, the Mac's that Apple sells are now lasting three, four, and in
the case of the iMac, 5+ years. That's going to kill their sales to existing
customers - so they'll need to rely more on their mobile platforms (not that
they don't already)

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xentronium
> I don't really feel any pressing need to upgrade

Retina displays could be a driving force for selling more airs.

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hnriot
possible, but unlikely. When I ask friends with Airs they never complain that
the screen is lacking in any way. I think "retina" displays are a marketing
gimmick, and in some cases actually cause problems until all the apps know how
to work with them.

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kevinpet
No one ever knows how badly they need something until they see it. When you
see a retina display, then go back to normal resolution, you notice a slight
difference. And that can be enough to push people from "I'll upgrade when it
breaks" to "hmm... this is several years old."

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glenra
I've seen retina displays (in the store, anyway) and couldn't really tell the
difference. But maybe I'm just old. Size and weight and amount of disk/memory
all matter to me but screens have already been "good enough" for _years_.

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Steko
Strange this article has 30 pts, is 1 hour old and is at the bottom of page 2.

A 3 year old article with similar pts is in the top 20.

Does Apple take 30% of the HN points too? Techcrunch penalty?

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msbarnett
It's probably being flagged down by the Android fanboy contingent more than
anything else.

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positr0n
Or by people who don't wear their hardware choice on their sleeve and don't
think a corporation's quarterly earnings are interesting to hackers.

~~~
Steko
How is that not an egregious misuse of the flag button. Do people just go down
the list and flag every article they aren't personally interested in?

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ChuckMcM
Interesting stuff indeed:

Q1 2012 46.3B Revenue 13.1B Profit (28.3% net profit) Q1 2013 54.5B Revenue
13.1B Profit (24.0% net profit)

So 4.3% of your net profit (2.3 billion dollars) went somewhere. Did anyone
see on their balance sheet where it went? Any extraordinary items? Down
payment on the new HQ or anything?

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Steko
iPads are lower margin than phones so a higher mix of ipads would give a lower
profit percent. Fundamentally though they sold a lot more phones and a lot
more ipads which are the big ticket items so you'd think total profits would
go up but they are the same 13.1 bln so maybe there is some big investment
made.

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corresation
Neither investments nor dividends impact net profit.

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Steko
Thanks for the correction.

More Tim Cook on the call:

"regarding the mix as an example, the iPad mini gross margin is significantly
below the corporate average "

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ChuckMcM
I'm guessing this is the most likely contributor. They moved a ton of iPad
minis it seems like.

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porterhaney
FYI: Q1 2012 = 14 weeks Q1 2013 = 13 weeks

Q1 2012 profit/week = $0.93B Q1 2013 profit/week = $1.00B

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bitcartel
How much of the profit is trapped outside the US? It seems a tax holiday on
repatriating those funds is unlikely to happen, given that Google just sunk
$1bn into a new London HQ. What will Apple execs do?

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protomyth
I would imagine the same investment strategy and using the money to make huge
component buys. I gotta wonder how much investment in the US is kept from
happening by the US government's insistence on taxing income not made in the
US.

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driax
You mean by not being a tax haven for profits from outside the US. Or am I
missing something?

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protomyth
I mean not taxing revenue earned outside the US when it is brought back into
the US.

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Steko
Ars live blog of the earnings call:

<http://live.arstechnica.com/apples-2013-q1-earnings-call/>

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Steko
Tim Cook, from the call:

"In addition to reporting changes, to further increase transparency, we're
changing our guidance approach In the past, we've given a conservative
estimate. Going forward, we plan to project what we are likely to achieve"

And the projection for the Jan-Mar quarter:

"we are expecting between $41 and $43 billion for the next quarter"

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nodesocket
Nice graphs, courtesy of TechCrunch for visual people.

[http://techcrunch.com/2013/01/23/apples-record-first-
quarter...](http://techcrunch.com/2013/01/23/apples-record-first-quarter-
of-2013-in-charts/)

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pooriaazimi
(to save others the trouble of doing the math themselves) It means 6
iPhones/second and (almost) 3 iPads/second.

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6thSigma
With a company as big as Apple ($485B market cap) you can pretty much throw
out the fundamentals. The question is, can they continue to grow?

I personally don't think they can grow to be much bigger than they already
are.

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OGinparadise
There must be some unwritten law about not growing above $500 Billion market
cap, at last not staying there for any long durations.

Makes sense, especially in tech companies; an investor has a lot to lose and
less upside given the current market cap.

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OGinparadise
$13 Billion in profit a quarter and Wall Street slams their stock. I guess
they expect 20% growth year to year on a company valued at $500Billion.

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nirvana
Despite the quarter being a week shorter, YoY growth on the iPhone and iPad
unit sales was around %30.

So, even if that's what Wall Street expected it seems ... off... to be down so
much.

I think the reality is, some people expected %50 growth, and Wall Street
doesn't like the fact that the margins are smaller.

The margins being smaller, however, goes hand in hand with what it takes to
produce the massive growth... and the margins will improve.

Which is why markets aren't perfectly efficient... and people have an
opportunity to profit from this kind of nonsense.

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OGinparadise
I understand the reasons, just don't agree with them. Google is meanwhile at
24 PE (~double AAPL') simply because they ruined their product by introducing
"pay to play." What's going to happen a few quarters down the line when
everything is pay-to-play and maxed out? But I guess they can sell the shares

