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Post by aapl4kiki on Apr 25, 2013 14:04:35 GMT -8
icam - that is anther possibility. If so, it should have been emphasized in the conference call tough. I don't believe in misleading (lying to?) shareholders. If this is the main reason, hopefully we have seen the end of it. Nonetheless there was a definite drop in ASP - $22 or 3.5%. That's not insignificant for the most important product line, when the growth is slowing down. I'm not at all saying the future is bleak - I'm only pointing out the main reason for the drop in profit. It is not the iPad Mini. And yet here is what I don't get... The Street wants a cheap, errrr, low cost iPhone. That's basically what the 4 and 4S are and they're bringing down ASP imo - until we see proof Samsung is raising prices as Apple walks. So Apple provides the low cost phones and then gets hammered on decreasing margins. Record revenue doesn't seem to matter. |
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Mav
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Post by Mav on Apr 25, 2013 14:27:24 GMT -8
Oh, but it IS the iPad!
What was the ASP drop on them iPads YOY anyway?
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Post by Deleted on Apr 25, 2013 14:33:37 GMT -8
Looking again at Horace's article, it looks like he has calculated that total operating profit from the iPad segment is actually less y-o-y, despite the huge increase in units.
Of course once the iPad mini anniversary hits, a huge increase in units will equal a huge increase in total operating profit, assuming ASP & GM% remain similar (As Tim Cook implied in the conference call).
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Post by appledoc on Apr 25, 2013 14:41:20 GMT -8
And yet here is what I don't get... The Street wants a cheap, errrr, low cost iPhone. That's basically what the 4 and 4S are and they're bringing down ASP imo - until we see proof Samsung is raising prices as Apple walks. So Apple provides the low cost phones and then gets hammered on decreasing margins. Record revenue doesn't seem to matter. Seems to me they want an even cheaper option. The iPhone 4 costs the equivalent of $500 in China. Not exactly cheap. TC stresses constantly how great the ecosystem is and how they want to bring more people into it. China and India are home to millions upon millions of potential customers. But to tap into that potential, the iPhone has to become cheaper. I've actually changed my opinion on this recently. I'm okay with a cheaper iPhone targeted at non-US populations. It's not going to be a zero margin product. Think iPad mini margins, which are a hell of a lot better than just about every phone on the market right now. |
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Post by Deleted on Apr 25, 2013 14:49:47 GMT -8
Correct me if I'm wrong, but does China and India even have access to the App Store? The big stickiness with Apple products is iTunes and the App Store, if you ask me. Without those 2 in China, I don't see the big benefit to launching a $200 iPhone Lite for China/India, since I'm not sure why it would draw people into the Apple Ecosystem.
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Mav
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Post by Mav on Apr 25, 2013 14:59:13 GMT -8
Hey, how was AMZN AH action at first anyway? Wasn't following, it's currently off 3%.
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Post by Mav on Apr 25, 2013 15:00:10 GMT -8
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Post by tuffett on Apr 25, 2013 15:02:38 GMT -8
Huh? What did I say that's wrong? My point is that earnings from iPad + iPad Mini - cannibalization > iPad alone. Is that wrong? If so, it's not a good thing. Of course iPad ASP is down but they also grew sales 65%. Pointing to the iPad Mini as the main problem for lack of earnings growth is simply wrong. It's iPhone. Lower ASP and not much growth. Simple. So your saying Tim Cook lied on the conference call? Unlikely. Look at the basic numbers, iPad sales were up 65%, but iPad revenue was up only 40%, ASP falling from $531 to $449. With the ipad ASP now well below the entry level price of the ipad 9.7" model, it is certain that the iPad mini has indeed cannibalised the full size model. But it had to be done, otherwise it would be apples competitors doing it. And of course the iPad mini has smaller margins than the full size iPad, everyone has said this, including Apple. The iPad is going to have the very toughest year on year comparison in Q3. The current iPad lineup in now in its third quarter, whereas last year Q3 was the first full quarter of iPad 3 availability and inventory build. Not only is it an old lineup vs. last years fresh model, it's also a lower ASP vs last years high ASP. The iPad is going to have to have a large sequential rise just to match last years iPad revenue in Q3, and it would have to have a HUGE sequential rise to even think about matching last years iPad operating income. iPhone ASP is fine for its current place in its product cycle . iPhone margins are down slightly, which some have contributed to suppliers increasing component costs, but I think is from the obvious fact that the entry level iPhone 4 costs significantly more to produce than the iPhone 3GS did as last years entry level model. We're really saying the same thing, you know. Apple earned less that they did a year ago. They earned more on iPads. They earned less on iPhones. That is all I'm trying to say. Nothing about iPad having lower ASP and cannibalizing is untrue, but it also isn't relevant to the point I'm making. |
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Post by tuffett on Apr 25, 2013 15:05:18 GMT -8
Oh, but it IS the iPad! What was the ASP drop on them iPads YOY anyway? A lot, but not as much as the positives of a 65% increase in sales. That's all I'm saying. I'm talking about profit, not ASP, not margins. The first post infers that profits are down YoY because of the iPad Mini. That is incorrect. The iPad Mini has increased profit despite lower ASP and lower margins, because of huge volume. |
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Post by lovemyipad on Apr 25, 2013 15:08:01 GMT -8
Ahh, but if this is a classic Gap 'n Go, we will see a push in the last hour of the day. That's when I would expect $415.00. Greg - note of caution. "classic Gap 'n Go" calls for a "major gap". T3 defined that as at least 3% to 5%. Todays $6 move was only 1.5%. Doesn't mean it can't happen...but....I'm skeptical. What icam said. Also, note the gap was closed by 10:45 AM. That means it's NOT a Gap n' Go. More likely a Gap n' Crap, so then you look to see if the next upwave takes out the HOD. If not, that's a short signal. Note the neg. divergences into 12:45. Another hint: ain't gonna happen. |
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Post by Mav on Apr 25, 2013 15:15:09 GMT -8
You can't have it both ways. iPad ASP drop was enormous compared to iPhone. iPhone grew 7ish% YOY with 4% less ASP. iPad grew 65% with an ASP drop of 15%+. iPhone profit margin and iPad profit margin both "suffered" YOY.
If you're gonna say profit was hurt - you have to blame EVERYTHING. Apple deliberately released what apparently IS a lower-margin iPad (mini) to keep iPad on a nice trajectory - and it shows.
Only in WS is a 37% GM cause for alarm. Of course Apple could have telegraphed the precipitous drop in GM much better, since most of it was "planned all along" (iPad, iPhone 4/4S), but that's Apple culture, not a failure in Apple's business model. If anything the drop in GM proves Apple is still awake at the wheel between product refreshes. If they must resort to that lever to help "see them through" these "dry spells", so be it.
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Post by tuffett on Apr 25, 2013 15:32:22 GMT -8
There you are still talking about margin. I've already acknowledged this - don't see why you keep going on about it.
iPad (in all likelihood) made more money than a year ago. iPhone (in all likelihood) did not. Ergo, the profit decline is far more attributable to iPhone than it is to iPad. iPhone revenue was under a billion more than last year with a large drop in margins. iPad's revenue increase far outweighs its drop in margins.
I'm not making any "iPhone is doomed" projections from this - merely making a logical conclusion of stated numbers.
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Post by phoebear611 on Apr 25, 2013 16:02:17 GMT -8
Samsung just reported
January - March operating profit increased 54% from a year ago to 8.8 korean won ($7.91 billion), broadly in line with its estimate.
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Post by artman1033 on Apr 25, 2013 16:12:33 GMT -8
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Post by Deleted on Apr 25, 2013 16:16:59 GMT -8
So your saying Tim Cook lied on the conference call? Unlikely. Look at the basic numbers, iPad sales were up 65%, but iPad revenue was up only 40%, ASP falling from $531 to $449. With the ipad ASP now well below the entry level price of the ipad 9.7" model, it is certain that the iPad mini has indeed cannibalised the full size model. But it had to be done, otherwise it would be apples competitors doing it. And of course the iPad mini has smaller margins than the full size iPad, everyone has said this, including Apple. The iPad is going to have the very toughest year on year comparison in Q3. The current iPad lineup in now in its third quarter, whereas last year Q3 was the first full quarter of iPad 3 availability and inventory build. Not only is it an old lineup vs. last years fresh model, it's also a lower ASP vs last years high ASP. The iPad is going to have to have a large sequential rise just to match last years iPad revenue in Q3, and it would have to have a HUGE sequential rise to even think about matching last years iPad operating income. iPhone ASP is fine for its current place in its product cycle . iPhone margins are down slightly, which some have contributed to suppliers increasing component costs, but I think is from the obvious fact that the entry level iPhone 4 costs significantly more to produce than the iPhone 3GS did as last years entry level model. We're really saying the same thing, you know. Apple earned less that they did a year ago. They earned more on iPads. They earned less on iPhones. That is all I'm trying to say. Nothing about iPad having lower ASP and cannibalizing is untrue, but it also isn't relevant to the point I'm making. APPLE DID EARN LESS ON IPADS - and will most certainly also earn less on ipads in Q3. The increase in iPad revenue was not enough to counter the drop in iPad margins. Apple also had decreased earnings from iPhone, but that was expected. (Margin data cribbed from Horace's estimates) Anyway - in 2 quarters time we will be at a like for like comparison for iPads, at which point increasing iPad units & revenue will also equal increasing earnings from that segment. However for the next 2 quarters increasing iPad units & revenue will not equal increasing earnings. |
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Post by artman1033 on Apr 25, 2013 16:39:34 GMT -8
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Post by nathanstevens on Apr 25, 2013 16:54:26 GMT -8
Any thoughts on the lifecycle revenue generation of iPads vs iPhones? I'd be inclined to say that the ipad generates more revenue/device for apple after the initial hardware sale than the iPhone does. Combination of more expensive apps and higher percentage video content purchased. Perhaps apple sees this and intends to improve the services offered to take advantage of it and is happy to trade iPad hardware gross margins for it.
Just my 2 cents. Anyone have any data to support or shoot down the theory?
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Post by Deleted on Apr 25, 2013 17:01:40 GMT -8
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Post by Deleted on Apr 25, 2013 17:06:54 GMT -8
So I stopped by AT&T store for an update. One full time employee confessed he has sold two (2!) Sammy S4's since they became available for preorder. And he was quite please with this! LOL
Then he said to me "it's nothing like when the new iPhones come out..."
Sammy will try to spin it with limited supply due to crazy demand, blah, blah, blah; It's pure marketing.
The interest in the HTC One is growing, as it's on display and the screen is far better than any Sammy I've seen. HTC is also giving this handset to ATT reps with a trade in on an old Sammy S3.
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Post by Deleted on Apr 25, 2013 17:09:27 GMT -8
Samsung just reported January - March operating profit increased 54% from a year ago to 8.8 korean won ($7.91 billion), broadly in line with its estimate. I think Sammy is going to be disappointed with it 2014 YOY compare if they're still running with the S4, which is only a warmed over S3 with gimmicky software. |
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Post by Deleted on Apr 25, 2013 18:13:27 GMT -8
So I stopped by AT&T store for an update. One full time employee confessed he has sold two (2!) Sammy S4's since they became available for preorder. And he was quite please with this! LOL Then he said to me "it's nothing like when the new iPhones come out..." Sammy will try to spin it with limited supply due to crazy demand, blah, blah, blah; It's pure marketing. The interest in the HTC One is growing, as it's on display and the screen is far better than any Sammy I've seen. HTC is also giving this handset to ATT reps with a trade in on an old Sammy S3. Interesting...thanks for the info. |
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Post by Deleted on Apr 25, 2013 18:18:41 GMT -8
Any thoughts on the lifecycle revenue generation of iPads vs iPhones? I'd be inclined to say that the ipad generates more revenue/device for apple after the initial hardware sale than the iPhone does. Combination of more expensive apps and higher percentage video content purchased. Perhaps apple sees this and intends to improve the services offered to take advantage of it and is happy to trade iPad hardware gross margins for it. Just my 2 cents. Anyone have any data to support or shoot down the theory? I definitely think you are on to something - in fact I would say the iPad mini has a higher attach rate than the full size iPad, particularly with its suitability as a book reader. |
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Post by icam on Apr 25, 2013 18:26:30 GMT -8
Samsung just reported January - March operating profit increased 54% from a year ago to 8.8 korean won ($7.91 billion), broadly in line with its estimate. I think Sammy is going to be disappointed with it 2014 YOY compare if they're still running with the S4, which is only a warmed over S3 with gimmicky software. Nothing like letting the dirty rotten patent stealing copying slandering scumbags at Samsung expose themselves as such and prove it by having an epic fail at trying to be an innovator. Oh the smile on my face...I'd flip them the bird, bud Lovey doesn't have an emoticon for that... |
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Post by prazan on Apr 25, 2013 18:32:17 GMT -8
Greg - note of caution. "classic Gap 'n Go" calls for a "major gap". T3 defined that as at least 3% to 5%. Todays $6 move was only 1.5%. Doesn't mean it can't happen...but....I'm skeptical. What icam said. Also, note the gap was closed by 10:45 AM. That means it's NOT a Gap n' Go. More likely a Gap n' Crap, so then you look to see if the next upwave takes out the HOD. If not, that's a short signal. Note the neg. divergences into 12:45. Another hint: ain't gonna happen. Take a look at the chart today for ALXN, which shows a classic gap and go: gap up, then an attempt to fill the gap, which fails, and is then followed by the go part. |
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Post by Deleted on Apr 25, 2013 18:46:48 GMT -8
I think Sammy is going to be disappointed with it 2014 YOY compare if they're still running with the S4, which is only a warmed over S3 with gimmicky software. Nothing like letting the dirty rotten patent stealing copying slandering scumbags at Samsung expose themselves as such and prove it by having an epic fail at trying to be an innovator. Oh the smile on my face...I'd flip them the bird, bud Lovey doesn't have an emoticon for that... Good description of Scamsung. What I find interesting (and pleasantly amusing) is that the tech sites are praising the HTC One over the S4, both on the merits of the hardware and self preservation -- it's rather boring to write just about Apple and Scamsung. In short, if HTC falters, the tech pundits will be deprived of writing material. When the ATT rep noticed my puzzlement as to why the HTC One isn't an obvious choice, he knew what we know: Samsung marketing dollars have created a monster product, albeit an undeserving one relative to HTC. We know how dominant the iPhone on ATT, so the context here is what comes in second place. |
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Post by Mav on Apr 25, 2013 18:56:37 GMT -8
Samsung net profit up 42%, revs up 17% online.wsj.com/article/SB10001424127887323335404578445532742015350.htmlSounds like Samsung is still benefiting nicely from mix-shift to higher-margin items like the S3. Considering Samsung is fast becoming the household name in Android, this doesn't surprise. But market share is a long game, and Greater China has yet to realize its potential as one of the two "final frontiers" of smartphone growth (India maybe being the other, but the stories one hears about the wireless infrastructure there...). |
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Post by Deleted on Apr 25, 2013 19:22:51 GMT -8
Samsung net profit up 42%, revs up 17% online.wsj.com/article/SB10001424127887323335404578445532742015350.htmlSounds like Samsung is still benefiting nicely from mix-shift to higher-margin items like the S3. Considering Samsung is fast becoming the household name in Android, this doesn't surprise. But market share is a long game, and Greater China has yet to realize its potential as one of the two "final frontiers" of smartphone growth (India maybe being the other, but the stories one hears about the wireless infrastructure there...). I think we found where the 200 basis points missing from Apple's margins landed... |
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Post by Mav on Apr 25, 2013 19:28:16 GMT -8
Whatever.
Samsung isn't the only chip-making, NAND-flash/RAM/LCD supplying game in town (though they are formidably integrated in this regard, and their component product seems more than solid if my iOS products or the RAM in one of two of my iMacs are any indication).
Apple's absurdly strong position allows it to play The Very Long Gameā¢ by, for example, making various moves away from multi-year component/multi-billion supply agreement deals with direct competition. Of course it hurts as far as WS, but hey, if 35% GM from Apple is "lean times", it really ain't so bad, except maybe for intermediate-term AAPL longs.
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Post by Nevyn on Apr 25, 2013 19:54:37 GMT -8
I'm not sure if anyone mentioned this, but for every share that AAPL buys, they are saving the dividend. So once they have bought back 100M shares, they will be saving $1.2B per year.
What was their return on cash? It seems that they will be saving more in dividends (3%) than they were earning in interest (1-2%)
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Post by nathanstevens on Apr 25, 2013 21:18:21 GMT -8
It took aapl a bit over 18 hrs to match amzn's profits for the entire qtr.
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