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  (Source: Goodfon)
Apple's profit is flat due to higher manufacturing costs

While Apple managed to surpass analysts' profit forecasts for the fiscal 2013 first quarter, the company's stock took a tumble as investors worry over Apple's ability to maintain steady growth with new products.

Apple reported a revenue of $54.5 billion for the quarter ended December 29, 2012, compared to $46.33 billion in the year-ago quarter. The tech giant just missed analyst expectations of $54.73 billion.

Apple also earned a net profit of $13.1 billion ($13.81 a share) compared to $13.1 billion ($13.87 a share) a year ago. Profit clearly remained pretty flat, but it exceeded analysts' expectations of $13.44 a share.

The iDevice maker also noted that it had record iPhone sales for the quarter at 47.8 million (compared to 37 million in the year-ago quarter). It also had an uptick in iPad sales, from 15.4 million in the year ago quarter to 22.9 million in the most recent quarter.

“We’re thrilled with record revenue of over $54 billion and sales of over 75 million iOS devices in a single quarter,” said Tim Cook, Apple’s CEO. “We’re very confident in our product pipeline as we continue to focus on innovation and making the best products in the world.”

While Apple did okay for the quarter, investors are concerned with the company's flat profit due to higher manufacturing costs and also worry whether Apple can keep up its momentum with product popularity. Many new devices are hitting the market at lower prices and offer newer, better features. For instance, the iPad's market share was bested by Google's Nexus 7 tablet in Japan mainly due to cost differences.

Apple's stock has lost nearly 25 percent of its value since September 2012 ($170 billion in market value).

In after-hours trading today, Apple's stock fell over 10 percent.

Looking forward to fiscal 2013 second quarter, Apple expects a revenue of between $41 billion and $43 billion.

Earlier this month, it was reported that Apple had cut iPhone screen and component orders by 50 percent for the first quarter of 2013.

Source: Apple



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By jpeyton on 1/23/2013 7:48:46 PM , Rating: 3
Actually out of all your scenarios (A) is the most likely. Kantar Worldpanel just released figures that put Android at 75% global smartphone marketshare in Q4. Apple actually had slight declines in their two strongest markets in Q4: USA and UK (but they grew in China to make up for it).

There is one overriding factor that everyone seems to overlook: nobody can compete with Android as long as Google continues to give it away for free (along with a host of other free services). This article sums it up: http://gizmodo.com/5785983/android-may-be-the-grea...


By txDrum on 1/23/2013 8:01:33 PM , Rating: 2
I don't know what causes people to underrate Windows Phone so much. It's a solid OS (coming from android), that brings things to the table that neither of the other two do. I don't think it's perfect, but the argument of being "too late to the party" is silly. RIM and win mobile were as firmly entrenched into the market that the iphone stumbled into as android and iOS are now that WP8 has come into it. I don't think WP8 will have 80% market share in 4 years or anything, but it's a solid, competent competitor.

Also, you're completely missing the point of the article (I believe).

If I sell 100 lollipops at a dollar each, and it takes a dime to make them, I make 90 dollars.

If next year, I sell 115 lollipops at a dollar each, but it takes 20 cents to make them, I'm only making 92 dollars. I've experienced growth (15%), but I'm hardly making any more money. Growth is great for market share, but it means nothing for profits if manufacturing costs offset it.


By TakinYourPoints on 1/23/2013 8:25:24 PM , Rating: 2
quote:
If I sell 100 lollipops at a dollar each, and it takes a dime to make them, I make 90 dollars.

If next year, I sell 115 lollipops at a dollar each, but it takes 20 cents to make them, I'm only making 92 dollars. I've experienced growth (15%), but I'm hardly making any more money. Growth is great for market share, but it means nothing for profits if manufacturing costs offset it.


Ding ding, nailed it.

iPhones cost more to make than the previous model, offsetting how increasingly popular they are. The popularity of the lower profit iPad Mini eating into regular iPad sales is also to blame here. I don't think that'll go away either, not when iPad Minis will eventually double display resolution, keeping its profit margins low.

A massive increase in revenue ($55BN, wtf) with a reduction in margins resulting in the same profits as the prior year is a negative thing.

Looks like they won't be reaping the rewards of the iPhone until the 5S comes out. The exact same thing happened between the iPhone 4 (reduced profits on new hardware) and the iPhone 4S (increased profit on mature product).


By Rukkian on 1/24/2013 11:21:31 AM , Rating: 2
I know I am not alone in my sentiment about Win Phone, and that is that it may well be a very good OS, but it is taking some of the things I hate most about IOS (locking it down, not allowing other app stores, etc) taking about my choice. I don't want somebody to tell me what I can install, from where. I want to be able to do what i want with my device when I want to do it. Due to that, I would probably go to an idevice before MS since they at least have a good app library.


By tayb on 1/23/2013 9:01:11 PM , Rating: 2
quote:
There is one overriding factor that everyone seems to overlook: nobody can compete with Android as long as Google continues to give it away for free (along with a host of other free services).


Rubbish.

First off Android really isn't "free." Each and every Android phone producer writes a check for every Android handset they sell. That's not free.

Secondly, the price of an OS in the smartphone market is beyond irrelevant. All smartphones are the same price at launch and the price is based on the hardware not the software. Neither Apple, RIM, nor Google technically "sell" an OS. In fact the only player out there selling an OS is Microsoft. Are WP8 devices more expensive than Android devices because of that? Nope.

Third, nobody can compete? Apple is competing pretty damn well and if Microsoft didn't have an absolutely moronic mobile strategy they would be competing just fine too. This market is in its infant stage right now. No one has won.


By Mitch101 on 1/23/2013 9:30:05 PM , Rating: 2
A lot of people are going to be quite surprised by how well the Windows Phone especially the Nokia 920/Windows Phone is doing globally despite there being two other established eco systems from Apple and Google.


By Tony Swash on 1/24/2013 11:26:53 AM , Rating: 1
quote:
here is one overriding factor that everyone seems to overlook: nobody can compete with Android as long as Google continues to give it away for free (along with a host of other free services).


I guess that must be why all the Android OEMs bar Samsung don't make any profits and why Apple just delivered in the last year the best annual profit earnings of any company in the history of capitalism.

What's actually so astonishing is that even with Android being given away free, and hence almost all OS development costs removed from their bottom line, the inept and blundering Android OEMs can't even scratch a profit. Only Samsung is a worthy competitor of Apple and even they can't seem to match Apple's performance.


"Google fired a shot heard 'round the world, and now a second American company has answered the call to defend the rights of the Chinese people." -- Rep. Christopher H. Smith (R-N.J.)














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