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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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RE: Flat
By TakinYourPoints on 1/24/2013 1:37:47 AM , Rating: 0
They thing they didn't "beat" was making newer devices for the same cost as the old one. iPhone sales have been blowing everything out of the water. The old iPhone 4S sold more than the Samsung GS2, GS3, and GN2 combined, and the iPhone 5 is selling even faster. They can't make them fast enough.

It isn't a matter of the market rejecting the iPhone 5, the what happened is that can't make them as cheap as the old iPhone 4S.

New devices, especially ones that are difficult to manufacture = lower profit margins. Simple.

Apple used to do just that even during a general downturn.

Nope, they've been hit by lower gross margins on new products before. The important difference is that the last time it happened with the iPhone 4 their annual revenue is now what they make in a single quarter.

RE: Flat
By retrospooty on 1/24/2013 7:29:54 AM , Rating: 2
You are also forgetting who buys the phones. Most of them arent sold to users, they are sold to ATT, VZW and Sprint (and many others worldwide). Apple made itself sweetheart deals with the major carriers as it was the best thing around. Deals that keep Sprint 6 years away from being profitable. So the end user gets the phone for the same price, but the carriers were eating the cost. Those sweetheart deals wont be made anymore as the competition has surpassed Apple and the zeitgeist fades.

RE: Flat
By TakinYourPoints on 1/24/2013 8:00:58 PM , Rating: 2
That scenario is a hypothetical, and right now data isn't pointing in that direction.

2/3 of Verizon's smartphone sales are iPhones. 80% of AT&T's smartphone sales are iPhones. They make up over half smartphone sales in the US and the majority of high-end smartphones globally (net traffic, app downloads, and Google's mobile ad revenue corroborate this).

The carrier investment in high-end smartphones like the iPhone or Samsung GS3 (devices like that and the Droid DNA cost carriers about as much as the iPhone) is done for a reason: to get customers hooked on expensive data plans. It isn't like Verizon and AT&T are just rolling the dice and hoping things work out, they've done the analysis and they turn a profit in the end. Is it a coincidence that the only major US carrier that was in trouble in 2012, T-Mobile, also didn't carry the iPhone?

Selling smartphones at "premiums" (similar to Samsung's mind you) to carriers won't go away as long as they sell well and get more people into data plans.

Something else important to note is that 1/3 of iPhone 5 buyers were owners of previous iPhones, 1/3 were people switching over from other smartphones, and 1/3 were people buying their first smartphone. The last statistic is an important one, that 30% upgrading to a smartphone data plan is what phone companies want, and that's why they'll keep paying up for the hardware.

Hell, if some people weren't so concerned about being "ripped off" by contracts then they wouldn't buy unsubsidized devices like the Nexus 4, right? Carriers are clearly benefiting from the arrangement.

RE: Flat
By retrospooty on 1/24/2013 9:52:54 PM , Rating: 2
"That scenario is a hypothetical, and right now data isn't pointing in that direction"

Of course not... They are profiting today from the sweetheart deals made years ago. When time comes to re-negotiate the contract, Apple has less sway. It's not hypothetical. It's first and foremost on every carriers mind. "We don't have to get raped by Apple this time, since now there is comparable products on the market". Put yourself in Verizon's boat a few years back and you are negotiating a contract for the iPhone and Apple wont budge on price. They really had no competition, now they do. Sprint got screwed hard and wont make a cent for an estimated 6 years from signing, not one cent for 6 years per Sprints own financial record. Anyhow, I am not getting into yet another endless debate with someone who's mind is so closed. I don't even care, I was just making a point, so lets just say this. The nest 5 years wont be as kind to Apple as the last 5... Unless of course they do something unexpected and innovate again, or maybe release a kickass iPhone mondo with a larger screen and higher res. Hell, throw in at least an SD card slot and I would even buy it. Maybe it would even get rid of that enormous iBezel :P

RE: Flat
By TakinYourPoints on 1/25/2013 5:35:38 PM , Rating: 2
They really had no competition, now they do.


Anyhow, I am not getting into yet another endless debate with someone who's mind is so closed.

This isn't about how I feel personally, it is about trends and where the numbers are. Fact is that an iPhone 4S from over a year ago outsold the GS2, GS3, and GN2 combined, and the latest model is outselling that one by a substantial amount. Using Android's higher marketshare doesn't work either as that number is mostly low end devices, a completely different market from devices like the iPhone, GS3, or Droid DNA. Its like using the significantly higher number of dumbphones to downplay the importance of smartphones, its a bad argument.

Your argument is completely based on "maybes" and "what-ifs", not what is actually happening.

Reality doesn't bend to your personal desires, feelings, or bias.

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