Apple to report first profits decline since 2009???

[John Kotches]

UK online journal The Register reports that Apple will be posting its first quarter since 2009 with a decline in profits.

According to the reports, although revenues will be up slightly, income will be down sigificantly. The report suggests that these numbers will be +8% and -18% respectively. If true, this could mean that Apple is having to accept decreasing margin on their products which would be chipping away at their margins.

They also note that stock has returned nearly to the level of when Tim Cook took the reins from Steve Jobs and could indicate and down from its peak when they had the largest market cap in the world.

Interesting report, and if accurate it might get worse before it gets better.

Don:

I hope you took your profits while they were out there

 

[lparsons21]

I'll wait for the actual reports instead of the guesses that are all over the 'net.

 

[John Kotches]

I'll wait for the actual reports instead of the guesses that are all over the 'net.

The numbers tracked pretty closely to The Register's source.

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[lparsons21]

Yeah they did.

 

[John Kotches]

Yeah they did.

Their style can be abrasive at times, but they have historically been accurate in their reporting.



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[lparsons21]

Yes, I know that. But there are so many rumors from so many sites, not to mention the fanbois of the various platforms to contend with that I just wait for official word.

And since I'm not in the market anymore, that works for me just fine.

 

[Peter Parker]

Apple was clearly overvalued at &700 a share. Ther were one or two Apple fanboys who tried pretty hard to distort logic reason and the evidence presented to them but well no matter what you post on boards the market does what it wants.

Having said all taht I would not count this company out. Thy may not ride as high as they dida few years ago but now that the stock is down substnatially it may bea much better investment.

 

[John Kotches]

Geronimo:

I don't think they should be counted out myself, but this is probably an overall correction to their valuation.

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[Peter Parker]

Agreed. A well needed correction. The runup was simply too extreme. If it goes much lower I might actually be tempted.

 

[mike123abc]

The only thing I see as a problem with Apple is that they are going to spend their cash hoard buying back stock. They are behaving as a company without future growth plans.

 

[TheForce]

Or, as Cook said they are generating far more cash in profits than they need to sustain the company's operations.

I still say they are holding the cash off shore waiting for the government to relax the taxes. The $100B to be used over the next 2 years is the expected earnings over the next 2 years so none of the present cash is in the plan for the buyback.

The increase in dividend is welcomed but it is a drop in the bucket compared to what I expected. I felt they would increase it to 5%, but 3% ain't bad. It's on par with Microsoft.

Many of you know I had traded Apple around a building core position but since November I have been in a holding pattern. But I am running out of patience. Still, at a P/E of below 10 with earnings around $50B a year, selling out is not a smart option. Considering the profits continuing to be generated, the price of the stock, it is a real bargain at this time to stay the course. If it had a P/E same as Google, we would be back at the price of Google but with Apple have the cash cow which we would not have with Google. But, for trading, Google is a good stock as it has large swings up and down.

Product history- Apple recently had two paradigm shifting products that today represent the bulk of the profits and continue to grow in sales. These two are iphone and ipad. Prior to that Apple had the iPOD and then there was about a 5-6 year gap in product paradigm shift introductions. If you plot the product cycles in Apple against time and sales volume, we should not expect a repeat of the new introductions until summer of 2014. Tim Cook says this Fall which will be a bit sooner. It will be these new items that will carry the company into the next growth cycle.

Acquisitions - Apple needs to get bold with its cash and buy into two areas. Social Media and TV. It has been suggested that Apple buy Twitter and Netflix. But they continue to hold off on any really bold acquisitions. With these two companies, Apple can round out it's place in technology and do with TV what they did with itunes. The longer they wait, the more expensive these two will get.

 

[dangue]

I think now is a great time to buy into Apple for medium and long term growth. Their P/E and cash stockpile just can't be ignored. And with the dividend, you're still making a little bit of money while you wait for the stock to rebound. I expect to be buying in over the next week or so. Just waiting for the quarterly report from another company before hopefully seeing that move north, selling and buying into Apple.

 

[TheForce]

I recently sold my Sprint, and 2/3 of my Verizon for some nice profits. This morning I dumped my Microsoft, all of it for $32.50. The only thing I bought in the past 2 weeks was some gold and silver. I'd buy more Apple too at these prices, but I'm topped out on Apple. My other big winners are again this year- Wynn and Las Vegas Sands. I still shed a tear, I sold my Netflix. Should have paid the income tax and held. Can't win them all.

 

[Claude Greiner]

Why doesn't Apple just launch another version of the Iphone, that will surely boost profits.

But seriously, I think launching a new phone every year is actually hurting apple as there is a certain segment of the market who only have an iphone as a hand me down from someone who upgraded, and now that they have an Iphone they likely will not spend the money to buy a new iphone.

Also I think with the last update with the 4G stuff on the iphone5, besides a better camera, or a faster processer there is no need to upgrade.

There is really no room to make them any better, except to market to the idiots like myself who want to always have the latest and greatest.

 

[TheForce]

Claude- iphone and ipad sales is not the problem. Their sales are growing as fast as the industry for smart phones. The company is doing just fine. The stock is broken because the company does not appear to know how to handle the cash it generates. You are right, there is no need for a new or better iphone for the US market. But Apple does plan to release a cheap version of the iphone mostly for Chinese market. This will help add to the profits but lower the gross margins. It will fund the share buyback and dividend growth but will not be a catalyst to drive the stock price higher.

 

[mike123abc]

Apple suffers because it makes as much money as it can from what it sells. It is a difficult choice:

Sell more at lower margin
sell less at higher margins.

 

[John Kotches]

Apple suffers because it makes as much money as it can from what it sells. It is a difficult choice:

Sell more at lower margin
sell less at higher margins.

Obvious the latter for the exclusivity appeal.

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[mike123abc]

Obvious the latter for the exclusivity appeal.

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The other manufacturers of smart phones have finally caught up and possibly surpassed Apple. The HTC one rivals the build quality of the iPhone 5. It was the case that if you wanted the best possible phone you bought the iPhone. Now, unfortunately, that is no longer the case. Apple is now at a tipping point in the phone market. They have to decide which way to go. Soon the tablet market will reach the same position. Apple is going to have to find new products to drive profits.

 

[John Kotches]

Mike:

My best possible smartphone does not have iOS not did it have a 4" screen.



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[TheForce]

The other manufacturers of smart phones have finally caught up and possibly surpassed Apple. The HTC one rivals the build quality of the iPhone 5. It was the case that if you wanted the best possible phone you bought the iPhone. Now, unfortunately, that is no longer the case. Apple is now at a tipping point in the phone market. They have to decide which way to go. Soon the tablet market will reach the same position. Apple is going to have to find new products to drive profits.

While I agree is is just a bit more complex than that. The smart phone pie is continuing to grow in size but this growth is with lower income people of the world. Apple plans to add new lower cost iphone model to it's line. This will be a phone that uses cheap construction to compete in the price range with the Samsung. Rather than machined metal housing, it will use plastic and stamped metal. Will the user care? Probably not as long as the cheap iphone holds up as well as the Samsung, of the same construction quality and it performs like an iphone in features. Still, Apple needs to wow the public with game changing innovation. It just doesn't need to do that every year.

We have had both an iphone 5 and I have my htc Thunderbolt. Personally, I prefer the thunderbolt because I'm used to it and it works fine. My wife's iphone is also very good, but somewhat restricted in a few things. Neither are rooted or hacked. Both stock. I agree that we don't need anything additional in a phone. My wife tether's her iphone to ipad with easy and uses the camera without issue. I do the same with my Thunderbolt.
If I had to say one was superior over the other, it would be the Thunderbolt has the edge on battery because when the battery goes down, I have a spare in my phone belt holster I can swap out in a minute. iphone would be dead in the field until I get to a charging station and then would need to carry the bulky charger. All the iphone boost charging devices are considerably more bulky than the thunderbolt spare.

As for tablet- we have two ipads and my wife loves hers. I like mine too and it is a great backup internet tethering system as well. But it has many limitations compared to a PC laptop. I am still considering a MS Surface Pro, maybe this summer. I bought some MSFT stock last year when it was down and sold it this week for enough profits to pay for a complete Surface Pro. So, the budget for it is in the bank now. Planning to start shopping for one today.