Encouraging Apple Q4 result
Plenty of doom and gloom (again) on Apple's latest quarterly result and guidance.
I have been reading articles like
"Apple profits decline despite iPhone sales boost " from the BBC,
"Despite sales of 34 mn iPhones, including iPhone 5S, iPhone 5C, Apple Inc results fail to enthuse" in the FinancialExpress,
Forbes: "...despite selling 33.8 million iPhones, nearly 7 million more than a year ago and a bump of 26%, the company actually saw earnings fall (to $7.5 billion as margins shrunk)."
Is it worrying that the margins are down to around 37% this time round, 5 quarters in a trot, from about 47% when they hit a record in 2012?
Yes and no.
Two reasons I'm not yet panicking as an investor: (1) although the moat is shrinking and price pressure builds up from maturing competition, unit sales held up (2) Fourth quarter is a weak quarter where it includes only one week of new iphone sales, meaning lots of older discounted iphones in that 33.8 million units, roughly 70%.
As sales of the iphnone 5C and 5S picks up, margins should improve. iPad Air and iPad Mini Retina are another two compelling products for the Apple faithful. The fact that Apple marks the iPad Air launch with a bold iCloud and free shareware move gives me a lot of hope for the future.Tim Cook stressed that iphone 4S is their main entry level smartphone and it is good to see Apple sticking to its principle.
Another reason to be positive is the imminent China Mobile deal. Bear in mind that Qualcomm does not have a TD-SCDMA baseband solution, therefore iphones have effectively been kept out of reach of the largest mobile operator base. As China Mobile roles out 4G TDD-LTE in 2014, iphone sales should surprise on the upside.
No one else seems to have innovated in the smartphone or tablet space save for more megapixel camera and larger screen and even larger battery. Personally I still like my smartphone to be pocketable and glad that iPhone 5S manage to double the speed and yet lasts as long using the same battery (half the capacity = half the charging time). But I would like to see a new "product category" in 2015 or I'll be joining the "where's the innovation?" bandwagon...
Or Apple can do an IBM: use your year's worth of net income to buyback shares (to boost EPS) and hope no one notices.
Small print: Operating cash flow of U$53.66bn (from 9.9(Q4), 7.83(Q3), 12.5(Q2), 23.43(Q1)) isn't to be sniffed at.
I have been reading articles like
"Apple profits decline despite iPhone sales boost " from the BBC,
"Despite sales of 34 mn iPhones, including iPhone 5S, iPhone 5C, Apple Inc results fail to enthuse" in the FinancialExpress,
Forbes: "...despite selling 33.8 million iPhones, nearly 7 million more than a year ago and a bump of 26%, the company actually saw earnings fall (to $7.5 billion as margins shrunk)."
Is it worrying that the margins are down to around 37% this time round, 5 quarters in a trot, from about 47% when they hit a record in 2012?
Yes and no.
Two reasons I'm not yet panicking as an investor: (1) although the moat is shrinking and price pressure builds up from maturing competition, unit sales held up (2) Fourth quarter is a weak quarter where it includes only one week of new iphone sales, meaning lots of older discounted iphones in that 33.8 million units, roughly 70%.
As sales of the iphnone 5C and 5S picks up, margins should improve. iPad Air and iPad Mini Retina are another two compelling products for the Apple faithful. The fact that Apple marks the iPad Air launch with a bold iCloud and free shareware move gives me a lot of hope for the future.Tim Cook stressed that iphone 4S is their main entry level smartphone and it is good to see Apple sticking to its principle.
Another reason to be positive is the imminent China Mobile deal. Bear in mind that Qualcomm does not have a TD-SCDMA baseband solution, therefore iphones have effectively been kept out of reach of the largest mobile operator base. As China Mobile roles out 4G TDD-LTE in 2014, iphone sales should surprise on the upside.
No one else seems to have innovated in the smartphone or tablet space save for more megapixel camera and larger screen and even larger battery. Personally I still like my smartphone to be pocketable and glad that iPhone 5S manage to double the speed and yet lasts as long using the same battery (half the capacity = half the charging time). But I would like to see a new "product category" in 2015 or I'll be joining the "where's the innovation?" bandwagon...
Or Apple can do an IBM: use your year's worth of net income to buyback shares (to boost EPS) and hope no one notices.
Small print: Operating cash flow of U$53.66bn (from 9.9(Q4), 7.83(Q3), 12.5(Q2), 23.43(Q1)) isn't to be sniffed at.
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