Weak demand leads Apple to halve iPhone 5 component orders

[Glaucus]

Apple just posted best Quarterly Results Ever. Net quarterly profit of $13.1 billion.

http://forums.macrumors.com/showthread.php?t=1530732

Quarterly iPhone unit sales reached 47.8 million, compared to 37 million in the year-ago quarter. Must be all that weak demand, Apple are doomed!

Not really best ever, same profit as last quarter, even though revenue is up. And shares have been declining for a while.

As BBC article says

Shares in the firm have fallen almost 30% since September over concerns the company may be losing its edge over increasingly confident competitors.

Of the two devices we've been talking about (iPad / iPhone), which of those *isn't* an awesome product? When was the last time Samsung/Nokia/Microsoft released a product which caused a paradigm shift in computing? Something that has totally changed your day-to-day computing habits, because this is what we're talking about. Apple released two of them in the past 6 years.
.

Rofl, I'm pretty sure Microsoft has changed the computing sector several times over. Not least with windows.

 

[shine]

A miss by the analysts estimations...

Yeah... but those same analysts (i.e. the market) set the price of the shares, so it really is a miss. I know a lot of people say 'well it isn't really a miss, Apple met their targets' - Apple's targets don't matter so much.

Hatter is right, while it can be argued Apple's estimates may be more accurate but as the shares are priced by what the analysts think Apple's numbers should look like an adjustment in the share price is therefore inevitable.

This doesn't mean Apple is in trouble (short term) but it does show they have work to do if they want to meet analyst expectations.

 

[Alpherah]

I do find it hilarious that after the highest corporate earnings ever recorded of any company (even the oil and gas industry) that there's so much doom and gloom around the company and its stock price.

 

[SteveOBHave]

I do find it hilarious that after the highest corporate earnings ever recorded of any company (even the oil and gas industry) that there's so much doom and gloom around the company and its stock price.

That's because neither a companies worth nor its stock price are governed by its earnings. What the company is able to sustain as it's earnings, what sort of an outlook a company has in terms of innovation and multiple possibilities as earners are what investors look at. The big investors aren't interested in a one or two trick pony and that's what Apple needs to move on from to retain investor interest.

 

[SDK^]

Apples share price has always dropped on their earnings annoucement and new product launches.
They could have exceeded the analysts expectations and it still would have dropped.

No company can sustain an ever increasing shareprice. It'll bounce back up - their market share in the emerging markets is still growing above 50%.

 

[Judgeneo]

They've cut their own targets for sales next quarter, which is the main reason for the stock price fall.
There may have been an element of truth in the OPs link after all.

 

[Morfik]

So the stocks at an 11 month low suggesting the market doesn't have as much faith in the iPhone 5, iPad Mini pushing Apple to new highs. Pretty much in line with the way Apple has failed to do anything revolutionary for sometime.

 

[theheyes]

So the stocks at an 11 month low suggesting the market doesn't have as much faith in the iPhone 5, iPad Mini pushing Apple to new highs. Pretty much in line with the way Apple has failed to do anything revolutionary for sometime.

Curse of the high expectation, to pinch a phrase used to describe the reactions to this news. The mere fact that failing to churn out regular revolutionary products is considered failure just shows how highly Apple are regarded whether its realistic or not.

 

[mrochester]

Curse of the high expectation, to pinch a phrase used to describe the reactions to this news. The mere fact that failing to churn out regular revolutionary products is considered failure just shows how highly Apple are regarded whether its realistic or not.

And there have always been large gaps between the release of revolutionary products. There was a massive gap between the release of iTunes, the iPod and the iPhone and iPad. I don't know why people are expecting Apple to release iPhone and iPad like revolutions every year. No other company does.

 

[Fillado]

And there have always been large gaps between the release of revolutionary products. There was a massive gap between the release of iTunes, the iPod and the iPhone and iPad. I don't know why people are expecting Apple to release iPhone and iPad like revolutions every year. No other company does.

It's because revolutionary products are how Apple survives. The only long-term-market-dominating product they've had (so far) is the iPod. That's it.

Mac? Eclipsed by Windows
iPhone? Eclipsed by Android
iPad? Currently doing well. But Android/Kindle is taking a nice chomp out of their market share every quarter.

When you run a business like Apple do you end up with a small amount of people buying high-margin products. Which is why the Mac is incredibly profitable, but is a minor note in desktop computer history that will all be about Windows. Same seems to be applying to iPhone Vs. Android. Apple's margins are now drastically dropping which is why investors are scared. Apple simply can't survive on low market share AND low margins.

Apple Reports Record Results
47.8 Million iPhones Sold; 22.9 Million iPads Sold

CUPERTINO, California—January 23, 2013—Apple® today announced financial results for its 13-week fiscal 2013 first quarter ended December 29, 2012. The Company posted record quarterly revenue of $54.5 billion and record quarterly net profit of $13.1 billion, or $13.81 per diluted share. These results compare to revenue of $46.3 billion and net profit of $13.1 billion, or $13.87 per diluted share, in the 14-week year-ago quarter. Gross margin was 38.6 percent compared to 44.7 percent in the year-ago quarter. International sales accounted for 61 percent of the quarter’s revenue.

The answer to the above is so simple yet seems to have been missed between all the Apple fanboys (John Gruber etc.) defending them and people reporting on the "doom and gloom" of the stock market (BBC etc.).

Revenue is up. "iPhone" sales are fantastic. But profit margins are down.

Answer?

"iPhone". Not iPhone 5. iPhone.

Leading from various comments in this thread and the internets-at-large Apple isn't really "innovating" much at the moment. Which means there is in reality very little differentiation between the iPhone 4, iPhone 4S and iPhone 5. Except price! The iPhone brand is still hugely popular but people are looking at contract prices and deciding on the iPhone 4 or 4S because the 5 isn't that much better. And yes since the iPhone 5 has come out I've actually seen such behaviour. Which means plenty of sales but lower profit margins.

This isn't bad. But it means Apple are going to have to turn into a mass market company or start that revolutionary thing going again.

 

[SteveOBHave]

This isn't bad. But it means Apple are going to have to turn into a mass market company or start that revolutionary thing going again.

I'd love to see them pull something out of the hat - it does nothing but good things for us as consumers. I love having a tablet almost as much as I love having my entire music collection with me. Without doubt we have Apple to thank for that.

 

[SDK^]

I don't know why people are expecting Apple to release iPhone and iPad like revolutions every year. No other company does.

No other company innovates these days, full stop.
Samsung, Asus, Microsoft, Sony, HTC, Dell, HP etc = What are Apple doing ? - lets do that !!

 

[Judgeneo]

No other company innovates these days, full stop.
Samsung, Asus, Microsoft, Sony, HTC, Dell, HP etc = What are Apple doing ? - lets do that !!

It could be argued that those other companies innovate (or at least try to) in their other areas of business.
Samsung in components and R&D are quite innovative.
Asus' transformer was original
HP tried to change its business structure entirely by buying autonomy - a disaster.
HTC are on a downwards slide
Microsoft have tried lots of new things - most fail, but they still try. Kinect, surface (the table not tablet), zune.

Apple have been stagnant on the innovation front in all sides of their business as of late. This itself isn't a problem as said time period is quite small, and they are still very very profitable. What has worried investors though is that they show no sign of true innovation in the near future.
Put simply Apple set the bar very high for themselves with their long list of successive successes, and they don't look like they will be able to jump that height in the near future.

 

[grimm]

The market has to get saturated at some point and people do get upgrade fatigue with a new Iphone coming out every year more or less. Especially when world economies are still looking pretty bleak, it's not surprising to me at least that this may be starting to happen.

Also the stock price is never wholly supported by company performance, market and investor sentiment plays a large role too. It might be that people don't see much more potential growth in Apple stocks and therefore are cashing in because they think it has peaked. If people are selling their shares en masse it will drive the price down regardless of how the company is performing.

 

[Streeteh]

I think that Judgeneo has hit something important on the head. Samsung have gotten a lot of flak in this thread for not innovating in their products, but I feel that's unfair. As he stated they innovate in R&D and hardware development.

I'd wager all of the recent innovations people have listed contain at least one product developed by or, I'd even wager built by Samsung. Stuff they're working on in that is in its early stages (eg flexible screen technology etc) will allow for the next stage of innovation. It may well be Apple that applies that technology in an innovative way for the consumer to make use of, but the development of the base technology is every bit as important.

Therein lies part of the issue; we are still waiting for these new technologies to complete development and become affordable for the consumer market. Very little has really come out as of late that allows for a big leap (yes faster/multi core CPUs etc allow for some innovation, but they don't change the way we use the product to large degree). The moment something big hits the market, companies will figure out new and interesting ways to make use of it, this will result in a mass adoption of whatever product it is.

 

[theheyes]

No other company innovates these days, full stop.
Samsung, Asus, Microsoft, Sony, HTC, Dell, HP etc = What are Apple doing ? - lets do that !!

This is just so wrong I don't even know where to start.

 

[n111ck]

Mac? Eclipsed by Windows
iPhone? Eclipsed by Android
iPad? Currently doing well. But Android/Kindle is taking a nice chomp out of their market share every quarter.

You seem to be conveniently confusing hardware and software to make a poorly thought out point.

Windows runs on any old hardware - OSX only runs on premium hardware.

Android is available free on loads of old handsets - iOS is only available on premium hardware.

Android / Kindle tablets are being sold at cost to make any sort of impact - iPad is only available at premium prices.

The fact that Apple is making so much money by purposefully restricting their market to the high end whilst their competitors are virtually having to give it away says everything to me.

 

[Morfik]

The fact that Apple is making so much money by purposefully restricting their market to the high end whilst their competitors are virtually having to give it away says everything to me.

They aren't making as much as the market felt they should be though hence the dramatic fall in share price. The ultimate aim of a public company is to enhance shareholder value and they aren't doing that.

 

[JAMAL]

No other company innovates these days, full stop.
Samsung, Asus, Microsoft, Sony, HTC, Dell, HP etc = What are Apple doing ? - lets do that !!

EDIT, was a bit harsh.

If you really think that than i think you are a bit deluded

 

[n111ck]

They aren't making as much as the market felt they should be though hence the dramatic fall in share price. The ultimate aim of a public company is to enhance shareholder value and they aren't doing that.

Based on arbitrary targets that would be ludicrous for any other company.

We still don't have any real evidence of decreased iphone demand which was the whole point of the thread.

What we do know is that to compete with Apple you have to give your products away.......