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The Almighty Buck Businesses Apple

Apple Profits Up Due to mini and iPod 80

Posted by Zonk from the small-things-cost-big-money dept.
dmarx writes "The Ottawa Business Journal reports that Apple's profits have increased more than sixfold. Apple's Q2 profit was $290 million, or 34 cents/share; their total revenues were $3.24 billion. The iPod accounted for 31% of Apple's sales, about $1 billion." Commentary also available on BusinessWeek and ZDNet.
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Apple Profits Up Due to mini and iPod More

Apple Profits Up Due to mini and iPod

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  • WEll I guess no one really cares about this. Or there's something completely awesome going on and I'm missing it because I'm lurking on slashdot. Check out http://www.apple-history.nl/support_files/h8.html [apple-history.nl] for some interesting mac history all the way from the 1970's to today.
  • I was really curious to see the total sales of the Mac mini when these reports came out. Exactly how many of those little suckers did they sell in it's first quarter.

    I suspect it did not break any records, or Apple would be crowing about it by now, but it would be fun to see how it did.

    • Re:mini Sales? (Score:3, Interesting)

      by javaxman ( 705658 )
      I was really curious to see the total sales of the Mac mini when these reports came out.

      suspect it did not break any records, or Apple would be crowing about it by now, but it would be fun to see how it did.

      While it's a little suspicious that they're not talking about Mac mini numbers, they don't ( as far as I recall ) traditionally report unit numbers on these calls ( just $ sales/profit/etc ). So it's not terribly insightful to make a big deal about them not calling the unit number out, though it is

    • Re:mini Sales? (Score:5, Insightful)

      by intmainvoid ( 109559 ) on Thursday April 14, 2005 @04:47PM (#12238895)
      it would be fun to see how it did

      Not nearly as well as it would have done if they could supply enough to match demand, that's for sure.

    • In the press release, they lump sales from Mac Mini and iMac together. Since the last quarter, iMac + Mac Mini sales have increased by 2%. This seems to indicate that the Mac Mini is not responsible for Apple's profits to any great degree. See Ping Wales [pingwales.co.uk] for more coverage.
      • Yeah, why would anybody buy a Mac Mini instead of an iMac, when the iMac has just been updated 4 month before the release of the Mini.
      • Ridiculous. Again, the last quarter was Christmas.

        Do some math -- note that in the first quarter, the average revenue per unit was like $1350. In this quarter, it dropped quite a bit. This suggests that either Apple sold a bunch of Minis or a bunch of eMacs, and I have a guess.
  • Boulderdash... every Apple store I've visited has had either a "Don't Touch" sign on their mini's or the LCD turned off. All are orphaned to a standalone table with usually peripherals alongside.

    Don't believe everything you read!

    • Re:MacMini profits??? (Score:1, Insightful)

      by Anonymous Coward
      Um... it's the only Mac being sold at places like Best Buy.

      They don't push it at the Apple Stores because most people who walk into Apple Stores are already mac users who they want to sell iMacs, laptops, and G5 towers to.

      You will notice that they don't call a hell of a lot of attention to the eMac in Apple stores either.
      • ZDnet:"...the company sold $483m worth of iMacs, eMacs and Mac Minis, down from $620m in the December quarter..." pure Boulderdash!
      • Hmm, I bought my mini at an Apple store. Everybody else was having trouble keeping up with sales. (or just weren't buying very many) There was at least 2 on display, one of each model, and they were running with nice, big LCDs. And of course, they were also surrounded by iPods. But isn't everything in an Apple store surrounded by iPods. They seem to have plenty of stock, but I saw a couple others go out the door in the 10 minutes it took to buy one.

        Of course, it was the first really nice Saturday we ha

        • Re:MacMini profits??? (Score:3, Interesting)

          by UWC ( 664779 )
          The nearest actual Apple store to me being a 4-hour drive, I ended up at a significantly closer CompUSA on release day, since they have their Apple corner. Definitely not a nice Saturday. It was windy and spitting snow while I was out. They didn't have any minis on display, but I asked a clerk about them, and he said they had a few. I really should have asked how many they had sold so far. There was someone talking to him about the mini before I got a hold of him, but I don't think the person was interested
          • Maybe Apple should be sending referral fees to Blizzard. I use mine with WoW as well. Now that they turned off the shaders, at least all the plants are rendering correctly. The Mac client seems to have more bugs than the Intel client, if that is possible. It seems to render more clearly though.

            I got the slower model and swapped the RAM with a 512m I had in another system. WoW was unplayable with 256m, but does pretty good with 512.

            An interesting bit of trivia, the mini uses less power than my Intel 2g
            • Well, in Blizzard's defense, they do explicitly list 512MB as the minimum RAM for playing WoW on OS X.

              I haven't tried attaching a printer to this yet. My current printer is parallel, so emailing the file to an XP machine attached to the printer for the few times I've had to print has sufficed and delayed the purchase of a USB printer (or maybe just a USB cable; I forget if this printer does both, but it definitely didn't come with a USB cable) for a while.

              As for shortcut keys, I do still get mixed up,

    • What does a "Do Not Touch" sign have to do with the topic?

      And why are you turning off screens at the Apple Store?

    • And a computer store that I went to over spring break (that carries Macs) said they sell out what they get in very quickly. (My grandpa got the last one :))
    • Anecdotal accounts trump empirical evidence, right? Right??
  • Hasn't exactly done wonders for the stock price though has it http://www.google.com/search?hl=en&q=aapl

    • Re:Stock Price (Score:4, Informative)

      by Kaamoss ( 872616 ) on Thursday April 14, 2005 @02:52PM (#12237619) Homepage
      dude, take a look at the two year report, no the report for today http://chart.finance.yahoo.com/c/2y/a/aapl.gif [yahoo.com] There is deffinitly a steady and steep rise here.
    • A bought another couple thousand two days ago expecting the bounce and am getting reamed today :( But seriously I think this is a pretty shortsighted selloff. Success of Tiger plus the biggie--iPod-enabled Motorola cell phone; rumored for some months now--well send it back up.
      • I would certainly hold onto that stock. With the way Apple has been performing recently, this is nothing more than a short term drop. I would label it a 'buying' opp.

        If you already bought a lot of shares at a higher price, you could pick up some more at a discount. If it was a good stock in the $40 range, it is an excellent stock in the $30s.

        </TinyManCan>
        • Terrible timing though. I would be buying more AAPL today, if I wasn't in a short term cash flow problem.

          What's this "IRS" stock anyway? I buy a ton of it every April 15th and it's never done anything for me. :)

          • Tax man time - my whole portfolio is down. People selling stocks to pay taxes I imagine.

            I'm no better though, I had to do a similar thing. ;-(

    • Re:Stock Price (Score:2, Interesting)

      by sho222 ( 834270 )
      Yeah, the stock got slammed even though Apple beat earnings estimates by $.10/share (not too shabby). The explanation [fool.com] is that iPod sales are up 16%, but iPod revenue is down 16% (they keep slashing prices)... yes, Wall Street views Apple as the maker of iPod and little else. Apparently the drop is because higher expectations were built into the price at $42/43 a few days ago (when I should have sold).

      I'm holding for now and hoping Tiger/mini drives up some revenue in the next quarter or two. Hey, it
      • You are right that Wall Street thinks of Apple as the iPod company. Even Fool does to some extent:

        Ask yourself what the iTunes Music Store has, beyond a strong early sales lead, that will help it compete in the long term.

        iTunes is almost universally recognized as the nicest music store around (with the best usage rights (please don't bring up allyourmusic.com or whatever)). I think they'll be able to hold off competition, but it seems their music sales growth isn't as high as it once was.

        Also, Apple is
        • Your cents make sense, Andrew. iTunes is like the Tower Records of the online music-store world. It just doesn't jive that so many folks sold Apple short today. But, it was a rough day; everyone got hammered (except PepsiCo, WTF???)

          I bought AAPL just after the split at about $40. I'm not imagining that it will make me rich, but if it can't return at least 20% by the end of the year, I'll be quite disappointed. Many analysts' target price is much higher than that.
          • I expect it will be at or above $50 within the next year (which seems to be the analyst predictions now). It had a lot of forward momentum this year, and it had lots of expectations riding on it, so investors are maybe cashing out because they think the stock has had its run. It may have been overvalued at $45, but I think it is just slightly undervalued now (well, at least when I look towards Apple's future). I think Apple has at least a few bright years ahead (and hopefully more), so I expect the stock wi

  • Good source! (Score:4, Funny)

    by mattkime ( 8466 ) on Thursday April 14, 2005 @02:51PM (#12237589)

    Ottawa Business Journal

    Ottawa Business Journal? Wasn't there a more obscure resource to link to?

    Oh well, its always good to get the opinion of Canuckistan

  • further stats: apple skyrockett while stock falls (Score:5, Interesting)

    by goombah99 ( 560566 ) on Thursday April 14, 2005 @02:57PM (#12237673)
    macintohs sales accounted for 52% of profit.

    revenues are about 5% of microsoft's. Price to earnings ratio is about twice that of microsoft and dell. earnings this quarter are down from last quarter, but up 5 fold from last year. Oddly while earnings were 50% higher than the predicted earnings (24 cents verus 36 cents per share), the stock has fallen 8% in the last two days. Are people dissatisfied that apple did not exceed expectations by more? I dont get it.

    On the other hand maybe people are just going elsewhere. I note that the annual earnings per share is about half that of dell. However its pretty clear that the upward trend for apple is so large that if it continues it will be twice that of dell by next year. Apple is now growing faster than the computer industry as a whole (which is dominated by dell and microsoft). Apple sold 1 million macs and 5 million ipods in the last quarter alone. Look for an earnings bump the next quarter from Tiger and then another bump in fall with the back-to-school release of new hardware, and it looks like year of sustained earnings.

    notably thi

    • Re:further stats: apple skyrockett while stock fal (Score:4, Interesting)

      by Secret Agent 99 ( 855215 ) on Thursday April 14, 2005 @03:12PM (#12237867)
      Are people dissatisfied that apple did not exceed expectations by more? I dont get it.

      They're dissatisfied by the creation of 13 million new shares through the exercise of options, and they're wary because the price has already tripled in the past year. They might also see the iPod numbers as indicating that the low-margin shuffle is responsible for the rise in unit sales. (Compared to last quarter: unit sales up by almost a million, revenue down by about $200 M, per-iPod revenue down by about $70.)

      No surprises here. Could be a buying opportunity if you figure Tiger will drive an upgrade cycle and bring some nice high-margin software sales...but it's a speculative gamble no matter how you look at it.
      • The options were probably already figured into the price, and there was no evidence of the shuffles causing a decrease in earnings... margins in that area were up.

        The real reason that things fell was the tradition that on good news Apple's stock goes down. This is bordering on a truism, and humorously in the past when the numbers were bad the stock went up initially.
        • I thought the options figures were only released with the other financials yesterday; i.e. this is not options granted, but exercised.

          As for the shuffle...I was probably wrong to call them "low-margin" but if you look at the numbers it's clear enough that compared to last quarter, they sold more iPods and took in less money for them. (Something like 5.5 M units/$1.08B vs. 4.5 M units/$1.2 B.) True, that doesn't necessarily mean less profit, but it does represent a shift to a mass-market strategy that's unf
      • Also, I believe, one of the people in the talk mentioned that this rate of growth is unsustainable. I already knew that, it seems obvious, but I think investors are reacting, in part, to that. The year over year growth has been about 70% the last two quarters (I believe), but, IIRC, Oppenheimer said they expected it to eventually level out around 15% growth annually. This is not nearly as much growth, but is still very respectable, in my opinion.
    • Most people who follow stock prices of their company soon learn to ignore the day to day workings of the company. This sort of "market reaction" is part of the reason.

      The thing is, yes, Apple is down today (and more after hours). However, if you look at the stock in a longer term (a quarter represents more than a single day, after all), you'll find that they were up quite a bit. The daytrader philosophy here is "buy on the rumor, sell on the news." However, looking at the stock, I don't think that complete
    • Stocks Tumble, Sending Indexes to New '05 Lows [latimes.com]

      Stocks slumped Thursday for the second straight day in a brisk, broad sell-off that knocked major indexes to new lows for 2005.

      Investors cited unease about the economy, pointing to signs that tighter credit and high energy costs are taking the wind out of consumer spending and corporate profit growth.

      Apple as a "luxury" brand is of course the obvious victim for losing the most, so the carefull know when to get out. Does this make sense? Well, this is the

  • Apple's flash-based MP3 player market share (Score:5, Interesting)

    by Shag ( 3737 ) * on Thursday April 14, 2005 @03:15PM (#12237914) Journal
    Last September, months before the iPod Shuffle was announced, an article on MP3 player market share [macobserver.com] listed the top 5 players in the flash-based player space, who combined controlled 68.2% of that market segment:
    • 18.8% iRiver
    • 18.6% Rio
    • 15.8% Digital Way
    • 8.8% RCA
    • 6.2% Samsung
    Apple is now claiming that the iPod Shuffle, after one quarter on the market, has 43% market share. In a segment where the existing players were battling to see who'd reach 20% share, that's pretty scary. Of course, all these numbers are probably US-only, but still.

  • We need a petition! (Score:5, Funny)

    by Shag ( 3737 ) * on Thursday April 14, 2005 @03:20PM (#12237958) Journal
    Clearly, Apple can afford to better compensate its employees.

    I propose that Steve Jobs's salary be raised to $2.00 per year!

    Who's with me?
    • I know it's sarcasm, but Steve Jobs is the highest paid CEO in the US in terms of total annual compensation. He weighs in at about $78m...
      • Er if you're refering to the article that made a list of all the highest paid CEOs in the US you are of course aware that the numbers they used for Steve Jobs were heavily inflated right? He's the CEO of two large companies and Apple provides him with a personal jet that he doesn't technically own (it was included in the figure they came up with). I believe his actual salary from Apple was about $20 million or something. But either way he's not starving.
      • That was a few years ago. The "compensation" you are referring to was when the Apple board decided to give him an airplane. It was a Gulfstream IV with a sticker of $49 million. Of course, the taxman must be served, so the board also covered the taxes too. And the taxes on covering the taxes. So the "compensation" actually consisted of: 1 airplane and $29 million paid to the IRS

        And you know what? Apple shareholders (myself included) didn't have a problem with it!

  • Apple's strategy (Score:5, Interesting)

    by sac13 ( 870194 ) on Thursday April 14, 2005 @03:33PM (#12238096)
    is a pretty good one: penetrate markets with low priced products that get people hooked on the elegance and simplicity of Apple's designs. I picked up an iPod last year because of all of the buzz. After playing with it for awhile, I realized how brilliant Apple's design was. So, I decided to check out what else they had at the local Apple store. OS X seemed to be so easy to use, not to mention the power of having a CLI with every utility I'm used to using with linux, I had to buy a PowerBook. Now I do all my development work as well as meet my other desktop application work on one machine that JUST WORKS. I don't have spyware/virus worries. I don't have to worry about finding a driver that works for my wireless card. I just power on and start working.

    I used to laugh at the Mac zealots... now I know what they were so excited about.
    • I feel fairly certain that Apple paid a lot of money to Slashdot for advertising. Is that evil? I do not think so. I just bought a 17 inch powerbook because I kept hearing how they could run most of the software that I ran under a linux based system with the obvious advantage of a killer GUI (cue grammar nazi rant). I suppose I could have waited a bit longer for xorg to work more magic, it is looking pretty hot right now with xdamage and the compositing manager.

      My premise is that I think advertising on Sla

    • Re:Apple's strategy (Score:1, Flamebait)

      by ErikZ ( 55491 )
      *sputter*

      Low priced products? LOW PRICED PRODUCTS?

      Apple?!?

      The Ipod may be many things, but "Low priced" isn't one of them.
      • This isn't 1997, you know. Apple has changed. They do have products that compete on price.

        A 512MB flash player for $100? A full-featured desktop computer for $500? A combination audio streamer and 11G base station for $130? A real-time motion graphics application for $300? How about an operating system that's half the price of its biggest competitor?

        Apple may not have the absolute cheapest product in a lot of categories, but these days they do have many products that are average price or better.

        • The original statement was "Penetrate markets with low priced products."

          They compete on price with a few of their products. As in "Are about the same price as the competition."

          So, that means the first statement is flat-out false. It would have to be amended to "Penetrates markets by offering some products that are roughly the same price as the competition."

          Which doesn't make sense.

          What the heck is a "Real time motion graphics application" anyway?
          • Motion [apple.com]. Compare it with Adobe After Effects, which is $400 for a limited time only and whose regular price of $700 is more than twice Motion's.

  • Things haven't changed in the stock market (Score:5, Insightful)

    by UnknowingFool ( 672806 ) on Thursday April 14, 2005 @04:05PM (#12238462)
    Net profit of $290 million (530% increase from last year), 5.3 million iPods sold (558% increase from last year). Stock price down $3 because analysts expected 6 million iPods.

    Sometimes I don't get it.

    • What's not to get? The stock was already trading at a price based on the expectation that they had sold 6 million iPods. The actual number of 5.3 million was less than that, and so the stock fell.

      News in the market is only good news if it's better news than what they were already expecting/forecasting.
      • My point is this. Apple posts huge profits in a quarter that they normally don't do well. Stock price goes down. SCO reports losses or decreased revenue but harps about how IBM has stolen their IP. Stock price goes up.

        It's like that Dilbert cartoon where Wally and Dilbert in a cube and the PHB stops by:

        PHB: Management has announced that we will stop making products.
        PHB: Instead we will engage in a nonstop series of mergers and spin-offs.
        Dilbert: Stock price?
        Wally: Up three points.

    • It's because of the US idiocy about corporate profits. If companies would stop focusing on quarterly earnings and bullshit like selling $ARBITRARY_NUMBER of $PRODUCT, maybe, um, I dunno where I'm going with this, but it's definitely an annoying thing about investing and business here.
    • Yeah, its one of those strange things of the market. There is a concept called the "whisper price" or "whisper number", which is basically a rumored target price, earnings number, etc. Sometimes it comes from insiders, but in this case it was most likely from the analysts on the street; they figured that stock X should have reported earnings per share of (say) $0.70, while the company expects to post earnings of $0.50, and last report was $0.30. When it actually comes out as $0.60, it didn't meet the whispe
    • The stock market is one of the stupidest institutions on the planet. It's gotten so far into mind games and distant possibilities that the price of a stock has no bearing what so ever on its value as a part of a company. If Wall Street were a TV sitcom, it would have descended into mind-numbing self-parody long ago.

  • Pippin vs Xbox, Round 2 (Score:3, Interesting)

    by Andy_R ( 114137 ) on Thursday April 14, 2005 @04:48PM (#12238901) Homepage Journal
    So, Apple are making big money selling a sub $500 power-pc box to home users, and Microsoft are going to be losing a fortune doing the same?

    Of course it's a very strange comparison, as one is supposed to get the brand into new markets and the other is supposed to make money by getting a cut from 3rd party games, but I can't help thinking Apple have come up with a better business plan than Microsoft's console division.
    • Apple is, damn it, Apple is. I am so sick and tired of reading comments that refer to a corporate entity, such as Apple, as a collective. This is more primitive than the their/there and your/you're errors. Argh!!!
      • You is a grammar Nazi!

        Apple are a collective, since they are comprised of many divisions and of many employees. It's correct english to say (for example) "Apple's recently acquired E-Magic division is no longer supporting PCs as Apple are committed to their own platform", or "Apple are experiencing better stock market returns now Steve Jobs is back in charge."
      • In British English, corporations are considered to be collective nouns.

        Read a book.
    • as one is supposed to get the brand into new markets

      Wait, you mean BOTH, right? Microsoft is still trying to horn in on the console business, although I'd say they did a fair job for a first console (losing money on hardware and huge advertising budgets don't hurt, either).

  • Summary of why the stock price fell (Score:5, Interesting)

    by amichalo ( 132545 ) on Thursday April 14, 2005 @05:47PM (#12239461)
    As a shareholder, I have spent the day perplexed and amazed at the 9% fall today (as well as a 5% fall post-market close!)

    I summarize the reasoning thusly:
    - Apple's gudance for Q3'05 is the same as the Q2'05. That is, Apple guided analysts towards $0.28 cents per share or about $3.15B for next quarter. This is EXCELLENT right? Well some analysts didn't think so because it is just about the same $3B that Apple posted this quarter. The analysts see the guidance as showing Apple is expecting flat growth. Further compouding this is the fact that the just ended Q2 is typically Apple's weakest of the 4 quarters and so Q3 should be higher than Q2. Offsetting this logic is the fact that in this quarter apple intorduced the iPod Shuffle which was quickly swooped up and generated a great deal of sales not typical for Q2.

    - Average price per sale (APS) was lower this quarter than peviously. Now lets try to figure this one out. Apple introduced the Mac mini at $499 and the Shuffle at $99. Demand for the products was high. The average of a $99 Shuffle and a $499 iPod Photo is $299. If Apple sells the same number of iPod Photos but also sells a ton of Shuffles, then the APS drops. (Duh, this is basic math.) The analysts don't like that though - they want high sales, high margins, and high profits. The logic escapes me. For years analysts say "lower your prices so you will sell more" Apple does, and is beat with the Bear stick by the Market.

    - Finally, there is the "iPod can't keep this up" camp that is so damn afraid that any moment now Sony will unseat Apple's 70% market share (No worry that Sony doesn't even account for a tenth of that market today). Also there are the people who think that as soon as there is a WMA player built into a cell phone, everyone will buy that instead of the iPod (No worry that Apple and Moto are about to release their own iTunes phone this year).

    So there you have it. my personal views. I own the stock so take that into consideration. I am also clammoring up some cash to buy more because I see the $36 and change stock price as pretty darn tastly for a stock that just beat bullish earnings estimate by a dime (that's two nickles) and whose forward PE is 20 though it's trailing is three times that. But don't you go buying up AAPL just because you read this because that would be plain foolish.
    • ... Further compouding this is the fact that the just ended Q2 is typically Apple's weakest of the 4 quarters...

      Yeah, I was wondering about this too. Apple beating projections for the post-christmas quarter would seem to be a sign that they're doing pretty well right now...

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