Linked by Thom Holwerda on Tue 23rd Apr 2013 22:35 UTC
Apple "Apple just posted its hotly-anticipated Q2 2013 earnings, and the company posted a profit of $9.5b on revenues of $43.6b, compared to $11.6b in profit on $39.2b in revenue this quarter last year and $13.1b in profit on $54.5b in revenue last quarter. That's right in line with the company's guidance from last quarter. Most importantly, iPhone sales are fairly flat year-over-year. Apple sold 37.04 million in Q2 2013 versus last year's 35.1 million, a modest growth of seven percent. iPad sales for the quarter were 19.5 million, up a massive 65 percent from last year's 11.8 million, but the average selling price (ASP) dropped fairly steeply year-over-year, likely due to the introduction of the cheaper iPad mini."
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RE: What's going on here?
by galvanash on Wed 24th Apr 2013 00:32 UTC in reply to "What's going on here?"
Member since:

I don't see the kind of excitement for Apple products (esp iOS) as I used to. Even the Apple fanboys in the tech press are kind of going 'WTF'? But I think I have an idea of what's going on here. The problem for Apple is that they don't have Jesus Jobs around anymore.

Ill probably be modded down but what the heck...

In my opinion, the "character" of Apple as a company is being slowly transformed from the Jobs-era. This is being done by Tim Cook, and it is completely intentional.

Jobs ran the company like it was a zero-sum game - to win everyone else had to lose. He didn't want to compete with anyone, he wanted to own a market lock, stock, and barrel. Success was going through the slow, meticulous, and risky process of perfecting a new "game changing" product in secret so that it could be sprung upon the world, instantly marginalizing any competing products to the point they had to spend years scrambling to catch up. Once the lead was establish you protect it (i.e. patents, legal actions, etc.) as long as you can and milk it for all that it is worth, until finally it has run its course and you rinse and repeat for the next huge influx of cash.

Jobs finally hit pay-dirt with the iPod using this strategy. Then it was iPhone. Then it was iPad. Apple made gobs and gobs of money and everyone is happy...

Well not really. The thing is if you keep doing this you pigeon-hole your company. You become dependent on the next big thing to motivate investors - it doesn't matter how much money you made already, investors are more concerned with whats coming, and since you do it is secret they don't know what is coming until is comes. Sure, they know something is coming, but they don't know if it will make money until it is released. In short Apple demonstrates it has an almost supernatural ability to gamble successfully, but it is still gambling.

Apple has not been bitten by this as of yet (at least in their current incarnation), because they haven't dropped a real dud on the market yet...

Tim Cook, imo, doesn't want to run a company that way. It certainly worked for Jobs, but it is a dangerous game... He wants Apple to calmly and intelligently manage the life cycle of their products. He wants to build on what they have, and he wants Apple to develop a bit of zen and slow the f*ck down a bit. More importantly, I think he would like Apple to finally become a grown up company, i.e. something investors think of as stable long term investment.

So yeah, excitement is down a bit. I don't see that as a problem though - I think it is completely intentional. I think Apple will still "innovate", but the pace will slow down and more focus will be put on capitalizing on their existing products - less hype and more straight up business sensibilities.

I think the recent stock repurchase announcement is very much inline with the new "grown up" Apple. Jobs would have never threw 60 billion in cash back at investors unless the stock was completely tanking... But it isn't tanking by a long shot - unless your a short term investor. This kind of buyback program is aimed to weed out those kind of investors (i.e. buy their stock back) so that Apple can resell it later (at a profit) to investors who will stick it out and believe in the company over the long haul - all Cook has to do is convince them Apple is a strong ship that won't rock too much.

That is something Jobs could never do.

Reply Parent Score: 11

apple stock purchases
by shotsman on Wed 24th Apr 2013 06:53 in reply to "RE: What's going on here?"
shotsman Member since:

I agree with you. If Apple has declared that they were going to issue 'new' shares then I'd be worried about the future of the company.

most major corporations do buy back lots of shares. IBM has been doing it for years. It keeps the share price high but can provide a better ROI than just dividends.
The difference between a Growth stock and an Income stock perhaps?

disclaimer: I bought $50K of Apple at $32 and cashed out at $190 years later. I also lost a load on Compaq/HP over the same period.

Reply Parent Score: 3

RE: apple stock purchases
by galvanash on Wed 24th Apr 2013 23:37 in reply to "apple stock purchases"
galvanash Member since:

most major corporations do buy back lots of shares. IBM has been doing it for years. It keeps the share price high but can provide a better ROI than just dividends.

It also does a number of other things... It demonstrates confidence from the board in the company's ability to grow relative to their current stock price. It is in effect saying "we are betting 60 billion dollars of cash from our own pockets on our ability to make our stock price go up from where it is now".

Also, it is very attractive to smaller short term investors who will see it as a quick win and will happily trade some stock for $$$. Apple can stockpile the repurchases and reissue later when the stock price is higher, making money along the way.

Lastly, it helps maintain earnings per share - the more stock they sell the more eps drops...

All in all I think Apple wants to make itself more attractive to fund managers, and to do that they need to pay dividends and demonstrate some intent to stabilize.

They don't want flighty investors, and to make yourself attractive to long term money you have to have a long term plan.

Tim Cook thinks long. Steve Jobs didn't.

Edited 2013-04-24 23:38 UTC

Reply Parent Score: 3

RE[2]: What's going on here?
by HappyGod on Wed 24th Apr 2013 07:48 in reply to "RE: What's going on here?"
HappyGod Member since:

You're absolutely right. I really do believe that's the game plan for Apple by Tim.

Unfortunately that excitement is like crack for some people. They've had a fair bit of it, and they want more.

If Apple stops providing it, they'll look elsewhere. And they are looking elsewhere. Just look at the latest product launch for the S4. It was right over the top, in the kind of way that Steve Jobs was like to do in the past. It wasn't quite as slick as Apple, but you could clearly see what they were trying to do.

But, most importantly; grown-up, boring companies make grown-up, boring products. It's the irresponsible, risk-taking companies that make the stuff you actually want to buy.

Just ask Microsoft.

Reply Parent Score: 3

RE[2]: What's going on here?
by unclefester on Fri 26th Apr 2013 06:23 in reply to "RE: What's going on here?"
unclefester Member since:

The word on Wall Street is that an active search is on to find a replacement for Tim Cook.

Reply Parent Score: 2