Apple posts $1.58B profit, buys monocle, top hat
By Nilay Patel 
posted Jan 22nd 2008 4:52PM
posted Jan 22nd 2008 4:52PM
Well, the holidays were pretty happy down Cupertino way this year -- Apple just posted its Q108 financials and they're impressive. Spurred by sales of 2.3 million iPhones, 22 million iPods, and 2.3 million Macs, Steve and the boys raked in $9.6 billion in total revenue, which translates to $1.58 billion in pure, glorious profit. That represents Apple's latest best quarter ever, with a 35 percent jump in revenue year-over-year -- a $2.5 billion increase from last December. The $1.76 profit per share also beat consensus analyst estimates of $1.63 a share, and, as Piper Jaffray's Gene Munster pointed out in his notes, Mac sales have increased 43 percent since last year. All in all, quite a quarter for a fruit company -- we'll let you know what else we find out during the conference call later today.
And yet, still didn't meet the shipping quotas for their cash cow, which caused their stocks to tank. Thanks for thinking about your own bank account before your investor's portfolios guys.
They can't, the european union has decided that our dollar is worthless there, though it's still worth the exactly same amount in every nation we actually have trade with, and nothing is inflating here save oil, which is again, the eu's fault. The arabs have to trade the dollar for euros, so, the euros saying they'll give less per dollar, raises the price of gas for the world. Thanks europe.
But wait, there's more.
This doesn't just mean the arabs, it means american business too. It costs us more to operate in europe, and we pass that cost right on to you. Perhaps the UK is ready to acknowledge some value to the US dollar?
See what happens when you quit being so selfish and start realizing people still need Windows on the computers....
NOW release the iPhone into the wild and see what happens.
How can they post Q108 profits if Q108 isn't over yet?
@ Wel,
Apple, like many companies, start their business year October 1st. Since the holiday season usually makes this quarter the most profitable for companies it's a way to start the financial year out on a positive note.
(That is the simple answer)
Strange comment Kiwi.
Odd, shares closed down -$5.72 today and about $155.74 still a steal from the target $215 for the year. I believe it will take the market 48 hours to digest the financials, but despite the recession woes, I don't think there is any other way for AAPL but to go up.
Google Finance shows it down a further $15 to $140 in afterhours trading. I wonder what the delay there is. I wonder if that signals people betting against apple's earnings and losing or what?
And yet take a look at their after hour numbers,http://moneycentral.msn.com/detail/stock_quote?ipage=qdp&Symbol=AAPL, as of right now down another 15+ points or 10% in value. Looks like the market was expecting them to blow through their numbers even more than they did. Although things are a little askew right now.
Given their forecasts for next quarter, I doubt there is much up.
The market expected on average 1.62 EPS, Apple posted 1.76 EPS. Really, this makes no sense to me...
I think is the unloading of a lot of folks that shorted the stock the days before the announcements, and haven't realized the news. Also it is something of a trend: With the exception of the 2007 iPhone announcement it has become almost a given rule on AAPL to be down almost 9% post-January. There is just too much hype on this stock.
Where is my God Damn 3G iPhone?!
And AAPL is already dipping below 140 a share in after hours...
credit crunch FTW!!!
Hmm... Because the markets are down. American markets have lost about 1 to 2% today. Asian markets were down 5 to 7% yesterday. Europe is also down.
Look at it this way. There is a fire sale. You cannot have ANY item in your store without a discount, how much ever good it might be. EVERYTHING has to go.
No other way but up? Hmmm.... Really doubt so, a hefty 60% of Apple's revenue (SEC form 10-K) came from US consumers, guess what, hello?! Recession?! Ever heard of that word? Today's unprecedented action by the Fed shows what deep shit US and A is in. And where do you think your iPods, iTouch, Mac Book, Mac Pro, iMac, Mac mini, xServe, apple TV is made? Fcuk Me! I rather buy a few guns, go shoot bambi, maybe donate the rest to Ron Paul's campaign.
Also that MacBook Air, stylish indeed, for posers that is, I would definitely count this as a discretionary purchase. Hmmm... Any luck with the iPhone? Apparently sale ain't that hot in Euroland, guess those Eurothrash just ain't clued up as to how very 'boom' 'boom' this is.
You guys aren't getting how the market works...
"Target price" means nothing. Nothing's a bargain in relation to its target price. That's an arbitrary number that some analyst somewhere arrived at.
P/E ratio means something. Apple's P/E is 39.59, which is actually not ridiculous for a tech company but is still well over the S&P 500 historical average of about 15. So Apple is not a "bargain" unless you think it's going to continue experiencing explosive growth - otherwise you're paying $40 for every dollar of earnings, which is not a very good deal.
Also, with a company like Apple, people *expect* them to blow past guidance. They do it every quarter. Probably the next six quarters are already priced into the stock and every one of them is expected to be better than guidance. If Apple ever came in *at* guidance, you would see the stock get absolutely *hammered*. Because that would mean the company did worse than investors had expected when they originally bought the stock. Everyone's expecting explosive growth out of Apple.
So if you bought at 170, I hate to tell you but you bought high. The stock will eventually get back up there, assuming Apple continues to do well, but this is not a "bargain".
Here's a little tip: no company with the amount of hype surrounding it that Apple has is *ever* a "bargain". You honestly think you're the only person following Apple? You think other investors have never heard of them? Institutional investors spend *billions* on companies like Apple, and they've got huge research teams working to find the best deals on stocks. Apple is not somehow flying under the radar here. The stock is priced where it should be priced.
Sorry to burst your bubble.
(Kind of an apt pun, I guess.)
If we were in a recession and discretionary purchases were down, why this has been a record quarter, ever? What has changed from November to January? Is inflation up? No. Is consumer confidence index (the single economic measure that we would need to be looking at here) down? No. Are AAPL fundamentals bleak? No. Is the future forecast of the company conservative? Yes. It should be. That always has an impact on stock because some translate conservative as bad forecast.
The stock dropped because analysts were predicting a much higher return per share.
Sorry I thought this was Engadget not Wall Street Journal.
@ Crayola: "Hmmm... Any luck with the iPhone? Apparently sale ain't that hot in Euroland, guess those Eurothrash just ain't clued up as to how very 'boom' 'boom' this is."
I live in [a part of] "Euroland" and trust me, there are SO many people that WANT iPhones. They just can't justify the tariffs. £35+ a month? £420+ a year? £840+ per two years? That's just ridiculous. I would NEVER justify paying that much for a phone, whether or not it had an Apple on it - which is why I shall invest in an iPod Touch and keep my Samsung phone instead. Who cares about one device when I can have two for much less than the price of one?
The only two iPhones I've seen in the flesh were owned by my Math teacher and some guy in a rich village I visited once. That's all. We just can't afford them - even if we DO want them. Or maybe some of us just know how to use money more wisely than our Western sibling? - after all, we're the ones with a currency worth twice as much as yours :P
The only negative I can see is 2.5M iPhones. I have an iPhone, it's a blowaway product, everyone who's seen it wants it - they should have sold 5 or 6M of this by now. They have been limited by their locking+revenue sharing strategy here. I hope Apple learns from this and in the future just sells their gadgets to whoever wants to buy them - e.g. most of the world, you can't even buy an iPhone from Apple. Because they haven't struck a deal with local carriers yet.
All else is impressive, Mac unit growth tells me that the hammering of AAPL after hours is a typical panic reaction to what I don't know. Perhaps just "buy on rumor, sell on facts"?
@nikster
That's how many iPhones they sold in 1 quarter not total. The total amount sold that was reported at Macworld was over 4 million.
Since the iPod and iTunes consist of 50% of Apple, year over year growth of 5% is horrible. Apple likes can claim that the Touch is going to be the greatest thing ever, but the numbers don't lie. 5% growth for 50% of your company doesn't warrant a P/E of 40.
Anyone who thinks the stock should go up because of the last quarter shouldn't be investing in stocks which are based on future earnings.
That's impressive for any company. 35% increase. holy shatz. Too bad the rest of the economy is sucking pickled pig dingle right now.
"...the economy is sucking *pickled pig dingle right now*" = xDDDD
That was hilarious.
---------
If Apple was able to do that well, for our economy's sake, Steve Jobs for president, perhaps?
Hrm, not needed. I heard he was just going to update all the Apple products at once--free of charge, this time--to enable iNdepence, which is a bit of a misnomer as it will be step one in Apple's quest for global domination.
They are basically running unchallenged. MS can't get their shit together with Zune and the iPhone is currently the supposed top of the heap luxury fashion item.
As much as I hate Apple, their Iphone and Ipod touch makes me want to buy in (but that isn't gonna happen).
God Forbid Steve Jobs ever became president...
Everything would be solid colors and covered in transluscent glaze, everything would be proprietary, there would be no fun games to play, and the Sun would be changed to a spinning rainbow thingy.
If Steve Jobs became president?
Personally, I'm all against a cult run country.
Otherwise known as Communism.
I'll star it the conversation...
Mac is greatblahblahblahblah iphone awesomeblahblahblah
Your an idiot blahblahblah
Proper grammar isn't necessary when posting a comment on a blog *except* when insulting someone's intelligence. Hint hint...
Whoa, Stock down to 140ish right now.
I'm sooooooooo glad I didn't break my stock market cherry with my christmas bonus and APPL @ 200ish.
congrats appl.
Please tell me you didn't abbreviate "apple" with five characters.
But that's the American way.
I think he was trying to sound, you know, "Wall Street"-y and savvy, with a reference to 'aapl'. He ended up with a typo.
Their stock is down because of their forward guidance.
"Apple disappoints -- The iPod and iPhone maker reported better than expected sales and profits but stock plummets on weak guidance for its next quarter..."
"For its second quarter, Apple expects earnings of about 94 cents per share on about $6.8 billion in revenue. Analysts expected earnings of $1.09 per share on revenue of $6.98 billion."
http://money.cnn.com/2008/01/22/news/companies/aapl_apple_earnings.ap/index.htm
In case noone ever noticed, Apple always gives conservative guidance. More often than not, they also fall after giving their quarterly results (even if they are great). The level it is going down suggests to me that recession fears are coming into play. Maybe I'll buy an option tomorrow.
Tomorrow is shopping day.. a fire sale is on, I won't miss it this time.
Not surprising since they pretty much markup everything at least a 100%.
Unlike Dell, who only marks up about 30%, Apple has a right to - their stuff actually works, and it works well.
You got to remember, Dell has extremely improved themselves over the past three years, but Apple needs to mark it up because their warranty/advertising/everything about them costs money.
So long as you pay $20 for your updates that is.
@ csjk789
That's what my friend told me. I kid you not, within the next 30 minutes, his iPhone's SMS didn't work (because firmware 1.13 screwed it up), his MacBook didn't work (with Netflix, and my NAS's control panel).
I envision a world wherein everyone uses macs and pcs are broken down to create alternative fuels.
A Mac IS a PC, regardless of what Apple's marketing department says in their commercials. It has all the same components of a Windows, Unix or Linux machine it just has a different OS. It has the same processor and HDD, optical drive, video card, sounds output methods...for shite's sake, it will even run Windows if you so choose!
How can Apple fan boys think that they are somehow using something besides a personal computer to brows the tubes?
@nathan
Thank you thank you thanks I have been saying this FOREVER and nobody seems to listen, that why I hate those stupid mac vs pc adds it should be Windows vs OS X but that doesn't sound condecending enough.
I'm well aware. Have you any substantive argument or did you just want to point out a common error that most wouldn't even pick up?
Holy dystopia!
No thanks; I actually enjoy having control over my components and, you know, free will.
No duh, Sherlock. Well, a Mac is a PC with a specific hardware set that makes it much easier to tune the hardware for the OS. Windows works on a Mac so well because there's ONE SINGLE SET of drivers that makes it work - well, a set for each specific version of Windows that runs in Boot camp. (Even 64 bit Vista now).
As for the Mac vs PC ads, did Teetdogs notice that many of them do make it WIndows vs OS X. Or is he so blind that he can't see?
Such lame arguments as this only show one thing. People don't get it. It's about the software! The OS! Just like you can take a Brillo pad, a few ounces of TNT and some detergent and blow up a house (read: Inside Delta Force), the same with making a piece of crap computer, or a great one with just the right combination of pieces of hardware and software.
I don't understand how they could possibly be crashing so low in after hours though...
everything is crashing in after hours today. you can't spell depression without recession.
You can say that again.
I don't understand how they could possibly be crashing so low in after hours though...
The truth is coming out.
"Oppenheimer: iPod market is bigger than market for just simple music players. iPod will become first mainstream Wi-Fi mobile platform"
Your headline reads "Apple posts $1.58B profit, buys monocle, top hat". Your article says nothing about buying monacle and top hat. What's the deal?
Don't you watch Futurama
Leela: "I know Fry's rich, but do we really have to wear these top hats?"
Bender: "Maybe you don't understand just how rich he is. In fact, I think I'd better put on a monocle."
I'm afraid that I don't watch "Futurama" so I did not "get" the reference. Thanks for letting me know!
"Dont you watch Futurama"
havent you ever played monopoly?
Cmon guys, monocle and top hat is a reference from monopoly.
Yeah, but Monopoly is awful, while Futurama is awesome!
You get to burn in hell for calling Monopoly awful...
As long as I don't have to play Monopoly... Never liked it.
Wait, I thought nobody uses Macs?
[sarcasm off]
I don't see the need for your sarcasm tag.
It's not hard to have such a huge profit when your products are severely overpriced. [Drum and symbol thing]
For nearly 2.5 million people THIS QUARTER, Macs were obviously not overpriced. Maybe overpriced in the sense that a BMW is overpriced compared to a Chevy, but hey, you get what you pay for. If people didn't see the value in owning a Mac, they wouldn't buy them.
@Ellianth: Huh? So all you have to do to post huge profits is to severely overprice your products?
Seriously, that makes no sense whatsoever.
...nor does "drum and symbol."
@ the people who bothered to reply.
I was kidding. However here is my logic. If it costs you 100 dollars to make something and you sell them for a whole lot more than 100 dollars, then you end up with a lot more profit. Like say, you sell it for 600 dollars. 500 of that is profit.
Drum and symbol. I couldn't spell that "du-du-dum*pish*" sound (even now it's probably spelt wrong) so i just wrote drum and symbol in brackets.
Its small marketshare would point that out.
No, nobody reads anymore.
where's the news, cited in the headline, about purchasing monocle and top hat?
How about sharing the wealth Apple?! How about free iPod Touch upgrades for us early adopters that lined your pockets in 2007. (Yes, I'm bitter.)
I think it's interesting that Apple sold just as many iPhones as they did computers.
It's simple:
Their earnings they posted = good.
Their forecast for 2 quarter 2008 = bad.
They lowballed their forecast for 2Q to .94 cents per share vs. analysts expectations of 1.09 per share
Okay, so Apple grew the top line about 35% and their backward looking P/E is around 46 with the stock at $157. Still seems kinda expensive really. A P/E of 35 would only happen if the stock dropped to $118 or so.
Also, I just checked the number of Macs (1.517M in the final quarter of 2007, up 36% for the year) vs the number of PCs shipped in the same quarter (Gartner says 75.9M in the same quarter, up 13% for the year). Even though Macs continued to outgrow PCs this quarter, the Mac market is still only 3% of the PC market. In fact Dell shipped 5.3M PCs just to consumers in the same quarter, and that's probably only 1/4 or less of their PC business...
You really should be looking at the forward P/E for future earnings (P/E=~24, PEG=1.4). This is cheap for how quickly its earnings are growing.
By forward P/E, GOOG seemed spendy for each of the last 24 months (stock still went f/ $400 to $585--today's close).
I appreciate your trying to sound smart and all (and your point about 'forward P/E' actually makes sense) but anyone with half a brain for investing knows that 'PEG' is an utterly meaningless measure.
What a shame the people who make their gadgets dont get a just share of the profit. It stinks doesnt it?
I'm certain that employees have an employee stock plan that allows them to buy discounted shares, options, etc. Plus, they get bonuses just like any other company's employees, and the value of the bonus is usually tied to how well the company did that year. Also, it's nice to know that your employer isn't at risk of going out of business and leaving you without a job.
I think Greg was trying to say, "Isn't it a shame the employees don't get their options back-dated like His Steveness."
The bonus system is not a fare share of the profits. By the people who make the stuff, I was also refering to the factory workers who make the product, who are mainly in China.
Apple products are great, but it would be nice to see a more equitable model for people getting the appropriate amount for their labour.
http://www.ilounge.com/index.php/news/comments/low-wages-long-hours-for-ipod-factory-workers/
According to this, ipod workers are paid $50 a month. This needs context, becasue $50 a month may go along way.
$50 (im assuming US$) = (around) 350 Chinese dollars, per month. By comparison, a primary school teacher in a poor province would earn about 1500-2200 Chinese dollars a month, with insurance and housing support (as well as only 8-9 hour days).
A worker I know who does a really manual job in the railway in a poorer city, gets around 1000 per month, with benefits (and free decent housing).
So, in light of this, the praise for the huge profits is quite disturbing.
@Greg, the Chinese currency is called the 'yuan (pr. 'yu-wen') and not dollar. But your exchange rate is about right.
Yes, I live in China so im aware its called the "yuan", but yuan just really means "dollar" in chinese
Factory workers make less than school teachers in the United States, as well. Imagine if some foreign company started a factory operation in the United States and paid all of its workers $7,000/month ($84,000/year). What incentive would people have to get jobs working for their own country's economy if they could just do factory work and be set for life? I understand your point that outsourced factory work has people working without benefits or housing, but we can't just inject money into the Chinese market to match the United States economy without repercussions.
Jon, I wasn't suggesting that at all. But in the US, does a factory worker earn 5 to 6 times less than a school teacher?? (and Im talking about a regualr school teacher in a government school). In Australia, where I'm from, that's certainly not the case.
I have lived in a very ordinary Chiense city before, and even if you were to cook all your own food and live very simply, 350 a month would leave you about 150 a month savings. A good local cough syrup, for instance, costs around 10 yuan, so in that context the salaray is appalling.
I'm not suggesting that Apple pay US salaries, but even decent local ones would be a step in the right direction.
And I might add ethically, whats wrong with some of these workers recieving a small share, in the form of a bonus, for their work?
Like Mr. Peanut? Couldn't be the Monopoly guy, as that is already taken by MSFT (as demonstrated by the settlement w/ the DOJ).
That top hat and monocle didn't work out so well for the Monopoly guy the other night on Family Guy...
That is an awesome, awesome title.
they made that much money with those handicapped products !
i wonder what the result would be if they had good enough product! like , 3G iPhone , or easily upgradeable iMac.
I for one was very disappointed not to see the monocle and top hat illustrated.
"I want to take those profits and I want to put them into a strategic [communication] fund that will begin to fund alternative, smart [cellular] devices; alternatives and technology that will begin to actually move us toward the direction of independence [from carriers]."
Borrowed quote from an inept presidential candidate altered into an intelligent statement that should come from Steve Jobs...too bad he doesn't have the bullocks to make a statement like this.
seriously, an open wifi device is going to kick all their asses. I can't wait for the google phone. Now if they can just get that 700 mhz spectrum we'd ALL be set.
So, where's the post about Microsoft's 66% rise in quarterly net profit to $4.35 billion? If we're going to post about one company's profit jump, why not the others?
http://www.reuters.com/article/technologyNews/idUSN1832542920080122
I think Apple is a much more exciting company then Microsoft. And Excitement sells. People don't get as excited about Microsoft press conferences as they do Apple Keynote. Plus typically people like to root for the little guy and Apple is the little guy in the OS category when compared to XP and Vista.
No wonder they are making such huge profits when they charge so much more for their products outside of the US:
Apple iPod Classic 80Gb: an extra $64
Apple Nano 8gb: an extra $56
Apple TV 160gb: an extra $200
I can't believe that it costs them this much more to sell in the UK as opposed to the US, I won't be buying Apple until they sort out their pricing.