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Analysis: Only one-third of Samsung smartphone sales are of iPhone class
Daniel Eran Dilger at AppleInsider took a look at the numbers reported at Samsung Mobile's investor meeting today and reports that numbers show that the company sold fewer high-end smartphones than Apple this year. News from the meeting wasn't too upbeat for Samsung Mobile. Dilger notes that the executives chose to focus attention on the company's future plans to accelerate acquisitions to move focus away from lagging sales of high-end smartphones. Since 2010, Samsung has made about 14 acquisitions. Apple has made about the same number of acquisitions in the past year, and Google has made about one acquisition a week since 2010. Dilger quoted a Bloomberg report noting that Samsung "has used sales of cheaper handsets in emerging markets to stoke earnings in mobiles as growth in high-end devices slows amid market saturation." Samsung's latest quarterly earnings report shows that "high-end model shipments stayed at similar level QoQ" -- indicating stalled growth -- while Apple's iPhone sales were up 26 percent over the quarter a year ago. That's not all of the bad news for Apple's primary competitor in the smartphone market: Dilger points out that all of those devices sold by Apple were high-end, while roughly one-third (126 million of total projected 2014 sales of 360 million devices) will actually be premium models like the Galaxy S and Note series. Dilger ends his piece with the observation that "Apple also relies very upon iPhone sales, but it also has profitable Mac, iPad and iTunes, software and service related businesses, which generate 10 times the profit of Samsung's struggling Chromebook netbook, Android tablet, and Windows PC sales." For more details and graphs illustrating the situation that Apple's archrival is in, be sure to take a look at the AppleInsider piece. Image: Samsung, via AppleInsider
Apple R&D expenditures up 32% in 2013
As part of the Apple earnings folderol earlier this week, the company today filed a Form 10-K with the US Securities and Exchange Commission. There's some good news in there for those who want the company to continue to innovate with new and improved products: Apple spent 32 percent more on research and development in 2013 -- US$4.5 billion -- than it did in 2012. The company revealed that R&D expenses, when compared to net sales, actually remained fairly constant. Since net sales have ballooned, so have R&D costs. Much of the growth in R&D expenses was attributed to additional personnel. Apple's filing states that, "The Company continues to believe that focused investments in R&D are critical to its future growth and competitive position in the marketplace and are directly related to timely development of new and enhanced products that are central to the Company's core business strategy. As such, the Company expects to make further investments in R&D to remain competitive." Also in the 10-K were these tidbits: The company had 80,300 full-time equivalent employees as of September 28, with more than half (42,800) being employed in the retail operations. At the end of the company's 2013 fouth quarter, the company occupied about 19.1 million square feet of building space, most of that in the US and about 63 percent of it leased. Apple owns 1,428 acres of land, which we calculated to be roughly 9.5 percent of the size of Manhattan Island.
Apple Q4 2013 earnings call liveblog scheduled for 5 PM today
Apple announces its Q4 2013 earnings for the period of July 1 to September 30 today at 5 PM ET, and TUAW will be presenting a liveblog with analysis and commentary at the same time. Join us as we talk about the good -- or bad -- news, skewer some analysts as they ask CEO Tim Cook and CFO Peter Oppenheimer stupid questions, and otherwise try to make dry financial news fun. As usual, you can listen in on the exciting financial and accounting banter as Apple provides a streaming webcast of the event. We usually have "the numbers" about 30 minutes before the call, so be sure to visit TUAW to take a look at sales and earnings prior to the liveblog.
During the last 4 months, Apple paid out $25 million per day to iOS developers
During yesterday's media event, Tim Cook gave us his typical update on all things App Store. Specifically, Cook informed us that the App Store now houses more than 1 million apps and has seen more than 60 billion downloads. But there's one data point in particular that's worth some extra attention, namely that Apple has thus far paid out US$13 billion to iOS developers. Now anytime you're talking about "billions," you're clearly talking some serious business. Indeed, the $13 billion figure is so large it's easy to casually gloss over its significance. To help put the figure into perspective, here are some facts about Apple's App Store payouts to developers over the past five years. 1. The App Store has grossed $18.57 billion, with Apple keeping $5.57 billion of that. With the $13 billion figure, and Apple's 70/30 revenue split, it's easy to deduce how much money Apple has grossed and netted. Since the App Store first opened up for business in July of 2008, Apple has netted $18.57 billion. Of that total, $13 billion was paid out to developers with Apple keeping the remaining $5.57 billion. 2. Apple's monthly payout to developers are not just increasing, they're also accelerating. It took Apple nearly two years (June of 2010) to reach the $1 billion payment threshold to developers. Since then, the number of iOS devices has exploded, and naturally, the payouts to developers have increased at an accelerated rate. From January 2012 to January 2013, Apple's payout to developers increased from $4 billion to $7 billion. That payout comes out to an average of $250 million a month to developers over the 12-month timeframe. From June 2012 to June 2013, Apple's payout to developers increased from $5 billion to $10 billion, representing a cool $5 billion in payments in 12 months. That comes out to about $416 million per month in developer payouts during the 12-month timeframe. From June 2013 to October 2013, Apple's payout to developers jumped from $10 billion to $13 billion. That's an increase of $3 billion in just four months. Translation? During the last fourth-month period, Apple has been paying out an average of $750 million per month to developers. 3. Over the last four months, Apple has paid out $25 million PER DAY to developers. An average of $750 million per month comes out to $25 million per day in developer payouts. Again, that's $25 million every single day. 4. In one month, Apple pays to developers more money than the cumulative 2013 payroll of the three Major League Baseball teams with the highest payrolls. The 2013 payroll for the New York Yankees was $228 million. The Dodgers come in second with $216 million, while the Phillies come in third with $165 million. If you add that all together, Apple could cover those teams' entire 2013 payroll with just one month of developer payouts.
Carl Icahn reportedly pushed Tim Cook for $150B Apple share buyback
The planned dinner between investor Carl Icahn and Apple CEO Tim Cook took place as scheduled last evening, and Icahn is reporting through Twitter that the dinner was "cordial" and that he pushed for Apple to bump its share buyback program up to US$150 billion. Icahn believes that Apple's share price is "extremely undervalued" and that the company should spend more of its cash to bolster it by purchasing more shares at the current price. The continued discussions between Icahn and Apple will most likely come after the next quarterly earnings call, which should happen sometime in the third week of October.
Apple's iPhone revenues exceed those of Microsoft, Boeing, and other huge corporations
Just for the hell of it, let's say that Apple's iPhone unit was a separate company. Businessweek has done a bit of speculation and determined that the iPhone unit would be the ninth largest company in the Dow Jones Industrial Average based on revenues. Those revenues, which currently reach over US$88 billion annually, are alone enough to beat out those of entire mega-corporations. Think that consumer goods giant Procter & Gamble is huge? iPhone revenues just exceed that company's annual revenues (about $85 billion). Surely all of those huge aircraft rolling out of Boeing's plants have to be worth more in sales revenue than a pile of iPhones, right? Wrong. Boeing's revenues are less than those of the mythical iPhone-only company. And remember, Apple also has other product lines -- the iPad, Macs and various services including iTunes -- that also contribute to the bottom line. Just recall that at the announcement of the iPhone at Macworld Expo in 2007, Steve Jobs felt that achieving 1 percent of the mobile phone market would be a measure of success. In 2013, the iPhone owns about 7 percent of that global market, but brings in more than 60 percent of the profits in the market. Last weekend's huge launch of the iPhone 5c and 5s make the future of Apple look bright indeed.
It's a date! Carl Icahn and Tim Cook to meet next Monday
After investor Carl Icahn made a big splash by purchasing about US$2 billion worth of Apple Stock last month, he said via Twitter that he was going to have dinner with Tim Cook to discuss the "magnitude" of Apple's share buyback program. CNBC is reporting that the two will be meeting Monday in New York City, although it may not be over dinner. Icahn isn't a "top 10" shareholder in the company, but his stake -- and influence -- is still impressive enough that Cook wants to meet with him. For more on the "date" and other breathless banter by CNBC's morning team, check out the video embed below.
Daily Update for September 23, 2013
It's the TUAW Daily Update, your source for Apple news in a convenient audio format. You'll get all the top Apple stories of the day in three to five minutes for a quick review of what's happening in the Apple world. You can listen to today's Apple stories by clicking the inline player (requires Flash) or the non-Flash link below. To subscribe to the podcast for daily listening through iTunes, click here. No Flash? Click here to listen. Subscribe via RSS
Apple adjusts its quarterly earnings outlook on strength of tremendous iPhone sales
In the face of pundits who thought Apple's iPhone success had plateaued, Apple sold a record number of iPhones this past weekend -- 9 million units to be exact. In fact, Apple's iPhone sales this past weekend were so great that Apple this morning filed a regulatory filing with the SEC slightly tweaking its initial financial forecasts for the quarter. Apple expects total company revenue for the fourth fiscal quarter to be near the high end of the previously provided range of $34 billion to $37 billion, and expects gross margin to be near the high end of the previously provided range of 36 percent to 37 percent. Apple's fiscal quarter ends on September 28.
AAPL shareholders to receive dividends today
Apple will pay its shareholders another quarterly dividend today. Shareholders of record as of August 12th will receive US$3.05 per share. With over 908 million outstanding shares, that means Apple will spend $2.7 billion today giving money back to its shareholders. However, as AppleInsider points out, Apple is actually spending $110 million less this quarter on dividends because the company spent $16 billion buying 36 million of its own shares last quarter. Apple repurchased some of its own shares because the company saw its share prices as cheap and doing so would allow it to pick them up while depressed and also receive some healthy tax write-offs. AAPL has been on a roll over the past few days with Carl Icahn purchasing $1.5 billion of AAPL on Tuesday and other hedge fund and regular investors getting back into the company on Wednesday.
Apple is the world's most valuable company... again
Wow, it seems like it was only yesterday that we were reporting that Apple had slipped by ExxonMobil as the world's most valuable company. Well, actually it was almost two years ago, but we're happy to tell you that Apple's stock price has soared recently, bringing the company back into the top spot once again in terms of market capitalization. It's interesting to note that back on August 10, 2011, Apple's market cap was at a paltry US$337.17 billion, nowhere close to this morning's $416.3 billion. Take that, Michael Dell...
Apple buying back many shares of AAPL
Last April, Apple announced plans to increase its share repurchasing program from US$10 billion to $60 billion. Apple at the time noted that this represented the "largest single share repurchase authorization in history." While the full buyback program is slated to be finished by the end of 2015, Apple has already began buying back shares. Philip Elmer-DeWitt of Fortune reports: By my calculation, the company spent $16 billion last quarter ($4 billion in cash, $12 billion through the so-called accelerated share repurchase program) to purchase 36 million of its own shares at an average price of just over $444. Coupled with Apple's dividend payments, which now stand at $3.05 a share, Apple over the course of three years will be spending $100 billion as part of its initiative to return money to shareholders and buy back its own shares.
Numerous Apple executives sell millions of dollars' worth of shares
Last Friday we reported on a new SEC filing from Apple which relayed that Apple's Board of Directors tweaked Tim Cook's compensation package by adding a performance metric to his stock options. In addition, there were a number of other SEC filings from Apple which disclosed that a number of top executives sold millions of dollars' worth of Apple shares that had recently vested. Here's the breakdown: Apple CEO Tim Cook sold 41,391 shares for $17,115,178.50 Jeffrey Williams sold 38,181 shares for $15,787,843.50 Bob Mansfield sold 14,465 shares for $5,981,277.50 CFO Peter Oppenheimer sold 37,828 shares for $15,641,878 Phil Schiller sold 37,878 shares for $16,287,540 Bruce Sewell sold 37,828 shares for $15,641,878 Apple investors, however, shouldn't be worried that Apple's executive team is losing faith in the company. Keep in mind that the shares above were originally part of an allotment granted back in November 2011 with two vesting dates. The first one was on June 21, 2013 and the second is set for March 21, 2016. In other words, it's business as usual.
Apple's April 'mugging'
Philip Elmer-DeWitt over at Apple 2.0 had an interesting post today talking about why Apple's share price took such a beating in April. Elmer-DeWitt pointed out a column by Canadian money manager and financial columnist Mal Spooner in which he describes a burst of short-selling between April 2012 and April 2013. Short-selling is the brokerage practice of selling stock that you don't own, betting that the price of the stock will drop. The short-selling of AAPL that started last April was described by Spooner as being like swarming, where an "innocent bystander is attacked by several culprits at once." At the time Spooner wrote his column in early April, things were quite bad for Apple. Short interest in Apple had climbed from 8 million shares in April of 2012 to 20 million in April 2013. During the last two weeks of April 2013, short interest doubled again to 41.6 million shares -- and that's when Apple's share price fell to $385.10 (it's currently hovering around $444 - $450). Spooner's comment in early April points out how unethical the practice of shorting a valuable stock really is: "I've never claimed to be all that smart, but I just can't figure out how aggressively attacking a company's share price, selling stock that the seller doesn't even own, for the sole purpose of transferring the savings of innocent investors into one's own coffers... is a noble thing. Isn't it kind of like a bunch of thugs beating someone up and stealing his/her cellphone declaring it was the loner's own fault for being vulnerable?" The bears are still shorting AAPL, but the short interest has fallen to 26 million shares in just two weeks. For Apple, hopefully that's a sign that shares may recover some of their value in the future and that the muggings are over for the time being.
Livestream of Tim Cook and Peter Oppenheimer at today's congressional hearing
Catch up on all of Apple's tax controversy here as both CEO Tim Cook and CFO Peter Oppenheimer gear up to testify in front of Congress to address Apple's billions in foreign-stored cash.
Apple's $17 billion bond deal allows it to avoid $9.2 billion tax hit
Yesterday I reported on the clever economics behind Apple's US$17 billion bond deal, specifically pointing out that the interest Apple will owe on each share it repurchases will be less than the dividend it would have otherwise been responsible for. Going a bit further, Businessweek did some calculations surrounding Apple's $17 billion bond deal and deduced that the company is avoiding a $9.2 billion tax hit by borrowing the money as opposed to using its own cash pile. Specifically, if Apple wanted to raise $17 billion by using its foreign stash of cash, it would have had to repatriate upwards of $26.15 billion. With a 35 percent corporate tax rate, Apple would have owed about $9.15 billion in taxes to Uncle Sam. Instead, Businessweek notes that Apple's annual interest payments on its issued bonds will only come out to about $308 million. And again, those payments are tax deductible. All in all, Apple's structured bond deal appears to be the result of some extremely shrewd financial planning.
Daily Update for May 1, 2013
It's the TUAW Daily Update, your source for Apple news in a convenient audio format. You'll get all the top Apple stories of the day in three to five minutes for a quick review of what's happening in the Apple world. You can listen to today's Apple stories by clicking the inline player (requires Flash) or the non-Flash link below. To subscribe to the podcast for daily listening through iTunes, click here. No Flash? Click here to listen. Subscribe via RSS
Apple reports Q2 2013 earnings
It's the earnings report everybody has been waiting for. Apple just announced earnings for the second quarter of its 2013 fiscal year, and the news is actually quite good. Apple's own guidance for Q2 2013 expected revenues in the range of $41-43 billion, with gross margins in the range of 37.5 to 38.5 percent. Wall Street analysts were in the same general range, with institutional investors looking at an average earnings number of $41.82 billion and independent analysts a bit more bullish at $43.75 billion. Results for the same quarter last year were $39.19 billion in revenue, earnings per share of $12.30 and a gross margin of 47.4 percent. Actual results for the quarter were as follows: Revenue: $43.6 billion (beat expectations and institutional investors) Earnings Per Share: $10.09 Gross Margin: 37.5 percent (met expectations, did not meet street expectations) Tim Cook was quoted as saying, "Our teams are hard at work on some amazing new hardware, software and services, and we are very excited about the products in our pipeline." Apple is providing the following guidance for its fiscal 2013 third quarter: revenue between $33.5 billion and $35.5 billion gross margin between 36 percent and 37 percent operating expenses between $3.85 billion and $3.95 billion other income/(expense) of $300 million tax rate of 26 percent Join us at 4:50 PM ET today for a liveblog of the earnings call.
