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Apple and Samsung earn 99 percent of mobile phone vendor profits
While the two big smartphone vendors, Apple and Samsung, are battling it out in the courtrooms, they're still in total control of operating profits. Horace Dediu of Asymco has just published his analysis of operating profits for the top eight mobile phone vendors and found that Apple and Samsung together pulled in 99 percent of the profits in the first quarter of 2012. Apple had the largest share of that total, with a full 73 percent of the profits made by the top mobile phone vendors. Only Apple, Samsung, and HTC made a profit in the first quarter of 2012, and HTC's share was a tiny 1 percent. The other companies on the list -- Motorola, Nokia, RIM, LG, and Sony Ericsson -- all had losses for their handset businesses. Apple and Samsung are reaping the benefits of being the top vendors in the lucrative and growing smartphone business. Profits from the eight top vendors detailed in Dediu's report have gone from US$5.3 billion to $14.4 billion, primarily from carrier subsidies on pricey smartphones. [via MacRumors]
Travis County Commission OK's Apple's Austin, Texas expansion plans
As expected, the Travis County (TX) Commission has approved an economic development package for Apple to spur the development of jobs in Austin. The package was approved last night by a 4-to-1 vote, and is expected to bring new jobs to Austin in return for US$5.4 to $6.4 million in tax rebates. In return, Apple will make an expected $282.5 million investment in Austin. The company has also received an $8.6 million economic development grant from the city of Austin, as well as a similar $21 million grant from the Texas Enterprise Fund. The incentives were key to Apple basing its Americas Operation Center in Austin, which is expected to add about 3,600 new jobs to the existing 3,100 who currently work at the Northwest Austin campus. Apple state and local governmental affairs manager Jason Lundgaard, who attended the Commissioners Court meeting last night, said that the company plans to work with the county to hire economically challenged individuals.
Barron's: Apple should be in the Dow
Apple has been traded on the NASDAQ exchange since it first went public back in 1980. For most of that time, AAPL has been part of the NASDAQ 100 index, so a gain or loss by the company has an impact on the technology-oriented exchange. A post on Barron's today posits that Apple, which is now the world's most valuable company, should be part of the Dow Jones Industrial Average instead. However, Barron's thinks that it would be hard to admit Apple or Google to the Dow Jones index considering that the component companies are weighted on the price of their shares. Apple, which has been valued at $580 - $645 over the past few months, would simply "overwhelm" the index with a 26 percent weighting, almost double that of Dow component company IBM. Barron's notes that Apple's 9 percent jump in share price after the recent earnings call would have raised the DJIA a full 300 points. Barron's suggests that a different weighting, in which the weighting of any stock is capped at an fixed percentage, might be needed for companies like Apple and Google to become part of the Dow Jones Industrial Average.
Suppliers' stocks climb on Apple's success
As the old saying goes, "a rising tide lifts all boats," and that's never been more apt than in the case of Apple suppliers. As the company's fortunes have risen, so have those of the many suppliers who make the bits and pieces that go into every iPhone, iPad and other Apple products. CNNMoney notes that Apple's shares rose almost 10 percent this morning after yesterday's earnings call. This transferred over to some semiconductor manufacturers almost immediately -- Cirrus Logic was up about 9 percent, Skyworks Solutions was up more than 6 percent, and Triquint had a bump of about 5.5 percent. Even two larger semiconductor companies that supply Apple -- ARM (which gained 3.6 percent) and Qualcomm (up 2 percent) -- saw a solid jump in stock price today. Omnivision, a company that builds iPhone camera sensors, was up 6.2 percent on the solid Apple news. A company didn't need to be a supplier to reap the benefits of Apple's incredible news. Zagg, which makes iPhone and iPad accessories, also jumped up about 5 percent this morning.
Apple sold 645,000 devices per day in the 2nd quarter
Blogger Adrian Kingsley-Hughes over at ZDNet did the math and came up with some staggering statistics about Apple's hardware sales during the last quarter. As we heard during the Q2 2012 earnings call yesterday, Apple sold 35.1 million iPhones, 11.8 million iPads, 7.7 million iPods and 4 million Macs. That total of 58.6 million pieces of hardware, divided by the 91 days in the financial quarter ending March 31, 2012, means that Apple sold an average of 645,000 devices per day. Of those 645,000 units, over 385,000 of them were iPhones and about 130,000 of them were iPads. Kingsley-Hughes also played off the announcement during yesterday's call when Apple CEO Tim Cook noted that the company has sold 67 million iPads so far, and that it took Apple 24 years to sell that many Macs. In 42 quarters, notes Kingsley-Hughes, Apple has sold 344.3 million iPods, but in half that time the company has sold 218.1 million iPhones. It's also obvious from Kingsley-Hughes's almost-obsessive charting of cumulative and quarterly sales of Apple's devices that Apple has "undoubtedly made the transition to being a true post-PC company." As he notes when discussing the chart below, "If we add Macs into the equation, they are barely a blip on the post-PC landscape." It's a fascinating visual look at the changing product mix at Apple and how it is has completely moved away from dependence on the Mac as a primary revenue source.
Apple Q2 2012 Earnings Call Liveblog
Welcome to the TUAW liveblog of the Apple second quarter 2012 earnings call. This call covers the financial results for the company for the period beginning January 1, 2012 and ending March 31, 2012. Most Wall Street analysts are expecting another hot quarter for the iPhone and iPad, but the calls usually provide one surprise after another. You don't need to refresh this page -- as soon as new content is added it will appear in this post. If you wish to discuss the earnings call as it happens, please join us in our special chatroom on IRC node irc.freenode.net, chat room #tuaw.
Join TUAW for a liveblog of the Apple FY 2012 second quarter financial results
Time flies, and it's already time for Apple's second quarter 2012 (January - March) financial results call. We'll be liveblogging the event today at 5 PM ET (2 PM PT) to provide analysis and up-to-the-minute coverage of the call. Be sure to keep your eyes on TUAW this afternoon before the event, as Apple usually releases a summary of the results just prior to the earnings call. You'll have a chance to talk with the TUAW team in IRC during the call -- please join us at irc.freenode.net, chat room #tuaw. To listen to the call, join Apple's live audio streaming at www.apple.com/quicktime/qtv/earningsq212.
Apple makes a tax deal for Prineville, Oregon data center land
We've heard before that Apple plans to build a data center on land it previously purchased in Oregon, but now the Associated Press reports on part of the cost. The company has reportedly agreed to pay US$150,000 per year to local governments, and has signed off on at least 35 jobs. Those jobs will be paid at a rate that's at least 150% of the average wage in the Oregon county. Finally, according to the AP, Apple will have to invest at least $250 million into the data center building itself. In return for all of that, Apple will be exempt on property tax payments for the next 15 years. Whether that will be worth it or not depends on exactly how much they build there, but odds are Apple's accountants aren't that worried. The company already paid $5.6 million for the land earlier this year, and it's setting up plans to both build up the infrastructure of the local power company to keep the data center running, as well as a green energy site there on the spot. Oregon is apparently a popular place for data centers like this. Google, Amazon, and Facebook all have similar sites in the surrounding area. [via MacRumors]
Apple will webcast Q212 earnings release conference call on April 24
What is arguably the most anticipated earnings call on Wall Street every quarter will take place next Tuesday, April 24th at 2pm PT/5pm ET. That's when Apple will release its earnings report for the second quarter, which ended March 31st. There's lots of speculation about whether Apple will hit consensus estimates for their Mac products -- notably iMacs and MacBook Pros, which have not seen major updates in almost a year. However it's generally assumed that the launch of the new iPad in this quarter will help Apple offset any missed Mac numbers. In the run up to the earnings call this week, Apple's stock has swung wildly, having its largest ever point drop on Monday, followed by its largest ever point gain on Tuesday, before falling over 3% again on Wednesday. AAPL shares are up 45% YTD. TUAW will have complete coverage of next Tuesday's financial results.
AAPL closes over $600 for the first time: We respond with poetry
For the first time in history, or at least since Apple went public on December 12, 1980, AAPL has closed at over US$600 per share. The stock closed on the NASDAQ exchange at $601.10, up a whopping $15.53 (or 2.65 percent) on the day. AAPL opened at about $598 due to off-hours trading in the wake of yesterday's announcement of the Apple cash call. This morning's news disclosing that dividends would be paid to shareholders obviously resonated with the markets. To celebrate, our very own Erica Sadun got all poetic and sent these sweet words of happiness throughout our virtual newsroom: "If in Apple's stock you invest, today it has achieved the best. Gone up past six hundred, in case you had wond'dred, now you can retire and rest." Or how about this "News in Haikus"? "AAPL Dividend. Stock is up past six hundred. Good investment, no?" And this final piece of limerick doggerel: "Up $15.53 on the day, investors all saying HOORAY! Most in after hours last night, still to their delight, dividends are soon on their way." Think you can do better with the poetry? Let's see your attempts in the comments.
Apple hosting conference call on March 19 to discuss cash balance
Apple issued a press release today (Sunday, March 18) saying that CEO Tim Cook and CFO Peter Oppenheimer will host a conference call bright and early on Monday, March 19 to "announce the outcome of the Company's discussions concerning its cash balance." The call should be of particular interest to shareholders, who could possibly hear of a dividend payment. The press release also notes that "Apple will not be providing an update on the current quarter nor will any topics be discussed other than cash." To listen in on the call, which begins at 6 AM PDT / 9 AM EDT, a webcast is available here. The rebroadcast of the call will be available for approximately two weeks afterwards.
How long does it take to buy a new iPad with 50 shares of Apple stock?
The Telegraph's Conrad Quilty-Harper has an intriguing spin on Apple's soaring stock price. Instead of measuring Apple's atmospheric rise in direct dollar figures, Quilty-Harper measured it in terms of raising money to buy an Apple device. Quilty-Harper started by looking at the price of Apple's stock before and after the recent iPad launch. He then calculated how long it would take for you to recoup the purchase price of the iPad if you bought 50 shares of stock on the day before the launch. Assuming you have US$27,000 to buy 50 shares of Apple stock, his figures show that you could recoup the cost of the new iPad in two days. If you did a similar calculation for the iPhone 4S, it would take 5 days. Quilty-Harper does the same for other Apple mobile devices, including the iPad 2, the iPhone 4, the original iPad and the iPhone 3GS. Point your browser to the Telegraph's website to read the rest of his unique analysis.
AAPL hits $500
Shares in Apple have reached a new all-time high today, pausing briefly at the stratospheric height of $503.83 this morning before dropping slightly below that level. It wasn't all that long ago -- three months -- that Apple shares were quavering around $360. There's more to come. Seeking Alpha's Robert Paul Leitao has now set a 2012 price target of $790 per share for AAPL. Leitao does note that if Apple takes the step of beginning to pay quarterly dividends, that could affect the share price in a very positive way: "Extraordinary events such as a resumption of a regular quarterly dividend or a share split are also not factored into this share price forecast and may accelerate the pace at which the shares approach this $790 price target." [Stock charts via NASDAQ.com]
Apple rollin' in the dough: 75% of cell phone profits
The news just keeps getting better for Apple in the mobile phone business. Just yesterday, IDC reported that the company is in third place in terms of worldwide mobile phone sales. Today, Asymco analyst Horace Dediu announced that with a relatively small piece of the pie (IDC said 6 percent of market, Dediu says 8.7 percent), Apple is pulling in a whopping 75 percent of profits in the industry. Philip Elmer-DeWitt at Apple 2.0 notes in an analysis of Dediu's numbers that out of the top eight manufacturers, only five are showing meaningful profits. Samsung has about a 16 percent profit share, while "Nokia, Research in Motion, and HTC are just scraping by. Motorola, LG and Sony, which bought out Ericsson last month, are still in the red." As Elmer-DeWitt points out, this is for all mobile phones, not just smartphones. And these numbers are for the worldwide market, not just the United States. He concludes that "This doesn't bode well for the manufacturers who have hitched their wagon to Google's Android or Microsoft's Windows Mobile 7."
Investors eyeing Tim Cook's management of Apple's cash horde
Every three months Apple announces its quarterly earnings, and we see the company's huge pile of cash grow to increasingly awe-inspiring heights. Like clockwork, a day or two after the earnings announcement comes calls for Apple to give some of that money back to its shareholders in the form of dividends. Reuters claims that these calls for dividends are getting louder, and some investors are getting restless. Apple's US$98 billion cash horde is so big that it represents a value of $104 per share, a big slice of the current $444 per share stock value. Several Wall Street analysts are convinced that Apple will pay a dividend to investors in 2012, but they say that every year. Apple has not paid dividends on its stock since 1995, and Apple CFO Peter Oppenheimer has stated that the money isn't burning a hole in Apple's pockets. CEO Tim Cook and Oppenheimer revealed that Apple is actively looking at what to do with its money, but neither of the executives would commit to a firm comment on the company's intentions. One major stumbling block is that most of Apple's cash is tied up overseas -- $64 billion of its $98 billion. Repatriating that money to the US would subject it to a 35 percent tax, skimming over $22 billion off the top... something that Apple has lobbied against. Within the next few days I predict we'll see another wave of posts predicting huge company acquisitions -- finish your drink if you see "Apple could buy Facebook" in your RSS reader before the end of the week. That's also an unlikely scenario; Apple has a history of buying smaller companies that aren't already household names, and it usually only drops a few billion dollars in the process. Much like the iPad cannibalizing the Mac, I suspect Apple's executives see the company's cash stockpile as a nice problem to have. It affords the company a great deal of flexibility; Apple could make zero dollars in revenue for the next seven straight years and still be able to sustain its current operating expenses. With dividends and major acquisitions likely out of the picture, there's no way of knowing what Apple intends to do with its money... though I have my own loony ideas about that.
Lesser-known facts from Apple's earnings statement
The attention-grabbing numbers from Apple's most recent earnings statement have already made the rounds -- US$46 billion in revenue, net profit of $13 billion, 37 million iPhones sold -- and all of that within three months. Apple didn't just turn in record-breaking performance for a tech company; only Exxon has ever managed to have a more profitable quarter than the one Apple just reported. Combing through the spreadsheets on Apple's earnings statement provides some additional insight into the company's overall performance, where its strengths and weaknesses lie, and where the company might be headed in the future. These numbers aren't as headline-grabbing as Apple's profits or unit sales, but they tell an important story all the same. Research and Development In three months, Apple's expenditures on R&D totalled a staggering $758 million. This compares to expenditures of "only" $575 million the year before. To get an idea of how much money Apple's pouring into R&D, compare its three-month expenditures to the production costs of Avatar, one of the most expensive films ever produced. Avatar cost $237 million; in just three months, Apple's R&D expenditures are enough to finance an entire Avatar trilogy. The $575 million in R&D Apple spent in Q1 2011 likely went into the iPad 2, iCloud, the iPhone 4S, iOS 5, OS X Lion, the newest MacBook Air, and a whole host of things we haven't even seen yet. Apple's R&D expenditures for Q1 2012 have increased by an additional $183 million, so the company is still clearly focused on innovating like mad. Mac sales One of the few minus signs visible in Apple's sales data was its North American Mac sales. Though sales were up by 19 percent compared to a year earlier, compared to the previous quarter Mac sales actually declined by 6 percent. North America was the only market to see a decline in Mac sales during the quarter, but at the same time only Europe and Asia Pacific had double-digit growth in Mac sales. Oddly enough, sales of Mac desktops actually seemed to perform better over the quarter compared to portable sales (by trend, not by number of units sold): Desktops Unit sales up 16 percent Revenue up 15 percent Portables Unit sales up 3 percent Revenue up 2 percent Both types of Mac vastly outperformed the year-ago quarter, but the tapering off of portable Mac sales and the overall decline in Mac sales in North America during the Christmas sales period is intriguing. Several factors may explain this phenomenon. First, there were no significant Mac notebook updates during the quarter; the MacBook Pro's late October refresh was quite modest, and the MacBook Air hasn't been updated since July. Second, the mid-2011 discontinuation of the plastic MacBook eliminated Apple's "entry level" offering; the smaller and less capacious 11-inch MacBook Air costs the same as the old MacBook, but it may not be as attractive an offering to budget-minded notebook shoppers. Larger economic factors may have been at play, too; North American shoppers in particular simply may not have had the discretionary funds for a Mac purchase over the holiday quarter. While all of those things likely had an impact on sales of Mac portables, I think what we're really seeing here is the effect of the iPad's cannibalization of the lineup. Over the quarter, the iPad outsold all Mac portables by nearly 4 to 1, and outsold all Macs combined by 3 to 1. Apple has admitted in the past that the iPad has "slightly" cannibalized Mac sales, and classified it as a "nice problem to have." It looks like that so-called "problem" is showing signs of getting worse. None of this is to say that the Mac is in any danger; in a sharp contrast from the rest of the PC industry, the Mac is still seeing unit sales and revenue growths well into the double digits. Whether that trend continues or not is going to depend greatly on the iPad's growth; Tim Cook has said he expects the iPad to eclipse the PC industry eventually, but in terms of both unit sales and revenues, the iPad has already supplanted the Mac after less than two years on the market. iPod sales During its earnings conference call, Tim Cook revealed that the company sold a total of 62 million iOS devices in the past quarter. Subtracting the iPhone and iPad from that number yields a total of approximately 10 million iPod touches sold (assuming Cook wasn't also counting the Apple TV as an "iOS device," that is). This means the iPod touch now accounts for almost two-thirds of all iPods sold; the iPod nano, shuffle, and classic combined are now essentially one drop in Apple's massive bucket. Small wonder, then, that Apple's music-only iPods weren't updated at all this year. The steep year-over-year decline in iPod sales came as no surprise. The iPod reached its all-time sales peak in Q1 of 2009, with 22.7 million units sold. Three years later, the iPod has clearly lost its mojo. With only 15.4 million iPods sold during the holiday quarter, the iPod barely outperformed its sales during the 2006 holidays. Apple sold five million fewer iPods this holiday season compared to the previous year. As a matter of fact, Apple sold more iPads than iPods over the holiday quarter. This is a sharp contrast to the 2010 holiday season, when the iPod outsold both the iPhone and iPad. In late 2010, iPod sales were a few million units higher than the iPhone and exceeded those of the iPad by nearly 3 to 1. In late 2011, the iPad pulled just ahead of the iPod, and the iPhone outsold the iPod by more than two to one. As recently as four years ago, the iPod was by far Apple's biggest cash cow; revenues from iPod sales exceeded even Mac sales by a healthy margin during the 2007 holiday season. iPod sales are rapidly falling, however, making it clear that the device is no longer among Apple's high-priority projects. Given the yearly declines in iPod sales, it's easy to envision a not-too-distant future where the iPod is relegated to niche status. It's unlikely Apple will stop selling the device altogether, as it still addresses markets not served by the iPhone, but the days when the iPod was central to Apple's fortunes are long gone. iTunes Apple's revenues from the iTunes Store, App Store, iBookstore, and iPod-related accessories totalled more than $2 billion over the quarter. Look back to exactly ten years earlier, to the first quarter of 2002; quarterly revenues were a mere $1.375 billion for the entire company. It's long been speculated that the various iTunes-related retail services operate at break-even or, at best, at a modest profit, and the services exist merely to spur growth in Apple's hardware sales. That scenario may have been true years ago, but with a 42 percent year-over-year growth in revenue, iTunes is starting to look like a pretty lucrative business all on its own. Peripherals Apple sold $766 million in peripherals during the past quarter. Again, when you compare that to the company Apple was 10 years ago, the difference is stunning; sales of all Macs combined during Q1 2002 amounted to barely over $1 billion. If Apple's sales of peripherals continue to increase by the same rate, by Q1 2013 it'll be taking in nearly as much money from peripheral sales as it made from the Mac in 2002. If Apple counts the Apple TV among its peripherals, then the device accounted for a fairly significant portion of the overall sales. With 1.4 million units sold during the quarter, Apple's "hobby" would account for nearly a fifth of all peripheral sales. iOS Apple sold 37 million iPhones, 15.4 million iPads, and (going by Tim Cook's numbers as revealed during the conference call) around ten million iPod touches over the holiday quarter. That's a grand total of 62 million iOS devices sold in three months -- all running the latest release of iOS, not some year-old version of it, and all of them virtually guaranteed OS updates for several years. During the last quarter, iPhone sales reportedly exceeded sales of all Android handsets, from all vendors, combined. The iPad continues to utterly dominate the tablet market; Tim Cook reported no measurable impact on iPad sales even after the debut of the most popular Android (forked) tablet so far, the Kindle Fire. Apple earned almost $34 billion in revenue from iPhone and iPad sales -- in three months. Google's revenue for 2011 -- all of Google, for the entire year -- was $37 billion. Clearly, Android is winning. Average revenue per unit sold Comparing Apple's unit sales versus its revenues gives us an opportunity to see, on average, how much money Apple takes in with each sale in each product category. In turn, this gives us a general idea of which items in each category gain the most sales. Desktop Macs: $1309 With 11 different models ranged over the Mac mini, iMac, and Mac Pro, the average selling price of a desktop Mac is $2072. The Mac Pro's high prices drive that average selling price much higher than the actual revenue/unit number, which leads me to believe that sales of the Mac Pro are negligible at best. Looking at the numbers, it seems the 21.5-inch iMac is very likely Apple's most popular desktop model, followed by the 27-inch iMac, then the Mac mini. I would be shocked if the Mac Pro accounted for more than 10 percent of overall Mac desktop sales last quarter. Portable Macs: $1254 The MacBook Air and MacBook Pro combine for a total of 9 different models at an average selling price of $1588. The revenue/unit numbers from Apple's earnings suggest that the MacBook Air and 13-inch MacBook Pro account for a majority of Apple's portable sales, with much lower sales for the 15 and 17-inch MacBook Pro models. iPods: $164 The revenue/unit numbers for the iPod line are lower than the lowest-priced iPod touch, but higher than the highest-priced iPod nano. With the iPod touch accounting for at least 50 percent and as high as 66 percent of overall iPod sales, this suggests that the 8 GB $199 iPod touch is Apple's most popular iPod, with significantly lower numbers of 32 or 64 GB iPod touches sold. iPhones: $659 Unsubsidized iPhones range from $375 for an iPhone 3GS up to $849 for a 64 GB iPhone 4S. With five total models on offer, the average sale price across the iPhone line is $634, lower than the actual revenue/unit numbers in Apple's earnings. To perhaps no one's surprise, this suggests the iPhone 4S is Apple's most popular iPhone. Given that the revenue/unit average is slightly higher than the $649 price for an unsubsidized 16 GB iPhone 4S, I'd theorize that while Apple's most popular iPhone is likely the 16 GB iPhone 4S, sales of the more expensive 32 GB and 64 GB models must also be fairly brisk to counterbalance the the (admittedly much less popular) iPhone 3GS and iPhone 4 on the low end. In other words, despite being labelled as a "disappointment" by a tech press weaned on months of rumors about a substantially redesigned iPhone 5, it appears Apple sold every iPhone 4S that came off the assembly line. iPads: $593 Between the Wi-Fi only and Wi-Fi + 3G options, the iPad 2 is available in six models at an average selling price of $664. With the iPad's revenue/unit number falling below that, but still significantly higher than the $499 price of the low-end Wi-Fi model, the numbers suggest that Apple's mid-range iPads are fairly high sellers. Sales numbers of the iPad very likely map closely to the models' prices, with brisk sales of 16 GB models, decent sales for the 32 GB option, and comparatively lower (but still more than satisfactory) sales of the 64 GB iPad 2. Unsurprisingly, the revenue/unit number suggests the Wi-Fi only iPads significantly outsell their Wi-Fi + 3G cousins. Overall To put it mildly, Apple's earnings report shows a company in a very robust state of health. While iPod sales are in steep decline and some segments of Mac sales are showing signs of levelling off, the astonishing uptick in iPhone and iPad sales more than makes up for it. The iPad by itself, in one quarter, brought in more revenue than 230 out of the Fortune 500 companies earn in an entire year. The iPhone by itself, in three months, brought in more revenue than McDonald's made in all of 2010. Apple has $97 billion in cash. It could buy an iTunes copy of the film 2001: A Space Odyssey for everyone on Earth and still have $27 billion left over. How about a potentially better use of its money? After adjusting for inflation, Apple is a little over halfway to being able to finance its own version of the Apollo Program, all by itself. If you cut it down to just one mission, Apple is easily capable of building its own spaceport, developing and building its own launch vehicle, training its own astronauts, and sending a team of humans to the moon and back -- and it would still have tens of billions of dollars left over. Apple may not enjoy this level of success forever, but it's showing no signs of slowing down anytime soon.
Results of Thailand floods still affecting tech industry
Last year, Thailand was rocked by floods that devastated the country. It destroyed cities and towns and put a severe dent in Taiwan's manufacturing industry. Hard drive manufacturing was hit the hardest and shortages in the supply of drives started to surface last year. This deficit is impacting tech companies from Western Digital to Intel and AMD. According to Macworld, Western Digital recorded US$199 million in charges and expenses from the floods and its hard drive manufacturing plants are still trying to recover. As a result, hard drive shipments fell from 57.8 million drives in Q3 2011 to 28.5 million drives in Q4. Intel's business slowed as computer makers like HP lowered their microprocessor orders. Even AMD's GPU business, which uses components made in Thailand, fell 10 percent in the last quarter because of this manufacturing slowdown. Unlike other tech companies, this shortage will have little impact on Apple's computer business. CEO Tim Cook confirmed in yesterday's earnings conference call that Apple will see little financial impact from this disaster. The company will pay more for its supply of hard drives, but it can secure the drives that it needs for its computers. It helps that Apple has moved several of its computer models to SSD, which is not affected by the floods. It also doesn't hurt that the company has a $97 billion cash reserve to absorb this extra manufacturing cost. For the financially-minded, this extra cost is already calculated in Apple's Q2 2012 guidance.
Amateurs beat pros at predicting Apple's Q1 performance
When it comes to predicting Apple's financial performance, you may want to ask bloggers, day traders, and amateur analysts instead of listening to Wall Street analysts. As cited in a post by Apple 2.0's Philip Elmer-DeWitt, the real analysts blew it big time predicting Apple's financial numbers for the first quarter of 2012. As noted by Elmer-DeWitt, "although even the most bullish independents were surprised by the strength of Apple's Q1 2012 results, at least they were in the ball park." In a ranking of accuracy, the independent analysts took the top fifteen positions, while the Wall Street gurus brought up the bottom of the chart. That's not to say that Wall Street's finest aren't capable of making at least a few good estimates. Asymco's Horace Dediu and Sterne Agee's Shaw Wu were both accurate on predicting the Mac sales numbers. TUAW's favorite analyst, Piper Jaffray's Gene Munster, was right on target with his estimate of iPod sales. When it came to iPads and iPhones, though, the independents beat the street. Gabriel Dubois was close with his estimates of iPhone sales and gross margin, while Gregg Thurman "missed narrowly on iPads." Elmer-DeWitt notes that "The company that Steve Jobs built is still that rare beast in American business: A $400 billion giant that acts -- and grows -- like a start-up." That ability to be agile, design and sell innovative products, and make huge margins on sales of those products make it difficult for even the most highly-trained Wall Street analysts to make accurate predictions.
Daily Update for January 24, 2012
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.
What's Apple going to do with $97 billion in cash?
During its earnings conference call, Apple confirmed the company is sitting on a treasure chest of US$97.6 billion. This stack of cash is steadily growing, up from $81.6 billion at the end of the September quarter. With all that money in the bank, you can't help but wonder... what's Apple going to with it all? Rather than sitting idly in the bank, Apple said it's "actively discussing the best use of its cash," which could be a hint it's looking at strategic acquisitions. Neither CEO Tim Cook nor CFO Peter Oppenheimer would comment specifically on any acquisitions or what other plans Apple had for this cash. The only straight answer was that Apple, in the past, has spent its cash wisely and will continue to spend it wisely in the future. Apple has a long history of quietly acquiring companies and adding their talent to Apple's hardware and software teams. In past few years, the company has acquired mapping company Placebase, 3D-map maker C3 Technologies and online music service LaLa. It recently scooped up voice control software Siri and flash memory maker Anobit. If Apple does use some of its reserves to acquire new technology, which company will be next? Besides improving its Numbers app, what else could Apple do with its money?
