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  (Source: Reuters)
Apple still logs record profit, but sees shareholder confidence shaken by miss

The good news Apple, Inc. (AAPL) fans is that Apple is forecast to be the most profitable American company for 2012 [source].

The company's calendar Q2 2012 (fiscal Q3) results, just reported, revealed a 20 percent spike in profits on a year-to-year basis, soaring to $8.8B USD on a revenue of $35B USD, a profit of about $9.32 USD/diluted share.

The bad news is that Apple's iPhone sales slumped, moving only 26 million units versus an analyst consensus of 28.4 million units.  Analysts had already scaled back their expectations earlier in the month from 30.5 million units.

Apple's arch-rival, Android phonemaker Samsung Electronics Comp., Ltd. (KSC:005930) is believed to have sold around 50 million smartphones for the quarter.  In other words, it is out-selling Apple -- by itself -- approximately 2-to-1 in unit sales.  In fact, Samsung's flagship Galaxy S III smartphone reportedly alone moved 19 million units.  That means that Samsung's sales of just its top model are already approaching Apple's total sales.

Analysts had expected $2.2B USD more in profit (revenue of $37.2B USD).

iPhone 4S
Samsung left Apple's iPhone in the dust in Q2. [Image Source: The Tech Journal]

The remaining good news for Apple is that it moved 17 million iPads, versus the analyst expectation of 15.4 million.

Mac sales fell slightly short of the expectation -- 4 million units versus the consensus of 4.3 million.  iPods -- largely marketed today as "kiddie iPhones" -- settled in at 6.8 million units, just above the 6.6 million unit consensus.

The good news regarding iPods and iPads was not enough to convince investors to overlook the profits and iPhone sales miss.  Stock was down $27 USD in after-hours trading and is expected to open lower tomorrow.

The sixth generation iPhone is expected to follow a pretty straight-forward formula -- larger HD screen, LTE, and faster processor.  The iPhone's current screen, processor, and modem are quite dated compared to those found in the Galaxy S III International Edition [source].  The iPhone does manage a draw on battery life, though, besting its Android rival in web-browsing life, but getting beat in talk time [source].

But the phone was a no-show in June, indicating Apple likely would continue to release handsets in October, following the slipped iPhone 4S launch.  Some analysts had hoped Apple would "catch up" with an accelerated sixth generation launch, returning to June product announcements and late June/early July product launches.

There's background noise to the investor fear as well -- some worry that the death of iconic CEO and visionary Steven P. Jobs may make Apple unable to stay ahead of the curve.  Indeed, Apple remains untested, in a sense, in that it has not released a major new product line since the death of Mr. Jobs.

Apple is relatively desperate to try to stop Samsung in court, seemingly unable to stop Samsung on the market.  It has seen some success scoring sales bans on the Samsung Nexus smartphone and Samsung Galaxy Tab 10.1 tablet.  But it failed to secure its most hoped for ban -- a kill shot on the Galaxy S III.

Apple attorney Josh Krevitt sums up his company's plight, remarking, "Samsung is always one step ahead, launching another product and another product."

Indeed, Apple looked a step behind in Q2.

Sources: Apple, Bloomberg, Reuters


Comments     Threshold


Can not wait to see Q3 numbers!
By jnemesh on 7/24/2012 6:31:24 PM , Rating: 3
I really can't wait to see how badly Apple gets stomped by the phone they tried to ban...the SGS III! Considering that they have already sold 10 million handsets since launch, it should be pretty bloody for the iPhone!




RE: Can not wait to see Q3 numbers!
By michael2k on 7/24/12, Rating: -1
RE: Can not wait to see Q3 numbers!
By Reclaimer77 on 7/24/2012 7:02:26 PM , Rating: 5
If the SGS3 was the only phone Samsung made, you would have a point.

quote:
a 9 month old phone is still competitive with the brand new SGS3.


Only in the minds of sheeple idiots.


RE: Can not wait to see Q3 numbers!
By michael2k on 7/25/2012 1:38:25 PM , Rating: 2
Oh, real classy, call me a sheeple idiot.

The Galaxy S3 has been out worldwide since May, days shy of 2 months now. So 10m a month, 19m+ in two months.

Somehow, despite that, Apple still sold 26m iPhones, the majority of which were the 4S. In what bizarro world is 26m iPhones not competitive with 19m+ (extrapolated to 30m in a quarter) Galaxy S3?

Had it not been competitive, we would expect, oh, say 15m iPhones sold.


RE: Can not wait to see Q3 numbers!
By Reclaimer77 on 7/25/2012 3:45:18 PM , Rating: 2
Do you know what a yearly quarter is? It's not 2 months. And to say the GS3 has been fully available world wide that entire time, isn't entirely accurate.

And way to ignore my point about Samsung not just relying on one model.


By michael2k on 7/25/2012 4:53:23 PM , Rating: 2
What does "yearly quarter" have to do with our conversation?

But you are right, I am underreporting the demand for the GS3. Had it been fully available worldwide for the full two months they probably would have hit 30m sales.

And why is your point that Samsung has multiple models relevant? Apple has 3 concurrent iPhone models. I'm comparing Apples to Apples in this case, Galaxy S 1/2/3 to iPhone 3GS/4/4S sales.

Actually, in my more detailed comparison in a different thread, I'm shortchanging Apple by only counting 4/4S sales. So between the two powerhouses Apple has something like 165m 4+4S sales while Samsung has 73m S1+S2+S3 in approximately the same time period.


RE: Can not wait to see Q3 numbers!
By Iaiken on 7/24/2012 7:15:45 PM , Rating: 2
quote:
a 9 month old phone is still competitive with the brand new SGS3.


If the SGS3 had been around for the entire quarter, you would have a point. If the SGS3 had been available world wide, you would have a point.

Point is, you don't have a valid one.


RE: Can not wait to see Q3 numbers!
By Cheesew1z69 on 7/24/2012 7:26:05 PM , Rating: 5
It launched on the 12th of this month. 2 weeks ago. 10 million in 2 weeks? And I know why, it's a wicked sick and fast as hell and sexy as all can be.


RE: Can not wait to see Q3 numbers!
By michael2k on 7/25/2012 3:42:46 PM , Rating: 2
It launched in May, 57 days ago. 19m in 2 months, actually.


RE: Can not wait to see Q3 numbers!
By Cheesew1z69 on 7/25/2012 9:41:07 PM , Rating: 2
By michael2k on 7/26/2012 12:32:58 PM , Rating: 2
RE: Can not wait to see Q3 numbers!
By B3an on 7/24/2012 7:29:35 PM , Rating: 2
Considering the GS3 only just come out and in some areas theirs been supply shortages, and in the US its been out less than a month on some networks. Then 10m units is very impressive. It could well outsell the iPhone in the coming months.

Even the older GS2 outsold the iPhone for multiple months is some places (like the UK).


RE: Can not wait to see Q3 numbers!
By zerocks on 7/24/2012 8:21:19 PM , Rating: 1
Apple have sold 26 million iPhones since the 4S was launched 9 months ago, that's not just sales of the 4S itself, that's including the very outdated 3GS and iPhone4.
Coupled with the fact that Samsungs one flagship has sold 10 million in under 3 months since launch, that's a nail in the coffin, my friend.

If you show all of Apple's phone sales then you should also show all of Samsung's phone sales for the same time period.


RE: Can not wait to see Q3 numbers!
By artemicion on 7/24/2012 8:37:24 PM , Rating: 5
WELL MY PHONE MANUFACTURER'S DAD CAN BEAT UP YOUR PHONE MANUFACTURER'S DAD, SO NYAHHHH!

So freakin' childish. Who the heck cares whether their phone sold more than someone else's phone?

I don't even know the model of my phone, but it's one of the basic ones Verizon gives away for free, and I've seen it EVERYWHERE. So that makes me better than both of you.


RE: Can not wait to see Q3 numbers!
By dark matter on 7/25/12, Rating: 0
RE: Can not wait to see Q3 numbers!
By bupkus on 7/25/2012 8:52:04 AM , Rating: 2
I'm reading it to see who's postings sell more ratings.


RE: Can not wait to see Q3 numbers!
By spread on 7/25/2012 9:05:45 AM , Rating: 2
I'm here to live vicariously through Apple.


RE: Can not wait to see Q3 numbers!
By teldar on 7/25/2012 9:04:52 AM , Rating: 2
They sold 26M iPhones in one quarter, not 3 quarters. They may have sold 26M 4s though in 9 months. I don't track iPhone sales.

That being said, i have a sgs3 and it is the awesome. I'm looking forward to the jelly bean update in a couple months.


By michael2k on 7/25/2012 1:59:56 PM , Rating: 2
Apple sold approximately 98m iPhone 4S in the last 9 months.

37m the first quarter, 35m in the second, 26 in the third.

Each and every single quarter, Apple's flagship has outsold Samsung's flagship.

You talk about 10m in 60 days as being a big deal. It isn't. It's a big deal only because it's the most popular Android flagship, but it still pales in comparison to Apple's iPhone.

Of course maybe the iPhone has plateaued. Maybe instead of selling 60m iPhones the first full quarter the new iPhone is available they will only sell 30m. It's always possible. It just seems unlikely to me, given how successful Apple has been in spite of the Android juggernaut.

Oh, and since you wanted Samsung's phone sales, it would be approximately 140m for 3 quarters, of which the "comparable" Galaxy Sales add up to about 20 S3 and 53m "to date" S1 and S2, which really means lifetime sales up till June 1st. So 98m iPhones for 3 quarters vs only 73m lifetime Galaxy sales. Including the iPhone 4 as well as the 4S increases Apple's count from 98m to about 175m or so.


RE: Can not wait to see Q3 numbers!
By mckinney on 7/24/12, Rating: -1
By hexxthalion on 7/25/2012 7:39:05 AM , Rating: 2
and it's not just that but that belief of 50M phones sold is based on this:

http://in.reuters.com/article/2012/07/16/idINL6E8I...

and let me quote from there:

quote:
Samsung is expected to have sold 50 million smartphones in the quarter, compared with Apple's forecast sales of 30.5 million iPhones. "Samsung is expected to be the smartphone hero in the second quarter," said IDC analyst Francisco Jeronimo.


iPhone inferior in every way
By B3an on 7/24/2012 7:27:41 PM , Rating: 2
quote:
The iPhone does offer slightly better graphical power in most benchmarks, and better battery life, though.

Not compared to the international Galaxy S3. Faster CPU and faster graphics... http://images.anandtech.com/graphs/graph5810/46302...

The international GS3's battery also lasts longer in most reviews i've seen.




RE: iPhone inferior in every way
By JasonMick (blog) on 7/24/2012 7:43:14 PM , Rating: 3
quote:
Not compared to the international Galaxy S3. Faster CPU and faster graphics... http://images.anandtech.com/graphs/graph5810/46302...

The international GS3's battery also lasts longer in most reviews i've seen.
Fixed!

You're wrong about the battery life, though, I think.

http://images.anandtech.com/graphs/graph5868/48204...
http://images.anandtech.com/graphs/graph5868/48205...
http://images.anandtech.com/graphs/graph5868/48206...

Looks like more of a draw.

Apple wins on web browsing, but Samsung has superior talk time (though the international version was not included in that test).


RE: iPhone inferior in every way
By Reclaimer77 on 7/24/2012 8:13:41 PM , Rating: 2
All that tells me is that if the iPhone had to power the same size display as the G3, it would get trounced on battery life.


RE: iPhone inferior in every way
By nofear4COMment on 7/24/2012 8:39:44 PM , Rating: 2
You are definitely correct! Apple stock is not going to be near as predicted, say $1000 per share. I'm highly doubt that and it's not going to happen. Dream on Apple!


RE: iPhone inferior in every way
By leviathan05 on 7/25/2012 8:19:22 AM , Rating: 2
I wouldn't jump to that conclusion so quick. Apple has developed incredible brand loyalty since the release of the iPod, and those numbers have continued to climb. Couples with the fact that Apple's profit margins are about the best in the world, and I can see their stock continuing to appreciate in value even though they are being outsold in the phone market.


RE: iPhone inferior in every way
By ven1ger on 7/25/2012 9:07:23 PM , Rating: 2
I agree with you on their profit margins, but I think those will soon shift. Unless Apple can come out with the next hot seller, in which they can charge exorbitant prices. But those profit margins are fading with each product cycle as they are being out-done by the competition in both better hardware and cheaper costs.


RE: iPhone inferior in every way
By B3an on 7/24/2012 9:27:00 PM , Rating: 2
The US version drains battery quicker from what i've seen (but its hard to find decent comparison benchmarks), mainly because of the inclusion of LTE in the US GS3. LTE is always a battery hog. Thats why i said the international version lasts longer.


By ScotterQX6700 on 7/25/2012 2:20:18 AM , Rating: 1
And Google's new voice actions show up Siri in every comparison I've seen.


RE: iPhone inferior in every way
By Natch on 7/25/2012 8:16:33 AM , Rating: 2
This is the true story of Apple lawsuits. If you can't sell a competitive product, with better features all around, and are getting stomped in sales by the competition, simply accuse them of violating your ( inane, never should have been awarded ) patent, take them to court, and have their product banned from import!

Look how well it's worked for them, so far.


$27 drop
By neothe0ne on 7/24/2012 7:03:49 PM , Rating: 2
quote:
Stock was down $27 USD in after-hours trading


yikes that's a huge loss say it isn't so




RE: $27 drop
By Cheesew1z69 on 7/24/2012 7:27:39 PM , Rating: 2
Actually, it's now down 31...


RE: $27 drop
By Lonyo on 7/24/2012 7:32:56 PM , Rating: 5
Losses are usually presented in % form for a reason.
$27 or $31 is still "only" around 5%, and you can easily get 3% or more swings in a single day even from a blue chip stock like MS or Apple, even when it's not an earnings report day.

When you consider it dropped over 10% from April to May/June, then bounced back up to the same level (~600->~540->~600), it doesn't really mean much to lose $30, especially since the earnings were below expectations. It's all about the pipeline anyway. Stocks will care more about any announcement of the iPhone 5 Apple TV and smaller iPad than missing earnings in this quarter.


RE: $27 drop
By xti on 7/25/2012 12:14:14 PM , Rating: 2
rumors have moved the IPhone5 up to sept, but why would Mick say report the news.

This just in, he still hates being Job's illegitimate child.


RE: $27 drop
By Ytsejamer1 on 7/24/2012 7:33:32 PM , Rating: 2
agreed...seems a little too knee-jerk considering Apple makes an obscene amount of profit per device sold.


RE: $27 drop
By TakinYourPoints on 7/24/2012 8:59:49 PM , Rating: 1
It is a reasonable response given that the stock ran up bigtime into earnings.

If a stock runs up into earnings, high profit is already being baked into the price. If a stock goes down into earnings, it is potentially being undervalued. This is why you often see companies go down on "good news" (ie - 20% growth and tons sold) and companies go up on "bad news".

Context and the big picture is important.

On the plus side, the AAPL August 650/655 call option spread I opened to sell on Friday is going to do VERY well for me. >:)


Most profitable?
By kingmotley on 7/24/2012 6:19:49 PM , Rating: 2
quote:
The good news Apple, Inc. (AAPL) fans is that Apple is still the world's most profitable company -- by far.


I believe there are a dozen (or more) companies that would like to differ. Perhaps you meant profit to revenue ratio? No, that doesn't work either. Sorry, not sure what you meant here. There are companies with higher revenue, and companies with higher profit, so whatever you meant, it wasn't what you said.




RE: Most profitable?
By Souka on 7/24/2012 6:37:57 PM , Rating: 2
perhaps compared to other phone making companies...eg, Motrola, LG, HTC... ?


RE: Most profitable?
By Camikazi on 7/24/2012 6:48:33 PM , Rating: 3
That is a pretty important detail to miss in a sentence like that.


RE: Most profitable?
By JasonMick (blog) on 7/24/2012 7:53:52 PM , Rating: 3
quote:
I believe there are a dozen (or more) companies that would like to differ. Perhaps you meant profit to revenue ratio? No, that doesn't work either. Sorry, not sure what you meant here. There are companies with higher revenue, and companies with higher profit, so whatever you meant, it wasn't what you said.
Forecasted to be the most profitable AMERICAN company in 2012, is what that should have been.

http://247wallst.com/2012/01/10/2012s-most-profita...

Last year it was the most profitable tech company, No. 3 over all in the Fortune 500 in profits. Source:

http://www.npr.org/blogs/thetwo-way/2012/05/07/152...

It got beat out in profitability by Chevron and Exxon, but beat out perennial favorites like Wal-Mart and Microsoft.


RE: Most profitable?
By ptmmac on 7/24/2012 8:42:35 PM , Rating: 1
Apple has trailing 12 months earnings of $42.54 per share. That number is 4th on the all time list of earnings according to Wikipedia. Next quarter Apple would need to beat last years quarter 4 earnings by $6.02 billion dollars to have the largest annual earnings from any public company. Those numbers are adjusted for inflation if that matters to you. Otherwise, Jason is actually correct to call Apple the most profitable company in the world.


Why the long delay?
By zephyrprime on 7/25/2012 11:30:58 AM , Rating: 2
It's still a mystery to me why Apple hasn't produced a successor other to the iphone 4 other than the 4s which was only a small improvement. What have they been doing with their time? It's been more than 2 years since the iphone 4 was released. They're lucky that they even has as much market share as they have given how old the iphone 4 is.




RE: Why the long delay?
By Cheesew1z69 on 7/25/2012 12:03:55 PM , Rating: 2
It's no mystery really, they have been busy suing everyone. It's pretty obvious...


RE: Why the long delay?
By zephyrprime on 7/25/2012 4:22:54 PM , Rating: 2
Their lawyers on retainer have nothing to do with produce development. Still no explanation. Apple actually has very few products for a company of its size.


RE: Why the long delay?
By Cheesew1z69 on 7/25/2012 9:43:55 PM , Rating: 2
Obviously my point wasn't very clear, why innovate when you can just try to ban everyone...

clear enough now?


By rubbahbandman on 7/25/2012 11:25:32 AM , Rating: 2
Apple will trash everyone 4th qtr.




By Cheesew1z69 on 7/25/2012 11:59:59 AM , Rating: 2
Ok Tony....


By rubbahbandman on 7/25/2012 1:56:25 PM , Rating: 2
Um I highly doubt Tony would ever consider Android eventually toppling Apple down the road...

Anyway, who's to argue the iphone 5 will be anything less than a very solid phone and since it will probably be available for all of Q4 then its sales are going to set records this cycle (assuming they can produce enough).

For now I plan on staying Apple, but after this phone I'll probably go Android unless Apple completely overhauls the look and feel of ios.


Time for a Change in Strategy?
By KPOM1 on 7/24/2012 10:01:41 PM , Rating: 2
Apple's been reluctant to tinker with the iPhone sales model, but should Samsung's rise and this quarter's miss lead them to change it? Maybe they need to sell a legitimate lower-priced version, and not just a 2- or 3-year old iPhone 4 or 3GS? Maybe they should adopt a 6 month cycle (major update in October followed by a spec bump in March) so that Samsung isn't always a step ahead?

There is a lot riding on the new iPhone. It may need to sell 50 million in Fiscal Q1 in order for Apple to break out of the range it's been stuck in during most of 2012.




RE: Time for a Change in Strategy?
By Belard on 7/25/2012 5:45:11 AM , Rating: 2
Keep in mind of some things...
These are still just quarterly sales... both companies are doing well (*cough* RIM / Nokia).

Apple has 2/3 current models really. Samsung has about 20 with 4-5 WP7 phones (okay, they sold about 200 of those in a year).

The other thing, apple makes more money off each phone with app sales... Samsung make ZERO / nothing off app sales... but they save some money because they own the factory that makes the phone (same as HTC). Apple has to pay another company to make their hardware.

Apple is not going broke and not really losing much ground. But they need to spend more energy making products than steaming up court rooms.


Diminishing Returns...
By Arsynic on 7/25/2012 8:43:36 AM , Rating: 2
iOS is long in the tooth and needs a serious overhaul or Apple risks becoming another RIM--so paralyzed by past success that they are afraid to innovate.




RE: Diminishing Returns...
By rubbahbandman on 7/25/2012 2:01:53 PM , Rating: 2
Agreed. I think redesigning ios should be Apple's #1 priority.


The BEST quote from today's earnings call
By Pirks on 7/24/2012 6:04:55 PM , Rating: 1
"We are VERY excited about our opportunities in China!" - happily grinned Tim Cook, juggling a couple of Chinese human kidneys in his hands.




By kleinma on 7/24/2012 6:14:31 PM , Rating: 2
China has plenty of fake apple stores selling crap. No need for real Apple stores selling crap.


apple new way to make money sue
By SPOOOK on 7/25/2012 12:58:59 AM , Rating: 3
apple new way to make money is to sue, this is a last resort
to a failing company who sells outdated iphones bribing judges to act in thir favor for phoney fake patents you cant patent size or buttens but by bribing judges and lieing




Prophecy
By Gio6518 on 7/24/12, Rating: 0
Apple are doomed!
By Tony Swash on 7/24/12, Rating: -1
RE: Apple are doomed!
By Pirks on 7/24/2012 6:38:00 PM , Rating: 2
Tony wanted to say "Apple are doomed to double in size next year" but his transmission was suddenly cut by BBOD :P


RE: Apple are doomed!
By Tony Swash on 7/24/12, Rating: -1
RE: Apple are doomed!
By momorere on 7/24/2012 8:52:15 PM , Rating: 5
I'm going to start posting random "quotes" from random people/articles and passing them off as facts like you. Just because an article or person says something, don't mean it's true, this is the internet afterall. We all know it's a VERY tough pill for you to swallow about Apple getting surpassed in both quality and quantity. All "empires" come tumbling down at some point. We are only seeing the beginning of the end of your beloved Apple.


RE: Apple are doomed!
By Tony Swash on 7/25/12, Rating: -1
RE: Apple are doomed!
By karlostomy on 7/25/2012 6:36:47 AM , Rating: 2
Apple are doomed?

As far as I can see, no one else is saying that except you, Tony.
Let go of the melodrama and histrionics, already.

This quarter Apple got bested, same as you have been.
Get used to it.
No need to get all huffy about it, though.


RE: Apple are doomed!
By Gondor on 7/25/2012 6:43:48 AM , Rating: 2
Indeed, Apple is doomed, but it's all thanks to their own stupidity.

However, they are still before the point of no return and can use that heap of stashed cash to salvage the company, before it gets demolished by litigation. Then again shareholders might get greedy and drain those cash reserves instead before the ship sinks ... who knows.


RE: Apple are doomed!
By Cheesew1z69 on 7/25/2012 8:55:24 AM , Rating: 1
You keep comparing Windows to Mac sales when they aren't even in the same category. But of course, this is you, you like to make shit up to further your agenda.

Comparing software sales to hardware sales = moronic

Apple TV and XBOX, same, not in the same category but hey, whatever floats your boat to make yourself feel better.


RE: Apple are doomed!
By spread on 7/25/2012 9:12:17 AM , Rating: 2
The Apple TV is the most popular computer in North Korea.

Tim Cook is actually German, born in Frankfurt.

For every iPhone sold, 0.5% of the profits go to fund homoeopathic research.


RE: Apple are doomed!
By Cheesew1z69 on 7/24/2012 8:36:15 PM , Rating: 4
That you are a tool? Everyone agrees.


Samsung sales
By Phynaz on 7/24/12, Rating: -1
RE: Samsung sales
By mckinney on 7/24/2012 9:22:11 PM , Rating: 1
quote:
quote: Apple's arch-rival, Android phonemaker Samsung Electronics Comp., Ltd. (KSC:005930) is believed to have sold around 50 million smartphones for the quarter.

Believed by Jason Mick at least. Could you link something other than your own "article".


Jason Mick is believed to be the worlds best blogger.

Remember that blogging is graffiti with punctuation ...


RE: Samsung sales
By hexxthalion on 7/25/12, Rating: 0
"We shipped it on Saturday. Then on Sunday, we rested." -- Steve Jobs on the iPad launch











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