I realize that such things are of little interest to many people, but they interest me so...

Exxon-Mobil made news in 2006 when it reported record quarterly and annual profits ($10.7 Billion for Q4 2005 and $36.1 Billion for FY 2005). It went on to report new record annual profits in 2006, again in 2007, and again in 2008 ($45.2 Billion in FY 2008). Annual profits fell off significantly for 2009 and 2010, but for 2011 they will likely approach (though still fall a bit short of) the 2008 total.

At the moment, I'm more interested in that quarterly profit number that I referred to. Since it posted profits in excess of $10 Billion for the 4th quarter of 2005, Exxon-Mobil has posted quarterly profits in excess of $10 Billion eleven more times (with the largest being $14.8 Billion in the third quarter of 2008). This past quarter likely represents the 13th time it's done so, we'll know for sure later this month. As far as I'm aware, Royal Dutch Shell is the only other private company to have posted a $10 Billion plus profit quarter. (*) Not surprisingly, that was in 2008. British Petroleum came close to doing so in 2008.

Why those companies were able to reach that level of profitability is probably, for most people, readily apparent: They've grown (through merger or otherwise) into huge companies and they've benefitted from very high commodity prices. These aren't great business stories so much as they are big business stories. There's nothing truly remarkable (i.e. with specific regard to Exxon-Mobil) about the way Exxon-Mobil has achieved the profit success it has in recent years (other than, some might argue, how it was able to win approval for the merger of Exxon and Mobil some years ago).

Not so when it comes to Apple, and that's the point I'm getting to. Just as Exxon-Mobil will, Apple will report its results for the fourth of calendar year 2012 later this month (for Apple, it will actually be Q1 of its FY 2012). I believe there's a chance - one that I would put at about 40/60 - that it will join Exxon-Mobil and Royal Dutch Shell in the $10 Billion plus profit quarter club.

First, Wow! The reality that that's possible is, in itself, amazing. We're talking about a consumer electronics device producer / retailer that sells a limited range of products and services. Whether one likes Apple products, or the Apple way of doing things, or not, it is hard to deny the remarkable and impressive character of its business story. It has already surpassed global tech giant Microsoft and retail giant Wal-Mart when it comes to profitability and market value. Could it possibly have surpassed Exxon-Mobil in profits in this past quarter, even with oil prices as high as they are? I'm not looking for that to have happened, but I think it is within the realm of possibility. Wow, again! For someone like myself that follows financial matters in some detail, and the results and metrics of various individual companies, that comes close to being a mind-blowing realization.

Anyone want to hazard a guess as to whether Apple hit $10 Billion in profits last quarter? Or, did the unthinkable and beat the tremendous profit machine that is Exxon-Mobil? Regardless - whether it posts $8.3 Billion or $10.9 Billion - it will represent a quarter that stands out in American corporate history, even more so I believe, all things considered, than any that Exxon-Mobil has turned in. Steve Jobs may not only be the Walt Disney and possibly the Thomas Edison of our times, he may be the Henry Ford of our times as well. And that's where, in my opinion, he's gotten far too little credit - he's perhaps the greatest industrialist of my lifetime, though I doubt he'd cherish or even accept the title.

I would like to make this point though: No one should take my comments as an endorsement of Apple stock. A company being great doesn't equate to its stock being great at a particular time, the latter depends in large part on the current pricing of the stock, which I'm not commenting on now. Even accepting that a given company is great, it can have a stock evaluation that is very unattractive just as it can have a stock evaluation that is very attractive.



(*) If anyone knows of another private corporation that's posted a $10 Billion plus profit quarter, please feel free to point it out to me. I didn't do an exhaustive search, I was going mostly from memory. If I'm wrong, I'll appreciate the correction.

It is interesting to compare the two; absurd oil prices on a product people must have vs. a very optional device.

E/M made profit of about $33 per man, woman and child in the nation last quarter. Doesn't sound like such a big deal when considering how much gas a family of four used in that time, some 500 gallons or so.

However, for Apple to earn about the same off of Ipods and Iphones and Icomputers and all their Istuff, that is certainly a big deal.

Geek.


:lol:

I do not see how it is even remotely possible for a manufacturer of anything to post $10B in a quarter. Fuel, sure because it is high demand, must have, small unit of purchase (gallon/barel) with profit cababilities at several steps from ground to pump.

What have been Apples past quarters been? Is $10B a huge jump or have they been in the $8B range before?

I do not see how it is even remotely possible for a manufacturer of anything to post $10B in a quarter. Fuel, sure because it is high demand, must have, small unit of purchase (gallon/barel) with profit cababilities at several steps from ground to pump.

What have been Apples past quarters been? Is $10B a huge jump or have they been in the $8B range before?

Apple's last 10 quarterly profits:

$1.8 Billion
$2.5 Billion
$3.4 Billion (Christmas quarter)
$3.1 Billion
$3.3 Billion
$4.3 Billion
$6.0 Billion (Christmas quarter)
$6.0 Billion
$7.3 Billion
$6.6 Billion

Consensus estimates for this last quarter: $9.2 Billion


There are a number of reasons to believe that this past quarter will represent significant sequential profit growth, including: (1) it's a Christmas quarter, which historically means a significant step up, (2) sales metrics from this past quarter that we've got a pretty good idea about - e.g., iPhone sales were through the roof, and that's Apple's biggest profit driver, and the reality that the iPhone was deep into its product cycle in the previous quarter, and many were waiting for a new version, was the reason profits weren't as high in that previous quarter (otherwise, that quarter was nothing short of blowout), (3) because of the way Apple defines its quarters, this past quarter will have an extra week in it (both as compared to the previous quarter and as compared to prior Christmas quarters), and (4) Apple's own guidance for this past quarter (which guidance is always very conservative, so much so that nobody pays attention to it anymore because it's always so far below what their results end up being).

I would be very surprised if Apple didn't beat $8 Billion in profit in 4Q CY 2011. Is it possible, sure, but I don't think it's very likely.

For a little more perspective, Apple made nearly twice as much profit as Walmart did in each of the first three quarters of CY 2011 (Walmart's quarters are offset by a month, but you can still see the comparison). And, just to be clear, we're talking about after tax profits - Apple's income tax liability through the first three quarters of CY 2011 was more than $6 Billion.

It is interesting to compare the two; absurd oil prices on a product people must have vs. a very optional device.

E/M made profit of about $33 per man, woman and child in the nation last quarter. Doesn't sound like such a big deal when considering how much gas a family of four used in that time, some 500 gallons or so.

However, for Apple to earn about the same off of Ipods and Iphones and Icomputers and all their Istuff, that is certainly a big deal.

Geek.


:lol:

Takes one to knows one. :neener:

:whistle:


bought 2 iPhone 4 and 2 4S in Oct.

Apple stock hit an all-time high of $427.75 / share earlier today. That represents a market cap of almost $398 Billion (it's down to about $394 Billion right now). Exxon-Mobil's market cap is now around $409 Billion.

:whistle:


bought 2 iPhone 4 and 2 4S in Oct.

You and more than a few others. :lol:

Samsung and Apple are now dominating the global smartphone market. Motorola, Nokia, RIM, and now even HTC are struggling.

The 4S will be available in China soon...

Apple stock hit an all-time high of $427.75 / share earlier today. That represents a market cap of almost $398 Billion (it's down to about $394 Billion right now). Exxon-Mobil's market cap is now around $409 Billion.

Which, if it were a country, would make its market cap the 31st largest GDP in the world. Right between Malaysia (30) and Belgium (31). Based on revenue as GDP, it would be 66 - right between Cuba (65) and Iraq (66).

Which, if it were a country, would make its market cap the 31st largest GDP in the world. Right between Malaysia (30) and Belgium (31). Based on revenue as GDP, it would be 66 - right between Cuba (65) and Iraq (66).

Behind Cuba by revenue? That's an outrage, all they do is make cigars, right?

E/M made profit of about $33 per man, woman and child in the nation last quarter. Doesn't sound like such a big deal when considering how much gas a family of four used in that time, some 500 gallons or so.

You made me curious enough to look up Exxon-Mobil's crude oil production relative to the production of the United States. Domestic production in 2010 was 5.5 million barrels per day, more or less. It looks like (http://www.exxonmobil.com/Corporate/Files/news_supp_earnings4q10.pdf) Exxon-Mobil's total liquids production (most of which would have been crude oil) in 2010 was a little more than 2.4 million barrels per day, with a little less than 400,000 of them coming from U.S. operations. It produced another 2.0 million or so barrel oil equivalents of natural gas per day, with about 1.7 million of them coming from U.S. operations.

Behind Cuba by revenue? That's an outrage, all they do is make cigars, right?

:lol:
I was actually surprised that Iraq, even its reduced oil producing state, generates less revenue than Cuba. I was also surprised to learn that Cuba has a very extensive biotech industry. :shrug:

Did you know Cuba's public debt is only 35% of their GDP? How's that for pondering...

It is interesting to compare the two; absurd oil prices on a product people must have vs. a very optional device.

E/M made profit of about $33 per man, woman and child in the nation last quarter. Doesn't sound like such a big deal when considering how much gas a family of four used in that time, some 500 gallons or so.

However, for Apple to earn about the same off of Ipods and Iphones and Icomputers and all their Istuff, that is certainly a big deal.

Geek.


:lol:
Then do the math and figure how much money the government made if the gas company made 10 billion.

Then do the math and figure how much money the government made if the gas company made 10 billion.

Why? They're not related. The government gets a set price per gallon whereas the oil companies cut goes up and down.

The government used to net a lot more per gallon than the oil company and WAY more than the gas station. Now, they just net a 'good bit' more.

I am guessing that is where you're going with this?

Why? They're not related. The government gets a set price per gallon whereas the oil companies cut goes up and down.

The government used to net a lot more per gallon than the oil company and WAY more than the gas station. Now, they just net a 'good bit' more.

I am guessing that is where you're going with this?

In general, I think the oil company (i.e. the segment producing oil) nets more per gallon now than the government does, though the government probably does net more than the gas stations (and the downstream segment of oil companies).

:lol:
I was actually surprised that Iraq, even its reduced oil producing state, generates less revenue than Cuba. I was also surprised to learn that Cuba has a very extensive biotech industry. :shrug:

Did you know Cuba's public debt is only 35% of their GDP? How's that for pondering...

It's easier to run a tighter ship when you aren't stifled by (real) democratic processes. :lol:

Why? They're not related. The government gets a set price per gallon whereas the oil companies cut goes up and down.

The government used to net a lot more per gallon than the oil company and WAY more than the gas station. Now, they just net a 'good bit' more.

I am guessing that is where you're going with this?

Yes it is. Despite the "tax breaks" the government STILL makes more than the gas company does off of the gas companies products.

Is there ANY other corporation out there providing revenue even closely similar than the Oil Companies? Yet they are the BIG Bad Guys!!

And this is just the tax at the pump, not to include the corporate taxes they pay..

Imagine Apple getting hit with a "surcharge" at the register of an additional $500 per laptop or iPhone.. on top of the taxes they currently pay

Yes it is. Despite the "tax breaks" the government STILL makes more than the gas company does off of the gas companies products.

Is there ANY other corporation out there providing revenue even closely similar than the Oil Companies? Yet they are the BIG Bad Guys!!

And this is just the tax at the pump, not to include the corporate taxes they pay..

Imagine Apple getting hit with a "surcharge" at the register of an additional $500 per laptop or iPhone.. on top of the taxes they currently pay

If we're talking about the oil companies, no they don't. If we're just talking about what the oil companies make from refining, marketing, and retailing fuel products, then it might be true. But, that's not how oil companies make their money or how they try to make their money. They make their money taking oil out of the ground and delivering it to the refineries.

If we're talking about the oil companies, no they don't. If we're just talking about what the oil companies make from refining, marketing, and retailing fuel products, then it might be true. But, that's not how oil companies make their money or how they try to make their money. They make their money taking oil out of the ground and delivering it to the refineries.

No they don't. They make their money by getting the government to institute polices that make that oil worth $100 a barrel when they get it out of the ground and deliver it to refineries.

:evil:

No they don't. They make their money by getting the government to institute polices that make that oil worth $100 a barrel when they get it out of the ground and deliver it to refineries.

:evil:

:lol: Okay, then: Thanks to government policies, they realize their profits by taking the oil out of the ground and delivering it to the refineries.

:lol: Okay, then: Thanks to government policies, they realize their profits by taking the oil out of the ground and delivering it to the refineries.

Too bad we, the people, didn't realize this.

I want $30 oil and I am willing to go to war over it, damn it.

Too bad we, the people, didn't realize this.

I want $30 oil and I am willing to go to war over it, damn it.

To war even with reality, apparently. :lol:

Anyway, $30 oil is easy to get to. All you have to do is get us drilling / recovering as much oil as we can AND convince a #### load of people (to include some of those in China, India, and Brazil) to stop using it.

To war even with reality, apparently. :lol:

Anyway, $30 oil is easy to get to. All you have to do is get us drilling / recovering as much oil as we can AND convince a #### load of people (to include some of those in China, India, and Brazil) to stop using it.

When I get done, were I to be your president, they wouldn't be able to use it.

I've had my fill of globalism. I am interested in the US and A.

:buddies:

To war even with reality, apparently. :lol:

Anyway, $30 oil is easy to get to. All you have to do is get us drilling / recovering as much oil as we can AND convince a #### load of people (to include some of those in China, India, and Brazil) to stop using it.

:killingme

It's easier to run a tighter ship when you aren't stifled by (real) democratic processes. :lol:

:lol:

Maybe we should go banana republic...

Target to test-drive Apple mini-stores - MarketWatch (http://www.marketwatch.com/story/target-to-test-drive-apple-mini-stores-2012-01-12)

NEW YORK (MarketWatch) -- Target Corp. said Thursday it is moving closer to committing to opening Apple Inc. shops within its own stores, announcing a test in select stores.

"We will have 25 stores (in Targets) with unique display and assortment," said Target spokeswoman Dustee Jenkins, who described the move as "a test."

2011 Was the Second-Worst Year for U.S. PC Sales in History - Arik Hesseldahl - News - AllThingsD (http://allthingsd.com/20120112/2011-was-the-second-worst-year-for-us-pc-sales-in-history-except-at-apple/)

Last year, for the first time since 2001, the U.S. market for personal computers shrank, according to separate research reports issued yesterday by the research firms Gartner and IDC. The year 2011 was, by IDC’s reckoning, the second-worst year in the PC industry’s history.

U.S. consumers and businesses bought 71.3 million PCs, representing a drop of nearly 5 percent over 2010, when they bought more than 75 million, IDC said. So much for the year.

The iPhone 4S went on sale in mainland China and a number of other countries today. That won't impact the results from this previous quarter, but it should help sustain results, to some extent, into the current quarter.

iPhone 4S Sales Canceled at Beijing and Shanghai Apple Stores - John Paczkowski - Mobile - AllThingsD (http://allthingsd.com/20120112/iphone-4s-sales-canceled-at-beijing-and-shanghai-apple-stores/)

“The demand for iPhone 4S has been incredible, and our stores in China have already sold out,” an Apple spokesman told AllThingsD. “Unfortunately, we were unable to open our store at Sanlitun due to the large crowd, and to ensure the safety of our customers and employees, iPhone will not available in our retail stores in Beijing and Shanghai for the time being. Customers can still order iPhone through the Apple Online Store, or buy at China Unicom and other authorized resellers.”

Eggs Thrown in China iPhone 4S Scuffle - CNBC Video (http://video.cnbc.com/gallery/?video=3000067330)

Also, it's being reported that Apple released a list today of its suppliers. I'm trying to find a copy of it now. That surprises me, and it strikes me as indicative of a change of culture at Apple. They generally don't comment on who their suppliers are and their suppliers generally don't comment either (though, in the latter case, we can assume that's not by choice).

Apple stock touched new highs again today. It poked its head above a $400 Billion market cap yesterday before closing just below that level. It's back above that level now (perhaps, in part, on the iBook2 news from this morning).

$400 Billion. Incredible. That's enough to fund the federal government for, what, 5 or 6 or 7 weeks?

Apple stock touched new highs again today. It poked its head above a $400 Billion market cap yesterday before closing just below that level. It's back above that level now (perhaps, in part, on the iBook2 news from this morning).

$400 Billion. Incredible. That's enough to fund the federal government for, what, 5 or 6 or 7 weeks?

See, people see that and they think Apple HAS $400 billion in cash. If they had to convert that to cash today, hell, what would they have, a billion shares netting something like $24 each for the year so, at best, three times that or about $100 billion if someone wanted to 'buy' the company outright for cash? And no one would pay that looking back, paying that sort of premium. So, maybe 1/2 of that is what they could come up with in cash?

See, people see that and they think Apple HAS $400 billion in cash. If they had to convert that to cash today, hell, what would they have, a billion shares netting something like $24 each for the year so, at best, three times that or about $100 billion if someone wanted to 'buy' the company outright for cash? And no one would pay that looking back, paying that sort of premium. So, maybe 1/2 of that is what they could come up with in cash?

I was going to follow up on this with some points about the value of a business based on what it earns and might earn (particularly relative to what else someone might do with investment capital), and to provide some details about Apple with regard to things you referenced (e.g. how much cash it has, how much its earning per year). But, when I was typing it became clear to me that - despite whatever qualification I might include - my comments would be hard to interpret as anything other than me assessing (and giving my opinion on) the current stock price. I don't really want to do that. For one thing, I believe strongly that no one should buy individual stocks unless they can and do figure out for themselves if, and importantly why, they should. So, I try to avoid discussing some kinds of specifics in open environments. Second, I have a particular friend that has been bugging me about whether or not they should buy or sell Apple stock ahead of this afternoon's earnings release, and I've steadfastly refused to tell them what I think. I'd hate for them to read something I said, which would implicate long term expectations without concern for short term expectations, and convince themselves that it reflected what I thought about likely short term price performance. Plus, they just need to do the freaking homework and come to conclusions themselves.

Anyway, maybe we'll get a chance to discuss the issue in general in a different context, or in specific in a different setting at some point.

With that said, Apple's Q1 FY 2012 earnings will be out this afternoon. I've been reading some crazy estimates for iPhone sales (especially considering the 4S wasn't available in China in the quarter). Estimates usually creep up going into earnings. My guess is that iPhone units will indeed be enormous (maybe 30 million +), that Mac units will be very strong (5 million +), and that iPad units will be strong - meaningful growth - but not as strong as some are expecting (13 million +). I'd guess that earnings beat consensus estimates (which are currently about $10 / share), but I wouldn't be shocked if they didn't. As for immediate price action in the stock, I have no idea. Exxon-Mobil's earnings will be out next week, then we can compare.

Wow!!!!

I think they're actually going to beat Exxon-Mobil for this last quarter. When I suggested that possibility, I thought it was quite a long shot. These results are unbelievable.

Earnings were $13.06 billion. I think that will beat Exxon-Mobil's earnings for this last quarter, but we'll have to wait to see for sure.

37 million iPhones - and the noteworthy thing (to me at least) is that the per unit revenue on iPhones was actually up from previous quarters, so that 37 million number probably isn't too inflated by sales of older models (at reduced prices); they ended the quarter with an iPhone backlog, meaning the only reason they didn't sell more was that they couldn't build enough

15.4 million iPads - by my count, that means they sold over 40 million iPads in CY 2011 and had sold 55 million iPads in the first 21 months

5.2 million Macs

All things considered, this may be the greatest earnings beat I've ever seen - companies this big and this established just don't beat like this. Oh, and they ended the quarter with $97.6 Billion worth of cash and cash equivalents on their books.

Verizon's earnings were released this morning and those results hinted at a big iPhone number, but I don't think they hinted at one this big. Verizon's margins were squeezed some by significant sales of iPhones (they reported that 4.3 million of the 7.7 million smartphones they activated in the quarter were iPhones). They even lost money for the quarter, though that was largely due to a pension issue rather than losses related to the initial sale of iPhones.

All things considered, this may be the greatest earnings beat I've ever seen - companies this big and this established just don't beat like this. .

So, if it is 'too good to be true' what's going on? Is this a sugar high? A bubble?

:popcorn:

37 million iPhones - and the noteworthy thing (to me at least) is that the per unit revenue on iPhones was actually up from previous quarters,




several iPhone 4S owners I talked to, bought the 64 Gb Model because the 16 and 32 were sold out, and they did not want to wait .........


[thinking the 64 g has a higher margin]

Exxon-Mobil reported earnings this morning: $9.4 Billion for the quarter. So, Apple not only made more money than Exxon-Mobil last quarter, it beat Exxon's earnings by 39%. Think about that. It now seems plausible that Apple could beat Exxon-Mobil for the entire year (either FY or CY 2012). It may not of course - and a lot will depend on what happens with oil prices - but the real possibility is there.

For more perspective, Apple paid more in income taxes last quarter than Google made in profits (before taxes). Apple made more last quarter than Exxon-Mobil and Google combined. Though (CY2011) 4th quarter earnings aren't in yet for all of the largest U.S. health insurance companies, I feel comfortable saying that Apple earned about 4 times as much in that quarter than the 5 largest such companies combined. And those 5 account for a very large share of the market - Apple almost surely made more than twice as much as all U.S. health insurance providers.

So, if it is 'too good to be true' what's going on? Is this a sugar high? A bubble?

:popcorn:

I don't think it's too good to be true, though it seems it is too good to be believed by some. I think there are real reasons - understandable, predictable, even sustainable (with regard to baseline performance, though surely not long-term with regard to growth) - for Apple's business success. I won't go into the reasons, but this is real performance - real business excellence, in terms of execution and in terms of vision. It's just one of those amazing stories that comes along sometimes, and one of the greatest business stories of modern times. It compares favorably with that of Microsoft. I'm curious to see how the Facebook story evolves, perhaps it will turn out to be just as amazing - but it has a way to go yet to get there. For now it's still a remarkable social phenomenon more so than an amazing business story.

Honestly, stock analysts as a group don't seem to have great big picture vision - they seem to get lost in the trees and miss the forest. I suppose that's not so surprising (or bad for them) considering that equity markets have become more short term trading markets than long term investment markets.

several iPhone 4S owners I talked to, bought the 64 Gb Model because the 16 and 32 were sold out, and they did not want to wait .........


[thinking the 64 g has a higher margin]

I can believe that. All of the iPhones represent large margins for Apple. Its gross margin this last quarter was incredible (44.7%), driven in part by the leverage high volume in general exerted on fixed costs, but also largely by the high portion of that volume which represented iPhones.

That's part of the earnings success of Apple - it's managed to make its iPhones relatively inexpensive to the end customer while still realizing large margins on them. Much of the cost is hidden from the customer as being paid by the carriers. That 16GB 4GS that the customer is paying $200 for (with contract), the carriers are paying $600 or $650 for. That 64 GB that customers are paying $400 for, the carriers are paying $800 or $850 for. The carriers aren't subsidizing other smartphones to that degree, they don't have to. And the good news for iPhone customers is that those increased costs of business acquisition / maintenance are, effectively, spread out over the entire data customer base of the carriers - that is to say, they don't charge iPhone customers more for monthly service than they charge customers who buy other smartphones (which they don't have to subsidize to as great an extent). In effect, the people that buy other smartphones are subsidizing the people that buy iPhones. That's the marketing power that Apple has built up for itself by providing to customers products that they love, that transform their lives, for which those customers feel there is no substitute.

This is the reason that Apple, while having only single digit percentages of the mobile handset market, accounts for more than half of handset maker profits. I suspect it made more than 60% (perhaps 65%) of handset maker profits in this last quarter. Samsung sells just as many smart phones as Apple (more in the quarter before this last one, though likely a tad less in this last one), but it makes no where near as much money as Apple does - and it is a more diverse company with, e.g., a very strong (and profitable) semiconductor business (in which Apple, ironically, may be one of its biggest customers).

I .

That's part of the earnings success of Apple - it's managed to make its iPhones relatively inexpensive to the end customer while still realizing large margins on them. Much of the cost is hidden from the customer as being paid by the carriers. That 16GB 4GS that the customer is paying $200 for (with contract), the carriers are paying $600 or $650 for. That 64 GB that customers are paying $400 for, the carriers are paying $800 or $850 for. .

So, let me get this straight; Apple gets paid a premium by the carriers? Every phone I buy, my carrier is paying $6-800 to Apple for the right to service it to me?

So, let me get this straight; Apple gets paid a premium by the carriers? Every phone I buy, my carrier is paying $6-800 to Apple for the right to service it to me?

The carriers are paying $400 - $450 of the cost of the iPhone above what the customers (i.e. the ones getting a contract price) are paying. Verizon pays Apple something like $600 for that 16GB iPhone 4S that it sells to customers for $199. Other smart phones are carrier-subsidized in the same way, but not to as large a degree.

When a carrier tells the markets 'hey, we sold a #### load of iPhones this quarter', that means 'hey, you need to take your earnings estimates down because we aren't going to make as much money this quarter because of loses associated with the initial activation of iPhones.' When Verizon got the iPhone early last year, it was seen as (and likely was) good for Verizon long-term, but it meant somewhat reduced margins and less cash flow in the short term. Verizon actually lost money this past quarter - mostly due to accounting for a pension issue, but also to a small degree because of the iPhone 4S coming out and accounting for 55% of its smart phone sales in the quarter. Going forward, it expects margins to increase in part because the mix of smart phone sales will be more favorable to the bottom line (i.e. less iPhone dominated).


EDIT: Man, these skimlinks ads inside posts are annoying. I wish they at least somehow looked different than user-embedded links (e.g. to data sources) so that it was clear when a poster was providing a link for readers to get more information / confirmation. As it is, I think user-embedded links are going to get lost in the noise.

The carriers are paying $400 - $450 of the cost of the iPhone above what the customers (i.e. the ones getting a contract price) are paying. Verizon pays Apple something like $600 for that 16GB iPhone 4S that it sells to customers for $199. Other smart phones are carrier-subsidized in the same way, but not to as large a degree.

.

Ah, OK. Verizon is simply buying phones and then selling them at prices of their own choosing; get them the phones, make money on the service. Got it.

Ah, OK. Verizon is simply buying phones and then selling them at prices of their own choosing; get them the phones, make money on the service. Got it.

I think the pricing (to customers) is more so determined by Apple, though perhaps in consultation with the carriers.

But yes, that's the model - sell customers phones at a loss and lock them into service long enough to make it back (and then some).

Apple stock has been very strong since the last earnings release (big surprise :lol:). It's currently above $471 / share, which equates to a market cap of almost $440 Billion. Apple is putting some distance between itself and ExxonMobil - Exxon's market cap is a little below $410 Billion.

AAPL spent some time above $600 / share last week. It's currently trading around $599 - up almost $180 (43%) since the last earnings release.

Current Apple Market Cap: $558 Billion
Current Exxon Market Cap: $408 Billion

$618 right now, touched above $621 earlier today. I can't keep track of how many days it's touched new all-time highs over the course of the last 2 months - it's been a lot of them.

Current market cap: $576 Billion, greater than that of Microsoft, Google, HP, and Dell combined.

Sorry I get geeked out about such things.

Wow, the gap between XOM's and AAPL's market caps is now $180 Billion ($586 Billion versus $406 Billion). It's now big enough to slide a JP Morgan, Pfizer, or Coca Cola in between there and almost big enough to fit a Walmart. That's right, Apple is now just $30 Billion shy of being worth as much as Exxon-Mobil and Walmart combined.

Wow, the gap between XOM's and AAPL's market caps is now $180 Billion ($586 Billion versus $406 Billion). It's now big enough to slide a JP Morgan, Pfizer, or Coca Cola in between there and almost big enough to fit a Walmart. That's right, Apple is now just $30 Billion shy of being worth as much as Exxon-Mobil and Walmart combined.

Is there any better symptom that Wall Street is still ####ed up? Stunningly so?

Is there any better symptom that Wall Street is still ####ed up? Stunningly so?

Why? In this case, the fundamentals support the valuation. This isn't like in the late 90's when companies were getting ridiculous valuations that couldn't be justified by what the businesses were actually doing - where they were being expected to 'grow into' the valuations by increasing their profits many fold (or, in some cases, they hadn't even proven that they could make money at all).

Apple's stock price is just now getting to where it's actually debatable (given downside risk and upside potential) as to whether the stock price is right based on the businesses performance. From a technical standpoint (i.e. having nothing to do with the actual business, considering only stock price dynamics) some might be able to argue that it's run too far too fast, but from a fundamentals standpoint the current price is not at all unreasonable. This company makes money - lots of it - and its positioned to keep growing the amount it makes for a while. If the company were 10,000 times smaller such that someone could buy all of it as a smallish, turn-key business, 1/10,000th of its current market cap would seem like a fair price for the business - it would be justified by the cash on hand and how much money the business made (especially considering that there's a considerable amount of upside).

How much of an expected return do you think would make the purchase of a business (as opposed to putting the money into bonds or investing elsewhere) seem attractive? I'm talking about returns from the business' operations, not stock valuation returns - and let's assume that owning the business didn't mean having to invest significant amounts of one's own time to run it.

Again though, my statements about what constitutes a reasonable valuation for the company (based on fundamentals) aren't meant to suggest that its a good stock at this price - the stock market is often driven by technical factors not fundamental ones, it can be quite whimsical and, of course, the company's business performance could change going forward.

We're through another earnings cycle for Exxon and Apple (as well as most other companies) now. Apple again blew through estimates to post earnings of $11.6 Billion and beat Exxon for a second consecutive quarter. It's starting to look like Apple might actually beat Exxon when it comes to full year earnings and, more impressive still, it could challenge the all-time single year earnings record set by Exxon back in 2008 - $45.2 Billion. (That's when oil hit $8,642 / barrel, remember?)

All things considered, this past quarter for Apple was probably even more impressive than the previous one was. In addition to it not being the Christmas quarter, it didn't have an extra week like the previous quarter did, it didn't have a brand new iPhone and pent-up demand there for, and the new iPad was only available for the last 2 weeks of the quarter. Additionally, the desktop Mac lines are even older and in more need of refreshes than they had been in the prior 3 months. (Come on Apple, how the heck can you compete in the global PC market with 1 to 2 year old products?)

To put some more perspective around what Apple - as a business, not as a stock - is accomplishing: When Walmart reports later this month, Walmart and Exxon-Mobil will have combined to make about $27.7 Billion in the last 6 reported months. Apple alone has made $24.7 Billion in the last 6 reported months. Apple made almost as much money in the last 3 months as Microsoft made in the last 6 ($11.6 B versus $11.7 B). It wasn't too long ago that Microsoft made significantly more than Apple did, and the change isn't much on Microsoft weakness - its last quarter was pretty strong. Their reporting periods don't line up exactly, but Apple has made more in the last 3 months than Walmart and Target combined have made in the last 6 reported months (including each's holiday quarters).

How about some of the other big tech players? Microsoft, Google, HP, Dell, Facebook and Amazon combined made less than Apple in the last 6 months.

I think earnings will be down in this next quarter, the question is how much. iPad sales will probably increase some (Apple ended the last quarter behind demand on the new iPad), but iPhone sales will surely fall off - perhaps significantly - and that's their biggest earnings driver. Apple said that it achieved supply-demand balance on the 4S toward the end of January and was able to fill the channel with enough inventory to get within their normal target range (4-6 weeks). I don't see much reason to think Mac sales will improve meaningfully, unless we get the new line-ups introduced soon. I'd guess they will go on sale pretty close to the end of the quarter, if not in the next.

Anyway, things could of course change for Apple. It faces a number of meaningful headwinds at this point, and we can't just assume that it will continue to execute as remarkably as it has in all of the aspects of its business that it has. At the same time, there are a number of potentially important tailwinds that aren't as apparent to some as they should be. Who knows where Apple goes from here? But the story that's unfolded so far is just amazing. Years from now, I think college economics courses will teach whole segments based on what Apple accomplished and how it was able to do it - this business success goes well beyond the innovation and Apple's seemingly innate ability to understand what consumers wanted before even they did. They've done a long list of things right.


EDIT: Oh, the cash pile is now about $110 Billion. Over $18 Billion of that is loaned to the U.S. Treasury and another $21 Billion is in U.S. agency debt.

Apple will release quarterly earnings again this afternoon. This figures to be a difficult quarter, speaking relatively of course, for Apple for a number of reasons: the iPhone, which is their biggest revenue and earnings driver, is deep into the product cycle and unit sales are likely already suffering from the next generation anticipation effect; FX effects probably hurt them this quarter (e.g. because the Dollar was strong versus the Euro); gross margins will probably be down (e.g. because margins on the new iPad and the reduced-price iPad 2 are lower); and there's also the general decline in economic conditions / expectations globally. I'll be somewhat surprised if they're able to beat consensus estimates this time. But they've surprised me to the upside a number of times before. I suppose I should stop looking for reasons to expect something less than hard-to-believe good from them. The new portable Macs should help a little, but they were released toward the end of the quarter so the effect probably won't be too big in this quarter. IPad sales will surely be strong (I'm guessing they'll match or beat the 15 million or so that they sold in the Christmas quarter), but iPhone sales will just as surely be off.

At any rate, anticipating less than amazing results, I'm less-long APPL right now than I've been in quite a while. I still believe in the stock long-term, but I've sold a few shares thinking I might get a better deal if this quarter's results disappoint a little.

Back to the original point of this thread though, it seems very likely that Apple will have greater earnings this year than Exxon-Mobil will. The remaining question is whether they'll break Exxon's record for fiscal year earnings of $45.2 Billion set in 2008. Apple needs to earn an average of about $10.3 Billion for the last 2 quarters of its fiscal year in order to do that. Will they get to $10 Billion or $11 Billion this quarter? Their own guidance was for a little over $8 Billion, but they always beat that and I'm sure they will this time as well - but by how much? I guess we'll know soon enough.

Ha! I finally got one right.

Earnings were $8.8 Billion versus expectations of around $9.7 Billion - a strong iPad number (17 million units) and a weak iPhone number (26 million). I think that puts the total number of iPads sold in 2-1/4 years over 80 million.

Seeing little reason to think that the September quarter will be a lot stronger, I doubt Apple will get to $45 Billion in earnings for its 2012 fiscal year. The December quarter may be record breaking and Apple could easily break the annual earnings record with its 2013 fiscal year though.

Exxon-Mobil reported earnings this morning of $15.9 Billion. But $7.5 Billion of that was from special items (divestments and tax-related issues). The real quarterly earnings were $8.4 Billion.

I must confess to being somewhat (pleasantly) surprised with how strongly Apple stock has rallied since the last earnings report. It closed at an all-time high yesterday, touched an all-time intraday high today, and is currently trading above $643. It had traded down below $570 after the last earnings report. I thought it would rally, but didn't think it would regain these levels again for a while. We're in between 2 quarters that are likely to be relatively weak by Apple standards (one already was, the other seems to me likely to be). I didn't expect a major upward move from APPL until the next generation iPhone was released (and we got initial sales numbers and projections) and then based on results from the Christmas quarter, which I expect will be the greatest quarter in corporate history. Perhaps the market has learned from its mistakes when it comes to Apple.

Oh, and if my math is correct, as of this moment Apple has a market cap of over $600 billion - greater than Microsoft, Google, Amazon, and Dell combined.

I must confess to being somewhat (pleasantly) surprised with how strongly Apple stock has rallied since the last earnings report. It closed at an all-time high yesterday, touched an all-time intraday high today, and is currently trading above $643. It had traded down below $570 after the last earnings report. I thought it would rally, but didn't think it would regain these levels again for a while. We're in between 2 quarters that are likely to be relatively weak by Apple standards (one already was, the other seems to me likely to be). I didn't expect a major upward move from APPL until the next generation iPhone was released (and we got initial sales numbers and projections) and then based on results from the Christmas quarter, which I expect will be the greatest quarter in corporate history. Perhaps the market has learned from its mistakes when it comes to Apple.

Oh, and if my math is correct, as of this moment Apple has a market cap of over $600 billion - greater than Microsoft, Google, Amazon, and Dell combined.

So, how many shares of Apple do you own?

Our investment club has been following Apple on and off again for the last year or so, but have never made the plunge. I guess part of the reason is that Apple does not have a DRP. It would have been a great investment, but we know how that goes.