Welcome to the Club

Well, Apple released it’s financial results for the fourth quarter of fiscal 2011 today. And once again, it was a doozy.

Revenue for the quarter was $ 28 Billion; a bit less than the last quarter (which I actually did not expect) but a 39% increase over the year-ago quarter. Unit sales of all products were good, with iPhone and iPod units down slightly from the last quarter, but Macs and iPads up. They actually sold 11 Million iPads last quarter and 17 Million iPhones. iPhone accounted for almost 39% of their quarterly revenue, while iPads made up 24%.

But the big news (for me) was that, with this quarter’s results, we can determine that their annual revenue for 2011 was a grand total of $108,249,000,000. That’s just over $108 Billion, putting Apple into the “Billion Dollars a Year Club” for the first time.

You may recall, in my last blog post, I went out on a limb and predicted something between $113 and $116 Bn, and a Fortune 500 Position of somewhere around 15th or 16th place. As I was a bit short on the revenue, I will modify my Fortune 500 prediction to around 16th or 17th place, still well ahead of last year’s 35th spot; a record showing for them up to that point… but that depends, of course, on how well the other members of the club do with their fiscal results; as Einstein says, “It’s all relative.” Unfortunately, we’ll have to wait until the Fortune 500 list comes out, sometime around the end of May 2012, to know for sure.

But looking at that revenue figure…that would put Apple ahead (in terms of revenue) of companies like IBM, Wells Fargo and Proctor and Gamble. And way ahead of Microsoft, Dell and Intel.

As usual, based on this good news, Apple’s stock price has taken a beating and gone down, but it is worth noting that, at market close today, Apple had a Market Cap of $391 Billion (an almost 2 month high), ahead of Exxon Mobil by almost $8 Billion, making Apple the largest company in the US by Market Cap once again. This number will likely change significantly during tomorrow’s trading, of course (and as Mr. Gruber notes on his blog, now is probably a great time to buy some Apple stock… but I digress).

I may post some graphs and other analysis later, but I wanted to get this initial reaction onto the intertubes tonight.

Cheers!

 

News and Numbers from Apple

First off, Apple’s new iPhone, the 4S. Some are miffed that it’s not “iPhone 5.” Some are miffed that it is, essentially, only a minor improvement over the iPhone 4. Some are wondering why they would replace their current iPhone 4 with one of these. To all of these people I say… je ne give a shit pas, I’m getting me an iPhone. I’ve been waiting to get an iPhone for more than 3 years now (long story… no, a short story: got locked into a contract. Bleh) and I *need* a new phone.

iPhone 4S

(Some may say “want” but I say “need.” Because I need it. I do. Me. Need. Need a new phone. Now. Yes. Need. But I digress…)

Oh, and to those who already have an iPhone 4; you probably have a contract, so the fact that this phone is only an incremental upgrade is probably a good thing for you. Yay! Think how much more pissed off you’d be if this was THE GREATEST PHONE ON EARTH… and you couldn’t get one because you were locked into a contract. Meh. (How’s that for ‘silver lining’ thinking?) Of course, if you’re not locked into a contract and you’re wondering if you should dump your iPhone 4 for an iPhone 4S… I’d probably say ‘no,’ but it’s up to you, dude. Don’t let me tell you what to do. And don’t listen to those dumbass pundits and so-called ‘experts,’ either. Figure it out yourself.

But the other interesting thing that happened today had to do with “AAPL,” that is to say, Apple’s stock and the price thereof.

A while back, you may recall, Apple’s Market Cap exceeded that of MicroSoft. Market Cap, or Market Capitalization, is a measure of how large a company is. Essentially, you take the company’s stock price and multiply that by the number of stocks issued, and you get the company’s Market Cap value (measured in good old dollars). Bigger is better. It is ‘a’ measure of the size of a company, but by no means the only one.

When Apple surpassed MicroSoft on this scale, it was a pretty Big Deal(TM). And, at that time, the only company with a bigger Market Cap was Exxon Mobil (Ticker: XOM). And slowly but surely, Apple started to close that gap.

Market Cap is one of those things that you hear a lot about in the news, probably because it is so volatile. Market Caps go up and down every day, while we have to wait a whole boring three months to get a company’s quarterly financial reports. So Market Cap swings make for great news.

Well, as Apple started closing that gap, I started keeping track of the numbers. And like any good engineer would, I graphed them. Thus, I present:

(Click to Embiggen in a new Window)

This is a graph comparing the Market Caps of AAPL and XOM, from the 25th of August 2011 until today. The numbers on the vertical axis are in Billions of Dollars. As you can see, AAPL briefly exceeded XOM on the 26th, and they danced around for a couple of days… and then, on the 8th of September, AAPL pulled ahead… and stayed ahead. At one point (23 September), AAPL was ahead by $37.8 Billion. At that point, Apple Inc was, essentially, *the* largest company in the US (by Market Cap), and probably one of the top three or so largest companies in the world.

Their peak was on 20 September, where, by Market Cap, Apple (the company) was worth $383 Billion dollars. That is to say, that’s what it would cost you to buy each and every stock of AAPL out there. Unlike *some* companies I could name (*cough*dell*cough*rim*cough*hp*cough*), whose Market Cap is well within the ability of Apple to buy… out of petty cash. But I digress…

AAPL stayed ahead (albeit only by a paltry $380 Million on 30 September) until today. And, as usual for Apple, during today’s announcement of a new product (what for most companies is good news) their stock took a pummelling, while XOM surged and over took, giving Exxon a Market Cap lead of $8.7 Billion.

As I said, this is typical for Apple. Their stock always seems to go down when they have good news to announce. Ah well, c’est la vie, as they say. But it will be interesting to watch the stocks and see how the Market Cap numbers go over the next few months. Some have predicted that, not only will AAPL exceed XOM in Market Cap value, but AAPL may be the first stock to reach a Market Cap of $1 Trillion. (OK, admit it; you read that in Dr. Evil’s voice, didn’t you? I know I typed it in his voice, so it’s understandable if you did.)

The other interesting thing you get from these numbers, when compared to the actual stock prices of the two companies: Apple has a whopping 927 Million shares on the market, while Exxon has issued a mind boggling 4.8 *Billion* shares. So if you own a few shares (of either company)… it’s probably pretty insignificant. You’re welcome.

And now that September has ended (someone wake up that Green Day guy), we look forward to another of those quarterly financial results announcements. This next one will be for the fourth quarter of 2011, so we’ll be able to aggregate the numbers for the annual results also. And I am going out on a limb and predicting that Apple’s gross annual revenue will exceed $100 Billion this year. Obviously, sales of this latest iPhone will not have an effect on 2011 annual figures, as the next three months are the first quarter of fiscal year 2012. But recall that iPhone 4 was a very successful product, one of the most popular selling phones of the time. Not to mention income from iPad 2. Oh, yeah; and they also sell computers. Heh.

But let’s think about that for a moment. Last year, there were only 17 companies on the Fortune 500 whose gross annual revenue was more than $100 Billion. The biggest of those was Wal Mart, with $421 Billion. That’s no surprise; they’ve been #1 all but three times in the last 10 years, and those times, they were a close #2.

So the “$100 Billion a year club” a pretty exclusive group of companies. And I am predicting that Apple will join them for 2011. As a matter of fact, I’ll double down on that bet, and predict total annual revenue somewhere between $113 and $116 Billion, which should place them somewhere around 15th or 16th on the Fortune 500 list. So stay tuned, kids! We’ll have to wait for Apple’s quarterly results, and for the good folks at Fortune Magazine to produce the 2011 list, but I’m betting it will be worth the wait.

Cheers!

Putting Up Some Big Numbers

Apple released it’s quarterly financial results today, for the 2nd quarter of 2011 (Jan – Mar 11). As many people have noticed, they put up some big numbers, yet again. Just some quick highlights:

Once again, the best, non holiday quarter ever, with $24.667 Billion in revenue and $5.99 Billion in profits. A while back I predicted that Apple would join the “$100 Billion Revenue a year” club in FY 2012, and they seem to be on track for that with these numbers.

They shipped just over 4.5 Million iPads in the quarter, bringing the grand total since introduction up to almost 19.5 Million. Almost 20 Million in just 4 quarters. It’s interesting how fast iPad is being adopted; it took iPhone 8 quarters to reach the 20 Million mark, and iPod took 12 quarters to reach that number.

Unit sales and revenue for every product was down significantly from the previous quarter (which was the holiday quarter)… except for iPhone. iPhone sales were actually up quite a bit from the previous quarter (113% to be precise, Captain), with 18.6 Million units shipped, generating almost $12.3 Billion in revenue. I expected iPad sales to be down, following the same “jig saw” pattern we’ve seen with iPod sales, but it’s interesting that iPhone did not follow that paradigm. It’s also interesting to note that iPhone accounted for just shy of 50% of Apple’s total revenue for the quarter. 49.86%, if you want to be picky about it…

Gruber and others have noted that the year-over-year gain in revenue and profits was 83% and 95% respectively. That’s the best year-over-year gain in revenue that Apple has seen for at least the past 14 years… but not for profit. As a matter of fact, the year-over-year gain in quarterly profit from Q4’08 to Q4’09 was a very impressive 122%; $1.1 Billion to $2.5 Billion. And even that’s peanuts compared to way back in 2005; Q2’04 to Q2’05 profits increased by an amazing 530%, from $46 Million to $290 Million.

Still waiting to see how they did on the Fortune 500 list for FY 2010. I’m predicting a placing of 31st, comfortably in the top 50 and much better than their best-so-far (official) place of 56th on the 2009 list.

Cheers!

Apple’s Latest

Ok, I know my blog has become, more or less, an “Apple’s Latest Financial Numbers” blog. Such was not my intent, but my current schedule and other responsibilities severely restrict my parenthetical thinking. It will eventually (I am certain) return to normal, but not for a while. In the meantime…

Earlier this week, Apple announced their numbers for Q4 of 2010. And, as expected, they were very good (once again, their best quarter *ever*).

Revenue for the Quarter was over $20B, bringing the grand total for FY 2010 to just over $65B. As I expected, this should place them comfortably above the 50 mark in the 2010 Fortune 500 list of the largest companies. Depending on how things play out for the others on the list, they may even make it into the low 30s. I’ll go out on a limb and predict 35, just to pick a number, and we’ll see how I do, ok? Gotta wait for the list to come out.

Revenue for FY 2010 was also increased by 52% compared to FY 2009. And the average increase in Apple’s annual revenue for the past 5 years has been 36%. That’s amazing. So, based on that, I’ll make a second prediction also. That by 2012 (two years from now), Apple will join the “$100B a year club.” And I bet they get there before Microsoft and before Dell. Keep tuned here to find out how I do! But I digress…

Interestingly, most of their revenue for FY 10 was from iPhone; about 38% total. CPUs (laptops and desktops) accounted for about 27%, and iPods for almost 13%.

Now, as you may know, the Fortune 500 list places companies in “industries,” based on where they get their revenue. There was a bit of a kerfuffle a while back when General Electric was moved to the “diversified financials” industry, because that’s were they were making most of their money.

Apple has, up to now anyway, been placed in the “computers and office equipment” industry. But with most of their revenue coming from iPhone, will that still be the case? I don’t think there’s a “cellphone” industry in the Fortune 500. We shall have to wait and see, I guess.

Even more interesting, as has been noted by others, between iPhone and iPad, in Q4 2010, Apple generated almost 60% of its revenue from products that did not even exist 5 years ago. And iPad has been an amazing success; in Q410, they sold more iPads than CPUs. And, of course, more iPods than iPads, and more iPhones than iPods…

Another example of how successful iPad has been; if we look at their last three “new” products, and their first quarter of availability:

  • iPod: Q402, where they sold 140,000 units and generated $53M in revenue.
  • iPhone: Q307, where they sold 270,000 units and generated $5M in revenue.
  • iPad: Q310, where they sold 3,270,000 units (!) and generated $2.16BILLION in revenue!

So, in the first quarter that Apple started selling iPad, they were already a $2B per quarter, $8-$10B a year business. Amazing. As Gruber has noted, there is no way Microsoft and Intel, not to mention Dell, HP and RIM, are not paying attention to this…

But even more interesting… if we look at those same three quarters, and look at Apple’s CPU business at the time:

  • Q402: 734,000 units, $1B revenue
  • Q307: 1,760,000 units, $2.5B revenue
  • Q310: 3,470,000 units, $4.4B revenue

So, while it is true that iPod, iPhone and iPad have been huge successes for Apple, and apparently growing quite nicely, it is also true that Apple’s CPU business (which was pretty much it’s ONLY business 8 short years ago), has been doing very well also. Apple is still a computer company, and, as I noted in my last, short blog post; the combined CPU and iPad sales have given them some significant gains in Market Share.

Oh, and speaking of the Market… just did a quick check of the stock market. Apple stock is trading at 307.47 a share, putting its Market Cap at 281.63B, and making Apple the second largest company by Market Cap. Exxon Mobil is still number one, with a Market Cap of 337.79B… based on a stock price of 66.34 a share… I think it’s still possible for Apple to become number one, but given the variable nature of the stock market, it’s impossible (for me anyway) to predict when. We’ll see.

Cheers!

Mac Sales

OK; I’m working on a longer Blog entry, but I just noticed something I want to get out right away.

Today, Apple held a special event, where they discussed the Mac. They talked about the next version of OS X (Lion), the new Mac Book Airs, and a few other things. They also noted that the Mac business was worth $22B in 2010.

But waitaminit… by my numbers (which are from Apple’s own quarterly Data Sums), CPU revenue (Laptops and Desktops) for 2010 was just under $17.5B… not $22B. What gives? But then I noted that, for 2010, iPad revenue was almost $5B… aha! As Ihnatko might say; “J’Accuse, Apple!” I saw what you did there. We all know that including iPad as a (some would say successful) competitor to those silly Winduhs “netbooks,” gives Apple a huge leg up in the “Market Share Wars.” Well played, Mr. Jobs… well played sir!

Apple’s latest numbers

(I am not a number! I am a free man!)

So, a couple of days ago, Apple released its results for the latest fiscal quarter, Q3 of 2010. And, once again, the numbers were good.

They had profits of $3.25 Billion, on revenue of $15.7 Billion; this was their best quarter ever. Take a look at that again; their best *quarter* ever, not their “best non-holiday quarter ever.”

That is to say, Q310 had higher revenue than Q110, the quarter that includes the annual spend-a-thon known as Christmas. For the past few years, Apple’s revenue has shown distinct “spikes” for the holiday quarter of each fiscal year, driven primarily by iPod sales, which (as I have noted before) make great Christmas presents. But this year, things were different. It’s also interesting to note that the last time Q1 was not Apple’s best quarter was back in fiscal 2005. Back then, their revenue for the *entire year* was $13.9 Billion, and their quarterly revenue was on the order of $3 Billion… which is what they made as *profit* this past quarter. So it may be a trite statement, but things have changed for Apple over the past 5 years, and changed in a very good way. I think, as time goes on, we will still see the spikes of the holiday quarter, but the new revenue streams of iPhone and iPad will smooth out that line, just a tad.

Breaking the numbers down a bit, we note that iPod unit sales were down slightly, reinforcing a trend that has been going on for some time. iPhone sales were also down very slightly, while CPU sales were up. This was the first quarter that Apple was selling iPads, and they did well, selling 3.2 Million of them; we’ll have to see how those numbers change over the next couple of years.

Percentage wise, iPhone represented 33.97% of their revenue, while CPUs accounted for 28.02%. Surprisingly, iPad was worth 13.8%, quite a bit higher than iPod, coming in fourth with 9.84%. This was the fourth quarter in a row that iPhone revenue was greater than CPU revenue.

A while ago, a friend of mine theorized that Apple had become more of a music company than a computer company. The numbers didn’t bear that theory out, but they do seem to support the idea that Apple has become more of a phone company than a computer company. But, if you consider the iPhone as more of a handheld, personal computer that can do phone calls, maybe not. And the iPad is more of a computer than anything else. Indeed, it may be what computers will look like more and more as time goes on. So I still think we can consider Apple a computer company, first and foremost.

This most recent financial announcement also included the final “revision” of their fiscal 2009 numbers. Using their updated accounting procedures, Q3 of 09 had $1.397 Billion more revenue than what they originally reported, putting their annual revenue at $42.905 Billion, rather than $36.537 Billion. As I noted before, this would have placed Apple in 51st placed in the Fortune 500, rather than the 56th place they actually made. Still, it’s the best Apple has ever placed on that venerated list of US Companies.

A couple of other interesting points were made during their announcement. First, Apple is forecasting revenue for the fourth quarter to be around $18 Billion. Industry analysts said this is “conservative,” as is typical for Apple (they don’t like to brag). But if they do make that number, it would push their annual revenue for 2010 to around $62 Billion. That would be a increase of 46% from 2009, and would push them to the low 30′s on the Fortune 500 list.

The other interesting point was made by Tim Cook, who said that not everything is all rosy and nice. They are having a problem at Apple… mainly in that they cannot seem to meet the demand for iPhone 4 and iPad. They can’t build them fast enough, but they are working through that as best they can. You have to admit, it’s a “good” problem for a company to have.

Finally, I have to note that Apple’s market capitalization was $231 Billion this morning, making them the second most valuable company in the US. Over the past 5 years, Apple’s stock price has increased almost 500%. Which only makes the fact that I did not buy any stock that much harder to take.

Apple’s Latest Fortune

Well, it’s that time of year again; time to purchase my annual copy of Fortune Magazine, the one with the 2009 Fortune 500 list (Volume 161, Number 6, dated 3 May 2010, to be precise, Captain…)

I guess I’m just a sucker for numbers, statistics and analysis…

Anyway, no huge surprise at the top end of The List; Wal-Mart is once again #1, with a tad over $408 Billion in revenue. Exxon-Mobil is a bit of a distant second, with only $284 Billion… and believe me, I see the irony of using the term “only” to describe almost “three hundred billion dollars…”

There are 16 companies in the “$100 Billion Plus” club this year, with American International Group making some very impressive gains; moving from 245th spot on last year’s list to #16 this year; that’s an amazing 829% increase of gross revenue…

But, to be honest, I’m much more interested in seeing how my favourite company has done. And they did well; Apple placed in the 56th spot. That’s the best Apple has ever done, since their debut on the 1982 list, at 411th. It was also quite a jump from last year, when they placed 71st, and even a significant improvement from their previous record of 67th way back in 1993.

The record placing on the list was obviously due to their record breaking revenue in 2009; $36,537 Million… Thirty Six and a half Billion dollars…

Hrm… wait a minute… according to my records (yes, I know; me having “records” of Apple’s financial results is more than a little geeky), Apple’s revenue last year was $41,508 Million… but the Fortune 500 list clearly says $36,537 Million. That’s a difference of $4,971 Million. Not exactly chump change. Where did it come from? I highly doubt Steve Jobs found it in the couch cushions one day…

Oh, of course; as I mentioned in a previous blog post (on 26 Jan), Apple has been revising how they account for iPhone revenue. That made for an “extra” $900 Million in Q2, $1,693 Million in Q1, and a whopping $2,309 Million in Q4… and we still don’t have the revised numbers for Q3; those won’t be released until early July.

So, if we take in to account their revised revenue (at least for the three quarters we know about), where would they have been on the Fortune 500 list? Well, it looks like they’d be a very comfortable 51st place (just behind #50 Pepsico, who had $43,232 Million of revenue).

And, if Apple’s revised Q3 numbers are high enough, they might even edge out that acclaimed purveyor of sugared water to claim 50th spot… at least “theoretically,” since the official Fortune 500 List uses their previously announced “official” revenue claims, rather than the ones that result from their revised accounting. And to be honest, that only makes sense. But… it’s nice to think about. I had theorized that Apple could break into the Top 50 of this year’s List; even though they did not, officially, it’s cool that they might, even if only theoretically.

Of course, when the Q3 numbers are released, I’ll be sure to let everyone know how it turned out… that’s just the numbers and statistics obsessed geek kind of guy I am.

Cheers!

iPad… goes up to 11

Apparently, the iPad will support 11 simultaneous finger touches. Kewl. As expected, there is a YouTube video showing it, but it only shows 10 fingers… it doesn’t show how they determined that 11 was the max…

Too cool. More detail here:

Apple Accounting – The Director’s Cut

Yesterday, Apple released its fiscal results from the first quarter of fiscal year 2010. And it was a great quarter; over $15 Billion in revenue… their best quarter ever, as a matter of fact. As you may remember from a previous blog entry, the first fiscal quarter corresponds to the holiday season of the previous calendar year, and Apple traditionally does well during that Holiday shopping spree we all know and love, so big numbers should not be a huge surprise to anyone. Even less of a surprise is that I am now blogging about those results. That’s just the kind of guy I am.

Now, in that blog post on Apple fiscal results, I showed data compiled over the last several years. This data comes from the Data Sums that Apple posts with their results; I have been downloading these files and putting the numbers into a big honking spreadsheet to make some pretty cool (if I say so myself) graphs for analysis. So the first cool thing about this quarter’s release was the note attached to the data sum:

In September 2009, the Financial Accounting Standards Board amended the accounting principles related to revenue recognition for arrangements with multiple deliverables and arrangements that include software elements. Apple adopted the new accounting principles on a retrospective basis during the first quarter of 2010. The new accounting principles significantly change how Apple accounts for certain revenue arrangements that include both hardware and software elements. The impact of the new accounting principles is reflected for all periods above. For additional information refer to the “Explanatory Note” in Apple’s Amendment No. 1 to the Annual Report on Form 10-K for the year ended September 26, 2009.

Now… that is interesting, and I’ll tell you why. The Data Sum that Apple releases each quarter contains not only the data for the quarter being reported, but also for the immediately previous quarter and for the year ago quarter, so you can compare how Apple is doing now to how they were doing in the past. And, as the note quoted above mentions, the changes in accounting principles were applied to the older results that are included in the Q1 2010 Data Sum. And the differences are pretty amazing.

Although the note does not specify, it is obvious, when you look at the numbers, that the impact from the new accounting principles is in the revenue Apple reported related to iPhone. Check it out:

iPhone revenue, based on these new numbers, was more than twice what was originally reported under the old accounting principles. Gross revenue for the year was $4 Billion higher than originally reported, based only on the differences from those two quarters. When Apple releases the new numbers for Q2 and Q3 09, the overall increase in total annual revenue will probably be pretty amazing.

Beyond the total revenue aspect, there are a couple of other cool factoids from the Q1 10 results:

First, for both this quarter and the (new) previous quarter, iPhone revenue was greater than CPU revenue. Which kind of takes the wind out of my sails; in the blog post linked to above, I argued that Apple was still, primarily, a computer company and it was computers, not iPods, that drove Apple’s revenue machine. That no longer seems to be the case. You could argue, I guess, that the iPhone is, in many ways, a handheld computer, but the fact that Apple themselves report iPhone revenue as separate from CPU revenue kind of makes the point. And the new device to be announced by Apple tomorrow may just add even more fuel to that fire.

The second cool factoid is that the total revenue for Q4 09 is now higher than for Q1 09. Remember how I said that Q1 revenue is always high, due to Christmas sales? That trend has been very evident in Apple’s results for the past five or six years, with a plausible explanation being iPods making such great Christmas gifts, and it showed in the “sawtooth” graphs I showed in my Charting Apple post. Well, at first glance, it appears that iPhone sales (which I postulated earlier might be stealing iPod sales) are causing Apple’s quarterly revenue to be more even, less influenced by Christmas sales. I am sure iPhones also make great Christmas presents, but the revenue from iPhone is less affected by the Christmas rush. Don’t forget, Apple gets a cut of the revenue from carriers. I don’t think we can make a firm conclusion at this point, based on just a couple of quarters; we’ll have to see what the “new” results for Q2 and Q3 09 are, and (naturally) the results from the rest of fiscal 2010. But rest assured, I will be blogging about them when they come out.

The other bit of neat info, not really from these fiscal results, is that Apple’s “cash on hand” and “short term investments” are around $40 Billion… which is more than enough cash to buy every single share of Dell. Not that this is actually “new” information; it’s been that way for a while; I’ve posted about it before. But it’s one of those things that is worth repeating. But who’d want to buy a washed up computer company like Dell anyway?

Found this on YouTube… pretty cool. It’s a 3D reconstruction (looks suspiciously like something out of a flight sim video game) of that US Airways flight that underwent several bird hits and subsequently went into the Potomac River in New York on 15 Jan 09.