“Asymco’s Horace Dediu has found a novel way to highlight a source of growth within Apple (AAPL) that is often overlooked,” Philip Elmer-DeWitt reports for Fortune.
“He’s stacked Google’s (GOOG) core business (i.e. without Motorola and ‘other’) against Apple’s iTunes/Software/Services division,” P.E.D. reports. “Taking into account the 30% [sic] [recte 70%] Apple pays app developers (which the company doesn’t report as revenue), Dediu figures the group had ‘gross’ revenues of $23.5 billion with growth of 34% year over year.”
P.E.D. reports, “‘On a yearly basis,’ he writes, iTunes ‘is nearly half of Google’s core business and growing slightly faster.'”
Read more, and see the charts, in the full article here.
MacDailyNews Take: Yet Apple supposedly deserves a P/E ratio of 13.15 while Google gets a 30.76?
[Thanks to MacDailyNews Reader “Craig C” for the heads up.]
Apple’s smallest division less profitable than Toyota, Nissan and Ford combined! Stock plunges 2%.
Buy on bad news, sell on good news.
Buying causes the stock price to increase while selling causes the stock to drop.
This should help many to understand now why stocks drop on good news.
Smart traders looking to buy have everything to gain by making the stock tank to get as many shares put on sale in the market. There’s much more money to be made by buying/selling several times at profitable pricepoints rather than sit on your shares and hope it reaches 1000$ or higher. That approach is also sustainable forever and works however signficant the dive/rise are.
Mathias is right when it comes to AAPL. I’ve been a long term holder of AAPL since the price was $49 ( and did have some before that ). I’ve certainly done exceedingly well from those shares over the years, but I was also concerned about how AAPL fluctuates so wildly for no sensible reason.
I subsequently opened a second trading account, which I seeded with a relatively small number of AAPL, but have frequently sold the lot when I felt a price drop might be on the cards ( quarterly financial results, new product launch etc ) and then repurchased them shortly afterwards, often getting 10% more of them than I sold without putting any more money in.
That second load of AAPL has now accumulated much better in the last four years than the ones I held. I didn’t make all the right calls and some of my buys and sells were less than optimum, but I’m certainly not complaining.
I would prefer not to deal like that, but if people are continuing to manipulate AAPL, then it seems silly not to take advantage of some of the more predictable manipulation.
The thing that investors need to keep in mind is that many analysts are in salaried positions with stockbroking companies. A stockbroker only gets commission when shares are bought or sold, so it’s very much in their interests to unsettle you and panic you into selling or buying. The one thing they don’t want you to do is to buy shares and then hold them for many years.
The perceived market value of Google has really been smartly communicated to the world through its own monetization model — the world greatest advertising agency which sell its own brand through helping others to sell theirs.
Google is also like a “Do No Evil, Be All Righteous” government (if not being a country) of its own. Btw, what tech company will have a director who bears the title of the Director of Cultural Institute? Wow, so inspiring. So… Think Differently…
And hey, we all are supporting it from here and there too.
Regardless of all these, I am going to make myself as invisible as I can from this Government of Advertising. No g+, no Google Map, and to slowly migrate away from Gmail, meanwhile wait for other search engine alternatives…
Why? I guess I am old enough to not trusting Google.
See how easily we are fooled? It’s a magician’s trick to swap things when one is not paying attention. Can’t trust any one, any more.
But the information they absorb with that search engine is priceless. That’s part of the reason why I wish Siri was a full search engine so Apple could collect that data (from iCustomers like me) and use it to their advantage.
My thoughts too: Dediu (of course) sets it out accurately in his original article while PED whether through excessive editing or mere haste has given the wrong impression. As I read it Dediu added the 70% developers’ share to the reported Apple income from the iTunes operation to give the gross income.
Wall Street pretty much understands that what Google does is relevant but what Apple does isn’t. Everyone needs search but no one needs music. Music sales are tapering off but search is still growing and growth is everything. Wall Street is all about perceptions and Google has convinced Wall Street that they can do everything and therefore Google is perceived to have unlimited growth.
Apple has become nothing more than iPhone sales and Apple’s iPhone business appears to be dying in comparison to Android smartphone sales. No sane investor wants to invest into what appears to be a dying business. Tim Cook can’t even convince me that Apple has new products coming and I’m a huge Apple fan. Telling me that Apple has some vague, awesome new products coming means absolutely nothing to me. Why bother to mention them if he’s not going to say what they are? It just makes it seem as though he’s lying.
I honestly don’t understand why Apple doesn’t simply build its own search engine and take Google’s core business away. That would be the quickest way for Apple to prove itself to Wall Street. Apple could probably cripple Google’s search engine business in months by using its own search engine as the default search engine on all iOS devices. Apple seems to be taking the rough road when the smooth path is readily available. Without the revenue from its core business, all those free services Google offers would likely lose steam as Google scrambles about trying of find other ways to monetize it’s business. It seems like it would be a piece of cake for Apple to do and not even break stride with its hardware business.
Google’s “core business” is using every means possible (ethical and otherwise) to track their ‘customers’ activity and sell the data to advertisers.
I am currently doing all I can to expunge the parasite from my life.
I recommend all thinking people do likewise.
Eric T Schmidt would shit a pantload if Apple got really serious about online advertising .
Whoa, that’s amazing. Apple doesn’t report iTunes revenue?
Perspective: Amazon net sales were $25.59 billion in the fourth quarter. Operating income was $510 million in the fourth quarter.
So iTunes generates about 5X the profit of all of Amazon on less than 1/3 of the revenue.
(I think I stated that correctly.)
Funny, right after this article was posted, I posted a comment noting that the article incorrectly said Apple takes 70% of the profits.
My comment has now “strangely” disappeared, but MDN now has a “[sic 70%]” noting that the article is wrong.
Guess MDN couldn’t stand that someone else caught something that slipped by them.
Shoddy excuse for “journalism” by MDN to do that…but I’m sure they’ll delete this comment, too.
Not to worry, I’ve scrapbooked it