“Forget Steve Jobs’ health problems. Cheap ‘netbooks’ could steal the sizzle from Apple’s hot notebook business,” Brian Caulfield writes for Forbes.
MacDailyNews Take: Define “sizzle.” Shipping units with little or no or even negative margins is not sound business. That’s one reason why debt-free Apple has more money in the bank than Dell is worth, Brian.
Caulfield continues, “Forget Steve Jobs’ health problems. Apple has other troubles. For starters, the Cupertino, Calif.-based computer and gadget company is wading chest deep through a recession with a heavy load of pricey products on its back.”
MacDailyNews Take: Apple is outgrowing the PC industry and has been for years, Brian.
Caulfield continues, “Analysts estimate that the company’s earnings will fall a little less than 1% for the quarter ended in December. Net income is expected to fall to $1.21, or $1.04 billion, from $1.16, or $1.05 billion, during the year-ago period, according to analysts polled by Thomson Reuters. Sales are expected to rise to $8.2. billion from $7.5 billion during the year-ago quarter.”
MacDailyNews Take: So sales are expected to rise, but profits may decline slightly (according to the analysts’ consensus which has been uniformly wrong about Apple for approximately the company’s entire existence), and Caulfield is intent on torturing logic to the point where he wants Apple to produce low-margin ‘netbooks’ in order to further decrease profits? You make no sense, Brian. None whatsoever. Probably because you don’t understand Apple or you have an agenda or both.
Caulfield continues, “The real problem is how Apple’s portfolio of expensive gear–particularly notebooks–will fare as the recession starts to bite. We already know Apple isn’t immune to the recession; over the past six months, the company’s shares have fallen by more than 50% to $82.33 from $171.81.”
MacDailyNews Take: Is Caulfield serious? Could he really be obtuse enough to believe that Apple’s stock price declining in a down market topped off with the media’s feeding frenzy over Jobs’ health means that Apple’s notebooks, which are dramatically outperforming the PC industry and which continue to gain market share, are a “real problem?” Give us a break, Brian. Funny, we almost typed “Brain.” Silly us.
Caulfield continues, “More worrying: Apple’s slice of the U.S. computer market fell to 8% in the fourth quarter, from 9.5% in the third quarter, according to recent figures released by tech tracker Gartner.”
MacDailyNews Take: Anyone who ignores the cyclical nature of Apple’s Mac (or any other) business is either a fool and has an agenda. Apple’s market share rose 8.3% to take 8% U.S. market share in Q408. That’s year-over-year growth, Brian. Q4 to Q4, not Q3 to Q4. That’s what matters. As you know. Employing one of the oldest tricks in the book is sad and desperate, Brian. Your entire premise has no foundation.
Full article – Think Before You Click™ – here.
MacDailyNews Take: Here’s an example of why Apple doesn’t need to stoop to churning out low margin products in order to try to move more units: Last quarter, Dell reported revenue of $15.2 billion with a profit of $1 billion. In contrast, last quarter Apple reported GAAP revenue of $7.9 billion with a profit of $1.14 billion. In other words, Dell had to generate nearly double the revenue in order to make slightly less profit than Apple. And that’s not even comapring Apple’s “real” non-GAAP figures (which account for iPhone and Apple TV deferred revenue and profits) of $11.68 billion in revenue with $2.44 billion profit. In this case, Dell had to generate 23% more revenue in order to make 2.44 times less than Apple. Cheap netbooks are not a problem for Apple, Brian.
This particular downturn is not creating a market of cheaper computers. That market has existed for some time and there are parts of that market that we choose not to play in.
I think when people want a product of the class that we make, over and over again people have done the price comparisons and we’re actually quite competitive. So we choose to be in certain segments of the market and we choose not to be in certain segments of the market. And the question is, is the downturn going to drive some of our customers to those lower segments of the marketplace and get to buy lesser products? And I will be surprised if that happens in large numbers. And I actually think that there are still a tremendous number of customers that we don’t have in the Windows world, or in the other 99% of the phone market we don’t have, who would like to, and can afford to, buy Apple products. So we’ll see what the ratio of those two things are, but we’re not tremendously worried.
As we look at the NetBook category, that’s a nascent category. There’s as best as we can tell not a lot of them getting sold. You know, one of our entrants into that category, if you will, is the iPhone for browsing the Internet and doing e-mail and all the other things that a NetBook lets you do, and being connected via the cellular net wherever you are, an iPhone is a pretty good solution for that, and it fits in your pocket. But we’ll wait and see how that nascent category evolves and we’ve got some pretty interesting ideas if it does evolve. – Apple CEO Steve Jobs, October 21, 2008
“We can’t ship junk. There are thresholds we can’t cross because of who we are. The difference is, we don’t offer stripped-down, lousy products.” – Apple CEO Steve Jobs, August 7, 2007
[Thanks to MacDailyNews Reader “MacBart” for the heads up.]