Apple expected to report record iPad sales, first shrinking profit in a decade

“Expectations are low for Apple’s recently concluded March quarter, in which some market watchers believe the company likely saw its first year-over-year profit decline in a decade, despite booming sales of its iPad lineup,” Neil Hughes reports for AppleInsider.

“On average, analysts polled by Thomson Reuters expect Apple to report revenue of $42.49 billion with earnings per share of $10.07,” Hughes reports. “In comparison, a year ago the company made $12.30 earnings per share on sales of $39.19 billion.”

Hughes reports, “The last time Apple saw a year over year decline in profit was in 2003. The company will report its March quarter results after the markets close on Tuesday, followed by a conference call scheduled for 5 p.m. Eastern.”

Read more in the full article here.

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Tero Kuittinen: iPhone sales projections now so low it’s ridiculous – April 22, 2013
From darling to dog: What the Street wants from Apple now – April 22, 2013
Apple could report all-time record Q2 sales, but also show first profit decline in a decade – April 22, 2013
Apple’s expected ‘miss’ may already be priced in – April 22, 2013
Handicapping Apple’s quarterly earnings and revenue: Q2 2013 – April 21, 2013

24 Comments

    1. Or it could be that most of us remember when Oppenheimer told analysts that Apple would be seeing reduced profit margins in the future as it moved into new products, in part due to materials costs and in part because Apple was going to aggressively price new products. This was shortly before the iPad was introduced.

      Apple’s money is less and less dependent upon Mac hardware sales and more and more dependent on mobile sales. Mac hardware has a higher profit margin traditionally (esp. desktops, less so for laptops) than mobile products.

      1. the situation is much more complicated than the simplistic choices that you outlined.

        first, Apple is managing itself in an attempt to hold high profit margins in each of its products. that was nearly fatal to the Mac in the 1980’s.

        second, nobody gives a crap about google, which is an advertising agency, or Microsoft, which appears to be following IBM’s steps to becoming a business & enterprise services company with negligible consumer products.

        However, it is a HUGE red flag to have record revenues and miss profits. That’s bad leadership unless Cook can reveal where all the money went. Given that Cook hasn’t announced any new products or services, nobody is expecting good news.

        Once again, could someone please share any anecdote showing decisive leadership from Cook? Any excellent problem-solving? Any brilliant strategic execution that changed Apple for the better? All I see is a belated, less-user-upgreadeable iMac, a mini tablet to combat the Fire that erodes profitability of the full-sized iPad, and an IOU for a new Mac Pro. Oh, and he’s going to do better in the future with Maps. Eventually.

        Any predictions on when iWork ’09 apps are going to be updated? Will Cook ever give users iMovie back? or restore all the functionality removed in iTunes 11?

        Apple is a great company, but its leadership is out to lunch.

        1. Well, you know your Apple products.

          That puts you way ahead of most trolls.

          How do you fit the best profit per electronics sale in the history of electronics with Cooks leadership?

          Surely Cook has won his stripes by running the most profitable public company on the planet.

          1. I expect better at Cook’s pay rate.

            His slow leadership of iOS has led Apple down the same path as the Mac: high margins but loss of market share. It’s not like the App store can’t be copied — everything else of Apple’s gets copied and Cook doesn’t bat an eye. SJ was ready to go to war against Google, but Cook just lets the constant IP theft slide.

            … and the Mac platform. What, please tell me, has Tim done to improve the Mac platform? It is succeeding only because of the mis-steps of competitors, certainly not by Cook being bold and decisive.

            Cook knows what he needs to do to restore interest in Apple: deliver new innovation to the market. He’s just not getting it done, and his silence against the many Wall Street FUDsters is as bad as the lack of new product releases. Apple users deserve better leadership.

        2. To answer your question, I refer you to this article which has historical profit margin info: http://tech.fortune.cnn.com/2013/04/18/apple-gross-margin-gm/

          Basically, Apple’s profit margin was an aberration (47%) last year for Q2. This is an incredible number for a company that makes hardware. Think of it as Tim Cook’s hundred point game (a la Wilt Chamberlain) in that it may only happen once. He doesn’t seem to be getting credit for executing that incredible quarter, yet he gets all of the blame for a still great quarter (albeit one on the side of sanity).

          In any case, Bizlow is incorrect in asserting that Apple’s margins fell after entering mobile. Quite the opposite. Marinating those margins is, of course, another matter, but Apple can do well in the accessories market IMO. They know how make luxury products.

        3. Hmm, all those products you mentioned were SJ’s responsibility. Cook just happened to be CEO when they popped out of the pipeline. Meanwhile, he was also CEO while Apple had another year of record profits and sales.

    2. Mike, it’s clear you haven’t heard or even follow Apples Financial information that has been put out by them and them alone.

      So take your Trolling “Fanboy” stigma and look in the mirror if you can stand what you see and what you have become.

      Unfortunately people like you get paid to troll sites, or have an Mental condition (Aka) “Obsessive Compulsive Disorder”, you fight against something that bothers you such as Apple, and you cant stop …. since you can’t think for yourself you can only use talking points that others throw to you as the mental anguish grows worse.

      Nothing original to add to a topic but a “Fanboy” slur and hate, you don’t show your true colors do you.

      Very un-original.

    3. No one is more stupid than these people that believe Apple’s success is tied in any way to the rigged game that is the stock market. Apple makes it’s billions because it makes things people want to buy. That’s it. That’s all. The absolute worst thing any company can do is react in ways to make the snakes and shills of Wall Street happy.

    1. You and 99.9% of Apple fans and 100% of AAPL holders.

      It would serve all those talking heads right to have their “inside” information to be 100% wrong!

  1. It looks like they will report 1 billion less in profit than a year ago (or roughly 10 billion instead of 11 billion). I did my calculation (very rough, I know) like this:

    2012 Q2 profit / 2012 Q2 revenues * 2013 margin estimates from Dewitt / 2012 margins * 2013 expected revenue.

    11.6 / 39.2 * .384 / .474 * 42.49 = 10.186 billion in profit. This is a very rough estimate based on predictions.

    Highly recommend reading the asymco article below. Basically, the margin decline is mostly due to the higher production costs for the iPhone 5. An oldie, but a goodie (with charts).

    Also, the Dewitt article on fortune is also very interesting, as it shows that Apple had 47% margins(!!) last year. That number should have never been that high to begin with.

    http://tech.fortune.cnn.com/2013/04/18/apple-gross-margin-gm/
    http://www.asymco.com/2013/02/05/margin-call/
    http://www.apple.com/pr/library/2012/04/24Apple-Reports-Second-Quarter-Results.html

  2. Stop and think and read again headlines and statements that claim: “Analysts expect Apple to miss expectations.”

    This is really getting beyond belief.

    1. I know. Sickening, isn’t it? You almost can’t blame the analysts (for taking advantage of mass stupidity) since they know that most people don’t really take the time to think about what they read. Analysts are repeatedly saying “We guessed wrong”, but seem to suffer no consequences………

    2. Since the analysts are the ones setting the expectations, they can pretty much set a company up to miss, or exceed, expectations when they want. There is no penalty for the analysts if they are wrong.

  3. Maybe analysts & traders are finished with the dump cycle and are gearing up for the pump phase with Apple’s stock. By setting expectations low they maybe giving Apple a chance to exceed Wall Street’s expectations.

    Remember, to Wall Street it is just a game.

  4. Apple is going to make more money in this quarter than a number of its putative competitors combined, and the propaganda shills will pretend this is somehow bad.

    And people think more of us should put our money in the rigged game that is Wall Street.

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