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back to article Peak Apple: First 'profit slip' in a decade - and, boy, it's gonna be BIG

Apple will reveal its first profit fall in a decade when it unveils its quarterly earnings later today, analysts say. According to Bloomberg, Apple's fiscal second-quarter income will probably have declined by 18 percent, year on year, to $9.53 billion. And even though revenue may be up 8 percent to $42.4 billion, this is the …

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"Only" 10 billion dollars in profit? Yup, that's a company that's really sliding down the toilet.

Company profits rise and fall over time. Share prices rise and fall over time. It's NORMAL. Enough of these stupid hyped-up articles already!

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Holmes

I dunno...there's a bit of substance to it this time though.

- No new compelling products

- Misread the market; witness success of Samsung vs iphone 5

- Massive recalls for iphone

- Cook isn't Jobs

10bn is still a fair whack of wedge, but an 18% slide is still 18%...

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>"Only" 10 billion dollars in profit? Yup, that's a company that's really sliding down the toilet.

It is to a Wealth Management company who regularly deal in 100's of billions.

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""Only" 10 billion dollars in profit? Yup, that's a company that's really sliding down the toilet."

The markets don't work like that. The share price is a reflection of the market's confidence in a company to make money and make it according to expectations. If it exceeds expectations then there are momentarily more buyers than sellers trying to get the undervalue stock and the price goes up. If it doesn't meet expectations then there are more sellers than buyers trying to exit the overvalued stock and the price goes down.

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>- No new compelling products

True, but I'd be more 'wait and see'. Various companies are trying new things, and there are a few new technologies- such as flexible displays- around the corner. There's no guarantee that Apple will end up on top, but they will have as good a chance as anyone.

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FAIL

"Anyone who's thinking about writing them off is probably engaging in wishful thinking."

That's what they said when Sculley knobbed Jobs back in the mid-80s.

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That's how the article and myself put it. Apple suffered a rare thing for it: it "misfired," as I put it. It's GOING to have a setback as a result, no doubt. Now the big question is if Apple can recover from the setback. The next iPhone needs to be really, REALLY good to get a full rebound. Otherwise, with Samsung on the verge of releasing the Galaxy SIV with tons of goodies (But beware of the steep price tag!), it's more likely to be a slog.

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Anonymous Coward

"- No new compelling products"

Maybe, but I don't know what you expect them to make. Apple tends to create revolutionary products when there are revolutionary advances in technology--miniature hard drives for the iPod, and touchscreens for the iPhone/iPad. I'm not aware of any advancement going on now that could result in similarly revolutionary products. I guess maybe that's why I'm not running a $100B company, but then again, hard to fault a company for not revolutionizing the industry every 4 years.

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Something new on the UI front

The big thing on the iPod and iPhone was the UI - jog wheel on iPod, clean touch-oriented UI on iPhone.

They weren't the only or even first ones doing either of these, but they did it very well.

Since then, basically nothing has changed - it's all minor tweaks, still staying close to the limits of the original hardware.

- Compare the home screens of an iPhone 5 to an iPhone 1. They are almost exactly the same!

It's no surprise that they are losing market share - even Microsoft has been more innovative than Apple in the last few years! Ok, MS are going full-speed in the wrong direction on the desktop, but in the tablet and phone space, they do have something that some people really like.

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Duh

How could that growth be sustained? There simply isn't enough money in the world.

Only an idiot could believe they could keep growing like that, especially when no revolutionary products have been launched recently (that isn't a slight on apple) - the competition is catching up.

Anyway, if my Co's shares 'tanked' to $400, I'd still be laughing all the way to the bank.

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Re: Duh

>Anyway, if my Co's shares 'tanked' to $400, I'd still be laughing all the way to the bank.

Not if you bought them at $700 you wouldn't.

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Re: Duh

Yes, but if another company is willing to sell out its short term future for a slightly higher share price, the investors will go to them. It's more a problem with the investor class, not the tech companies. The problem is that companies buy into the hype (the CEO's job depends on it) and does all sorts of dumb things to keep double digit growth.

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Re: How could that growth be sustained?

As you say, it probably can't, but for some reason, many shareholders seem to expect an upward trend, every year.

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Re: Duh

If you bought in at $700 you were an idiot to start with.

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I've been watching apple's share price drop over the last months and have enjoyed every minute of it. And yes I am therefore a sad bastard.

However, I cannot think of a more deserving company to have a massive crash and burn. I look forward every day to hearing about how they are falling apart at the seams, even with people like the BBC running über hype pro-apple articles today. I hope they fail, fizz and die, I'd consider throwing a party actually.

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Anonymous Coward

You jelly?

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Pint

I'll get the beer, you sort out the food....

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Pint

Wouldn't.....

cider be more appropriate since it's the best use for apples?

(Well apart from Apple crumble!)

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Devil

Re: Wouldn't.....

"cider be more appropriate since it's the best use for apples?"

Don't forget Yanks don't know what real cider is.

Or chocolate. Or bacon. Or beer. At least they can console themselves that they design a so-so phone.

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Anonymous Coward

Oh, I can think of several. Samsung comes to mind instantly. It's hard to think of of a more vile and greedy chaebol.

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Re: Wouldn't.....

Funny about the beer thing, they seem to win a lot of contests.

http://www.worldbeercup.org/wp-content/uploads/2012/05/WBC12-Winners-List1.pdf

I will admit the average American drinks crap beer, but they have a large microbrewery contingent.

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Re: Wouldn't.....

>I will admit the average American drinks crap beer, but they have a large microbrewery contingent.

i just wish that the many small British breweries who are using American Cascade hops did so with a bit more moderation... most of this new breed of IPA-style brews just taste of elderflower at the moment.

There is a UK brewery who does it well, but if I named it I would out of fairness have to disclose an interest, and that would be blurring the line between my real and Reg identity: You'll have to keep drinking and work it out for yourselves!

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Re: Wouldn't.....

>Or bacon.

Ok you can get away with the rest but not meat products not from the UK the land of crap food. Didn't mad cow disease start in the UK? Hard to believe the pork products are much better especially compared to Central Europe which truly does know how to make pig into delightful products.

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Re: Wouldn't.....

> At least they can console themselves that they design a so-so phone.

Yeah if only Apple could compete with Europe's biggest phone maker Nokia (hahahahaha). Oh wait that right they are being ruined by another evil US corporation (sorry guys but if not for crap Finnish management there would be no trojan horse).

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Re: Wouldn't.....

Vinegrrrrr much?

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Re: Wouldn't.....

Nope, BSE was an EU and USA thing, spread by feeding cow products to cattle. I don't think anybody could ever find the original source, not enough data exists.

There was always more BSE in the good 'ole US of A than the UK - but that's only because there are more actual cows. The prevalence was similar.

The difference was that the UK admitted it existed, other countries tried to hide it.

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Re: Wouldn't.....

Agreed- The IPA's are getting out of hand. There's actually a number of US beers that take pride in how hoppy they are. I won't complain about the 9% ABV, but not for the taste.

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Re: Wouldn't.....

"especially compared to Central Europe which truly does know how to make pig into delightful products"

What, schnitzels, bratwurst and all those horrible variations on the same? The Spanish and the Eyties I'll grant you do some really good stuff to dead pigs, but not the Teutons, in my book.

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Motorola and Nokia have shown how fickle the mobile biz is, one minute you're top of the heap making huge profits, next you are losing money on every phone you sell.

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Anonymous Coward

And it's been that way since the beginning of time, ok maybe just since the 80's when cell phones started to enter the lives of normal people. The hot phone or company typically has dominated for a few years before people get bored and move on to something else.

I've seen plenty of analysts claiming it's different this time because the apps will keep people loyal to one particular brand or ecosystem. But I've never believed that. Apple did an excellent job of devaluing mobile applications to the point that even if you switch to a completely different platform the cost of new apps is minimal. The apps most people use the most are typically free, and there are very few "must have" apps that are exclusive to one platform.

The main thing preventing people from moving is that they are too dumb to handle learning a new ui.

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@ oliver...

Only an idiot... So *thats* why all the fanbois are having conniptions? True story - type in fanbois on nokia E7 swype keyboard and you get rancid as the first option. Very apt!

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Wam

Hang on ...

Why not wait a few hours and report on the real figures, good or bad?

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Re: Hang on ...

Because then you only get ONE article and half of the click-through revenue.

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Coat

Re: Hang on ...

Next time, feel free to NOT real the Apple-bashing and wait until the report on the real figures. If you can stop yourself.

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IT Angle

Re: Hang on ...

Seriously...and he was wrong! Stupid blogger!

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Anonymous Coward

'The Patent wars will die down'.

LOL, this article makes it seem like Apple aren't a big part of keeping them going...If the exorbitant fees they have to spend on lawyers and court cases are affecting their bottom line they only have themselves to blame, no?

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@murph

No, they're not. They are an insignificant rounding error.

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Can you please stop finding a way to mention Jobs in every Apple post/headline?

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Poor results?

Poor results? More than 9 billion dollars in just 3 months! Man I need some poor results like those. I dream of your poor results! I slobber at the thought of your poor results. My greedy but empty fingers itch to become miserly claws in anticipation of sharing in your poor results. Almost every person on earth, all companies, even the big banks would sell their own...well, the banks don't have grandmothers but if they did, you could just imagine massive pens full of millions of grandmothers, branded Barclays or HSBC Prime Stock, being sold off in bulk at markets throughout the world. This is A. Cowshed's vision of the world, as distorted by the comment "poor results" in the article.

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Re: Poor results?

I don't know if you follow football (I don't particularly), but here's an analogy...

Queens Park Rangers are currently second from bottom of the table, and will be relegated. If they had finished 17th, not 19th, it would be a good result for them. A great result, in fact.

Had Mancester United (now league champions) achieved that exact same hypothetical 17th position, it would be an appalling result, and heads would roll.

But it's still the same number of points scored, and the same position in the table. Expectations are the key.

Apple have taken so much money over the last five years that yes, $10bn IS a bad result. Their stock was priced in expectation of their already phenomenal profits rising in future; a fall, even a slight fall, gives lie to this valuation. In truth, I think there was a good old fashioned bubble in Apple stock last year, one that is only now correcting itself....

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Re: Poor results?

whatball now?

Do you have an analogy using twiglets or something that might be meaningful?

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Re: Poor results?

Yes....thanks for that!

I come onto El Reg to get AWAY from the shit season that my team, QPR, are having....and You have yto go and bring it up!

Use a different analogy next time, please!!

Thanks!

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Re: Poor results?

Sorry..

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@Kristian: Re: Poor results?

That would be 'soccer', yes?

(/me ducks and head for cover where I can count up the downvotes...)

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Re: @Kristian: Poor results?

No. There's football, then there's American footchess.

$Diety! that game's almost as slow as cricket!

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Thumb Up

Re: @Kristian: Poor results?

"then there's American footchess"

A very valid correction, than you.

Football, cider, beer, chocolate, bacon.

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Today's Stock trading advice comes from Tyrion Lannister

Short.

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Anonymous Coward

Get rid of analysts

They're never 'wrong' and have vested interest in talking shares up/down.

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Meh

i was a mactard

but now i've got a chromebook and i'm ditching the iphone for a nexus 4.

apple will slip in the next 2-3 years but will still be healthy. cook just doesn't have jobs' manic passion.

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Re: i was a mactard

Bullshit, you sound like the people I hear who "were atheists"

If you want a computer (and I use the term loosely) that will only be useable with a net connection, go right ahead.

I really want more than a glorified dumb terminal.

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