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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  1. dz-015

    "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!

    1. Silverburn
      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%...

      1. Anonymous Coward
        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.

        1. Richard 12 Silver badge

          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.

    2. Andrew Moore

      >"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.

    3. DrXym Silver badge

      ""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.

      1. Dave 126 Silver badge

        >- 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.

        1. Charles 9 Silver badge

          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.

    4. Shagbag
      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.

  2. Oliver 4

    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.

    1. Andrew Moore
      FAIL

      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.

      1. Dana W
        FAIL

        Re: Duh

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

    2. ARP2

      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.

    3. Flywheel Silver badge

      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.

  3. yoinkster
    Thumb Up

    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.

    1. Anonymous Coward
      Anonymous Coward

      You jelly?

    2. MrMur
      Pint

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

      1. Pooka
        Pint

        Wouldn't.....

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

        (Well apart from Apple crumble!)

        1. Anonymous Coward
          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.

          1. ARP2

            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.

            1. Dave 126 Silver badge

              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!

              1. ARP2

                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.

          2. asdf Silver badge

            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.

            1. Richard 12 Silver badge

              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.

            2. Anonymous Coward
              Anonymous Coward

              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.

          3. asdf Silver badge

            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).

        2. Michael Thibault

          Re: Wouldn't.....

          Vinegrrrrr much?

    3. Anonymous Coward
      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.

  4. Gideon 1

    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.

    1. Anonymous Coward
      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.

  5. Jemma Silver badge

    @ 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!

  6. Wam

    Hang on ...

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

    1. Darryl

      Re: Hang on ...

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

    2. Captain Save-a-ho
      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.

    3. Jim in Hayward
      IT Angle

      Re: Hang on ...

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

  7. Anonymous Coward
    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?

    1. Anonymous Coward
      Anonymous Coward

      @murph

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

  8. HP Cynic

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

  9. Anomalous Cowshed

    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.

    1. Kristian Walsh

      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....

      1. Jon Double Nice

        Re: Poor results?

        whatball now?

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

      2. SuperHoopMango

        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!

        1. Kristian Walsh

          Re: Poor results?

          Sorry..

      3. Someone Else Silver badge
        Coat

        @Kristian: Re: Poor results?

        That would be 'soccer', yes?

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

        1. John Brown (no body) Silver badge
          Coat

          Re: @Kristian: Poor results?

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

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

          1. Anonymous Coward
            Thumb Up

            Re: @Kristian: Poor results?

            "then there's American footchess"

            A very valid correction, than you.

            Football, cider, beer, chocolate, bacon.

  10. g e
    Coat

    Today's Stock trading advice comes from Tyrion Lannister

    Short.

  11. Anonymous Coward
    Anonymous Coward

    Get rid of analysts

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

  12. Fuzzy Duck
    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.

    1. Dana W

      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.

      1. JEDIDIAH
        Linux

        Re: i was a mactard

        This is the flip side of "converting" people. They can "un-convert" as soon as the trendy thing no longer becomes trendy or something better comes along.

  13. James Micallef Silver badge
    Flame

    Flickering?

    "The market needs to see some evidence that the future looks bright because that candle is flickering"

    $9.5bln profit on $42bln sales?? Close to 30% margin??

    That's not a flickering candle, that's a towering inferno

    1. Uncle Siggy
      Mushroom

      Re: Flickering?

      > That's not a flickering candle, that's a towering inferno

      The light that burns twice as bright, burns half as long. And Apple have burned so very very brightly.

      1. Tom Maddox Silver badge
        Terminator

        Re: Flickering?

        "I want more life, fucker." -- Steve Jobs

  14. Thomas 4

    The main problem with Apple's recent releases?

    They're *boring*!

    Think about it. When the iPod first became mainstream it had interesting new ideas for menu navigation plus a crapton of storage. Then they released iPod Minis then iPod Touches and then introduced the Great Unwashed to the concept of a touch screen smart phone. Then they brought out an iPad and world+dog wanted one.

    All they've done in the past few years is tread water. The Macbook Air is just a slightly slimmer Macbook, there's no glaring changes between the iPhone 2 and iPhone 5, aside from screen and processor upgrades. They need someone that's prepared to make *changes* and venture on risky products.

    Show us something *new* and I might show you some of my money again, Apple.

  15. Armando 123

    Wow.

    "The market needs to see some evidence that the future looks bright because that candle is flickering.”

    I wish my company's candle flickered that bad ...

    No one can constantly be 100% on top of their game. Analysts and financial drones may wonder what's wrong, but sometimes you have to take a period of retrenchment to get things right. And considering how Jobs' last year and illness may have affected Apple, that time of uncertainty and distraction might have just shown up in the marketplace this last quarter.

  16. Anonymous Coward
    Anonymous Coward

    Perspective matters

    The analysts are the pet playthings of the investors. The investors exist on a market principle based on unlimited, predictable growth for all eternity. Some are daft enough to buy in, when a business is clearly at or near its peak. When growth is slower this quarter than it was for the same quarter last year, some of these people spit their dummies out. This is normal.

    The incubation and investment model needs to change.

  17. Anonymous Coward
    Anonymous Coward

    The channel was stuffed last quater, and this is the result.

    Channel stuffing is the last ditch trick to try and pretend your product is great and selling by the bucketload.

    It worked for Nintendo with the Wii, it worked for Microsoft with Kinect, but it's fallen flat on it's arse for Apple.

  18. Blubster
    Meh

    Peak Apple: First 'profit slip' in a decade

    Oh dear..... how sad..... what a pity........ never mind.

  19. Frankee Llonnygog

    "Or not"

    -said other analysts

  20. MooseNC

    Correction

    "...failing to introduce yet more exciting new technology into the marketplace."

    Should read;

    "...failing to introduce yet more exciting newly bedazzled technology into the marketplace."

  21. Dana W
    Happy

    Because selling more smartphones and tablets than the year before in a computer industry that has had drops across the board is obviously failure.

    And if we talk about this enough we can distract the fact that Microsoft is in freefall and heading for a crash of epic proportions.

    Windows sales are TANKING yet the "Peak Microsoft" articles are nowhere to be found.

    1. JEDIDIAH
      Linux

      Don't swim in the Kool-aid

      > Because selling more smartphones and tablets...

      Is an argument that only plays well to the rest of the cult. Everyone else realizes that ARM devices are quickly becoming a replay of MS-DOS and the original Mac. The platform with 10 cutthroat vendors trying to sell you variations on the same thing are finding more success catering to more people than a one hit wonder.

      The iPad Mini is a great illustration of that.

      Apple finally came around and decided to supply what the rest of the market was offering.

      It turns out that there are a lot more "irrelevant geeks" out there than Apple or it's fanboys realize.

      1. Dana W

        Re: Don't swim in the Kool-aid

        Its called numbers, no matter what they had to do to get them. Sales are UP, not down. The "Apple is dying" crowd are the cultists.

        I bought an iPad mini because I WANT a smaller tablet. Apparently a lot of people did as well, its selling great. Hardly part of the "Apple is dying" conspiracy.

        1. John Brown (no body) Silver badge
          Stop

          Re: Don't swim in the Kool-aid

          "I bought an iPad mini because I WANT a smaller tablet"

          I think you missed the point there. It's not that the iPad mini is selling well or not. The point is that Apple, until recently, had decreed that a smaller iPad would not sell because no one would want one one therefore Apple would not build and sell one. Rather than innovating with a smaller form factor to meet market demand, they had to have the proof shoved in their face (and for Steve "no smaller iPad" Jobs) to be out of the game)

          1. LPF

            Re: Don't swim in the Kool-aid

            Pretty sure , before the iPad was being launched al you idiots were saying that it was a toy, no one would buy it and making rather juvenile jokes about womens sanitary products...remind me again how much did Apple make, how many companys are still trying to match them?

    2. Anonymous Coward
      Anonymous Coward

      @Dana W

      The gradual decline of Microsoft is a given, so nobody finds it newsworthy.

    3. Daniel B.

      @Dana W

      There have been articles on that. Even here, this article mentions that IDC blames Win8 on the PC market crash. And they're right.

      The thing is, MS screwing the pooch and crash-landing isn't even news anymore. It's more like the usual news whenever Redmond and Windows is involved.

    4. Michael Thibault
      Trollface

      Well...

      of course, those articles aren't to be found: 'ya can't make no money from them'. Besides, it's widely known, and accepted, that Ms jumped the shark YEARS ago. If any company deserves encouragement in its earthward spiral, it's Ms. Don't see much of that, though--most everyone loves a free ride, I guess.

  22. John 104

    Wrong and Right

    You lot are all wrong on the beer thing. I've had my share of British beers. Boring. Guiness? A stout? Ahahahaha, barely. It's drinkable mind you, but here on the West Coast there are numerous stouts that put it to shame. Its my last ditch go to when nothing else good is on tap. Cascade hops are good and what the brewers are doing with those and other hops is fantastic. Imperial IPAs are some of the most complex tasting beverages you will ever drink. And the 9-11% alcohol doesn't hurt! Best part is, with the revolution in brewing going on in this country, you can find a quality micro brewery easily. My small town of 8k has 3!

    And yes, Microsoft is in the toilet. Windows mobile is so so and Windows 8 is a first rate pain in the ass to use. They had better do something very quickly to clean up their mess or their market share is going to take a long dive into oblivion.

    Oh, and no one is screaming about it because everyone loves to hate Microsoft and everyone LOVES Apple, right?

    1. Richard 12 Silver badge

      Re: Wrong and Right

      You do know that Guinness is a mass-market beer?

      It should be compared to something like Budweiser or another beer you will find in every single bar in the country.

      Mass-market beers are always like that - they have to be!

      If you want to compare mid-market beers that are easily found but not completely ubiquitous, look for Fullers, Greene King, Black Sheep and the like.

      If you want to compare micro-breweries, compare micro-breweries.

      Although you are right on one thing - the US microbrewery market is doing much better than the UK one. Thankfully the UK microbrewers are slowly making a comeback, which can only be a good thing!

      (And the ABV of a beer is irrelevant unless the intention is to get hammered or stay sober. It's all about the flavour!)

      1. Vic

        Re: Wrong and Right

        > You do know that Guinness is a mass-market beer?

        And Irish, AIUI, rather than British...

        Vic.

  23. Anonymous Coward
    Anonymous Coward

    AAPL maintains 50B p.a. cash surplus rate

    “Our cash generation remains very strong, with $12.5 billion in cash flow from operations during the quarter and an ending cash balance of $145 billion,” said Peter Oppenheimer, Apple’s CFO.

    I think AAPLs demise was prematurely announced

    1. Michael Thibault
      Facepalm

      Re: AAPL maintains 50B p.a. cash surplus rate

      >I think AAPLs demise was prematurely announced

      Who is it who keeps DOING that? Must be the umpteeninth time AAPL've been having their going-out-of-business sale.

      Anyway, a point related to the overall chatter here: if there's a bubble, it's in the artificial world of investors, analysts, stockholders, 'players', etc.. They're NOT connected to reality.

      1. Armando 123

        Re: AAPL maintains 50B p.a. cash surplus rate

        "Who is it who keeps DOING that? Must be the umpteeninth time AAPL've been having their going-out-of-business sale."

        The MacObserver has kept a count of these things for years in their Apple Death Knell Counter. http://www.macobserver.com/tmo/death_knell/ Amazing what people have predicted, even the editor-in-chief once.

  24. rciafardone
    Meh

    The whole article in the last paragraph

    The core idea is in the last paragraph. Nothing more nothing less, just natural rebalance.

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