Summary
Apple reported results of its 4th quarter today. This quarter is the best-ever quarter for Apple, with revenue of $26.7 billion driven by holiday iPad and iPhone sales. Apple’s net profit for this quarter is $6 billion, which also set a new record. In this last quarter, Apple sold 7.3 million iPads and sold a record of 16.2 million iPhones, surpassing the expectation of most analysts. In addition to this, the success of iPads and iPhones has also encouraged the sales of other Apple products, such as Mac and iPods. It is believed by the Apple Chief Operating Officer Tim Cook that iPad was cannibalizing other Apple products’ sales, especially Mac sales. In addition to that, the CEO of Apple, Steve Jobs has once again stepped down from his job and Cook will again handle all day-to-day operations.
Connection
The connection to chapter three is the income from operation, which is revenue and gross profit or gross margin. Gross profit is calculated by using sales revenue minus the cost of goods sold (an expense that records the cost of the units of inventory sold during the period). Because Apple’s major source of revenues is selling goods, it must make enough profit from sales of its goods to cover all the other expenses in order to operate the company. By calculating and examining the gross margin percentage (gross margin divided by sales), we can evaluate the company’s performance over time. To do this, we simply have to look whether the percentage has been increasing or not; plus we can also compare this percentage with other companies in the same industry.
Reflection
With a strong sale in quarter four, I believe that the sale for the current quarter is likely to fall. The success of this quarter is driven by holiday iPad and iPhone sales. Because of this, many people have used up their credits over the holiday; thus it is likely that sales of most Apple products will go down. The company itself has also noted that iPad sale will fall back in the current quarter because the tablet proved to be a hot holiday purchase only. Despite these facts, CEO Steve Jobs still believed that iPhone sales will be strong with exciting new features such as iPhone 4 on Verizon.
I agree that Apple will see a decrease in sales. Their numbers were inflated by the holiday season, so the company will definitely see a drop off. Despite this, Apple will continue to post favourable results. Even without the help of the holiday season, Apple should still be able to keep their net income on the positive side. Looking at their past income statements, Apple’s has steadily increased their revenue while keeping their expenses to a minimum, resulting in high net incomes. Based on this trend and Apple’s popularity, another new record in revenue in the near future is certainly not out of the question.
ReplyDeletehttp://ca.finance.yahoo.com/q/is?s=AAPL&annual
Overall I think your connection is done very well however I think you should include the accounting cycle in your connection. You could explain and show how the 26.7 billion revenue would be recorded and what accounts would be affected. I agree that Apple’s sales will fall because the holiday season have helped boosted the quarter’s result. However I believe Apple’s sale would not decrease a lot because of Apple’s successful strategy in its marketing skills. Apple has a strong and successful marketing department therefore they were always able to attract customers to purchase their product. Also Apple is always creative, and they constantly think of ideas to create new revenue streams such as the iPad which didn’t exist a year ago. Therefore I believe Apple would think of new products to increase there sales. Though holiday season is a factor however its affect on apple won’t be that huge. On the other hand I think Steve Job, CEO of Apple, stepping down from his position would have a greater impact on Apple. Without Steven Job leading Apple it may affect potential investors investing into Apple. Therefore there would be less money into researching for other technologies.
ReplyDeleteI don’t think your connection is thorough enough with respect to gross profit and revenues. You could have referred more to the article instead of just explaining what gross profit is. Moreover, I don’t think we can evaluate Apple’s performance correctly by just looking at its gross margin percentage. To assess its performance, we need to look at the companies’ sales, revenues, expenses, research and marketing progress, investment and other important factors. After the holiday sales, the market volume will shrink because people don’t have as much spare money to spend as they did before the holiday. In my opinion, Apple’s sales will drop up to a certain extent after the holiday sales, even though Apple’s CEO Steve Jobs believes that apple’s sale will maintain its stability due to its upcoming new features.
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