iTunes Radio Could Take the Sting Out of Apple's Limp Quarter
This has been Apple's "disastrous year" in terms of stock movement, suggested Covestor portfolio manager Libardo Lambrano, but the company is also likely to rebound due in part to the moves it has made in recent months. Its new iTunes Radio service, specifically, "will compete directly with Pandora, Spotify and Rdio," Lambrano noted. "Apple has a clear advantage."
Apple on Monday announced its fourth-quarter earnings for fiscal year 2013, including revenue of US$37.5 billion and a net profit of $7.5 billion, or $8.26 per diluted share.
In the year-ago quarter, the corresponding figures were revenue of $36 billion and net profit of $8.2 billion, or $8.67 per diluted share.
Apple this week also revealed that it sold 33.8 million iPhones -- a record for the September quarter -- compared with 26.9 million in the year-ago quarter. It sold 14.1 million iPads during the quarter -- essentially the same number as in the year-ago quarter -- and 4.6 million Macs, slightly down from the 4.9 million sold in the quarter a year ago.
Good News for Investors
Apple CEO Tim Cook called the numbers a strong finish to an amazing year.
"We're excited to go into the holidays with our new iPhone 5c and iPhone 5s, iOS 7, the new iPad mini with Retina Display and the incredibly thin and light iPad Air, new MacBook Pros, the radical new Mac Pro, OS X Mavericks and the next generation iWork and iLife apps for OS X and iOS," he said.
Investors also did well, said CFO Peter Oppenheimer, who pointed to $9.9 billion in cash flow from operations and an additional $7.8 billion in dividends and share repurchases during the September quarter, "bringing cumulative payments under our capital return program to $36 billion."
A Mixed Message
The figures definitely send a mixed message about what is happening at Apple, said David Johnson, CEO of Strategic Vision.
"The fact that revenues are up but profits are down suggests that some of the luster of the Apple brand is diminished," Johnson told MacNewsWorld.
"Before, Apple was considered an elite brand, and it cost to have an Apple product," he continued. "Now with recent introductions of less costly iPhones, more people can purchase Apple products, meaning that revenues will continue to rise but with less of a profit and a continued diminishing of the brand uniqueness."
'The Numbers Are Good'
While such debate is warranted, given Apple's position as a top global brand and American corporate icon, a cold look at the actual numbers shows Apple is in good shape from a balance-sheet perspective.
"The numbers are good -- very good, in fact," Trip Chowdhry, managing director of equity research at Global Equities Research, told MacNewsWorld.
"The product lines are doing well, and demand is strong," Chowdhry pointed out. "Also, I think we will continue to see improvements moving forward."
Apple is always held to a double standard by analysts, Charles King, principal with Pund-IT, told MacNewsWorld.
"By any financial measure it is a wildly successful company, which puts it in both an enviable position and an inevitable one," he said. "Any missteps, perceived or otherwise, will be dissected and bemoaned and discussed endlessly."
'A Clear Advantage'
The fact that income is down somewhat is, in part, a reflection of Apple's move to lower-margin markets, which is widely considered a good thing, he noted. That, in turn, could continue to boost its stock price.
If there is one discouraging metric in Apple's financial story this past year it has been its stock movement.
Yet while 2013 was in some ways "Apple's disastrous year," Libardo Lambrano, portfolio manager on Covestor, told MacNewsWorld, the company is also likely to rebound, due in part to the moves the company has made in recent months.
Besides the iPhone 5s and 5c, "Apple also launched a streaming music service in September, which is completely integrated with Apple devices and iTunes," Lambrano noted. "The product will compete directly with Pandora, Spotify and Rdio. Since none of these companies produce gadgets that integrate their services, Apple has a clear advantage in my opinion."