Thursday, January 29, 2015

Decoded: Apple's Record Quarterly Profit of $18 Billion

Apple Inc. on Wednesday created history when it posted a quarterly profit of $18 billion, the biggest ever reported by a public company, worldwide. The staggering feat was made possible by record sales of iPhones, which is single best-selling gadget of all time. Apple's revenue rose to $74.6 billion from $57.6 billion a year earlier.

Here's an attempt to decipher Apple's remarkable achievement:

1) Apple's quarterly net profit of $18 billion is more than the combined net profit of all 50 companies that make up the Niftybenchmark in India. India's biggest firms - Tata Consultancy Services and Reliance Industries - made less than $1 billion in profit each in the December quarter.

2) Apple shares are trading at $115, close to all-time high of $119.75. Apple is the most valuable company in the world with a market cap of $630 billion, which is nearly one-third of the size of India's economy.

3) Apple's cash pile is now $178 billion, which is more than the market cap of 483 of the S&P 500 companies. This cash is enough to buy Intel ($173 billion) or IBM ($152 billion) or TCS ($83 billion). In fact, Apple can pay every American $556 (over Rs. 30,000) out of its cash pile.

4) Apple's $18 billion of profit in one quarter is larger than the market cap of the bottom 240 companies on the S&P 500, tweeted Vala Afshar, CMO of Extreme Networks. The Standard & Poor's 500 is an American stock market index based on the market capitalisations of 500 large companies.

5) Apple's record quarterly profit was driven by iPhone sales. The company sold 74.5 million or 30,000 iPhones every hour in the December quarter. Sales of iPhones accounted for 60 per cent of Apple's revenues, according to estimates.

6) Apple's profit from iPhone sales is estimated to be bigger than what Microsoft and Google earn from their operations. Microsoft reported a quarterly profit of $5.86 billion in the December quarter.

7) Apple's net profit is nearly four-times what its South Korean rival Samsung made during the December quarter even though both companies sold the same number of smartphones. Samsung reported a net income of $4.8 billion in the December quarter.

8) Apple's operating cash flow in the December quarter is more than what Amazon has earned since it was founded in 1994, tweeted Rolfe Winkler of WSJ.

9) Apple's $18 billion in quarterly profit eclipsed Gazprom's record of $16.2 billion profit posted in the first quarter of 2011, according to Forbes. Russia-based Gazprom is the largest extractor of natural gas in the world.

10) Apple is such a wealth creator that most analysts suggest holding the stock for long-term. "Apple made little over 1.5 lakhs a minute last quarter, that's about Rs. 6 lakhs before you retweeted/shared this message," tweeted Srinivas Jain, executive director at SBI Mutual Funds. Apple trades at a price/earnings ratio of 15.5 times, which is considered a bargain for a blue chip tech company. Many investors who did not buy Apple shares in the past rue the missed opportunity. "10 years ago, I had the chance to invest 10k in Apple but didn't. It would now be worth over $500,000. If anyone needs me I won't be on my yacht," tweeted Australian radio host Ant Simpson.