Another record quarter for Apple

Jan 26, 2012

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Apple’s earnings report for the last quarter soared past Wall Street’s expectations. It reported a 73% year-on-year increase in sales to $46.3bn in the fourth quarter of last year, with net income of $13.1bn up by more than 100%.

Sales of iPhones and iPads reached new peaks. Apple’s struggling rival, smartphone maker Research in Motion (RIM), hired a new CEO and internet giant Yahoo! reported another poor set of results.

What the commentators said

“The investment community has never seen a company like this,” said ISI Group’s Brian Marshall – “inside or outside technology”. The most “eyepopping” element of the results was the sharp jump in profits, said Lex in the FT. The group added $20bn in quarterly sales compared to last year, and nearly half of that went into operating profits. Operating margins were up by 8%.

“That Apple can harvest accelerating economies of scale even at its current preposterous size suggests that we have still not seen peak profitability.” There is still plenty of room for iPhone sales growth in eastern Europe, Latin America and China, said Rolfe Winkler in The Wall Street Journal.

In the meantime, can RIM and Yahoo! mount a comeback? RIM’s keyboard-based BlackBerries “can’t compete” with touch-based smartphones from Apple or Samsung, noted Winkler.

Yahoo! is losing ground in its core internet advertising business, because Google and Facebook offer marketers discounts for buying in bulk. Pulling off a turnaround in tech is a “Herculean” task, said Jim Cramer on Money.msn.com. You have to revamp products, research and development, and the sales team, all of which means you are distracted in a fast-moving market and your rivals have time to steal a march on you.

“Think America Online versus… yes, Yahoo!” Virtually all tech turnaround attempts fail. “I fear that RIM and Yahoo! will too.”

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