Explaining Southern California's economy

FAQ: Why today's Apple earnings aren't the most important the company has ever reported

Peter Parks/AFP/Getty Images

Apple reports quarterly earnings on Wednesday. Will they be strong enough to halt a stock price slide that began last year?

There's so much fretting around Apple right now that analysts, commenters, and Apple-ologists are calling today's quarterly financial results that'll hit after the markets close the mother of all earnings reports (Forbes is explicitly calling it that).

Why the high anxiety about the world's most valuable publicly traded company — and the most valuable California company by a substantial margin (Apple: $418 billion market cap; number two Google: $254 billion)? Simple: Analysts suspect that Apple's epic comeback story, from near bankruptcy to a mature company that's printing money with its monumental profit margins, is over. Nothing gold can stay, to borrow a line from a rustic American poet who never would have dreamed of an Age of iPhones but who would probably have been retroactively credited by Apple for his efforts to "Think different."

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Why the pressure is on Apple to have a big holiday season

Peter Parks/AFP/Getty Images

Apple's stock has been declining. Will the holiday shopping season bring it back?

What’s wrong with Apple? That’s what folks may be asking as the California technology giant’s stock price continues to slide. The company introduces a new iPhone and a new iPad Mini — and sees its shares hammered down by 100 points, from a high of more than $700?

What gives?

Wall Street is getting nervous about Apple’s ability to — essentially — continue printing money with its popular smartphones and tablets. The company reported disappointing earnings last week, the result of having spent a lot to revamp its product lines in time for the holiday season.

Apple also cautioned that it might not make as much money this holiday season — but some analysts think the company may be playing possum, underpromising in order to overdeliver.

Still, competition is heating up in the markets that Apple has owned. Microsoft and Amazon have introduced new tablets to rival the iPad, and Android-powered smartphones continue to gain customers.

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3 reasons the Apple iPad Mini won't fail

Apple Introduces Latest iPad

Kevork Djansezian/Getty Images

SAN JOSE, CA - OCTOBER 23: Apple Senior Vice President Phil Schiller announces the new iPad Mini. It's smaller and lighter and $329 for a 16GB WiFi-only version. And it arrives just in time for the holidays!

Apple is currently rolling out some new products in San Francisco. So far, we've seen a new MacBook Pro and a thinner and sexier iteration of the iMac, which is just another word for "planned obsolescence" in Apple-land. 

But the main event is yet to come: A smaller iPad, about 8 inches in size, called "iPad Mini."

Unlike the iPhone 5, which prior to launch I argued was doomed — DOOMED! — the iPad Mini/Air/Junior/Deuce/Whatever could succeed wildly. Here's why...

Apple owns the tablet market, so it's no big deal to steal share from itself. Apple has sold 100 million iPads in the two years since its introduction. As I and others have pointed out, there is no tablet market. There's an iPad market. However, since the arrival of the Kindle Fire and now the Microsoft Surface, there is some pressure on Cupertino. iPad Mini naysayers argue that a smaller, cheaper tablet will cannibalize the Big Boy. Probably true. But the thing is, Apple can afford to cannibalize the iPad, with a base iPad Mini that's $329 in the 16 GB WiFi-only version. And if it steals some lower-end market share from Amazon ... well, there's nothing wrong with that.

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Q&A: What the Amazon sales-tax deal means for consumers — and Amazon

Amazon CEO Jeff Bezos addresses a press

EMMANUEL DUNAND/AFP/Getty Images

Amazon CEO Jeff Bezos addresses a press conference. The online mega-retailer will start charging California customers sales tax.

In just a few days — September 15, to be exact — Amazon will have to start collecting sales tax from Californians who buy stuff (and boy, does Amazon sell a lot of stuff these days) from the online mega-retailer. Last year, Amazon struck a deal with the state. In exchange for getting the statutory sales-tax deadline extended by a year, the company agreed to drop a ballot-measure battle it was gearing up for; and to create a total of about 35,000 full- and part-time jobs in the state by 2015.

So what does this all ultimately mean? Let's break it down.

Q: I'm buying stuff like crazy from Amazon ahead of the deadline. Am I really getting out of paying sales tax?

A: Legally, no. While the sales-tax deadline was extended, the "use tax" provision of state law wasn't waived. As the L.A. Times points out, taking a very hardline position, you were never technically getting away with skipping the sales tax before this whole thing came to a head last year. If you made purchases through Amazon, you were supposed to calculate the sales tax yourself and send it in. Amazon will now start doing that for you, but you're officially liable for the tax that you should have paid as sales tax on all those flatscreen TVs, tennis rackets, and Kindle Fires you picked up over the course of the past 12 months.

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Amazon rolls out 8.9-inch HD Kindle Fire in Santa Monica

Enter-Amazon-Dome

Matt DeBord/KPCC

We prepare to enter the Amazondome.

Bezos-Amazon-Event-Kindle

Matt DeBord/KPCC

Jeff Bezos, Amazon's CEO, take the stage in Santa Monica.

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Amazon

The 8.9-inch Kindle Fire HD.

Kindle-Fire-7

Amazon

The 7-inch Amazon Kindle Fire HD.


The word on Amazon's event this morning at the Santa Monica Airport (held an eerie blue-lit hanger) was that the company wouldn't introduce a bigger Kindle Fire, the highly successful tablet that represents the only real challenge to the Apple iPad in the tablet market. Amazon CEO Jeff Bezos flouted that expectation, unveiling a new Kindle Fire HD, a high-definition version of the device, with an 8.9-inch display.

It will cost $299, in a 16GB configuration with 3G wireless. And it will benefit from integration with all of Amazon's cloud-based data services. Really, that's the main difference between what Amazon is selling with the Kindle Fire and what Apple has in the market with the iPad — and Bezos relentlessly if not overtly kept the focus there, an unusual yet predictable tactic at en event intended to create excitement about new hardware.

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