Explaining Southern California's economy

Apple earnings: Record iPhone and iPad sales, stock still drops. Why?

Apple Unveils Updated iPad In San Francisco

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Apple CEO Tim Cook speaks during an Apple product launch in San Francisco. Apple sold a record number of iOS devices in its fiscal quarter, but Wall Street was disappointed by profit margins.

Apple reported quarterly earnings for its first fiscal 2013 quarter on Wednesday after the markets closed. On the surface, the results were astonishing: Apple sold a record number of iPhones and iPads — 48 million and 23 million, respectively. It wasn't able to build enough iPad Minis to meet demand. It raked in $54.5 billion in revenue and netted a profit of $13.1 billion.

But. But. But...CEO Tim Cook set investors up for disappointment during his opening comments on an earnings call for analysts. "You're going to hear a lot of impressive numbers," he said. "But the most important thing to us is that customers love our products, not just buy them."

The numbers are monumentally impressive, but Cook emphasizes that in a weird way, Apple is now relying on customers' devotion to its products — and also to the Apple ecosystem that includes software like iTunes and new technologies like the Internet-based iCloud. Were the numbers somehow not impressive enough? Why the focus on soft values rather than on the bottom line?

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

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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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FAQ: Why is Apple's stock sliding? And how low can it go?

A view of the main entrance to Apple Inc.

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A view of the main entrance to Apple Inc. in Cupertino, California. The company's stock has been crushed over the past few months. How low can it go?

Last year, Apple's share price rose above $700. Some analysts started getting all crazy with their predictions for where it might go. Could Apple hit $1000 and become the world's first $1 trillion company?

For a while these calls didn't look so crazy. As a company, Apple was a beast. It could do no wrong. The declines were inevitable, but temporary. The stock would always recover and resume its inexorable match to quadruple digits.

Apple dipped below the psychologically important $500 per share barrier this week (it's since recovered a bit as investors waiting for it to dip below the psychologically important $500 per share barrier piled in). There are some serious and well-respected investors who are bearish on this stock. Jeff Gundlach, of L.A.'s DoubleLine Capital, is one of them. He's set a target price for Apple of $425.

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If Apple drops below $500 per share, it could be a screaming buy

Apple Introduces iPhone 5

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Apple introduces the iPhone 5 earlier this year in San Francisco. Will it sell enough this year to satisfy Wall Street?

There's a bunch of Wall Street trader stuff happening with Apple right now, as the company heads for the critical conclusion to the holiday shopping season. Analysts who follow the stock have been downgrading their price targets and trimming expectations for the company, which has been on an epic tear for the past two years, but which has also seen its share price collapse in recent months, from a high of more than $700.

This could yield some short-term volatility for AAPL. (That's the company's stock market ID.)

This morning, the stock fell below $500 in trading before the markets opened, before recovering to close at $520

Will it plunge again?

If it does, you might want to take Slate tech writer Farhad Manjoo's sage advice and buy a share of Apple, rather that wasting the money on an iPad. 

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Are U.S. households really paying an 'Apple tax?'

FRANCE-TECHNOLOGY-COMPANY-APPLE

AFP/AFP/Getty Images

The Apple iPhone 5. Does getting one mean that you're paying the equivalent of a tax to Cupertino?

At Reuters, Chris Taylor argues that they most definitely are:

The analogy of an Apple tax might sound facetious, but think about it. Median U.S. household income was $50,054 in 2011, according to the Census Bureau. A sizable chunk of that is getting diverted to Apple headquarters in Cupertino.

Remember, this is not something that consumers are being forced to pay. They are dipping willingly into their own pockets, because they're essentially slaves to the devices.

Taylor quotes an analyst who expects Apple-related spending to rise to over $800 a year per American household by 2015. How does that compare with other taxes?

Well, if the median household has two parents filing joint tax returns, and two kids, it's paying about half the 2015 "Apple Tax" each month in federal income and Social Security tax: close to $450. So households may be spending a lot on the Apple ecosystem of products — from iPhones to iPads to iTunes — but a lot more of their money continues to go to the government. 

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