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: What is 'skeuomorphic design' and the executive shakeup at Apple

Apple Unveils Updated iPad In San Francisco

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SAN FRANCISCO, CA - MARCH 07: Apple CEO Tim Cook speaks during an Apple product launch event. The successor to Steve Jobs is enduring his first major leadership challenge.

Superstorm Sandy ravaged the East Coast this week, but another storm blew through the West Coast, and it was centered in Cupertino, California, at Apple headquarters.

Two Apple high ranking Apple executives, Scott Forstall and John Browett, were shown the door. In both cases, it wasn't really a surprise. But it was clear evidence that, a year removed from Steve Jobs' death and with the company's stock price sliding by more than 100 points in less than two months, CEO Tim Cook is experiencing his first major leadership challenge.

Q: Why were Forstall and Browett asked to leave?

A: Browett is an easier departure to explain. He ran Apple's retail operations and had instituted some bizarre strategies since his arrival at Apple little more than six months ago. As Tim Worstall points out at Forbes, his background in British retail didn't fit with Apple's brand goals for its stores. Furthermore, he created a near revolt among the Apple Store's blue-shirted staffers. A lot of Apple observers were actively questioning why he was hired in the first place.

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Be sure to thank Foxconn and wireless providers for your Apple dividend

Apple Unveils Updated iPad In San Francisco

Kevork Djansezian/Getty Images

Apple CEO Tim Cook speaks during an Apple product launch event at Yerba Buena Center for the Arts on March 7, 2012 in San Francisco, California. Today, the company announced its first dividend since...1995!

Apple announced this morning that, in response to various levels of pressure, it will be dispersing some of its $100-billion cash hoard by paying a $2.65 quarterly dividend to shareholders, starting in 2013, and buying back $10 billion worth of stock. These were both fairly conservative, but far from unexpected, moves. As soon as Apple announced that it would be...making an announcement, some kind of dividend scenario was in the picture. The questions were along the lines of "How big?" and "Will it be a one-time dividend?"

Apple's stock, not surprisingly, is waaaayyy up in trading this morning, currently humming along just a hair below $600. Actually, it's been headed almost straight up since last December. And it could have been set up by Apple CEO Tim Cook and CFO Peter Oppenheimer to move higher, but they went for a relatively small dividend: 1.8 percent versus what Apple's biggest Wall Street bulls wanted, something like 2.5 percent.

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Is Apple defying Steve Jobs with Apple TV?

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Steve Jobs delivers the keynote address at the 2011 Apple World Wide Developers Conference at the Moscone Center on June 6, 2011 in San Francisco, California.

It's looking more and more like Apple is going to enter the TV business. The Wall Street Journal recently characterized this as one of Steve Jobs' "ambitions." But was it really? From the same WSJ report:

In meetings as far back as 2010, Mr. Jobs met with a series of cable and satellite executives to discuss next-generation television services for Apple devices, according to people familiar with the matter. Among the questions Mr. Jobs asked in the series of meetings was how much of the universe of video content the providers actually had the rights to, according to a person familiar with the meetings.

Apple's own executives have wondered what the company had up its sleeve. Last year, at its "top 100" meeting for senior managers in Carmel, Calif., an attendee asked Mr. Jobs whether Apple was developing a television.

He responded that it would be a bad business to get into, noting that the margins on television are far lower than the margins Apple makes from its other devices and that consumers don't buy new televisions very frequently, according to this person.

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Reportings: Obama v. everybody; old loan troubles; cold September jobs; Tim Cook iPhone 4S fail

Obama can't win: "Of course, aggressively addressing capital requirements and restructuring zombie banks three years ago would have turned Wall Street against Obama—but Wall Street's now against Obama anyway. Meanwhile, blaming Wall Street for its contribution to the country's problems—and actually backing up the talk with action—would have won over the rest of the business community and Main Street." (Business Insider)

 

The problem of "old loans" versus "new loans" and how it relates to willingness to work. To earn money. And to spend it all paying off the old loans: "A significant fraction of households and businesses are typically so burdened with the debts they accumulated during the housing surge that they have little incentive to produce and work, because their creditors would get most, if not all, of the fruits of their labor." (NYT)

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