Apple’s Startling Rates of Growth: A Five-Year Overview

  • Posted: 05 December 2010 07:51 PM

    This is the last of the weekend posts designed for the benefit of AFB members and to serve as a repository of Apple’s recent financial results for easy and convenient reference. It’s titled Apple’s Startling Rates of Growth: A Five-Year Overview.

    In compiling the post retrospective adjustment financial results for Apple for the past five fiscal years I was a bit startled by the results. We all know the results and lived through the years, but seeing the data in a concise form and with all iPhone revenue and earnings reflected in the years of sale, it brought home the point that not only has Apple had an extraordinary five-year run, this fiscal year will the greatest year for revenue and earnings growth in the company’s storied history.

    Snippet: In the current fiscal year that began in late September, more than 60% of the company’s revenue may be sourced from products that did not exit in the marketplace four years ago today. Apple’s ability to grow revenue and earnings at rates that startle the financial markets is sourced in the development of new products that expand the company’s revenue and earnings range and disrupt established industries. The Apple iPhone and the Apple iPad are the two most recent examples of Apple’s approach to growth.

    This post builds on yesterday’s posts:

    A comparison of FY 2009 & 2010 revenue and earnings per share by quarter.

    Apple’s financial results (revenue and expenses) for FY 2009 and 2010 by quarter.

    For a more in-depth look at the influence of costs on Apple’s earnings results please see my November blog posts titled Apple: A Quarterly Comparison of Costs and Cost Ratios To Revenue and Apple’s Profitability and the Influences of Gross Margins, Tax Rates and OpEx.

    [ Edited: 05 December 2010 09:04 PM by DawnTreader ]      
  • Posted: 05 December 2010 08:23 PM #1

    First link needs fixed

         
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    Posted: 05 December 2010 08:40 PM #2

    Great post DT. But has Apple’s growth & earnings really startled the
    Markets? If only! The markets seem to be completely ignoring Apple’s monster numbers of late. I’m half-expecting Apple to announce a $25B Q1 only to have it met with yawns from the Street.

    Posted from my iPhone BTW.

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    We filed for over 200 patents for all the inventions in iPhone and we intend to protect them. — Steve Jobs, 2007

         
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    Posted: 05 December 2010 08:57 PM #3

    JDSoCal - 06 December 2010 12:40 AM

    The markets seem to be completely ignoring Apple’s monster numbers of late. I’m half-expecting Apple to announce a $25B Q1 only to have it met with yawns from the Street.

    It does seem that way.

    Posted from a room with 3 Macs in daily use, average age 5 years old.

         
  • Posted: 05 December 2010 09:05 PM #4

    roni - 06 December 2010 12:23 AM

    First link needs fixed

    Thank you.  grin

    I thought I had checked them all before posting the topic.

         
  • Posted: 05 December 2010 09:06 PM #5

    Tetrachloride - 06 December 2010 12:57 AM
    JDSoCal - 06 December 2010 12:40 AM

    The markets seem to be completely ignoring Apple’s monster numbers of late. I’m half-expecting Apple to announce a $25B Q1 only to have it met with yawns from the Street.

    It does seem that way.

    Posted from a room with 3 Macs in daily use, average age 5 years old.

    I don’t think analysts have grasped the magnitude of this quarter. Even if the iPad has modestly successful quarter the results will be almost unreal. The gap widens between analyst estimates and what will be 1st fiscal quarter realities.

         
  • Posted: 06 December 2010 12:16 PM #6

    The majority of the financial market is back east and they are still mired in traditional, white-suit mentality. Apple is a left-coast company, something these people can’t and don’t want to understand. Apple is also a constantly changing and evolving company. Microsoft, the darling of all mutual funds (maybe not as much as they used to be), hasn’t come up with anything significant, except losses, in the last decade but it is still liked by the static government and enterprise marketplaces. Apple also doesn’t play in the cutthroat garbage market, which is covered my Dell and the rest. When you go to a store looking for automotive tools (wrenches, etc.), you see lots of knockoffs and tools that will break the second time you use them. Apple produces higher-quality items, which cost more to design and produce than these garbage items. Sooner or later people get tired of re-buying garbage products and finally lay down the money for the good items. Once they do, like with tools, they never want to go back. Good tools give good and consistent results. To me, Apple’s growth is long overdue.

         
  • Posted: 06 December 2010 12:51 PM #7

    Great articles, DT. Many thanks for the notice.

    I agree with JDSoCal and Tetrachloride that Apple’s performance, running circles around any competition, has become the new normal, at least for Apple. I don’t think the Street yawns so much as it says, ‘Sure. What’d you expect?’

    prl53 - 06 December 2010 04:16 PM

    Sooner or later people get tired of re-buying garbage products and finally lay down the money for the good items. Once they do, like with tools, they never want to go back. Good tools give good and consistent results. To me, Apple’s growth is long overdue.

    One should not underestimate the grip that IT departments have over enterprise equipment purchases. Unless corporate accountants factor in many of the indirect costs, such as down time, maintenance, depreciation, functional obsolescence (machines that still work, but lack features that have become new industry standards), the real cost of stocking the cubicles with bottom-dwellng machinery is under-appreciated, and IT departments continue to look good for saving money. Many of these IT departments are not so much ‘anti-Apple’ as they are ‘anti-learning new tricks’. Indeed and ironically, many IT department wonks sport Macs themselves, even when they do not endorse them for the rank and file.

    The iOS devices have the greatest promise in prising open the enterprise sector and compelling accommodation of Macs, which senior level ‘switchers’, initially sold on an iOS device, will increasingly demand. I am seeing this in my profession, at any rate, and now am no longer surprised to hear of people switching to the Mac in the work place, even if they have to purchase it themselves.

    That said, I do not envision an iMac in every cubicle anytime soon, nor do I believe that would be good for Apple, at least not at this time.

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  • Posted: 06 December 2010 01:10 PM #8

    Wab95—I don’t underestimate IT’s mismanagement. I managed publications-related systems from 1978 until a few years ago when those IT Management types finally figured out a devious way to remove me from the daily operations of our systems. Since then, the Windows-centric operations people have totally messed everything up and finally admitted they knew nothing about supporting a publications system, especially one based around Macs. Didn’t surprise me since those support people might have had Microsoft service certificates but as we all know, those are just pieces of paper. IT management has way too much power in deciding what the people they support really need. Of course, they also forget that they are a service group and not the most important people around. Computers have become too important when they are simply a tool one uses to express themselves and get a job done. At least Apple makes using those tools reasonably easy and something that doesn’t always get in the way of one’s creativity and production effort.

         
  • Posted: 06 December 2010 01:11 PM #9

    prl53 - 06 December 2010 04:16 PM

    Sooner or later people get tired of re-buying garbage products and finally lay down the money for the good items. Once they do, like with tools, they never want to go back. Good tools give good and consistent results. To me, Apple’s growth is long overdue.

    Apple has performed better than most large enterprises during the prolonged economic downturn. Has there been a “flight to quality” during the Great Recession and will Apple benefit at least as well as other tech companies during the eventual economic rebound?

         
  • Posted: 06 December 2010 01:15 PM #10

    wab95 - 06 December 2010 04:51 PM

    Great articles, DT. Many thanks for the notice.

    I agree with JDSoCal and Tetrachloride that Apple’s performance, running circles around any competition, has become the new normal, at least for Apple. I don’t think the Street yawns so much as it says, ‘Sure. What’d you expect?’

    In looking at the five-year growth stats, Apple has its best year ahead. We’re looking at 60% or better revenue growth and earnings growth a bit higher than that frenetic pace of growth. This magnitude of success is not priced into the stock at this point in time.

         
  • Posted: 06 December 2010 01:33 PM #11

    DawnTreader - 06 December 2010 05:15 PM
    wab95 - 06 December 2010 04:51 PM

    Great articles, DT. Many thanks for the notice.

    I agree with JDSoCal and Tetrachloride that Apple’s performance, running circles around any competition, has become the new normal, at least for Apple. I don’t think the Street yawns so much as it says, ‘Sure. What’d you expect?’

    In looking at the five-year growth stats, Apple has its best year ahead. We’re looking at 60% or better revenue growth and earnings growth a bit higher than that frenetic pace of growth. This magnitude of success is not priced into the stock at this point in time.


    Very important point. I think at least some analysts are figuring this out. I forget who it was on Bloomberg last week (even forgot which day) who argued that the two stocks he picked as ‘buys’ were Apple, first, and Microsoft second (on the strength of current Windows 7 sales and projected XBox sales and Bing revenue through this quarter). This latter did surprise me as a second pick.

    Any thoughts on potential impact on Apple’s stock price/share after fourth quarter results? It seems to me that Apple’s stock has been as much influenced by greater tech/consumer electronic concerns as it has the company’s performance this past year.

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  • Posted: 06 December 2010 01:39 PM #12

    Let me make sure everyone understands my previous comments. I am totally pro-Apple, top to bottom. I converted the publications system I was running in 1989 to almost all Macs and never looked back. The only time I added PCs was when the vendor of a specialized product didn’t support Macs. I have had to justify and re-justify my stance on systems since I started and usually my boss finally understood why I made those decisions. Most of the workers did as well, especially when they were subjected to inferior service and products. As for the future, I only see Apple going up, not because they make cute or fancy products but because the products they make just work. That’s the bottom line and when more people finally understand this, more will buy into Apple’s philosophy and convert to Macs. Nothing lasts forever, so it’s time for IT managers to go back to school and learn how to manage Macs instead of being selfish and just trying to keep their Windows-related jobs because that’s all they know. I kick myself every time I didn’t buy Apple stock but as a person in a corporate environment, I couldn’t ethically (a word too many Windows managers don’t understand) invest in Apple stock and then propose buying Apple products. I will continue to use Apple products as long as I can.

    typing this on a 4yr old MacBook Pro (work laptop, I’m on travel), next to my daughter’s iBook G4 (she complains about it’s lack of speed all the time but she has a job now so I shouldn’t have to buy everything). My other daughter is major Apple products. Half my family uses Macs and the other half use PCs, always good for arguments, I mean conversation, during the holidays. My work computers are all Macs although I use Fusion to host four other OSes for testing. Got an AppleTV and I love it.

         
  • Posted: 06 December 2010 01:47 PM #13

    prl53 - 06 December 2010 05:39 PM

    Let me make sure everyone understands my previous comments. I am totally pro-Apple, top to bottom. I converted the publications system I was running in 1989 to almost all Macs and never looked back. The only time I added PCs was when the vendor of a specialized product didn’t support Macs. I have had to justify and re-justify my stance on systems since I started and usually my boss finally understood why I made those decisions. Most of the workers did as well, especially when they were subjected to inferior service and products. As for the future, I only see Apple going up, not because they make cute or fancy products but because the products they make just work. That’s the bottom line and when more people finally understand this, more will buy into Apple’s philosophy and convert to Macs. Nothing lasts forever, so it’s time for IT managers to go back to school and learn how to manage Macs instead of being selfish and just trying to keep their Windows-related jobs because that’s all they know. I kick myself every time I didn’t buy Apple stock but as a person in a corporate environment, I couldn’t ethically (a word too many Windows managers don’t understand) invest in Apple stock and then propose buying Apple products. I will continue to use Apple products as long as I can.

    typing this on a 4yr old MacBook Pro (work laptop, I’m on travel), next to my daughter’s iBook G4 (she complains about it’s lack of speed all the time but she has a job now so I shouldn’t have to buy everything). My other daughter is major Apple products. Half my family uses Macs and the other half use PCs, always good for arguments, I mean conversation, during the holidays. My work computers are all Macs although I use Fusion to host four other OSes for testing. Got an AppleTV and I love it.


    You have a sympathetic audience, particularly on those family purchases. I am going to have to upgrade my kids’ laptop and iMac, respectively, sometime soon.

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  • Posted: 06 December 2010 04:04 PM #14

    wab95 - 06 December 2010 05:33 PM
    DawnTreader - 06 December 2010 05:15 PM
    wab95 - 06 December 2010 04:51 PM

    Great articles, DT. Many thanks for the notice.

    I agree with JDSoCal and Tetrachloride that Apple’s performance, running circles around any competition, has become the new normal, at least for Apple. I don’t think the Street yawns so much as it says, ‘Sure. What’d you expect?’

    In looking at the five-year growth stats, Apple has its best year ahead. We’re looking at 60% or better revenue growth and earnings growth a bit higher than that frenetic pace of growth. This magnitude of success is not priced into the stock at this point in time.


    Very important point. I think at least some analysts are figuring this out. I forget who it was on Bloomberg last week (even forgot which day) who argued that the two stocks he picked as ‘buys’ were Apple, first, and Microsoft second (on the strength of current Windows 7 sales and projected XBox sales and Bing revenue through this quarter). This latter did surprise me as a second pick.

    Any thoughts on potential impact on Apple’s stock price/share after fourth quarter results? It seems to me that Apple’s stock has been as much influenced by greater tech/consumer electronic concerns as it has the company’s performance this past year.

    My current price targets and forecasts can be found here. Please see the forecast for 02/01/11.  grin

         
  • Posted: 06 December 2010 04:32 PM #15

    DawnTreader - 06 December 2010 08:04 PM
    wab95 - 06 December 2010 05:33 PM
    DawnTreader - 06 December 2010 05:15 PM
    wab95 - 06 December 2010 04:51 PM

    Great articles, DT. Many thanks for the notice.

    I agree with JDSoCal and Tetrachloride that Apple’s performance, running circles around any competition, has become the new normal, at least for Apple. I don’t think the Street yawns so much as it says, ‘Sure. What’d you expect?’

    In looking at the five-year growth stats, Apple has its best year ahead. We’re looking at 60% or better revenue growth and earnings growth a bit higher than that frenetic pace of growth. This magnitude of success is not priced into the stock at this point in time.


    Very important point. I think at least some analysts are figuring this out. I forget who it was on Bloomberg last week (even forgot which day) who argued that the two stocks he picked as ‘buys’ were Apple, first, and Microsoft second (on the strength of current Windows 7 sales and projected XBox sales and Bing revenue through this quarter). This latter did surprise me as a second pick.

    Any thoughts on potential impact on Apple’s stock price/share after fourth quarter results? It seems to me that Apple’s stock has been as much influenced by greater tech/consumer electronic concerns as it has the company’s performance this past year.

    My current price targets and forecasts can be found here. Please see the forecast for 02/01/11.  grin


    Impressive! Thanks.

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    wab95