Cash For iClunkers? Some Observations On Sequential Apple Revenue Growth

Tyler Durden's picture

Without trying to take away from Apple's blow out earnings, a quick look at the Apple data sheet breaking down revenue and unit sales by geography points to something rather curious. While unit sales in Q4 were fine, with a modest drop in the US, even as European sales posted the biggest sequential increase on record at 306K (from 1,176K to 1,482K), one wonders just how sustainable this in itself is, now that Europe has officially entered a recession, especially since the incremental revenue in Europe in Q4 was also a record $3.9 billion (of the total $18 billion sequential increase). Yet nowhere was this quarterly surge more evident than in the US: the increase in American sales was a unprecedented $8.1 billion sequentially, from $9.7 billion to $17.7 billion (which means margins are blowing out: how long until FoxConn has something to say about this?). While most of this is to be attributed to the iPhone 4S launch in the quarter, the question then is just how sustainable is the new trendline growth if one normalizes for product cadence (yes, we hate that word too), or the ability of the company to reinvent itself quarter after quarter. With the iPad 3 expected this quarter, and the iPhone 5 the next, will Apple be a "product to product" company going forward, and what happens with baseline revenue growth ex-new product innovation? Or how about self-cannibalization? Not like we are saying anything new here, but the value of Apple is in product innovation, which is nowhere better seen than in the sequential Q4 revenue. Will this innovation ability stay with the new management? And how much of the Q4 sales surge was, sad to say it, the Steve Jobs death factor? Finally, the fact that in Q4 AsiaPac revenues were less than a year prior, does this mean that even with the 4S release, Apple has now lost the Asian market to cheaper, pirated, or Google-based competition? Finally, in a tried and true tradition of instant gratification (credit funded naturally), how much of the explosion in the December 31 quarter sales is simply a "cash for clunker"-like forward shifted of purchases that would have otherwise happened in the first quarter of 2012?

Sequential Mac Unit sales by geography:

Sequential change in total revenues by geography:

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TruthInSunshine's picture

The sheeple will starve to death before allowing their iPads/iPods/Macs to be pried from their cold, dead hands.

Give us iTunes & streaming iContent [Real Housewives of --insert plastic, toxic city of choice here--], or give us death, bitchez!

An iPad in every pot!

Molon Labe, bitchez!


*Never mind the Texas Instruments miss, nor the other bellwether misses so far, stock junky/gamblers of the world - unite.

*Apple is now the anti-General Motors of the 1960s to America. As Apple goes, so goes the country - NOT!

flattrader's picture

I'm not into iCool and iConsumption...and if I want a toy, I can buy a sub-$200 10 in. tablet that has the same chip as the iPad with a lot of the same features, webcam etc...and comes with a keyboard and case included (so it "feels" like a netbook) and it's expandable and it's Android market.

Yeah, iDon't get it either.

Careless Whisper's picture

The Careless Whisper Late Day News Update & Threadjacking


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Fukushima Sam's picture

Could Apple have teamed up with the big-media lobby to see MegaUpload shut down to protect their own business model?

Hulk's picture

Thats Charlotte CW, not Charlottesville. Jefferson would not approve...

Careless Whisper's picture

my bad. charlotte, north carolina.

Divided States of America's picture

People going to Europe to buy stuff (Fashion goods, Iphones) to take advantage of the 'cheaper' EUR....I guess you will see less fickle foreigners in your local malls in the States. European retail sales set to surge at the expense of US retail sales.

TruthInSunshine's picture

Cramer has an $1815 price target on Apple (strike date June 18th) and Abby Joseph Cohen has a spooz 1776 call out, both by year end (non-Mayan Calendar).

Executioner's picture

but... but... but... Reggae Midgeton has called for Apple tops all the way through 2011, always with the "i told ya, i told ya, i am awesome" meme whenever Apple dropped -1%.

French Frog's picture

"does this mean that even with the 4S release, Apple has now lost the Asian market to cheaper, pirated, or Google-based competition?"

I think that Reggie (Middleton) has been hinting this for quite a while now (credit where credit's due).

Mid-Ocean's picture

Looks like they did pretty well in Japan where the 4S was released already. China's 4S release date was Jan 13th. That statement could be proven right in time, but I'd hold judgment on that for a quarter or two.

flattrader's picture

If not now, soon I imagine.  I was stunned by what I found for the price...and I spent a great deal of time searching digital mag/blog reviews and user reviews.

Cdad's picture

LOL...the tools on Wall Street ramped TXN after that report, completely ignoring the implacations of the details surrounding the company's know, before they sold the crap out of it.

Am I the only person left who, seeing a qtrly report from Apple lift the Qs by 1.1%, recognzies that as yet another sign of just how screwed up this market is?  Just who does the criminal syndicate known as Wall Street think they are impressing with these computerized gyrations?  

As far as I am concerned, Apple isn't even an American company.  Were it the case, it would certainly be investigated for its horrific labor practices.

alien-IQ's picture

"Apple isn't even an American company. Were it the case, it would certainly be investigated for its horrific labor practices."

That statement could be applied to many many companies that, once upon a time, made products in America. Very few are left.

Cdad's picture

...yet, ironically, all of them have their hands in Joe Taxpayer's pocket, spending millions on gain billions of dollars in favors and special treatment...while they employ Chinese people. 


flattrader's picture
...Not long ago, Apple boasted that its products were made in America. Today, few are. Almost all of the 70 million iPhones, 30 million iPads and 59 million other products Apple sold last year were manufactured overseas. Why can’t that work come home? Mr. Obama asked. Mr. Jobs’s reply was unambiguous. “Those jobs aren’t coming back,” he said, according to another dinner guest...
...“Apple’s an example of why it’s so hard to create middle-class jobs in the U.S. now,” said Jared Bernstein, who until last year was an economic adviser to the White House. “If it’s the pinnacle of capitalism, we should be worried.” Apple executives say that going overseas, at this point, is their only option. One former executive described how the company relied upon a Chinese factory to revamp iPhone manufacturing just weeks before the device was due on shelves. Apple had redesigned the iPhone’s screen at the last minute, forcing an assembly line overhaul. New screens began arriving at the plant near midnight. A foreman immediately roused 8,000 workers inside the company’s dormitories, according to the executive. Each employee was given a biscuit and a cup of tea, guided to a workstation and within half an hour started a 12-hour shift fitting glass screens into beveled frames. Within 96 hours, the plant was producing over 10,000 iPhones a day. “The speed and flexibility is breathtaking,” the executive said. “There’s no American plant that can match that.” ...
So, Americans just need to build factories with armed guards (labor camps), have the workers live in dormitories, starve the workers, deny them sleep, pay them .70 per hour, make them work 12 to 16 hours a day for 13 day stints before a day off, when they try to commit suicide erect bars over the windows and catch nets and if they organize, send them to reeducation camps which are labor prisons...then we can have our Apple jobs back.
koperniuk666's picture

so why the fuk complain? take it or leave it.


flattrader's picture

I do leave it.  I don't buy Apple.  I don't pay a premium for iCrap.

Rynak's picture

Apple aren't exactly known to produce and especially design "crap". One may hate them for their vendor lock-in mentality (i do), or for the culture they created (i do), or for their treatment of lowclass workers (i do), or for the price they charge (i do NOT)..... but i'd never call their products "crap".

And as for those saying "you can get a product with "chip X in it" for price Y".... uh, sorry to break it to you, but design, interface and QA matters.... quality especially in the IT-market to a large degree nowadays depends NOT on the WHAT, but the HOW.... and it is the later, in which apple has a long history of superiority.

I admire them for that..... but it at least to me is not enough to offset all the things i hate them for.

flattrader's picture

>>>uh, sorry to break it to you, but design, interface and QA matters.... quality especially in the IT-market to a large degree nowadays depends NOT on the WHAT, but the HOW<<<

Not when it's a consumption drivien overpriced toy...that was my point.

LasVegasDave's picture

I guess labor isnt really worth $40/hour

Sorry for your wake up call America.

Disclosure: Short The Great Society, Long cold rice and ratmeat 

Rainman's picture

I hear ya. I slept through my Optimist Club meeting today too.

Rynak's picture

Rot in hell, parasite whore.

Sandmann's picture

America needs a Communist Party to build a New might get one !

disabledvet's picture

they are starving to death. and they will therefore demand to buried with their i phone/i pad/i touch/i see/ i you/i die/i bury device. and their i-device will still be providing personal data on us...even though we are dead. "it's an app thing." i understand if you don't...but you will. YOU WILLLLLLLLL!

monoloco's picture

Are they demanding wifi for the graveyard yet?

Ropingdown's picture

TruthInS:  Your footnote actually hits the nail on the head dragging in the anti-GM, and the WSJ actually featured this notion recently.  Cars are no longer cool, because  cars have to be economical because young people are poorer these days.  It's their gadgets, data and entertainment tools, that affect the aesthetics (and status) of their life.  The Chinese are finding this too, and they (see the lead blog above) love the iOS stuff.  The hardest thing is to sell it to the Chinese without causing a mob scene.  I've used apple stuff since 84 because my production is mainly documents with light bookkeeping and such.  We've had clone servers for ever, but that's just a different industry, application.  Linux and mostly an open stack.  I find the iOS and the macbooks just work, with good software, good screens, fine writing applications and PDF submission tools.   The cost of the things is nothing over a reasonable amort period.  It isn't about the computers anymore.  It's all about the visuals and flow because you can do major DB and statistics work on any box these days.  The "fan boy" stuff is kind of beside the point.  Manufacturing?  Easy to bring it home if the major clumps of semi-educated labor infesting most major US cities would read a bit at night, learn just a little simple math, and be willing to work flexibly, responsively, and with a clear head.  Yeah, so much for that idea for the moment.

DeadFred's picture

Think from a European viewpoint, what would you rather have a fistfull of euros or an iPad?  At least you can eat the iPad (so I hear)

francis_sawyer's picture

And how much of the Q4 sales surge was, sad to say it, the Steve Jobs death factor?

I suppose they could use the Bin Laden strategy and just kill him over and over whenever they need a bump...

jarboejl's picture

I think any goods producing (especially tech) company has to become a "product-to-product company" at the rate the Chinese are pirating and replicating our technology.  JMO

frostfan's picture

I thought they were going to come out with some kind of revolutionary TV next.

css1971's picture

They did.

iPad = iTunes TV.


Cdad's picture

Nooooot a proooooblem.  Here...

Cdad raises his 2012 price target on AAPL to $725 per share.  There...any questions about the sustainability of selling redundant and overpriced tech devices manufactured by Chinese slave labor are now settled.  No macro or micro economic threats need be contemplated now.

SheepDog-One's picture

We've always been at war with East Apple.

Cdad's picture

Exactly, brother Dog.  And they say...Wall Street bankers are the smartest folks in the entire country.  Somehow, just an average Joe like me can see right through this millions have.  So go ahead and ramp Apple to whatever price you like...and good luck selling it there.

Though, and of course, I love big brother.

TruthInSunshine's picture
Sheepdog said:  "We've always been at war with East Apple."



Essay on Great Gatsby, East Egg Vs. West Egg


Summary:   In The Great Gatsby, by F. Scott Fitzgerarld, the division between the "newly" rich and the "old" rich can be described as "East Eggers" vs "West Eggers."


East Egg and West Egg are "identical in contour and separated only by a courtesy bay ... They are not perfect ovals ... but their physical resemblance must be a source of perpetual wonder to the gulls that fly overhead. To the wingless a more interesting phenomenon their dissimilarity in every particular except shape and size."

East Egg is the fashionable group of social elite, also known as "old money" or people who have always had money. Tom and Daisy represent the 'old establishment', having lived in the wealthy upper class for most of their lives. Daisy is consumed by the materialistic values associated with her 'social class'. These people are shallow and lack values. They are careless and completely consumed with themselves, which is shown through Jordan Baker. She is a professional golfer who makes the comment that people should be careful of her when she drives. Also Daisy hits Myrtle, and does not even turn around to see if she is okay, all she is concerned with is the dealing with the consequences. "They were careless people, Tom and Daisy- they smashed up things and creatures then retreated back into their money or their vast carelessness or whatever it was that kept them together." The social elite of East Egg are inhuman; they are spoiled to such an extent that their morality has been twisted. Although these are clearly "bad" people they are envied and copied constantly by the West eggers. Throughout the novel it seems to be the West are trying to fit in the East, but East eggers, like Tom and Daisy, feel that they are too sophisticated to take part in that.

West Eggers are the newly rich; the people who have worked hard and earned their money in a short period of time. Their wealth is based on material possessions. Gatsby, like the West Eggers, lacks the traditions of the East Eggers. He is considered 'new money', in the sense that his wealth came to him more recently through his business dealings (which we are led to believe are corrupt). Although Gatsby is now a part of this class, his faith and belief in the success of his dreams has allowed him to preserve some morality. Despite the fact Gatsby made his fortune in a corrupt fashion one must recognize that he is someone to admire because of his hopes. Nick Carraway, the narrator of the novel, lives in West Egg and exhibits honesty in this place of superficiality. Clearly the West represents the more moral of the two. Although West Egg is the more moral, it is still a place of superficiality, excessive spending, and gaudy living.

Both of the eggs are people who love money, the difference is how they obtained that money and the way it has shaped their lives.


Dasa Slooofoot's picture

The amount of ways i can sign on to the internet may have reached its saturation point.

Rainman's picture

me too. I'm writing passwords on the wall now

nyse's picture, homie.

ShankyS's picture

Siri - Is it sustainable? 

Widowmaker's picture

Can you make a shoe smell?

847328_3527's picture

Everyone owns one already. This may affect the future growth. Plus, people are flat out broke these days.

alien-IQ's picture

As long as Microsoft continues to provide users a reason to switch to Mac...they will continue to switch to Mac.

A large part of Apples success can be directly attributed to Microsoft constantly pissing off it's customers.

Rynak's picture

No. You not just have it wrong - you have it wrong in more ways than i can probably mention in this post. And you're ignoring recent history.

1. The kickstarter for apple, had absolutely nothing to do with microsoft. It wasn't home computers.... but instead, first the iPod, and then the iPhone. Apple entered an entirely new market, and became a status symbol in it. Suddenly, lots of people who never ever heard of the name apple before, knew it. So, it wasn't the desktop that brought apple into public view.... but rather that it entered the mobile gadgets market and became an instant hit. To put it simply, the majority of people only know that macs exist, because of the iPod and iPhone. THAT is why mac marketshare exploded AFTER the iPod and iPhone success... because previously, people didn't even know they existed!

2. In terms of egomaniac treatment of customers, as well as abusive lock-in strategies.... apple is no better than microsoft. In fact, apple has acted even MORE aggressive in that regard, than microsoft.... the only reason why it had less impact than MS, is simply because they have less marketshare.... NOT because of how they use it.

3. What MAY drive people to macs, AFTER they via iPods and iPhones know about their existence.... may however be something entirely different than corporate strategy..... DESIGN. Apple eats microsofts lunch in terms of application design, whenever they release anything. Same for google versus microsoft. Plus, in a perverted way, in terms of design apple's vendor lock-in mentality actually can be benefical to users: If the amount of tech to support and consider in a design, is low (i.e. controlled only by you), then you can design interfaces, as well as QA, much more efficiently (with this, i do NOT mean to say that i like apples vendor lock-in mentality.... it actually is the primary reason why i reject apple.... i do however acknowledge, that a small controlled market of software and hardware, surely makes interface design and behaviour MUCH easier and MUCH less error-prone... if there aren't many combinations to consider, it becomes much more easy to create something that "just works").

Sandmann's picture

The kickstarter for apple, had absolutely nothing to do with microsoft. It wasn't home computers.... but instead, first the iPod, and then the iPhone. Apple entered an entirely new market, and became a status symbol in it.


Wow ! I remember an Apple OEM Manufacturer that had a name in tape recorders and made a small portable one with headphones. The Sony Walkman became a real hit, but funnily Sony never applied it to a flash drive to update the product and a delivery portal despite owning Movie and Record labels......or maybe because they did !

chrispycrunch's picture

When you take a look at the latest specifications for Android, along with ice cream sandwich, it is conceivable that this is a 1- or a 2-quarter phenomenon. Greece/Europe is on the verge of finally colapsing. This will also hurt China where Apple is ramping up.

Android: "Samsung Galaxy S III rumoured to launch in April, have a quad-core processor, 12-megapixel camera, HD display"


Suddenly, paying $900 might seem just a bit expensive (it's $650-700 in the U.S.).

Next thing you know, Nokia's ugly WP7 model might look attractive. Okay, maybe not, but eventually these smart phones will get price-sensitive.

blunderdog's picture

You're not going to see any real price discovery on phones until customers are forced to shell out the cash.  The cellphone market must be one of the greatest plays in the world--you sell a $500 toy to someone who doesn't have $500 but agrees to pay a cellphone bill for the next 2 years, and the phone company gives you your cash.

It's almost as delicious as sub-prime balloon mortgages.  At least they never intended to repo the phones.  They'll be worthless in 6 months, after all.

Rynak's picture

You nailed it.

(written by some guy, who has no cellphone contract, and owns two super-lowtech motofones.... but hey, i can even in bright daylight from 2 metres distance read it's clock.... i can make calls..... one can supposedly drive with a car over it, without damaging it, and the battery lifetime is 2-4weeks depending on the age of the bat.... it's a plain stupid phone damnit)

flattrader's picture

Agreed.  I have a semi-smart phone that even surfs the web (slowly).  It's indestructable, long bat life and when I'm in a group of smart phone usesers, it's the one they borrow when their phones have run out of juice.  A group trip is problematic because everybody is trying to use the car phone charger outlet.  Fortunately, when we take my vehicle it's not a problem as it has four of them.

Spastica Rex's picture

These "recessions" aren't for everybody; the top 20% are doing just fine and they're the ones buying. They're the middle class.