Mac Information

Apple Macintosh, iPod, iPad and iPhone news and advice in Dublin, Ireland


What a Difference 5 Years Makes…

Amazing what five years does. In the first half of 2007 Apple did not sell a mobile phone. In 2012, they control 75% of the profits of the entire mobile phone industry, and 40% of all revenues. This is today’s chart from Business Insider:

5 years of the iPhone

This shows two things. Firstly how Apple have come to dominate the industry, and they do this selling one model of phone, in three flavours (iPhone 4S, 4 and 3GS). The majority of their units and revenue come from just one model of iPhone, the new iPhone 4S. Apple don’t produce a myriad of handsets and configurations, and this helps to sharpen their image in the market. Everyone knows about the iPhone and most people either have one or intend to get one.

Secondly, Apple’s profit level on these phones far exceeds any other manufacturer. Many Android phone makes would envy the margins that Apple hold, while they pump pout low-cost handsets with thin dividends. Apple makes less than 10% of the total handsets sold, and yet rake in 75% of all of the profits.

It is an amazing story and shows just how far Apple Inc. have moved in the first five years. They have a sharp position in a crowded market, but manage to make their iPhone business one of the most profitable in the tech sector..

Presswatch: Guardian's take on pay

The Guardian ran a story this week on pay compensation for Tim Cook, Apple’s CEO. We would be the last people to endorse huge salaries, but the tone and accuracy of this article needs attention.

From the outset, Juliette Garside’s piece is incorrect:

Apple's late founder Steve Jobs created the world's most valuable company and was paid just $5 in the last years of his life – but his successor Tim Cook, unknown outside
Silicon Valley until his elevation to the top job last summer, has been awarded a $378m (£244m) pay jackpot.

A few problems here. Firstly, Steve Jobs did not work for $5. Jobs received a jet from Apple and generous stock options, which had mixed values. Some proved almost worthless due to a fall in the company’s stock value in the mid ‘00s and some made him a lot of money. As for the comment about Tim Cook being unknown outside Silicon Valley, this seems very simplistic. Cook was Apple CEO twice before August 2011, as he stood in for Jobs when he took sick leave. He was well know to any market watchers, and indeed it was Cooks’ reputation on Wall Street which is one of the reasons that Apple now has such a good financial reputation.


However the line that …”Cook's 2011 rewards, disclosed yesterday, put him in pole position to become the year's highest boardroom earner” is simply untrue. The conditions on the stock options, as stated later in the article, only come to fruition in 2016 and 2021. In fact Garside directly contract’s the earlier point, and states that the (UK) FTSE’s average salary for a CEO is now £5.1m sterling, substantially more that Cook’s USD$1m in 2011, even after you add on his bonuses of $0.9m.

The article seems to use Cook as an example, but misses the point. Cook’s stock options, substantial and huge as they are, do not kick in until 2016, when 50% are released, and 2021, when the final 50% are handed over. At that point, who knows what value they will have. Apple is now above Exxon Mobil as the most valuable company in the US, and it can be argued that this is an investment in Apple and Cook. If he stays with Apple, he will become extremely wealthy. If however he leaves, or he fails and the stock price falls, he may find that his options are worth far less than expected. This is what happened to Jobs in 2003 [see here].

Presumably the reason why this substantial stock option was handed to Cook was to tie him to Apple for years to come. This is a good move. We can all argue about the size of this award, but its true value will only be know in 2016 and 2021.

So for the record, for now Cooks compensation stands at under $2m for 2011, split between salary and bonuses..

Apple Results: The Headlines

Apple released their Q3 results last night, and here are some of the things which caught our eye:

Apple reports record quarter- some notes...

Apple have reported another record quarter, with $1.61 billion profit for Q1 2009. Revenue was a record breaking $10.17 billion, half a billion higher than the same quarter in 2008. Cash and short term investments stood at a staggering $28 billion, up $3.6 billion in the quarter.

Here are a few points we noted from the financial conference call....