Mac Planet: Bad luck for the lame duck

Who'd want to be Apple CEO Tim Cook? Photo / AP

Apple is in a state of collapse. Just look at the figures. It's enough to make a grown banker cry. Apple is no longer popular. It's a lame duck.

A few years ago, Apple was considered almost dead in the water. The Mac had dropped to around three per cent of the PC market, and the PC market back in 2005 was not the PC market of 2013. It was way smaller. Now Mac use is above 10 per cent in almost every market where it has an official presence, and Apple additionally sells truckloads of iPhones, iPods and iPads.

But still, thanks to analysts wanting bigger returns than Apple delivered, for reasons known only to themselves (share trading might be one conclusion) and thanks to consumers (me and you) wanting ever more magical amazingness from tech, it now looks like Apple is in a terrible position.

How terrible? We're talking big figures. It only has US$137,000,000,000 in the bank. That's only NZ$162,282,802,000. In English (for those zero-challenged like myself), that's over 162 billion dollars. So you can see why people are worried.

But that's not the problem. In many of the financial press accounts of Apple's Q1 2013 results, the terms 'disappointing' and 'flat' were used to describe this performance. Trouble is, people hear that and then berate me saying "Ooh, Apple's on the ropes! Doom and gloom! Bummer'. (And/or words to that effect.) But did they look at the figures? No likely.

Apple 'only' made US$13.1 billion in the last financial quarter. That's a difference of 3.1 billion from Exxon Mobil, $5.9 billion from Chevron and a differential of $6.7 billion from Microsoft, which launched a new operating system. To a very large audience.

Except that that's how much more Apple made than those companies, all otherwise considered stellar successes.

The 'disappointing' Apple quarter was the most profitable quarter ever for a tech company. The previous tech record was ... Apple's Q1 2012 net income of $13.06 billion. IBM was in third place for tech companies at $5.8 billion, so Apple's profits were more than those of Microsoft and IBM combined.

Ooh, tragedy. What on earth is wrong with those analysts? Still, investors are beginning to think that Apple products no longer have the attractiveness to consumers that they used to. So it doesn't matter what Apple actually achieves in sales and profit, its about the perception of Apple products. It's a sort of tacit acknowledgement that Apple really did innovate not so long ago, so hey, Apple, you should drive innovation again. Then all those other companies can profit off their own versions of Apple's things. As they have so handsomely over the last five years.

Just as a country's finance minister looking uncomfortable on TV and the market drops as a result, often for no good reason at all than, perhaps, personal discomfort of a minister, Apple seems to be suffering the fallout of both bad perceptions and rather gleeful (in the sense of premature schadenfreude) gloating over Apple's potential for demise. The company went from ugly mallard to beautiful swan; people hated the ugly duckling but boy, do they resent that pulchritudinous cygnus!

Most people love a good fall from grace, but like I say, it looks a bit premature, if not utterly false, wrong and not exactly imminent.

A lot of the speculation, which did serve to drive Apple's share price down, just proves to me how crap many of the analysts have become, which is not exactly an original thought.

Apple sold a record 47.8 million iPhones in that last quarter, compared to 37 million in the year-ago quarter, an almost 30 per cent increase despite the iPhone 5 apparently not being innovative enough. As of December 2012, Apple held a 36.3 per cent share of the US smartphone market, up over two points from its September 2012 share of 34.3 per cent. Samsung also gained with a 21 per cent share (in September 2012 Samsung was at 18.7 per cent). HTC, Motorola and LG comprise the rest of the top five OEMs at 10.2, 9.1 and 7.1 per cent market share, respectively. Nokia? Nah.

Apple also sold a record 22.9 million iPads compared to 15.4 million in the year-ago quarter, a nearly 49 per cent improvement.

But there were also some figures that gave pause, which may just mean the iPad is starting to be seen as a viable laptop alternative: Apple only sold 4.1 million Macs, compared to 5.2 million in the year-ago quarter, a significant 21 per cent drop despite some great new Macs. iPod sales were down too - 12.7 million iPods in the quarter, compared to 15.4 million in the year-ago.

iOS continues to trail Android in terms of mobile OS share. As of December, Apple's operating system held a 36.3 per cent share versus Google's 53.4 per cent, with Android seeing an increase just under 1 per cent. BlackBerry was third at 6.4 per cent, down 2 per cent from September. Windows Phone ranked 2.9 per cent and Symbian 0.6 per cent.

Anyway, despite the bad news, the ennui, the calamity... Apple's Board of Directors declared a cash dividend, poor darlings, of US$2.65 per share of the Company's common stock. Apple shareholders got a Valentine's Day gift in the form of a dividend, the third paid to shareholders.

Apple announced its dividend program last year and said it would distribute US$45 billion to its shareholders over the next three years. This is US$2.5 billion per quarter.
Apple may have payed out some cash, but the company was raking it in at faster. As you'd hope from any viable business.

Poor old Tim Cook, hey? Who'd be in his shoes?