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  • Apple 2012 2Q Financial Analysis

    Apple 2012 2Q results have to say are disappointing. Although compared with 2011 2Q revenue has increased by 23% from 28,6 bn.$ to 35 bn.$ but as can be seen from graph below pas few quarters if compared to each other show a decrease. If compared to Q1 revenue has decreased by -5% from 26,8 bn.$ Same is with Net income before depreciation increase by 24% from 7,8 bn.$ to 9,7 bn.$, but has decreased compared to previous quarter by -24% from 12,4 bn.$. And that is no seasonality which could explained decrease in Q1 compared to Q4 and that's a red flag!

    Companies sales by geography show source of this decrease. Although sales in US has increased by 3% and sales in Europe has decrease by -6% due to Europe decline, Apple lose of positions in Asia was the main reason. There sales has drooped more then 20%. This fastest growing market in the world was companies main drive in past, but now it seems that Apple is losing in Asia to Samsung. iPhone sales has declined by -28% compared to Q1. It seams that iPhone has reached it peak and iPad increase does not overweight that, so it is possible that we will see sale slowing down or even decreasing in the future unless Apple will come up with something new. Either way Apple will defiantly have a significant market share in coming future. iPod and Mac are slowly perishing as products of the past.



    According to Apple share in mobile and tabled marked has increased from 60% to 65% and is better then its main competitors Google Android which has increased only from 19% to 20%. But never the less big battle is projected in the future at this marked between Google and Apple. In general companies results are negative due to visible slowdown or even decrease.

    Balance sheet continue to be very strong. Equity level has increased a bit to 69%. High equity and profit decrease in past few quarters leads to visible decline in return on equity, which is drooped to 28%. It is even lower then previous courtiers before "the big jump" in Q4 where it was 35%-40%. So that is bad news for the company. Company paid it first dividends 2,65$/share or 2,5 bn.$ for the company. Dividend payout ratio is ~25% which is a good level. Also Apple will start repurchasing its shares, these expenses will be visible only in next quarter.

    No other major changes at the balance sheet. In general companies balance structure is good.

    Share value:

    Equity / share111,7 bn.$0,937 bn.119 $/sh.
    Market value648$+529£12,3 years
    Year Net income before Depreciation43,0 bn.$+45,9 $/sh.7,1%

    Companies share basic value is ~119$ (Δ+9,4%/109$ compared with Q1). Current market price is ~648$ (Δ+6,2%/610$). which shows that market is paying ~529$ more or 12,3 years (11,4 years) of Net income before Depreciation earnings, which shows that companies shares are over evaluated. Share profitability (Share market price/Net income before Depreciation) is 7,1%(7.2%) which is average. Main figures has decreased due to faster increase of share value then its profit and taking into consideration that companies profit show slowdown or even decrease this is not a good news. Company announced that it will pay 2,65$/share/quarter dividend or ~1,6% (1,7%) dividend yield which is a bit low due to high share price. In general companies share is over evaluated.

    Analysis source: Apple 2012 2Q financial results

    Previous analysis: Apple 2012 1Q financial analysis

    Tags: AAPL
    Aug 18 4:57 AM | Link | Comment!
  • Google 2012 2Q Financial Analysis

    Google 2012 2Q results are good. 2012 2Q revenue shows good increase to 12,2 bn.$. or +35% compared to 2011 2Q 9,0 bn.$. Main driver of such jump at 2Q was that from 2Q Motorola results are include into Google financials. Net Income before depreciation has increased to 3,5 bn.$ which is +17% increase compared to 2011 Q2. Earnings are increasing but a lot slower then companies revenue, this is something to note. Possibly this is because present larger expenses will generate larger revenues in future as this is not a retailer were present revenue has present expenses. In Google case (similar to Facebook) present expenses/investments lead to revenue in future.

    (click to enlarge)

    After acquisition of Motorola Google income became a bit more diversified. Although Motolola is just ~10% of Google income, but its a start. Income from Google website and google network has increased by ~20% compared to previous year. Main companies revenue source 2/3 is still from website.

    According to Google share in search engine market stays stable around 80% so Google continues to be #1 without any notable competition. And in Mobile devices Google share is even larger ~90%.

    (click to enlarge)

    Company is competing in its competitors fields: 1) Google+ competing with Facebook; 2) Chrome with Microsoft Explorer and 3) Android mobile + Motorola acquisition competing with Apple IPhone/IPad. As Mobile device market is almost dubbing each year this is were the main battle will be fought.

    At mobile operating system Google Android has increased its share a bit from 19% to 20%, but Apple (iOS) stays on top with its market share increased from 60% to 65%. So Google at the moment is behind Apple and the gap is even widening.

    (click to enlarge)

    Company is gaining ground in new segments and is firmly holding its main search market. In general companies results are positive.

    (click to enlarge)

    Balance structure continues to be very strong even after Motorola integration who had quite a lot of debts. Equity level has decreased only to 75% which is a very good ratio. ROE has drooped to 17% and should be monitored closely in the future. Liquidity level 3,8 very good due to large cash and equivalent reserves which drooped a bit at Q2 from 49 bn.$ to 43 bn.$ due to acquisition of Motorola, but still this is equals of 1/2 of total companies asset. Motorola acquisition is visible in Fixed asset increase from 20 bn.$ to 32 bn.$. In general companies balance structure remains strong.

    Share value:

    Equity / share64,7 bn.$0,327 bn.198 $/sh.
    Market value673$+475£11,7 years
    Year Net income before Depreciation13,3 bn.$+40,7 $/sh.6,0%

    Companies share basic value is ~198$ (Δ+4,2% from 190$ compared with Q1). Current market price is ~673$ (Δ+11,1% compared to past analysis time 606$) shows that market is paying 475$ more or 11,7 years (10,6 years) of Net income before Depreciation earnings, which quit a lot. Due to high share market value increase in past quarter its price got even more over evaluated. Share profitability (Share market price/Net income before Depreciation) is 6,0% (6,5%) which is also low. In general share is over evaluated and got even more over evaluated since 1Q analysis.

    Analysis source: Google Second Quarter 2012 Financial Results

    Previous analysis: Google 2012 1Q financial analysis

    Tags: GOOG
    Aug 17 11:29 AM | Link | Comment!
  • Y2012 World Economic Overview (April)

    International monetary fund has updated their 2012 forecast. Mostly GDP growth was increased. U.S. growth was increased from +1,8% to +2,1%. Japan growth was increased from +1,7% to +2,0%. These two markets will defiantly lead to increase. Also EU recession estimation was decreased from -0,5% to -0,3% while its main economy Germany growth was increased from +0,3% to +0,6%. UK growth was increased to from +0,6% to +0,8%. The only China estimation was unchanged at +8,2% growth. So US as Japan as predicted is the growing markets and Europe remains a decreasing market. Although China soft landing scenario seems inevitable, their growth remain more then twice the world average +3,5% so companies that has strong holding in China will continue to grow faster then others. Europe main market companies will meet with problems and decrease.

    Commodity price was changed quit a lot. Mostly oil. Previously -5% price decrease during Y2012 was estimated, now its +10% since larger growth is estimated which lead to increase on demand. Other non fuel commodities price decrease was lowered from -14% to -10%. So this is good news for energy companies.

    Source: World economic outlook by International monetary fund (2012 April)

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    May 30 10:54 AM | Link | Comment!
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  • FB is continues to go down as could be predicted as this is not a investment share is a fashon investment not based on numbers
    Jun 3, 2012
  • FB reasonable price would be 11-12$ if evaluate like GOOG or AAPL shares are right now, so I expect it to go down further. Overexpectation
    May 29, 2012
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