Shares Dwindle But The Spirits Not
Rekha is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
What we saw on the 21st September this year was one of the most awaited and definitely the biggest release of the year. Even after the launch being a success there has been mixed responses to iPhone 5. People are divided in groups with loyalists vouching for the smartphones and others are “iPhone haters”. Apple Inc. (NASDAQ: AAPL) for the record reported sales of more than 5 million iPhone 5 units during the first weekend of the product launch. Though there are questions surrounding the supply chain of Apple iPhone 5, first problem arises with riots at Foxconn and then with technical glitches in glass screen manufacturing. The company’s CEO, Tim Cook, said they had sold out their initial supplies pointing that there are disruptions in the supply chain.
The tech behemoth has encountered a dip in share prices over the past week. To long term investors it is however not of much importance. Some analysts have reported a sale of somewhere between 6 million to 10 million this past weekend. Apple has already setup shops to sell iPhone 5 units across United States, Canada, Australia, Germany, France, the UK, Japan, Hong Kong and Singapore among others. By the end 2012, iPhone 5 will be available in more than 100 countries.
According to records, Apple iOS and Google Inc.’s (NASDAQ: GOOG) Android command 33 percent and 52 percent of the smartphone market respectively. Trailing them is Research in Motion, Microsoft Corp. (NASDAQ: MSFT) and Nokia Symbian. These trailers lord the remaining 15 percent of the smartphone market.
Apple reports sales of $26 million iPhone 5 units. This amounts to $16 billion of Apple’s $35 billion in total net sales for the third quarter that ended June 30. iPhones being the centerpiece of Apple’s wide range of products, the competing smartphones are trying hard to steal Apple’s shine.
On August 24, the California jury ordered Samsung to pay $1.05 billion to Apple in damages as regards to the patent infringement issue. A week later, a Japanese court acquitted Samsung of the charges. Apple’s iPhone 5 and Samsung’s Galaxy SIII handsets look eerily similar. However, Samsung is counter-suing Apple, to protect its assets. Along with this suit, multiple cases between the two giants are ongoing around the world. On the software front, Apple has shed its reliance on competitor Google as a provider of maps on the company's devices, and has decided to develop its own version The smartphone iPhone 5, weighs 112 grams and stands 4.9 inches tall by 2.3 inches wide by 7.6 millimeters thick. This was a fresh change from the sleek and compact designs of the preceding iPhones.Both iPhone 5 and Samsung Galaxy SIII sell at $199.
The deadliest threat to Apple’s iPhone at this stage is Microsoft. On October 26, the tech giant is to release Windows 8 and surface tablet. Windows 8 is a blend of personal computer, smartphone and tablet interfaces. Just to make it clear, someone using Windows 8 can execute desktop commands through touch technology and scroll down through tiles to open MS Excel.
The Samsung ATIVS and Nokia Lumia 920 are both set to be launched this holiday season. The ATIVS is noted for its relatively large super AMOLED 4.8 inch screen and aluminium finish.
Alternatively, the Lumia 920 is being lauded for its picture clarity and 8.7 megapixel camera. Both Nokia and Samsung Windows 8 phone are powered by Qualcomm Snapdragon S-4 dual core processor. Nokia stocks immediately lost 15% of its market value after a Nokia Lumia demonstration in New York City.
Apple remains strong on its plans to sell around 100 million to 150 million iPhone units by next year. Apple even trades at $66.7, an amount 24 times that of 2011 earnings. Going by what market says, Apple iPhone 5 is set to play a long innings.
Apple has more cash reserves than the U.S.government. Well it ain’t a myth no more for this was discovered last year. Today, APPLE is the world's largest company by market capitalization. The company is worth more than two of its closest competitors, Microsoft and Google, combined. No wonder Apple is ranked second in the list of publicly traded companies based on profits.
The company's strong product development is complemented by its consistently increasing numbers in both revenue and profits. For the third quarter this year, Apple reported revenues of around of $35 billion, an up from $29 billion in the same quarter for 2011. Even though the company reported strong revenue for Q3, it did not live up to analyst expectations. Revenue was held to $35 billion due to lower-than-anticipated iPhone sale. Apple also announced a dividend of $2.65 per share while announcing the second quarter's results.
Until the last quarter, AAPL did not provide dividends to its shareholders. The company was frequently criticized for not doing so, despite being the number one company, based on market value. All that changed when the company announced a quarterly dividend of $2.65 per share.
Apple’s diversity, as an electronics manufacturer and as well as a computing company, makes it all the more difficult to find for it, an outright and direct competitor. However, Microsoft and Google have increasingly been threatening Apple on multiple fronts to become the market leaders. Google is giving Apple a run for its money in the smartphones, tablets and software sections, while Microsoft competes with Apple's computers, smartphones, software and tablets.
The comparison with competitors shows that Google and Microsoft stocks have remained relatively flat, because these competitors have not been as innovative with new products. While APPLE continued to diversify its range of offerings from Macs to iPhones, GOOG and MSFT have only recently ventured into the smartphone industry - with much to be desired in their products' performances. Compared to the iPhone 5's sales of around 5million units, Microsoft Windows based Nokia Lumia has sold 4 million units in the entire second quarter of 2012. The edge that Apple has on its rivals is unbelievable. The company is also rumored to be launching new models of its Macbooks later this year.
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rekhamarwah has no positions in the stocks mentioned above. The Motley Fool owns shares of Apple, Google, and Microsoft. Motley Fool newsletter services recommend Apple and Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.
