Chapter 11: Apple profit, revenue easily beat Wall Street targets

http://www.vancouversun.com/business/Apple+profit+revenue+easily+beat+Wall+Street+targets/3689773/story.html

Summary:

Apple Inc. recently exceeded their expectations towards their profit and revenue which made them have stronger predictions of their next profit and revenue value as the iPhone sales launched. However it resulted in weaker unexpected gross margins, along with iPad shipments disappointing investors. Therefore, the Apple shares fell 7% in the extended trading. The gross margins of the fourth quarter in the fiscal period came to 36.9%, lower than Wall Street’s average prediction of 38.2%. Yet again, Apple disappointed Wall Street’s expectations when it only sold 4.2 million iPads in its second quarter in the market. However, the shipments of more than 5 million tablet computers launched only in April which was not enough to satisfy the public’s demand. Analysts warned that due to the limited amount of supplies available will hold back sales. The company reported a net profit of $4.31 billion for the fourth quarter in the fiscal period which ended on September 25, 2010. This was an increase from the $2.53 billion profit from the year ago period. According to Thomson Reuters I/B/E/S, the profit was better than the estimated average made by the average analyst. This phenomenon not only exceeded expectations but also exceeded past predictions. Apple Inc’s revenue not only increased by 67% to $20.3 billion, but surpassed Wall Street’s target of $18.9 billion. Apple Inc’s estimate of this current fiscal quarter earnings is $4.80 a share on revenue of $23 billion.

Connections:

In this article it displays the importance of having a large inventory in a merchandising business, because as it was stated in the article, the company Apple would’ve made a higher profit if they had a larger inventory to satisfy the public’s hunger for their products. The reason for this is because inventory is strongly linked to the net profit in this type of business. Another connection would be the gross profit, because in this type of business, the amount of profit comes from the net sales over the cost of goods sold. This displays how well a company is doing by being able to still earn a gross profit after selling the products they bought. Therefore proves how well a business is doing by looking at the gross profit.

Reflections:

The article shows that by being an accountant you also need to be able to predict the amount of products should be stocked up in the inventory and the demand of the product during that time period, to maximize chances of a higher profit. Knowing that a certain product is in high demand, a business could be using it to its full potential and taking advantage of it by stocking up and advertising that certain item .By being educated in predicting the market it will not only help with the business’ future with benefits of gaining more publicity of surpassing estimates that analysts have predicted. In my opinion, when you enter a store hoping to buy a product, you assume that it will be in stock. Having the disappointment of wanting something but not having it available at that certain time can bring down your business because a customer will feel discouraged that your store isn’t fully stocked and having to waste their time by talking about the product and ending up coming out of the store empty handed.