Apple, Microsoft, and Yahoo make, lose, and lose money

Mitchell Hartman Jul 22, 2015
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Apple, Microsoft, and Yahoo make, lose, and lose money

Mitchell Hartman Jul 22, 2015
HTML EMBED:
COPY

Apple (AAPL) reported its fiscal third-quarter earnings after the closing bell on Tuesday. Earnings were up 38 percent from the same period one year ago, to $10.7 billion. Revenues were up 33 percent to $49.6 billion. iPhone sales were up 35 percent, totaling 47.5 million in the quarter, and iPhone sales more than doubled in China, a key market for mobile technology.

Nonetheless, Apple stock fell 7 percent in immediate after-hours trading following the earnings release. Investment analysts were expecting stronger iPhone sales — in the 50-million-unit range. The stock selloff may reflect investors’ concerns that the iPhone juggernaut could be peaking and the company’s iPhone franchise losing momentum.

iPhone sales account for 63 percent of Apple’s global sales, up from 53 percent of sales one year ago. By continuing to roll out major upgrades of the iPhone series, Apple has succeeded in pushing up iPhone prices by $100-per-phone to $662-per-phone on average, even as smartphone prices overall have been declining. Apple has continued to develop and release new versions of its popular iPad tablets, and it has introduced a new product category, the smart-watch (the company did not break out sales figures for its new Apple Watch separately in this earnings report).

Yahoo (YHOO) continued on its turnaround path in its fiscal second quarter, reporting higher revenues but a net loss due to higher expenses. The company increased sales by 15 percent year-over-year, more than analyst expectations. However, Yahoo’s cost of traffic acquisition — money it pays search partners — more than tripled, which cut into earnings and led to a net quarterly loss of $22 million.

CEO Marissa Mayer expressed satisfaction with Yahoo’s results, pointing to improvements in the company’s mobile, video, and social-media businesses, which are all key to Mayer’s revival plans for Yahoo.

Microsoft (MSFT) reported a record net loss in its fiscal fourth quarter, of $3.2 billion. That loss was primarily due to a $7.5 billion accounting charge Microsoft took in the quarter for its ill-fated purchase of Nokia. Microsoft announced earlier in July that it plans to eliminate 7,800 jobs connected to its troubled mobile-phone business. Microsoft reported that quarterly revenue was down 5 percent compared to the same quarter last year. Its full-year revenue increased to $93.5 billion from $86.8 billion the previous year. Annual profit fell to $12.2 billion from $22 billion the previous year. In the fourth quarter, Microsoft experienced some weakness in its Office and Windows product lines, countered by strength in cloud services, Xbox, and Surface tablet computers. 

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