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2019/10/31 10:49:38

Financial performance of Apple

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2019

In number 20 of the most profitable companies of the world

20 most profitable companies of the world. Profit in day, 2019
2019

Revenue — $260.17 billion, net profit — $55.26 billion

2019 financial year Apple completed with revenue in the amount of $260.17 billion against $265.6 billion the previous year. Sales to the company were reduced because of decrease in demand for iPhone.

For the reporting 12-month period closed on September 28 2019 calendar year, Apple earned about $142.38 billion from sale of iPhone that is notable below an indicator of year prescription in $164.89 billion. Telephone business which still brings to the American producer more than a half of turnover was the only thing falling at Apple.

Financial performance of Apple

Sales of computers brought the companies in a year to $25.74 billion revenue that it is a little more, than in 2018 to reporting year when income was measured by $25.2 billion.

Annual revenues of Apple in the market of tablets rose from $18.38 billion to $21.28 billion, and sales of wearable electronics, wireless speakers, earphones and other products which in the report are carried to the line Wearables, Home and Accessories increased from $17.38 billion up to $24.48 billion.

Service income to which earnings on Apple Pay payment system, app store of App Store and other services belong reached record $46.29 billion in 2019 to a fiscal year. In the 2018th revenue made $39.75 billion.

The largest sales market of products of Apple there are countries of North and South America which in 2019 financial year brought corporations of $116.91 billion revenue against $112.09 billion the previous year.

Income in Europe year on year decreased from $62.4 billion to $60.29 billion. In the Chinese market of sale of Apple fell with $51.94 billion in 2018 to a fiscal year to $43.68 billion a year later. In Japan revenue of the company changed slightly and made $21.5 billion.

In 2019 financial year Apple registered net profit in the amount of $55.26 billion that there is less profit of the year prescription equal to $59.53 billion[1]

Recession of sales in China. Diagram

Apple left the first place in the world on profit

Apple any more not the most profitable company in the world — this title passed to the Saudi Aramco oil company which is based in Saudi Arabia. At the end of 2018 the profit of the Arab competitor reached $111 billion while the profit of Apple was only $59.53 billion. English-language technology media agree in opinion that at such rupture of Apple not easy will be to return on the first line of rating if it is in general perhaps[2].

On the third line there is Samsung with profit at the level of $35.1 billion Daley Alphabet, Google parent company, and financial conglomerate JPMorgan which profit is at the level of $30.7 billion follow. Shell with profit about $23.4 billion was at the sixth place, it is followed by ExxonMobil with an indicator of $20.8 billion Daley Amazon with profit at the level of $10 billion follows.

2018

Falling of capitalization is lower than $1 trillion despite record revenue

According to the results of 2018 financial year of Apple gained $265.6 billion against $229.2 billion. Sales became record, but despite it stocks of the company fell in price by 7% after the publication of the reporting, and market capitalization of iPhone producer was reduced by $70 billion and there were lower than $1 trillion.

Distribution of revenue of Apple by products, data of Statista

The net profit of Apple for the 12-month reporting period which came to the end on September 29, 2018 was $59.5 billion whereas in 2017 financial year it was measured by $48.4 billion.

Financial performance of Apple

Annual sales of iPhone increased from 216.8 to 217.7 million pieces. Revenue from them in 2018 financial year reached $166.7 billion. Thus, sale of smartphones generated Apple nearly 63% of revenue.

At the conference devoted to the publication of annual accounts, the chief financial officer of Apple Luca Maestri said that, since the first quarter 2019 of a fiscal year, the company will cease to disclose the number of the sold smartphones, computers and tablets. This information, according to the top manager, "not always reflects the main force of our business".

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The number of sales is not so modern for us now as it was in the past, considering the width of our product portfolio and strong price dispersion in any of these lines. By the way, our main competitors in the markets of smartphones, tablets and computers do not provide quarterly information on quantitative sales — Maestri reported.
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Distribution of revenue of Apple by the product directions and regions

This statement became one of the reasons of falling of quotations of Apple as investors are obviously not happy with the solution of the company to conceal sales of devices. [3]

By the end of September, 2018 at Apple $237.1 billion money accumulated that for $6 billion it is less, than three months before. So large supply generates rumors about large acquisitions of Apple and investments into creation of content and also allows the company to increase actively business in the developing regions and to create thousands of new jobs in the USA.

Apple returned to Ireland 9 billion euros taxes and still will transfer 5 billion euros

At the beginning of August, 2018 Apple announced return of 9 billion euros taxes of Ireland according to requirements of the European Union. The company needed to transfer 5 billion more euros. From June 30 until the beginning of August of Apple transferred 4.5 billion euros.

Apple appeared in the center of one of the most massive cases considered by European Commission (EC). The regulator recognized illegal the tax benefits provided to Apple by the government of Ireland and obliged the company to pay to the authorities of the countries of 13 billion euros and 1 billion euros percent.

At the beginning of August, 2018 Apple announced return of 9 billion euros taxes of Ireland according to requirements of the European Union

By estimates of EC, in 10 years of Apple paid a 3.8 percent tax on $200 billion the profit got outside the USA. Apple was also a pioneer of the tax scheme which received the name later "double Irish with the Dutch sandwich". The company carried out profit through Irish and Dutch "subsidiaries", paying the minimum tax, and then brought her to the Caribbean islands.

The European Commissioner for the competition Margrethe Vestager showed discontent with slow return of means of Apple which she called "an illegal government assistance for Apple from Ireland".

On August 2, 2018 the European authorities declared determination to withdraw the claim of Apple if Apple translates all required amount of funds.

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We still support close contacts with the Irish authorities and we hope that return of the illegal help will be complete in full as soon as possible. It would also allow to stop the operating trial and not to assume that the European Court of Justice was up in arms against Ireland for non-performance the decision of the commission.
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Case of Apple became the biggest in series of investigations within which tens of the companies are suspected of an underpay of billions of euros taxes. The EC did not make the decision yet on [[McDonalds (McDonald's)|to McDonald's] and on the British tax regime of the international companies, Bloomberg notes.[4]

Revenue of Apple is more than GDP of Portugal

By May 15, 2018 market capitalization of Apple exceeded $962 billion. Thus, the American producer of electronics, whose income is more than GDP of some large countries, is close to becoming the first company worth $1 trillion. 

As counted Reuters agency, revenue of Apple in 2017 made $229 billion that GDP of such countries as Portugal and New Zealand there is more, and approximately corresponds to an indicator of Finland. 

Revenue of the large IT companies is more than GDP of many countries

2017

Possibility of economy to $47 billion thanks to tax reform of the president Trump

In December, 2017 it became known that the amount of tax liabilities of the company Apple can be reduced by $47 billion if republicans advance the tax program of the president USA Donald Trump (Donald Trump) directed, first of all, to reduction in tax for the profit of corporations.

Tax reform of Trump will save Apple of $47 billion

The inspiring scale of reduction of taxes, according to tax experts and observers of the Financial Times (FT) edition, became a subject of close attention at the beginning of December, 2017 when bills of the Senate and House of Representatives in the USA met over a question of management about $1.3 trillion revenues of the American companies which are stored in offshores.

Potential unforeseen income for Apple company is caused by a reduced tax rate on the foreign income which is outside the USA. As well as many other companies, Apple decided to leave the main part of the foreign profit abroad not to pay corporate tax in 35%, in case of return of funds for the territory of the United States. Republicans in the program suggest to tax such income no more than in 14.5% irrespective of location of means.

According to Moody's Investors Service, revenue of Apple outside the USA in investments and a cash equivalent reaches $252 billion that corresponds approximately to the one fifth part of all foreign revenues of the American companies. The total net income of Apple considerably exceeds $132 billion Microsoft company — the American corporation with the second in value largest foreign income.

If at the tax law existing by the beginning of December, 2017, Apple returns the foreign income home, then the company will have to pay $78.6 billion according to the revenue bill of the Senate, Apple will have to pay about $31.4 billion for last foreign income at once. The difference between two amounts makes at least $47 billion that exceeds an annual income of any other American company, FT notes.[5]

Return of 13 billion euros unpaid taxes of Ireland

At the beginning of December, 2017 Apple agreed to return to Ireland unpaid taxes in the amount of 13 billion euros. The Irish Minister of Finance Paschal Donohoe told about it.

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We reached the agreement with Apple on the principles of work of fund of collecting. We expect that the works will be completed somewhere in January, 2018, and then we expect that money from Apple will begin to arrive into our account in the first quarter the next year — he said.
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The head of financial department of Ireland at a meeting with the European Commissioner for the competition Margrethe Vestager approved parameters of the procedure of tax refund of Apple. 

Apple agreed to return to Ireland 13 billion euros unpaid taxes

According to Donohue, the parties will create the trust fund through which funds will be transferred. Besides, it is going to involve the investment manager who will be engaged in management of finance in Ireland.

In 2016 the European Commission (EC) based on investigation came to a conclusion that Ireland provided to Apple unjustified tax benefits therefore the country received less 13 billion euros.

In the solution the regulator emphasized that the American company got powerful benefit over other companies. According to the results of investigation which continued three years the EC came to a conclusion that the structure of Apple in Ireland "did not correspond to economic realities".

Apple did not begin to perform requirements of EC for tax refund, and then the commission filed a lawsuit against Ireland.

According to the report of South Korean Trade investment agency (Trade-Investment Promotion Agency), Ireland became the tax haven for the large international companies thanks to rather low corporate taxes and different tax benefits. For example, the foreign companies in the field of research and development in Ireland can pay taxes for activity at the rate of only 6.5%.[6]

Sales growth to $229 billion in a year

In 2017 financial year which came to the end on September 30, 2017 revenue of Apple reached $229.2 billion against $215.6 billion the previous year. Net profit during this time rose from 45.7 to 48.4 billion dollars.

Revenues of Apple appeared above expectations of Wall Street

For 2017 financial year of Apple sold 216.8 million smartphones against 211.9 million pieces the previous year.

Apple announced return to growth of revenue of the company in the Chinese market thanks to two-digit sales increase of iPhone. Luka Maestri also noted that the company doubled income in India, however in this respect did not begin to open additional parts. Indicators of operation of Apple in the financial statement are not given in Russia.

Strong growth in sales of smartphones and the Apple Pay in Russia

At the end of January, 2017 Apple published the report for work in the first quarter 2017 financial year. The company noted fast-growing sales of smartphones in Russia and great success of Apple Pay payment system achieved partly due to the Russian market.

For the reporting three-months period closed on December 31, 2016 revenue of Apple made record $78.4 billion that is 3.3% more, than the previous year. Sales to the company increased for the first time in four quarters. Net profit at the same time decreased from 18.4 to 17.9 billion dollars.

Журналист The Wall Street Journal tests iPhone 7 Plus

In October-December, 2016 78.29 million iPhones against 74.78 million units according to the results of the same period of the 2015th were sold. In the USA, Canada, Western Europe, Japan and Australia two-digit growth rates of sales of smartphones while in many emerging markets to which Apple carries Brazil, Turkey, Vietnam, Russia of the country of Central and Eastern Europe, rise was even higher are recorded.

As a result the average selling cost of phones of the company increased to $695 in December, 2016 from $619 three months before. This growth was also promoted by high demand on the iPhone 7 Plus model.

In the report of Apple it is said that fast-growing revenues of the company in the USA, Japan, Canada, France, Australia, Brazil, Turkey and Russia provided the company with record revenue in the majority the developed and developing regions.

At the beginning of October, 2016 the payment service of the Apple Pay earned in Russia. The Russian market made a powerful contribution to increase in volume of transactions in a system for 500% in the first quarter 2017 fiscal years concerning the same period of 2016 of a fiscal year. By the end of January of 2017 calendar year of the Apple Pay it is available in 13 countries, and the number of the companies working worldwide with this service approached 2 million[7]

2016

The first falling of revenue in 15 years prior to $215.6 billion

On October 25, 2016 Apple published the report for work for 2016 financial year. Annual revenues of the American corporation were reduced for the first time in 15 years.

For the 12-month reporting period which came to the end on September 24, 2016 the net profit of Apple was $45.7 billion against $53.4 billion the previous year. Sales decreased to $215.6 billion from $233.7 billion. Revenue of the company fell for the first time since 2001.

Revenue of the company fell for the first time since 2001

Revenues of Apple decrease in many respects because of easing of demand for iPhone to which share 63% of turnover of the Californian giant fall. In July-senyatbre, 2016 Apple sold 45.5 million phones for the amount of $28.2 billion that respectively for 5% and 13% there are less indicators of year prescription. Quarter recession of sale of iPhone was the third in succession. It should be noted that the reporting prepared in two weeks after start of sales of new Apple iPhone 7 and iPhone 7 Plus therefore their sales did not affect results.

The biggest decrease in revenue of Apple is recorded in Big China (continental China, Hong Kong, Macau and Taiwan) where turnover dropped by 30% year on year. In the USA fall of income was 7%, and to Europe this indicator grew by 3%.

Apple called financial performance "sure" and noted the strong growth of service business.

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Our sure results in a quarter which came to the end in September sum up the result of the 2016 financial year which became very successful for Apple. We it is excited about reaction of users to iPhone 7, iPhone 7 Plus and Apple Watch Series 2 and also about improbable indicators of our business of services in which growth of revenue was 24%, having set an absolute record, – the CEO of Apple Tim Cook said.
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In report comments the chief financial officer of Apple Luka Maestri noted that the company recorded a record cash flow from transactions ($16.1 billion for the fourth quarter of 2016 financial year) and returned to investors $9.3 billion in the form of share repurchase of stocks and dividend payout therefore the total amount of payments to investors within the program of capital repayment exceeded $186 billion[8]

The European Union demanded from Apple to pay to Ireland €13 billion

Ireland showed "the selective relation" to Apple and allowed the company to pay income taxes on an effective rate in 1%, says European Commission. According to her, as a result of Apple received illegal tax benefits for the amount to €13 billion[9][10].

The European Commission emphasized that the American company got powerful benefit over other companies. According to the results of investigation which continued three years the regulator claims that the structure of Apple in Ireland "did not correspond to economic realities".

It is said in the statement of European Commission that honor all income gained by two subsidiary companies Apple which managed sales outside the USA were considered as belonging to "head office" though, according to the regulator, such offices existed "only on paper" and did not get any profit.

It is about Sales International Apple and Operations Europe Apple companies. "Such income reserved behind "head offices" in one country was not assessed with taxes on the basis of special provisions of the Irish tax law which any more are not valid", the report says.

The position of Brussels in the USA was already called "unfair". The final decision which is made on Tuesday "can increase strength in the relations between Europe and the USA concerning tax policy", notices Bloomberg.

The U.S. Treasury called tax investigation "dishonest" and said that it, most likely, will badly affect the investment climate of Europe and the economic relations of two countries. Senator from a batch of democrats Charles Sumer accused Brussels of greed, BBC reports.

According to the Minister of Finance of Ireland Michael Nunan, the country "did not provide favorable tax regime for Apple". "Ireland does not conclude bargains with taxpayers", - the minister added. The Irish cabinet intends to gather later to discuss the decision of European Commission.

The Apple company said: "The European Commission made attempt to rewrite the history of Apple company in Europe, to ignore the tax law of Ireland and to invert the international taxation system".

According to Cook, the statements of European Commission about concessions on taxes for Apple from Ireland have no reasons. "We appeared in a strange situation: additional taxes obliged to pay us to the government of the country which officially recognizes that we should nothing to it" — the head of the company notes. Cook called actions of the authorities of the European Union unprecedented. He considers that European Commissioners suggest to replace the Irish tax law under own vision.

2015

Revenue of $233.7 billion and record profit of $53.4 billion

On October 27, 2015 Apple published work results in 2015 financial year. Revenues of the American company were record thanks to the growing demand for iPhone, expansion of geography of availability of the Apple Watch smartwatch and the biggest in the history to sales of computers.

Apple received revenue in the amount of $233.7 billion for the 12-month reporting period which came to the end on September 26, 2015 that is 22% more, than the previous year. The net profit of corporation jumped by 26%, having reached $53.4 billion.

The profit of Apple appeared the biggest in the history of the world market

Operating profit of the Californian giant was $71.2 billion against $52.5 billion in 2014 financial year. Operating expenses for the same period rose to $22.4 billion from $18 billion. Spent about $8.1 billion for research and development of Apple.

Structure of revenue of Apple from products, 1997-2015

iPhone remains the main source of profit for Apple. This time smartphones were on sale in record quantities at all. In particular, 74.5 million iPhones against 51 million for the same period of last financial year were implemented. Also pleased sales of Mac computers: 5.5 million against 4.8 million earlier. And here sales of iPad were reduced to 21.4 million — 24 million tablets were implemented the previous year.

2015 the Apple CEO Tim Cook designated financial year the most successful in the history of the company. The annual profit of iPhone and iPad producer appeared the biggest in the history of the world market. The former record belonged to oil corporation of ExxonMobil which in 2008 locked in net profit at the level of $45.2 billion thanks to peak values of prices of oil.

"This success became possible thanks to  our commitment to  creation of the best and  most advanced products in  the world that  is the evidence of grandiose skill of our command" — Cook said.

In July-September, 2015 Apple sold the number of computers, record for a quarter, – 5.7 million units that is 3% more year on year. Sales of iPhone increased by 22% up to 48 million pieces, and sale of iPad, on the contrary, was reduced by 20% to 9.9 million devices.

(For example, sale of licenses to use of technologies) the American corporation earned $5.1 billion in the fourth fiscal quarter from Internet services and different services, having increased this result by 1% in comparison with an indicator of year prescription.

The chief financial officer of Apple of Luca Maestri notes that within a quarter the company returned to investors $17 billion  in the form of share repurchase of stocks and  dividend payout. The total amount of the returned capital exceeded $143 billion from  $200 billion put in the program.[11]

Corporate business of Apple reached 50% of indicators of Microsoft

At the end of September, 2015 Apple published income in business market. They were equal to 50% of the corresponding indicators at Microsoft.

During the presentation at the conference, Box organized by the producer of business software, the CEO of Apple Tim Cook said that the volume of corporate business of his company for the 12-month period which came to the end in June, 2015 was $25 billion. The head of IT giant did not concretize that enters this digit, and only noted that it does not consider income from the people using structures of Apple in the working purposes.

"It not just hobby. It is this business" — Tim Cook told.
Tim Cook answers questions during the conference organized by company Box

As the The Wall Street Journal newspaper notes, revenue from sales of business solutions in $25 billion corresponds to about 11% in an annual turnover of Apple. Thus, the corporation is included into ten the largest sellers of technologies to other firms, however most of all she earns from consumer products. Microsoft has sales of corporate solutions for the financial year closed in June of the 2015th made $52 billion.

Tim Cook considers business market very important for future growth of Apple. Work here without support of partners very difficult therefore the iPhone producer already began to cooperate with such IT giant as IBM and Cisco.[12]

"In the past of Apple and IBM there were enemies, as well as Apple and Microsoft. Now Microsoft and Apple can work together on a large number of things that is fine for our clients. For this reason we do it" — Tim Cook noted.

At the same time he recognized that Apple there are not enough large contracts in business market

"We have no deep knowledge of those verticals in which there is a business", – Cook told, meaning sale of solutions in such sectors as financial services and power.

2014: Recession of sales of iPad and growth of iPhone and Mac in the III quarter

In April, 2014 the report of the company for the III quarter 2013-2014 financial years was published. Income of vendor was $37.4 billion, and profit — $7.7 billion. For comparison, income of the company for the same quarter of previous year was $35.3 billion, and profit — $6.9 billion. During the specified period of Apple reduced sales of iPad by 9%, for 13% increased sales of iPhone and by 18% — Mac computers.

2013: U.S. Senate: Apple evaded paying taxes for billions of dollars

The subcommittee of the U.S. Senate said in May, 2013 that Apple evades from payment of billions of dollars of income tax, using for this purpose the offshore tax havens.

The permanent subcommittee of the Senate on investigations said that Apple uses "complex network of offshore firms", including three foreign subsidiary companies which are not a tax resident of any country to reduce the income tax amount.

In the report of a subcommittee it is said that one of the Irish subsidiary companies Apple did not pay the last five years income taxes in one country. In the report it is specified that the applied practice is not beyond the law, but the chairman of a subcommittee senator John McCain called the company to account for use of tax loopholes.

"Apple states that it is the largest corporate taxpayer in the USA, but owing to only one size and scale it appears also among the non-payers of taxes, largest in America, - McCain said in a statement. - The company which got huge success, using possibilities of economy of the USA it is not necessary to translate the profits abroad to evade paying taxes in the USA, purposefully depriving the American people of income. It is important to understand smart tax structure of Apple that we could block effectively the holes used by many multinational corporations of the USA".

The subcommittee says that Apple uses the offshore holding company under the name Operations International Apple which is not a tax resident of any country. This holding company was founded in Ireland in 1980, however has neither salaried employees, nor physical presence. In Ireland tax jurisdiction only the companies fall, control and the management of which are performed within the country whereas in the USA the status of the tax resident proceeds from the actual location of the company.

In the report of a subcommittee it is said that Operations International Apple did not submit the declaration on income tax within the last five years though its revenue during the period from 2009 to 2012 made 30 bln. dollars.

Also, the subcommittee said that the second Irish subsidiary company, Sales International Apple, had the total sales of 74 bln. dollars for the same four-year period, however paid a tax for 2011 on an effective rate only five 100-th percent. According to a subcommittee, using these tax loopholes and offshore firms, Apple evaded paying taxes on 44 bln. dollars of the taxable income within the last four years.

For May, 2013 the reserve of cash of Apple makes 145 bln. dollars, but more than 100 mln. dollars from this amount are outside the USA.

Apple directed official assurance of a permanent subcommittee of the Senate on investigations in which said that it does the business "in full accordance with the law and in the spirit of the law" and "pays all taxes required by the law" to the USA and abroad.

The company emphasized that it pays "the enormous amount of taxes of the USA" and is, likely, the largest income tax payer in the country, having specified that it paid 6 bln. dollars of taxes for the 2012 financial year.

"Apple welcomes objective studying of a system of corporate taxation in the USA which did not keep up with approach of a digital era and quickly changing world economy", the document says.

Later the Apple CEO gave answers to charges of the U.S. Senate:

"Apple is the American company"

"Apple achieved unprecedented success for the last 10 years. The world popularity of our products reached unprecedented heights, and our foreign income twice exceeds our income in the USA today. I am often asked: whether considers Apple of still American company? My answer always was 'yes'. We are proud of the fact that we the American company, and are so proud of our contribution to economy of the USA".[13]

Economy of mobile applications

"If you sometime used iPhone or iPad, then know that mobile applications now one of the IT most hot areas. Applications made software development a fast-growing segment of employment in the USA. According to us, App Store created nearly 300 thousand new jobs in the USA. Application developers, sold through App Store, earned over 9 bln. dollars – and a half of this amount in only one last year. This economic activity just was not five years ago. But Apple made a courageous step, having created the App Store, and gave life to economy of mobile applications".

Creation of jobs

"Though growth of employment in the USA stagnated in the last decade, the personnel of Apple in the country grew five times. Today the company totals 50 thousand people, and we have personnel in all 50 states. Apple created hundreds of thousands of jobs in the small and large companies which give us support - from the people occupied in production to those who perform delivery of products to our customers. So, component parts for iPhone and iPad are manufactured in Texas, and glass for iPhone comes from Kentucky. In total, Apple created or provided creation of 600 thousand new jobs. We used our profit increase to invest billions of dollars to create even more jobs in America. We invest 100 mln. dollars to release Macintosh line in the USA by the end of this year. Assembly of a product will be performed in Texas, component parts - from Illinois and Florida, components - from Kentucky and Michigan".

The largest taxpayer

"As far as we know, Apple became the largest corporate income tax payer in America. Last year our effective tax rate, paid to the federal center of the USA cash, was 30.5%, and we paid to the U.S. Treasury nearly 6 bln. dollars cash. It is more, than 16 mln. dollars a day. And we expect that this year will be even more".

"To the last dollar"

"We pay all taxes what from us are due - to the last dollar. We not simply observe the law, but we observe spirit of the law. We do not rely on tax tricks. We do not translate intellectual property abroad and we do not use it to sell our products back to the United States and not to pay taxes. We do not hide money on the Caribbean islands. We do not take money from our foreign subsidiaries to finance our business in the USA and to bypass thereby a tax on repatriation".

The capital abroad serves for the international growth

"70% of our cash in view of rapid growth of our international business are the share of our foreign subsidiaries. We use this profit to finance our foreign transactions - we spend billions of dollars for purchase of the equipment for production of products of Apple and to finance construction of retail salons Apple worldwide. At the present system of corporate taxation movement of this cash back to the United States would cost us too expensive. Unfortunately, the Tax Code does not keep up with a digital century. The taxation system handicaps the American corporations in comparison with foreign competitors who have no such restrictions for liberalized capital movement".

For tax reform

"We recommend considerable simplification of a system of corporate taxation. This reform should not affect revenues of the state, but will eliminate all expenses on corporate tax, will lower rates of corporate income tax. It is necessary to impose reasonable income tax abroad to provide liberalized capital movement back to the United States. We offer the recommendations, it is clear realizing that it will probably lead to increase in taxes on Apple in the USA. But we firmly believe that such comprehensive reform would be fair for all taxpayers, would allow America to remain competitive on the world scene and would promote the economic growth of the USA".
"I think, the tax rate for sales in the USA as show the majority of researches which I saw, should be in the range of 25 percent if to discard all tax expenses".

Lower a tax on repatriation

"Today there is a barrier in respect of repatriation of cash - it returns to the country with a tax of 35%. Therefore our offer such is that we eliminate all corporate tax expenses, we pass to a simple system and we have a reasonable tax on return of money from abroad. And I think if we made it, then many companies would begin to move the capital here to invest in the United States, and it would be remarkable for economy".
"Apple does not call for time tax exemption. We believe, cardinally to reform the Tax Code. I think that the rate on return to the profit got abroad should be about several percent. And I think, it will not have a negative impact on revenues of the state. It means: some companies will pay slightly more - and, I think, we will be one of them, - and others it is less. But the fact that it will promote growth of the country is more important".

California, sweet home

"We the American company, at us the overwhelming volume of Research and Development is conducted in California. I never had a thought to transfer our headquarters to other country".

Apple is not going to return cash in the USA

"We cannot use our foreign cash for investment in the United States. I have no intention to return here foreign cash at current bid of a tax. It does not mean that Apple will never make it even if the U.S. Government will not lower a tax rate from repatriation. Everything can change".

2012

Analysis of financial risks of Apple

According to financial analysts, the greatest the risk for assets of Apple, on a twist of fate, represents what now is just strength of business of the company – incredibly high margin. However usually the margin of the companies making the equipment is expressed by unambiguous indicators. The big margin, nevertheless, is absolutely normal for the software companies like Microsoft whose business is stood on products with much lower cost of production.

Having built the hardware-software empire, i.e. having crossed two of these IT types of business, Apple was succeeded to achieve huge shares in the market of the devices made by it and at the same time to deliver the law described above upside down.

The diagram lower is shown steady growth of revenues of Apple from September, 2007 to March, 2012.


Such high marginality of business allowed Apple even to reduce the prices to nearly $600 for the flagman devices – smartphones iPhone. However all good sometime comes to an end.

If suddenly it turns out that the profitability of Apple reached the pica or even began to decrease, it steadily will have a depressive impact on the stock market. For benefit of what sooner or later it can do it happens, there is a number of proofs:

  • The margin of Apple reaches about 30% after payment of taxes. It is incredibly high rate as for equipment manufacturer, and in general for IT of the company;

  • The competition in the market of the user devices amplifies. Apple is capable to generate over profit so far as holds the prices of the devices on an upper level, at the same time trying to obtain the maximum decrease in operating expenses. But appearance of new generation of phones from Samsung successfully competes with "iPhones", and the Google tablet, comparable on functionality, is on sale for a half of the price of iPad;

  • Sales within a product portfolio of Apple are gradually displaced for benefit of more budget models, and price policy for corporation will become more and more burning issue in process of penetration on mass market and increase of the competition from cheaper models of other vendors;

  • The following one billion users of smartphones and tablets will be much price-sensitiver, than the first billion. At the moment the number of users of smartphones in the world reached 1 billion, and cell phones – 6 billion. Now increase in the market of smartphones will go at the expense of less secure inhabitants of the planet so the question of the price of the device will be more and more significant in competitive struggle;

  • iPad share in total sales of Apple grows, however the average price of the device fell sharply for the last year at the expense of a certain combination of sales more expensive and cheaper versions of the tablet. Thus, sales in this direction grew by 84% in a year, and here revenue – only for 52%. Perhaps, Apple prepares a certain device which will be able to oppose to small tablets like Kindle and Google Nexus 7 which cost is about $200. However it is undoubted that in this price segment the margin of the company will not be so high.

Revenue breakdown: third quarter

Apple published data for the third financial quarter 2012, having announced revenue in the amount of $35 billion that appeared below Wall Street expectations ($37.1 billion). According to promulgated information, iPhone continues to be the main driver of a gain of revenue of the company, but is not for Apple most revenue any more.

So, 46% of revenue of Apple in the third quarter were the share 2012 of sales of iPhone that below an indicator in 58% which was reached in the second quarter 2012 though in general result still rather impressive for phone which entered the market 5 years ago.

Revenue breakdown of Apple 2007-2012 quarterly

In quarter expression of sale of iPhone generated less revenues so far as the prices of devices for the specified period fell from $647 to $624 for one device. At the same time the share of sales of iPad in total sales of Apple for a comparable period of time grew from 17% to 26%.

Revenue share, comparable to iPad, was made in the third quarter by sales returns of computers. Only several percent from revenue were the share of sales of iPad, software and services.

2008: Revenue - $7.9 billion

Revenue of Apple company for the IV quarter of the 2008 financial year which ended on September 27 made $7.9 billion. Net profit was $1.14 billion or $1.26 counting on an action.

During the period from July to September, 2008 the company implemented 2 million 611 thousand Macintosh computers that 17% more in terms of money in comparison with the same three-months period of 2007 was 21% more in quantitative. Sales of iPod players made 11 million 52 thousand – 8% more in numerical and for 3% - in terms of money. Sales of iPhone made 6 million 892 thousand – against 1 million 119 thousand during the same period a year ago.

2009: Revenue - $42.9 billion

The financial year which came to the end at the end of September, 2009:

  • Revenue – $42.9 billion,
  • Net profit – $8.2 billion.

1995: Turnover of $11 billion

In 1995 turnover of Apple exceeded $11 billion.

Notes