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The Cost of the iPod 217

Posted by Zonk from the not-such-a-great-secret dept.
An anonymous reader writes "The New York Times is running an article today entitled Apple's Got a Secret. They discuss the cost behind making the ever-popular iPod ... a secret the company is keeping close to its chest. As a result of the company's signature secrecy and antiquated way of tracking profits, analysts are beginning to question the 'trust me' nature of buying Apple stock." From the article: "Geographic disclosure was adequate when pretty much all Apple sold were computers, Mr. Renck said. But the iPod has changed everything. Sales of Macintosh computers now trail those of iPod, which last year made up 46 percent of revenue. 'Apple clearly has its feet in two separate and distinct business models, namely computer manufacturing and software creation, and the consumer electronics industry,' Mr. Renck said."
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The Cost of the iPod

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  • The article underneath is much more interesting! (Score:5, Funny)

    by bunbuntheminilop ( 935594 ) on Saturday July 01, 2006 @03:12PM (#15643210)
    quote

    SMOOTHIES FOR THE ROAD Why would anyone want a blender powered by a bicycle? "Because human beings love human power," according to the Web site for the Byerley Bicycle Blender, or B3.

    Cool!

  • That was actually surprisingly good article (Score:5, Insightful)

    by ceoyoyo ( 59147 ) on Saturday July 01, 2006 @03:15PM (#15643214)
    Instead of just telling us about how this "analyst" is irritated that Apple won't tell him what he wants to know they include a little bit of balance, in the form of a quote from a poster on his blog:

      "How about actually doing their job and analyze the company they are covering? What a thought -- actually doing some independent research without the companies giving them all the information on a platter."

    He's got a point. It shouldn't be too hard to figure out what an iPod costs to make, within a margin of error, of course.

    • Re:That was actually surprisingly good article (Score:5, Insightful)

      by 0racle ( 667029 ) on Saturday July 01, 2006 @03:19PM (#15643231)
      This assumes its the job of an analyst to think. Despite what the word analyze means, it's not.

    • Re:That was actually surprisingly good article (Score:4, Interesting)

      by NineNine ( 235196 ) on Saturday July 01, 2006 @03:22PM (#15643245)

      He's got a point. It shouldn't be too hard to figure out what an iPod costs to make, within a margin of error, of course.

      That's not the point. Apple is a public company and has a duty to disclose to its' owners what the profit margins are on various products. That's pretty standard. If Apple doesn't disclose the margin of their primary product to their shareholders, I also wouldn't touch the company. In fact, it may even be an SEC violation.
      • Isn't that type of information available here? [apple.com]

        Particularly under the "Financial History" tab? I'm not a stock broker, but I would think the annual reports required by the SEC would cover this.

      • Re:That was actually surprisingly good article (Score:5, Informative)

        by TubeSteak ( 669689 ) on Saturday July 01, 2006 @04:18PM (#15643376) Journal
        Apple is a public company and has a duty to disclose to its' owners what the profit margins are on various products.
        Not quite correct. The disclosure rules apply to portions of the business that generate more than 10% of a company's revenue.

        From the marketwatch article
        "Commenting on the issue, in a statement on current accounting and disclosure issues, the SEC staff has said it believes segment information should be broken out unless "separate reporting of segment information will not add significantly to an investor's understanding of an enterprise [because] its operating segments have characteristics so similar that they can be expected to have essentially the same future prospects."
        Renck is complaining for one of two reasons:
        1. He's an analyst & they cry when companies don't give them all the info they want.
        2. Renck doesn't think that all Apple products "have essentially the same future prospects"

        It's not really Renck's place to make that conclusion on Apple's behalf.

        The determination is between Apple's CFO, Apple's auditing firm, and the SEC.
        • The determination is between Apple's CFO, Apple's auditing firm, and the SEC.
          Aren't the shareholders even worth a mention? Apple is traditionally a computer company, you'd think the shareholders would want to know if the computer business is going down the tubes.

        • Re:That was actually surprisingly good article (Score:5, Insightful)

          by BewireNomali ( 618969 ) on Saturday July 01, 2006 @05:43PM (#15643619)
          It's not really Renck's place to make that conclusion on Apple's behalf.

          But it is his place to have all the info possible at his disposal in order to advise his clients though, right?

          At the end of the day, whether or not Apple is meeting the requirements for a publicly traded firm is not for Renck or his firm to determine. However, Renck can assert whatever he wants to his clients, as his revenue depends to some degree on the accuracy of his analysis. What it seems like he's saying his ability to assess is hampered by the admitted lack of disclosure, and this is enough to make him skittish about the stock.

          His assertion does not seem unreasonable by any measure.
          • But it is his place to have all the info possible at his disposal in order to advise his clients though, right?

            Yes, he is welcome to try to get all the info, so that he can advise better. However it's nobody's responsibility to give him any information, except what SEC mandates. Apple does that, and it does not owe any analyst anything else.

            Can't get the info to analyze? Tough. Nobody held a gun to his head to become an analyst. He is free to get another job if this particular kitchen is too hot fo

            • Sorry to but in, but I do have info to add.

              Up until they passed a disclosure law a few years back, companies would frequently accidentally or on purpose play favorites by giving some analysts exclusive access to some information. I suppose these analysts would then release the information in a manner that wouldn't cause the stock to dive, maybe by only giving it to their favorite customers. As you might see, this is bordering on insider trading, which is illegal.

              In the olden days, an analyst would contact

              • Re:That would be Regulation FD (Score:4, Informative)

                by siriuskase ( 679431 ) on Sunday July 02, 2006 @03:20PM (#15646674) Homepage Journal
                That would be Regulation FD (stands for Fair Disclosure)

                Here's some links:

                SEC's Fact Sheet:http://www.sec.gov/news/extra/seldsfct.htm [sec.gov]

                On December 20, 1999, the Commission proposed new Regulation FD - for "fair disclosure" - to combat selective disclosure. Selective disclosure occurs when issuers release material nonpublic information about a company to selected persons, such as securities analysts or institutional investors, before disclosing the information to the general public. This practice undermines the integrity of the securities markets and reduces investor confidence in the fairness of those markets. Selective disclosure also may create conflicts of interests for securities analysts, who may have an incentive to avoid making negative statements about an issuer for fear of losing their access to selectively disclosed information.


                How one corporation explains it on its website:http://www.investor.jnj.com/guidelines.cfm [jnj.com]

                How Wikipedia describes it:http://en.wikipedia.org/wiki/Regulation_FD [wikipedia.org]

        • Re:That was actually surprisingly good article (Score:4, Insightful)

          by smallpaul ( 65919 ) <paul@@@prescod...net> on Saturday July 01, 2006 @06:14PM (#15643722)

          It's not really Renck's place to make that conclusion on Apple's behalf.

          The determination is between Apple's CFO, Apple's auditing firm, and the SEC.

          You are incorrect on two counts. First, Renck has the right to try to influence the decision of those people by publishing his opinion. It makes no sense to say that the only people who should speak of a decision are those directly involved. According to that logic, online commentators should not discuss Hamden because it is essentially between the Bush administration, the Supreme Court and a bunch of foreigners.

          Second, the aggrieved party here is the shareholders, not the SEC, the auditing firm or the CFO. Renck is telling shareholders that they are taking on extra risk investing in a company that does not use transparent accounting. Not only is that his right, it is his job. He never claimed that they were doing something illegal. You're conflating the argument of an analyst (that Apple is a risky investment) and that of a Slashdot poster (that Apple may be breaking the law). Someone on Slashdot postulated that PERHAPS it was illegal. He also has a right to express his opinion.

          So do I: it is totally ridiculous to say that Apple's 5% marketshare in PCs, it's much larger market share in music playing devices and its still larger market share in online music have "essentially the same future prospects." For example, the online music business is very vulnerable to changes in copyright law. The handheld business is potentially vulnerable to growth in MP3-playing cell phones (as someone else noted). And the computer business is vulnerable primarily to marginalization or dropping profit margins due to competition from Dell and other commodity PC vendors. I don't know enough about disclosure law to claim that Apple is breaking it, but I do know enough about Apple's business to say that one can easily imagine one of Apple's businesses going kaput while another soars and vice versa.

      • Re: (Score:3, Insightful)

        by account_deleted ( 4530225 )
        Comment removed based on user account deletion

      • Re:That was actually surprisingly good article (Score:4, Informative)

        by JulesLt ( 909417 ) on Saturday July 01, 2006 @06:29PM (#15643756)
        Apparently not. It is just something that many companies choose to do, in the spirit of best practice. The only people who could force Apple to disclose those figures would be a large group of unhappy investors, or if they felt they had to to gain further investors. At the moment, neither of those things are likely, although inevitably at some point hubris will enter the picture.

        I think it's right for analysts to draw attention to this, as a warning to investors that they are taking a gamble on opaque accounting; on the other hand, there is an implication to the analysis that the iPod is carrying an ailing computer business which I think is misleading - he is particular wrong in one major respect :

        'Apple clearly has its feet in two separate and distinct business models, namely computer manufacturing and software creation, and the consumer electronics industry'

        Besides lumping two things together that most companies keep separate (computer manufacturing and software creation), it also utterly fails to comprehend that it has been Apple's ability to develop it's own software than has resulted in it's success in the consumer electronics business. Most CE firms don't have that level of software engineering in-house (many don't have hardware engineering either, but that has traditionally been where companies like Toshiba or Sony have invested their R&D)

        As an example - I've just bought a new Fuji camera (on grounds of it being able to do reasonable ISO 3200 shots). Nice bit of hardware - you can even go to manual mode and set your own exposure or aperture settings, which isn't bad for a consumer level camera. The interface on the camera is good - a really nice touch I noticed was that in just doesn't display any of the advanced options if you have the camera set in 'Auto' mode, set my a manual dial on top. Nice solution to balancing functionality and simplicity.
        Guess what happened when I tried to install the supplied software - not only did it fail to install, the installer completely crashed the system (XP), resulting in a hard-reset (causing a boot-up disk scan).I can't even comment on the quality of the software because I couldn't install it. That is my 'out of the box' experience.
      • There's a difference between accounting reports for internal management, and accounting reports for public consumption.

        Apple stock holders need to know the overall costs and profits of the Apple iPod business so that they can see how much its running. Why do they need to know the production cost of an individual iPod? So they can point out ways to reduce costs? Stockholders are NOT managers.

        If you have doubts that a company the size of Apple is incapable of optimizing the production costs of its product

    • He's got a point. It shouldn't be too hard to figure out what an iPod costs to make, within a margin of error, of course.

      The only problem is I have seen these people "Analyize" what it cost to make something and be so far off that a margin of error is the size of a small country.

      The 360 costs microsoft something like $800 to make, according to one analysist, another says it's only $600, one says the HDD model costs them $300 while the $300 model costs $200.

      PS3 samething, it started off it only costs

    • There is at least one company that specializes in selling competitive information on electronic products.

      They rip apart the first iPods they purchased (every one of the models) and document every component and its cost, and for a few thousands of dollars they will sell you the reverse engineering report on any iPod you want.

      That is called "independent verification" of competitive information.
    • But then you might void the warranty...

      Do you think all the parts are available at Digikey?

      I would assume they make orders of far more than 25 components at a time.

  • Or maybe not. (Score:4, Insightful)

    by Anonymous Coward on Saturday July 01, 2006 @03:18PM (#15643225)

    'Apple clearly has its feet in two separate and distinct business models, namely computer manufacturing and software creation, and the consumer electronics industry,' Mr. Renck said.

    ...or maybe that old stock analyst hasn't yet realized that those aren't the two seperate and distinct markets they used to be?

  • You can say that again! (Score:5, Funny)

    by BasilBrush ( 643681 ) on Saturday July 01, 2006 @03:18PM (#15643227)
    'Apple clearly has its feet in two separate and distinct business models, namely computer manufacturing and software creation, and the consumer electronics industry.'
    'Apple clearly has its feet in three separate and distinct business models, namely computer manufacturing and software creation, and the consumer electronics industry... and the music download industy.'
    'Apple clearly has its feet in four separate and distinct business models, namely computer manufacturing and software creation, and the consumer electronics industry, and the music download industry... '

  • Two Business Models: One for the rich and one ... (Score:5, Insightful)

    by Distinguished Hero ( 618385 ) on Saturday July 01, 2006 @03:18PM (#15643228) Homepage
    'Apple clearly has its feet in two separate and distinct business models, namely computer manufacturing and software creation, and the consumer electronics industry,' Mr. Renck said."

    Yeah, it's not like iPods ("consumer electronics") would ever interact with computer hardware or software in any way. It's also not like iPods themselves are computer hardware that run computer software...

    • Re:Two Business Models: One for the rich and one . (Score:5, Insightful)

      by IamTheRealMike ( 537420 ) on Saturday July 01, 2006 @04:12PM (#15643366)

      The fact that they're technically similar doesn't mean they are similar businesses in similar markets. Clearly the Mac is in a very different kind of market to the iPod, as evidenced by one having like 3% market share and one having 50%+ ... and that's what matters to the shareholders.

      Shareholders should really have this information; the iPod is going to start facing tough competition from the mobile phone manufacturers soon, and knowing how much they could slash prices by to maintain market share is important. I myself use my phone rather than a dedicated mp3 player these days .... the iPod is probably a better music playing device but it's not that much better, and it's not worth it to me to carry about two devices when one + a pair of headphones is nearly as good. And the phones will only improve.

      • The fact that they're technically similar doesn't mean they are similar businesses in similar markets. Clearly the Mac is in a very different kind of market to the iPod, as evidenced by one having like 3% market share and one having 50%+ ... and that's what matters to the shareholders.

        But you are discounting the fact that they whole point of Apple is to straddle these markets, and have products that leverage both sides of that equation. iTunes would not be nearly no nice without an iPod to use it with. Wh
      • We were referring to business models, not markets. It is possible to use the same business model to service different markets. For example, the markets for computer programming books, popular psychology books, fashion magazines, and soft-core pornography is quite different, yet all these can be delivered to the consumer using the same business model (from the perspective of a book store), and in fact, you will find book stores stocking all these items. Similarly, in the US, Wal-Mart sells all sorts of di
        • Oy vey! I accidentally pressed submit instead of preview, and forgot to change HTLM Formatted to Plain Text. My post, presented in a more readable format, follows:

          We were referring to business models, not markets. It is possible to use the same business model to service different markets. For example, the markets for computer programming books, popular psychology books, fashion magazines, and soft-core pornography is quite different, yet all these can be delivered to the consumer using the same business

  • Kinda Obvious. (Score:5, Insightful)

    by Fusione ( 980444 ) on Saturday July 01, 2006 @03:41PM (#15643289)
    If people know how much money you're making on a sale, then they feel bad about paying for it. They see the value of the item as what it actually costs to produce, not what it is being sold for. .e.g If my friend gets a great deal on a bucket of apples (say 5$), and offers to sell them to me at 10$ a bucket.. I won't feel too happy about that, knowing full well he is taking advantage of and making profit off my skin. If I don't know how much he paid, then I assume he is keeping my best interest in mind, and don't feel harshly towards him for selling me the apples (which at 10$ a bucket is still a great deal.)

    I had this problem myself when I was selling speedstream DSL modems. I had purchased a gros (144) for 9$ each. I made the mistake of telling people what I had paid for them, and everyone wanted them for ~10$. They were selling for 120$ retail at the time, or 10$/mth with the ISP. No one wanted to pay 50$, even though it was a great deal, because they knew what I had paid for them, and how much profit I was making. I ended up only breaking even, because word got around what my profit was on each sale, and everyone wanted to bargain me down to what I had paid. :P

    The fact that apple doesn't want to tell what they cost to produce makes me think that their margins are pretty obscene, and they know it would make people angry to know just how much they're pocketing. :P

    /2 cents

    • Re:Kinda Obvious. (Score:3, Interesting)

      by SerpentMage ( 13390 )
      I agree with you, and your analysis.

      I think the reason why people want to know how much money they are making is because they want to know how to price the Apple stock. Right now the PE is about 30, and the question is how much more will this company grow. Personally I think Apple stock is a dud because Apple is nearing its peak.

      Apple is a funny company that has highs and lows. Right now they are on a high, but with the introduction of the Intel chip they are sliding down (eg computers cost more, quality pr

      • I think the reason why people want to know how much money they are making is because they want to know how to price the Apple stock.

        http://www.google.com/search?q=apple+earni ngs+guidance
        Many analysts tend to rely on corporate "guidance" to decide their stock valuations, the sharper ones then compare and contrast the guidance with their reading of the market and adjust their valuations accordingly.

        It seems to me that Renck doesn't trust Apple's guidance & feels like he can't make an accurate appraisal w

      • I hope you are not implying that they are sliding down simply because they are using Intel chips. I'm pretty sure that the price Apple is paying for those chips is much MUCH less than what you would be paying for them. Apple isn't stupid, my guess is that they researched all their CPU options and came to the conclusion that Intel had the production capabilities and performance to consistently provide a superior product than the other options.
        • There was bound to be a dip, as people planning a purchase would defer that purchase until the model they wanted was upgraded to intel chips. At probably as important, many people who would happily buy an nth generation iBook or Powerbook might wait for the 2nd or later generations of the MacBook and MacBook Pro line (such as myself).

          It has nothing to do with mac users rejecting intel technology. It has to do with users waiting for it (and waiting for the dust to settle).
        • Comment removed based on user account deletion
      • I think the reason why people want to know how much money they are making is because they want to know how to price the Apple stock.

        Not that I disagree, but I don't know why this is even an issue. The stock market decides what the price of a share is. That's all there is to it. People want to guess whether it will be worth more or less in the future, well, let them guess! And when they act on that guess, the share price will go up or down accordingly, and consensus as to the actual value of Apple's stock wi
      • Comment removed based on user account deletion
    • that was a bit silly telling people how little you paid for something when your profit was so high... although I have to wonder, would they really lose any sales if people knew how high their profit margin was? I lknow for a fact that in restruants you'll pay over 100% of the value of a bottle of wine, I'm sure other people know that too, but at that time it's the only wine you can get. Similarly with Apple; people want an iPod, for one you have to pay £200, so thats what you pay. I think some people
      • The thing is, consumer electronics isn't like a restaurant, you have the ability to shop around for the best deals and buy what you want, where and when you want (unless you live in an area where there's only one CE store, but that's usually quickly followed by competition). Granted, Apple is set up in such a way that it doesn't matter where you get your Apple product, it will be the same price (or close to it) no matter where you go (except maybe eBay). I know what a particular store's markup is for things
    • The fact that apple doesn't want to tell what they cost to produce makes me think that their margins are pretty obscene, and they know it would make people angry to know just how much they're pocketing. :P

      Very good point. And if I might add, people knowing how much Apple is pocketing would not be in the best interest of an investor as Apple's revenue would be injured and most likely their stock as well.

    • Re:Kinda Obvious. (Score:3, Insightful)

      by smallpaul ( 65919 )

      If people know how much money you're making on a sale, then they feel bad about paying for it. They see the value of the item as what it actually costs to produce, not what it is being sold for. .e.g If my friend gets a great deal on a bucket of apples (say 5$), and offers to sell them to me at 10$ a bucket.. I won't feel too happy about that, knowing full well he is taking advantage of and making profit off my skin. If I don't know how much he paid, then I assume he is keeping my best interest in mind, an

    • Re:Kinda Obvious. (Score:3, Informative)

      by Mattintosh ( 758112 )
      The fact that apple doesn't want to tell what they cost to produce makes me think that their margins are pretty obscene, and they know it would make people angry to know just how much they're pocketing.

      Apple has quarterly financial meetings for their shareholders. They always mention their product-by-product profit margins, and they're almost always around 25-30%. Lower (25%) on Mac Minis and iPods, and higher (30%, and even as high as 35% sometimes) on high-end systems like MacBook Pros and G5 towers. Soft
    • That was a mistake on your part, true (I was a collectible's seller on the fleamarket once). What people don't relize is that there are other costs than production/acquisition - your time and salary (nobody does it for the fun of it, you could be working for a "real" job or overtime), cost of selling venue (table and booth), cost of getting there (gas & misc.), etcetera. For a company like Apple - cost of production is besides the point - the first iPod costs the most - R&D, sales staff, etc.

      When
    • Either that or their margins are very thin and they don't want their competitors to know that if they dropped their prices ten percent the iPod would be in trouble.

      I suspect the most likely situation is that Apple is selling the iPod for a margin that's fairly well in line with what's normal in the consumer electronics industry, which everyone would consider obscene if it was revealed in too much detail.
    • On consumer electronics, for a fairly low volume wholestream, you paid 7.5% of retail? 1300% markup? Whilst I understand that every industry has to have some markup, and it can be quite high... consumer electronics traditionally has fairly low markup ...

  • Computers now their own classification? (Score:5, Interesting)

    by MrCopilot ( 871878 ) on Saturday July 01, 2006 @03:41PM (#15643292) Homepage Journal
    Apple clearly has its feet in two separate and distinct business models, namely computer manufacturing and software creation, and the consumer electronics industry,' Mr. Renck said."

    Computers (and peripherals) are Consumer Electronics. You see inside that tiny Consumer Electronic Ipod thingy your kids have there is a tiny computer running tiny software. Ipods are specifically a peripheral to a computer, be it Mac or PC. Same business model, Apple makes attractive easy to use consumer electronics. (Covers up Newton>) BTW, why not just link to the artcle three links and two blogs deeep. http://www.marketwatch.com/News/Story/Story.aspx?g uid=%7BEE4732BB-BCFC-49FE-9CA3-6E11FC25122D%7D&sit eid=mktw&dist= [marketwatch.com]

    FTA:
    Accounting standards, he adds, require that segments generating more than 10% of a company's revenue be broken out by several metrics, including sales, profit and assets. The iPod first passed that threshold in early 2004. Commenting on the issue, in a statement on current accounting and disclosure issues, the SEC staff has said it believes segment information should be broken out unless "separate reporting of segment information will not add significantly to an investor's understanding of an enterprise [because] its operating segments have characteristics so similar that they can be expected to have essentially the same future prospects." Renck goes so far as to say he believes Apple should do a separate breakout for computers, iPods, music-related products, peripherals and software and service. "Their business has changed and they should be doing it differently," he says. "Transparency is what everyone wants, and they don't want to be transparent."

    Dude, I want a transparent Ipod too.

  • Pills that treat every major disease costs $0.25 (Score:5, Insightful)

    by Anonymous Coward on Saturday July 01, 2006 @04:10PM (#15643360)
    Pills that treat every major disease costs $0.25 to make. But the first pill cost $1,350,000,000.

    R&D costs money. So does good design.
    • I'm too lazy to use mod points on this story, especially when I've made two comments already... er.. one comment - just twice.

    • Re:Pills that treat every major disease costs $0.2 (Score:2, Insightful)

      by Anonymous Coward
      But how is development costs affecting price once you have sold 1,000,000,000 at $25 a pop? The development cost have been repaid over 20X. Oh we have to pay for the costs of the ten drugs that didn't make it to market? Not entirely true. An ugly fact is most of the development money goes to finding new drugs to replace drugs that patents have run out for so they can go back to charging $25 a pop until that patent runs out. It's not about helping people it's about charging as much as possible at all times.

  • We love Apple (Score:4, Insightful)

    by timmy the large ( 223281 ) on Saturday July 01, 2006 @04:10PM (#15643362)
    It's laughable that the stuffed shirt Wall Street types are saying that Apple needs to provide more infomation, but the "Information wants to be free crowd" here at Slashdot thinks that Apple should hide the information from everyone lest there competitors find out their margin. Apple competitors know that a consumer doesn't really care if you can beat someones margins they care if you can beat their pricing. This is just Apple hiding information because they can.

    It drives me up a wall how this company always gets a free pass on this and other sites. Apple is not the greatest computer company ever. They are certianly not Open Source or even close to it. They make pretty boxes for a lot of cash, and now there boxes are just another PC brand.

    Atleast they are built better than Dell, I'll give you that.

    • Actually, I'm firmly in the Information-wants-to-be-reasonably-priced-and-woul d-be-if-there-was-an-adequate-micropayment-system camp. Thus far, the closest I've seen to an adequate micropayment system is paying $1 to download a song.
  • Please tell me otherwise if this site isn't credible, but I happened upon this.

    http://www.macnewsworld.com/story/6C07rmGkmpn1Oe/T he-iPods-Incredible-Journey.xhtml [macnewsworld.com]

    It details some of the ethical concerns in Apple's manufacturing, or outsourcing to manufacturers that do this. And then again maybe I'm some bleeding-heart, I dunno.
  • Except for the detail about Apple's separation by geography, isn't secrecy about details like profit margin true for most companies? Look at Google. They won't even tell you how many computers they have running. Microsoft surely won't tell you about profit per copy of Windows.

  • Hearsay and models (Score:4, Insightful)

    by fermion ( 181285 ) * on Saturday July 01, 2006 @04:57PM (#15643497) Homepage Journal
    First, believing what a firm discloses without doing independent analysis is what routinely leads to catastrophic stock devaluation. Some might say that there is x billion in sales and x million in profit, and that is distributed along such lines as so, but who is say that those figures represent reality, or at the reality of the investor. Even if the number follow all SEC rules and standard accounting practices. At the very least, income and expenses can be creatively classified to maximize profit, not to mention other issue such as stock dilution and options backdating with can signficantly increase management compensation without the knowledge of the shareholders.

    Therefore it seems to me a major part of the analyst job is at least to smell check the numbers released a firm, and in reality to generate independent data on major products services. Instead of complaining that Apple is not releasing profit margins, any analyst should be celebrating that Apple is now using mostly off the shelf compenants with widely known acquisition and integration costs. Furthermore, manufacturing costs should not be impossible as these seem to be also widely known in the competative market.

    As far as the markets, Apple has for a long time produced solutions. They produced a solution for graphic artists, a solution for home users, etc. This is why the fact that the mac was closed was not a big issue. When one bought a mac, it was a solution. Now apple has found some success with music and video solutions. It is not new becuae it is applying integrated technology, both hardware and software, to solve a problem. Some analyst get confused about solutions becuase they have been raised with MS philosophy of suppling components that others will turn into solutions. Compenents work for some people, but most of us buy a completed car, a completed refrigerator, a completed TV, and don't expect the manufacturer to deny responsibility because a component is made elsewhere.

    The only thing that has changed is that computing technology has become consumer technology, not the Apple has all of the sudden become a consumer technology company.

  • Nothing to See Here... (Score:3, Interesting)

    by rmckeethen ( 130580 ) on Saturday July 01, 2006 @05:22PM (#15643567)

    Investors will make decisions to buy or sell Apple stock based on a number of factors, the least of which revolve around gross margin disclosures to investors or just how much information Apple executives are willing to share outside the company. Analysts can and will examine, regurgitate and then pontificate about the most minute information available on a company, but the only meaningful question investors should have about buying or selling Apple stock is, "Will I make money if I buy this stock?" or, "Will I make more money if I sell this stock?" It really is that simple, and it doesn't take an analyst to figure it out.

    What analysts may know or not know about Apple's business is secondary and, in most cases, immaterial to calculating the profitability of owning Apple stock. If you trust that Apple's management team knows what they're doing, than buy the stock, even if the executives won't tell analysts how much money Apple makes every time an iPod is sold. If you think Apple is hiding crucial information that affects your own profitability as a stockholder, than your best move is to unload any Apple shares you currently have and not to buy any more. Stock tips from the New York Times are worth about as much as you've paid for them, and it shouldn't take a rocket scientist with reams of mathematical proofs to demonstrate such an obvious fact.

  • What/who is going on...? (Score:4, Interesting)

    by djupedal ( 584558 ) on Saturday July 01, 2006 @05:41PM (#15643615)
    Last week it was the trumped up claim that the iPod factory in Shenzhen is a hell-hole, which it isn't -- this week it is foggy data giving stockholders the creeps, and we all know that in the end, stockholders listen to their gut. Anyone suspect a trend? What/who is in the background trying to weaken Apple's public reputation?
    • u'r right. forget about wars, torture and spying on the public. the real conspiracy is "they" are just out to make apple look bad.
      • -1 non sequiter...things don't just appear in the media. News outlets don't have the cash anymore to do much reporting...especially when PR firms fax it to them for free. This investor-FUD about apple is a plant of some kind. And no, it isn't as big of a deal as toture and war and whatnot...
    • Well, after trying out the Vista beta, I've got to say Microsoft has a reason to be scared of... well, anybody with a decent compiler.

      Creative has been trying to play hardball lately.

      The Recording and Movie industry aren't happy with Apple's success.

      Many in the free software crowd don't see Apple as much better than Microsoft.

      I'm sure SCO wants a piece of the action for the Unix-derived OS X.

      This is largely business as usual for any American company that can make a headline.

      McDonalds is evil... Burger King
  • Geez, with a title like that I was expecting at least a rough estimate by some tech know it all on the breakdown of each widget that goes into the ipod. Thank you, please come again!
  • It was just last year that the music labels not only wanted to raise the price of downloadng music but they were talking about demanding a percentage of iPod sales. It would not be paranoid to suspect that the labels would use any iPod profit disclosures against them - and with some prejudice.

    If Apple showed a 50% percent profit on iPod sales, labels could demand a percentage of that 50% without regard to how iPod sales cover losses in other areas. This article already shows a penchant for dividing iPod fro
  • Consumers always want to pay less. Companies always want to make more money. It's not like there's some vast conspiracy.

    Who cares how much it costs them to MAKE the iPod, if the actual value of the device for the consumer is not equal to the price point then people won't buy it. The iPod seams to have crushed all the other music players, so obviously it's at a good price point for most people.

    Personally I think the iPods are over priced, so I won't get one. Pretty simple.

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