Plenty of headlines last week pointed out that Apple is the most profitable cell phone handset maker, even topping market leader Nokia. How? Operating profits. Nokia reported $1.1 billion while Apple reported $1.6 billion in profit. Joe Wilcox of Beta News thought he smelled a rat and decided to juggle the books in Nokia’s favor.
As good as this feat sounds for Apple—profit share beating market share—every one of these stories is wrong. Right, everyone is wrong.
So, Joe, if everyone is wrong, then who is right? What’s the real truth?
Both companies announced third calendar quarter results a few days apart in mid October. For devices and services, Nokia reported profits of $785 million euros, which is about US $1.1 billion. Apple reported total profits—that is for all products—of $1.67 billion in its earnings press release, and later the 10-K filing. I searched the 10-K, and, as I expected, Apple doesn’t breakout iPhone profits.
So, Joe, are Nokia’s numbers correct and Apple’s numbers wrong? Or, did you simply forget to check the facts? Again.
The Strategic Analytics report, which again I haven’t seen, might have gone no further than present numbers showing that Apple makes more profit per phone than Nokia. That absolutely makes sense. But to assert that iPhone generated $1.6 billion profit during a quarter when all Apple products generated $1.67 billion is simple stupidity.
So, Joe, you didn’t bother to read the report you’re criticizing? Did you bother to read Apple’s financial results for the quarter as part of your fact checking? Uh, doesn’t look like it. Oh, isn’t fact checking a part of Journalism 101 (see #7)?
Here’s the gist of this silly controversy you created:
Strategic Analytics report was based on an analysis of Apple’s financial numbers, which include the ever misunderstood subscription accounting, which is mostly iPhone revenue, or, as Apple reported, it would be about $2.85 billion in Adjusted Net Income (which includes iPhone’s subscription accounting).
At the very least, the difference between $2.85 billion and $1.6 billion is $1.285 billion, which still comes in higher than Nokia’s profit, made all the more remarkable by Nokia’s huge market share vs. Apple’s iPhone.
Face it, Joe. Man up. You got it wrong and you’re afraid to admit it. Only Apple really knows how much profit the iPhone brought in last quarter, but all accounts except yours put Apple’s iPhone profits above Nokia’s cell phone profits.