Apple’s outsized profits
Apple may be wrestling with a slump in iPhone sales this year, but it still enjoys an outsized share of industry profits.
As global demand for smartphones has slowed, some Asian phone makers are losing money on their products. In addition, Samsung, the world’s largest smartphone maker, took a hard hit on its recalled, fire-prone Galaxy Note 7. Consequently, Apple’s operating profit for the July-September quarter was greater than that of all smartphone makers combined, analyst Tim Long of BMO Capital Markets estimates.
Even in the second quarter, without the recall, Long estimates Apple made 70 percent of the industry’s second-quarter profits, with Samsung garnering 32 percent. Both HTC and LG lost money. Canaccord Genuity’s Michael Walkley estimates Apple made $9 billion in operating profit by selling 40.4 million iPhones in the second quarter. While that’s only 12 percent of all smartphones sold in the quarter, the iPhone commands a premium price and profit margin. Overall, the smartphone industry is unlikely to grow much more, Long warned in a recent report. But he and Walkley both contend Apple can continue to increase its market share – and profits.