5 Incredible Charts Proving Apple’s Dominance

Charts of Apple’s dominance  by John Szramiak was originally published on Vintage Value Investing

There’s been a ton of talk about Amazon in the media lately following the company’s announcement that it will buy Whole Foods for $13.7 billion. It indeed does look like Amazon is headed towards world dominance (Warren Buffett might even agree).

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david einhorn, reading, valuewalk, internet, investment research, Greenlight Capital, hedge funds, Greenlight Masters, famous hedge fund owners, big value investors, websites, books, reading financials, investment analysis, shortselling, investment conferences, shorting, short biasIt has not just been rough year for David Einhorn's own fund. Einhorn's Greenlight Masters fund of hedge funds was down 3% net for the first half of 2020, matching the S&P 500's return for those six months. In his August letter to investors, which was reviewed by ValueWalk, the Greenlight Masters team noted that Read More

But for now Apple still remains on top. It’s still the country’s most profitable company (with profits of ~$45 billion compared to #2 J.P. Morgan Chase and #3 Berkshire Hathaway with ~$24 billion each) and in terms of market cap (with a market cap ~$750 billion compared to #4 Amazon with ~$470 billion).

The 5 charts below are incredible interesting, and help prove just how dominant Apple still is:

1. The iPhone is One of the Best-Selling Products in History

Apple launched the iPhone in June 2007, unleashing a smartphone revolution that has changed the way people work and socialize, while reshaping industries of all sorts (from music to hotels). Ten years later, the iPhone has become one of the best-selling products in history: since its launch, Apple has sold about 1.3 billion units, generating more than $800 billion in revenue.


Source: WSJ

2. Since Its Introduction, the iPhone Has Come to Overshadow Apple’s Other Products

The iPhone now accounts for two-thirds of Apple’s sales, making the company now overly dependent on just one product line and overshadowing all of Apple’s other products. Any big stumble with the iPhone could be disastrous for Apple.

However, the iPhone has also created Apple’s second-largest business in terms of revenue: apps and other services offerings. Since the App Store launched in 2008, app sales have generated roughly $100 billion in revenue for Apple from over 16 million app developers world-wide (Apple has historically taken a 30% cut of all App Store sales, and more recently has begun charging a $99/year subscription to developers).

According to longtime Apple adviser and Steve Jobs confidant Regis McKenna, the iPhone has become “the razor and the blades are the software services… It creates this great annuity business.”

Source: WSJ

3. Apple Has Grown Like Crazy Across Nearly Every Dimension

As revenue has skyrocketed, so has Apple’s staff. The company hired about 100,000 people in the 10-year span since the launch of the iPhone, bringing its global workforce to 116,000 from 18,000 in 2006.

Apple’s sales from China have also grown to become a huge slice of the overall pie. In 2006, all of Asia-Pacific (excluding Japan) accounted for 7% of Apple’s revenue. Then when the iPhone hit Chinese shelves in 2009, it became a status symbol for Chinese consumers and took off. Last year, China alone accounted for 23% of Apple’s revenue… or $48.5 billion, which was greater than Coca-Cola’s total revenue world-wide. Now, however, some analysts worry that Apple is too reliant on sales from China.

Source: WSJ

4. Apple is a Money-Making Machine

The chart below shows the top 100 largest companies by market cap. The outside circles represent revenue and the inside colored circles represent profit for each company. Notice anything strange?

Look at the size of Apple’s cirlces. Apple is unparalleled in its ability to make money. In fact, Apple’s 2016 profit of $45 billion is far bigger than any other company, including Berkshire Hathaway ($24 billion), JPMorgan Chase ($24 billion), Wells Fargo ($22 billion), Alphabet ($19 billion), Samsung ($19 billion), Toyota ($17 billion), Johnson & Johnson ($16 billion), or Walmart ($14 billion).

Also impressive: Apple’s profits are bigger than the revenues of massive companies like Coca-Cola ($41.5 billion) and Facebook ($27.6 billion). The only companies that can compare with Apple’s profitability are Chinese banks like ICBC, Agricultural Bank of China, or China Construction Bank… state-owned enterprises that don’t exactly compete on the same level playing field.

Source: Ishtyaq Habib

5. Most of Apple’s Cash is Held Overseas

Apple has over $250 billion of cash sitting on its balance sheet. An astounding $240 billion of that – or 93% – is held overseas. If Apple wanted to bring that money back into the United States (called repatriation), it would have to pay a standard 35% corporate tax rate on that money to the U.S. government.

Although still short on details, President Trump wants to pass a tax reform plan that would encourage companies that have been stockpiling cash overseas (and not paying U.S. taxes) to bring that money back home. At one point during the campaign Trump proposed a one-time tax of 10% on offshore earnings.

The repatriated money could then be used for share buybacks, dividends, acquisitions, and capital spending. If repatriation tax rates are lowered, Apple would be by far one of the biggest beneficiaries.

Source: Bloomberg


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