Saturday, January 7, 2012

Not All Apple-Related Is Gold

我在上財務管理的時候要學生拿 Apple 和 HTC 的財務報表來計算一些比例數據,應該用鴻海的。

MacRumors, 1/5/2012, "Foxconn Profit Margin Remains Tight As Apple Flourishes"

簡單的說,Apple 的 profit margin 目前是 30.8%,鴻海是 1.5%。跟四年前相比,Apple 的 profit margin 加倍,而鴻海幾乎減半 (2.7% - 1.5%)。

今天同樣是在 MacRumors 網站上看到一個來自 Digitimes 的謠言,說今年會有兩款不同的 iPad。文章說 Digitimes 的過往記錄不是很好,不可盡信。如果他們不幸言中,那我們可能要等著看鴻海的 profit margin 再往下探。一年多生產一款新的 iPad 無法帶來更高的 revenue,不過在人員訓練、生產線調整等地方要付出的成本只有可能更高而不會更低。

9 comments:

Ben said...

>>Apple 的 profit margin 目前是 30.8%,鴻海是 1.5%。跟四年前相比,Apple 的 profit margin 加倍,而鴻海幾乎減半 (2.7% - 1.5%)<<

And that's why Apple is one of the most valuable brands in the world. Steve Jobs single-handedly made computing devices chic and sexy.

Foxconn, on the other hand, squeeze blood out of stones and made Terry Gou a very rich man. In addition to low operating margins, Foxconn also suffered from convoluted corporate structure and complex accounting. I haven't looked at Foxconn's financial statements in a while so maybe they have improved on these two areas in recent years. Nevertheless, I wouldn't be surprised at all if Foxconn, one day, turns out to be not as profitable as their numbers indicate.....

CCLu, what do you make of HTC's future? I personally think that HTC will either be acquired or go out of business in the next few years. HTC is caught in the no-man's land - not big enough to have scale and not innovative enough to create its own identity and brand. Tech grave yard is littered with companies like HTC - Wang, Digital, Compaq, Palm, Atari, to name just a few.

CCLu said...

Don't forget Tim Cook. He's responsible to have a killer business plan in place. iPad's cost is way lower than its competitors. This forces other companies to play Apple's game. No one can play the price card until Amazon comes along.

I agree that HTC is very fragile. I don't take their Q4 flop too seriously. It's mostly the economy. Given their past success in Europe, it's no surprise that they didn't do well in 2011. That being said, their future is not bright either. I thought they will have one more shot before the smart phone market is fully saturated. After that, they probably lack the ability to transform to another business plan and will fail like their founder's other company VIA Tech.

My guess is that Ms. Wang will miss the best opportunity to secure a strong buyer. When she realizes the tide has changed, it would be too late.

This guess is based on their proposed strategy change three years ago. When the smart phone market seemed stalled at the time, HTC announced that they will try to compete in a mid to lower end market. Their stock price plummeted because their proposal would sacrifice profit for market share. That plan was ditched because the smart phone market picked up speed soon after. They didn't make the right choice, God did it for them.

I don't think God will help HTC again with Steve Jobs by his side.

Ben said...

Apple is run by designers, and its fortune will be determined by designers going forward. I am not knocking Tim Cook; he is a very competent CEO, and he has made great contributions to Apple over the years. Design guys like Steve Jobs come along once in a generation, but operations managers like Tim Cook are dime a dozen. Before people start accusing me being an Apple fan boy and a Steve Jobs groupie, let me say that I think Apple products are over-priced, over-hyped, and over-rated. We have no Apple products in our household, just like one certain Bill Gates' family:) As for Steve Jobs the person, he is dead so I will let history be the final judge, but he was far from the technology saint that the media made him out to be right after his death.

I have followed HTC on and off since 2004-5 and I am surprised that it has done as well as it did. We are on the same page as far as HTC's future is concerned. It is hard for me to believe that Ms. Wang herself can't see the writing on the wall for her company's future. Perhaps a case of cognitive dissonance?

I think the company to watch going forward in the mobile device market is Samsung. Samsung is much more a threat to HTC than Apple is at this time. Samsung is probably the first almost vertically integrated tech company in the mobile device market since IBM during its glory days in the mainframe market. Apple has certainly taken notice and that's why Apple is suing Samsung all over the world and is using other suppliers whenever possible. Amazon's Kindle Fire is an intriguing product and business model. I wouldn't be surprised at all if Amazon only breaks even on its Kindle hardware sales, but will try to make up the margins with the content sales....your typical razor-razor blade strategy. Unfortunately, Amazon still has a way to go with its hardware/software design before it can catch up with Apple and Samsung. On top of all these, we have Google stirring the pot with its recent Motorola acquisition. What an interesting mess!

CCLu said...

To Ben,

I don't think you gave Tim Cook enough credit. If an executive in his caliber is dime a dozen, Acer would kill for one right now. Steve Jobs and Sir Jonathan Ive (that "Sir" has such a good ring to it) are the driving forces behind the success of Apple, but Tim Cook made them formidable. They can sell iPad at the price lower than competitor's cost yet still make a mediocre to decent profit (Amazon's Kindle Fire not included). Price war was out of the window from the beginning. If Apple's competitors want to win, they have to beat Apple at its own game.

My guess is Amazon will be willing to take a loss in their devices. They did that in the late 1990s before they start making profits, who's saying they won't do it again. Since Kindle Fire is still an Android machine, chances are they might let other players in for the game. Amazon could play Android's iTunes Store if they get a good enough deal.

Now let's get back to HTC. I think all successful entrepreneurs are like bond traders. They have to be super cocky, self-assured, and feeling entitled to their success. Or we can just say they have to be alpha male or female to pull it off. HTC's Ms. Wang is no exception. Asking her to go away when things are still doing well is like to punt in the third down. No one's gonna do that. The problem is they usually refuse to punt in the fourth down and think they can make that 15 yard conversion because they've done that before. Those who succeeded became legends, and others became homeless.

You brought up another interesting company, Samsung, into this discussion. I believe Apple brass would lose some sleep at night when they think of Samsung. They did want to diversify the production of some important parts, especially the CPU. Apple asked TSM for trying out a sample of A6, but TSM does not have the IP for it (a college classmate in the industry told me that). This is a big problem moving forward. Samsung is in some sense controlling Apple's life line.

The reason why Google acquired Moto is still unknown in my book. It could be for just their patents, it could be something more. My best guess is they didn't know the end game when they bought Moto, they wanted the patents to fight Apple and they think they can figure the rest out along the way.

phoenixes said...

台灣的行銷、品牌觀念剛在起步階段,無奈的過程。

不過鴻海畢竟是紅海中的霸王,微薄的淨利率也是一種保護門檻,別人難以從他手中搶走單。

CCLu said...

說淨利率低是一種保護門檻就像是說遊民不需要保全公司來保護因為他們財產很少。

事實上不然,遊民的安全是治安單位很大的問題。

鴻海目前的優勢在廉價勞工以及他們有本事組織這些勞工來有紀律的完成目標,但是代價我們也都看到了。軍事化的管理不是對任何人都管用的,特別是錢不夠多也看不到未來的時候。如果他們必須要用這麼低的價格才能夠得到蘋果的訂單,只要勞動成本上升,他們也很容易失去這些帳單。

Ben said...

I may very well be biased on Tim Cook. I knew of Tim Cook and some people on his team from his Compaq days. He was in procurement/supply chain at the time. He has certainly come a long way since then, and I have nothing but best wishes for him as Apple's CEO(like he cares or needs my best wishes!). Nevertheless, I still think that he may be the next Steve Ballmer. Time will tell.

I am also under the belief that most American CEOs are way overpaid. Funny how nobody knew what was going on at their companies after their companies blew up - the gang at Enron, Chuck Prince and Robert Rubin at Citi, Jon Corzine at MF Global, O'Neal at Merrill Lynch, to name just a few. Privatize profits and socialize losses at its best.

>>I think all successful entrepreneurs are like bond traders. They have to be super cocky, self-assured, and feeling entitled to their success. Or we can just say they have to be alpha male or female to pull it off.<<

I actually have a very different view on this topic. The successful entrepreneurs and traders I have met in my life tend to be control freaks who are constantly worried about risk, losses, and competitions. A trader once told me that he was driven to succeed not only because he wanted to be rich but also that he was so insecure, so afraid of failure and becoming poor again.

As for Ms. Wang(who was already rich before HTC), I would recommend that she listens to Kenny Rogers' Gambler again:

"You got to know when to hold 'em, know when to fold 'em
Know when to walk away and know when to run"

http://www.youtube.com/watch?v=Tw5LaEzEcJw

And she'd better start running soon...

CCLu said...

To Ben,

I guess my benchmark is too close to my circle, so I'd feel those people are taking too much risk to a degree that we can almost call them risk loving.

The Tim Cook you observe and the Apple CEO Tim Cook can be considered two different persons. The company behind him gives him different bargaining power. If Tim Cook works for Acer, I don't think he can really work the wonder he does for Apple.

Another thing about your reply seems inconsistent to me. You said those successful entrepreneurs and traders are control freaks, yet we all know those big names you threw out knew nothing about their firms. Dick Fuld seems a significant omission there. I guess up to certain point, those CEOs just simply cannot understand their firms like they used to.

We'd like to say Steve Jobs was behind every Apple product, but he only knew certain things. He probably had no idea how they are produced in China, for example.

Chances are HTC will lose its lure but it can still survive as a mobile device producer. Acer and ASUS can never be what they were, but we still need computers for years to come. The whole industry does not make big bucks anymore, so smaller firms have to go. HTC has its chance not to go total bust. It is among, by any means, a top few mobile device provider in the world right now. I think it still has a better chance than Nokia or RIM.

Ben said...

>>Another thing about your reply seems inconsistent to me. You said those successful entrepreneurs and traders are control freaks, yet we all know those big names you threw out knew nothing about their firms. Dick Fuld seems a significant omission there. I guess up to certain point, those CEOs just simply cannot understand their firms like they used to.<<

That's because I don't consider these CEOs as entrepreneurs; they are hired hands. You are absolutely correct that CEOs can't know everything about his/her company like he/she used to once the company gets to a certain size. Most entrepreneurs usually have troubles delegating authority, and that's why only the truly exceptional entrepreneurs can make the transition from a founder of a start-up to a leader of a Fortune 500 company - some obvious names are Bill Hewlett, Dave Packard, the three founders of Intel, Bill Gates, Jeff Bazo, and Larry Ellision. I didn't include Steve Jobs because he actually got kicked out Apple by his board in the 80's.

Your points on Tim Cook are right on and well taken.