AOL Reports Q2 2012 Earnings; Profit Nearly $1 Billion, Boosted by Patent Sale

AOL reported its earnings for Q2 2012, with a continued decline in its quarterly revenues which are now down to $531 million, a 2% decline year-over-year. While it should have posted just a marginal profit, it posted a net profit of around $970 million, which was mostly because of the sale of its patents to Microsoft for around a billion dollars. It reported a gain on disposal of assets (intellectual property) of $945.8 million, which accounted for almost all of its net profit.

It ended Q2 2012 with around $1.468 billion in cash and cash equivalents, over a billion dollars more than it ended the last quarter with.

Coming to the revenue split, it reported a healthy 5% increase in its advertising revenues, while its subscription and other revenues continued to decline.

Its domestic AOL access subscribers continued to decline to around 3 million, while its unique visitors on AOL properties increased to around 112 million and unique visitors to AOL’s ad network increased to 186 million.

Advertising will eventually account for almost all of its revenues. In the last quarter, it made around $140 million in display ad revenue, and $87 million in search ad revenue. Its third party ad network revenue added up to $111 million.

Tim Armstrong, Chairman and CEO of AOL, said:

“Today’s results represent a significant milestone for AOL as we returned to Adjusted OIBDA growth for the first time in four years. The strong results and consumer performance we announced today are clear signs our strategic and operating efforts are translating into significant financial progress.”

via AOL – SEC

Netflix Reports Q2 Earnings; $889 Million in Revenue, $6 Million in Profit

Netflix reported its earnings for the second quarter of 2012, with revenue of $889 million, up around 2% year-over-year, and a net profit of around $6 million, better than a net loss of around $4 million last year. It now has over $800 million in cash and short term instruments.

Netflix now has around 24 million domestic streaming subscribers, and is continuing to expand internationally into new markets like Canada, Latin America, UK and Ireland. It now has a total of 3.6 million international streaming subscribers, and 9.1 million DVD subscribers. DVDs continue to shrink as a part of its overall business.

Reed Hastings, Netflix CEO, mentioned this in his shareholder letter:

“In Q2, we achieved financial performance in the top half of our guidance in nearly every metric, and have returned to profitability.

66 months ago, we launched Netflix streaming in the US with limited selection. Now, we have 24 million domestic streaming members and an incredible selection of TV shows and movies. Networks that license us prior season TV shows are in several cases benefiting from record audience numbers in the current season, partly due to the availability and promotion of prior seasons on Netflix. We are growing our business, and helping to grow the entire industry.

This growth in each of our [new international] markets reflects our investment in an easy-to-use personalized selection experience, ever more compelling content, and higher quality streaming delivery. Device by device, title by title, network by network, market by market, we are constantly improving our service.

Q3 has begun strongly for us, and we expect to be profitable again in Q3.

In Q4, we will launch our next international market, which will drive us temporarily back into the red.

We have enormous challenges ahead, and no doubt will have further ups and downs as we pioneer Internet television. We are making progress in every market we serve, and see a once-in-a-generation opportunity ahead to build the world’s most popular TV show and movie service.”

via Netflix – SEC

Interesting Bits from Apple’s Q3 FY12 Earnings Call

Apple posted its earnings for Q3 FY12 on July 24, with quarterly revenue of $35 billion and a net profit of $8.8 billion, showing healthy growth of around 20% year-over-year. It also revealed some additional information in the press release, but most of the juicy tidbits were revealed only in the earnings call that followed.


Apple sold nearly 26.028 million iPhone units in the last quarter which ended in June. It generated $16.425 billion in revenue from iPhone sales.


Apple sold around 17.042 million iPad units, generating $9.171 billion in segment revenue.


Mac sales added up to 4.020 million units (1.010 Mac desktops and 3.010 Mac portables), generating $4.933 billion in total revenue.

iPod, iTunes and App Store

Apple sold nearly 6.751 million iPod units, generating $1.060 billion in revenue from hardware sales. It also made nearly $2.060 billion in revenue from iTunes, App Store and iBookStore sales.

The App Store is now available in 155 countries, and offers more than 650,000 apps and games, with 225,000 apps specifically for the iPad. It has surpassed more than $5.5 billion in payments to developers, which is way more than Google can claim yet.


It also made some additional revenue from peripheral sales, other hardware and software sales, and services, which added up to $1.554 billion.

All these numbers add up to $35.023 billion, Apple’s total revenue.

In the last quarter, Apple increased its cash reserves by $7.045 billion, bringing the total up to around $117.221 billion.

Geographically, while America still accounts for most of its sales, China is proving to be a huge opportunity for Apple. It generated $5.7 billion in revenue from China in Q3, with most of it coming from iPhone sales.

Going forward, we expect most of Apple’s growth to come from emerging markets in the Asia Pacific region.

Cook didn’t mention the iPad Mini or reveal any details of the next iPhone during the earnings call. Not that anyone expected him to.

Earnings call transcript via SeekingAlpha

Apple Q3 FY12 Earnings: $35 Billion in Revenue, $8.8 Billion in Net Profit

Apple has posted its earnings for the third fiscal quarter of 2012, with quarterly revenue of $35 billion and a net profit of $8.8 billion, both up nearly 20% year-over-year. It managed to improve its gross margins from 41.7% to 42.8% this quarter.

It sold 26 million iPhones this quarter, which was up 28% year-over-year, but fell short of analyst expectations which predicted 29 million iPhones unit sales. The lull in iPhone sales is because the iPhone 4S is now almost a year old, and consumers are holding out for the next iPhone which is expected to be launched in October.

It also sold 17 million iPads, which is significantly above the 15 million figure which consensus analyst estimates suggested. The iPad has been a huge hit globally, and the onslaught of cheaper tablets have failed to have much of an impact on its sales yet. That may change in the next quarter though, as we see the impact of the Nexus 7 tablet by Google.

Tim Cook, Apple’s CEO, said:

“We’re thrilled with record sales of 17 million iPads in the June quarter. We’ve also just updated the entire MacBook line, will release Mountain Lion tomorrow and will be launching iOS 6 this Fall. We are also really looking forward to the amazing new products we’ve got in the pipeline.”

The “amazing new products” could very well be the iPhone 5 and the rumored iPad Mini. We shall know soon.

Apple also declared a dividend of $2.65 per share which will be payable to shareholders on August 16, 2012.

Another interesting fact — Apple now has over $117 billion in cash, cash equivalents and short term and long term marketable securities.

AT&T Reports Solid Numbers in Q2 2012; Net Profit Grows to $4 Billion

AT&T has reported its earnings for the second quarter of 2012, with its total operating revenue growing marginally to $31.5 billion, and its net profit increasing 8.4% to almost $4 billion.

Its wireless division accounted for most of its revenue, around $14.8 billion, while data and voice services came in next at $7.9 billion and $5.7 billion respectively. However, its operating and net profit margins have increased quite a bit since last year.

It ended the quarter with close to $2.15 billion in cash and cash equivalents and current debt of around $3.4 billion.

Its customer metrics seem to have improved quite a bit, with postpaid, prepaid and total wireless churn rates at their best-ever levels yet. It added close to 1.3 million new net customers this quarter, with 320,000 postpaid net additions.

AT&T sold around 5.1 million smartphones in Q2, and smartphones accounted for close to 77% of all postpaid device sales. Since AT&T generates a much higher ARPU from smartphone users, this bodes well for its future earnings as well.

It activated around 3.7 million iPhones last quarter, with 22% of the subscribers being new to the network.

Randall Stephenson, AT&T’s Chairman and CEO said:

“We executed well across the business and posted another strong quarter with growing revenues, expanding margins and double-digit earnings growth. Our mobile Internet leadership continues, with solid gains in smartphones and tablets, plus our wireless margins have never been better. And most impressive, with this growth, we also achieved our best-ever postpaid wireless churn, which points to the premier experience customers receive on our network. All of these things add to our confidence and enthusiasm looking ahead.”

via SEC – AT&T

Apple Q3 FY12 Earnings: What to Expect?

Apple will be reporting its financials for the third quarter of fiscal 2012 on July 24. Here are some insights into what to expect from the consumer electronics giant this earnings season.


The iPhone 4S was launched last October and drove Apple’s revenue growth for the following two quarters. However, as consumers gear up for the launch of the next iPhone — the iPhone 5 — in October 2012, iPhone sales in the last quarter are expected to be relatively lower.

Apple always offers low guidance numbers, and then positively surprises analysts with better actual figures. However, it will be difficult for it to beat Wall Street consensus analyst estimates, given a slowdown in iPhone sales as well as a general macroeconomic weakness in China and Europe.

Since the iPhone accounts for a major portion of Apple’s overall profits, this will probably lead to significantly lower revenue numbers compared to last quarter.


The iPad 3 has been seeing some crazy sales numbers since its launch in March. This will be the first full quarter since the launch of the tablet, and we expect the revenue growth to be driven primarily by the launch of the iPad 3.

The iPad’s launch in China, particularly, could drive a huge jump in revenues.

Estimates suggest that Apple sold nearly 29 million iPhones in the June quarter, down from 35 million in the March quarter. However, it is expected to have sold around 15 million iPads this quarter, which could potentially compensate for the fall in iPhone sales.

The coming year is going to be very eventful for Apple, as it launches the next iPhone in October, possibly the iPad Mini before the end of the year, as well as the next version of the iPad in March 2013.

Other Stuff

Apple will also have sold a ton of Macs, iPods and other auxiliary stuff, and will also generate some revenue from iTunes and the App Store, but that is insignificant compared to its iPhone and iPad sales.

Analyst expectations point to estimated revenue of $37.2 billion in Q3 FY12, with earnings per share of $10.35.

via Reuters

Marissa Mayer To Earn $1 Million Annually with Potential Stock Options of Up To $60 Million

CEO of Yahoo – Marissa Mayer

After being appointed as new CEO of Yahoo, Marissa Mayer is a happy lady. She is not only going to enjoy leading one of the premier media giants in the world today but her bank balance will be in round numbers. Yahoo has announced that Mayer will be earning $1 million annually which works out at $83,333.33 a month. While it seems a mouthwatering salary, it just reflects one side of the spectrum.

Also Read: Dear Marissa Mayer, the Flickr Community Has a Request for You

Should Mayer be able to lead the company for five years, this package would spike drastically and could make her a fortune of $60 million. It will all depend on whether Mayer meets the set targets or not. During 2012, Mayer could participate in an incentive plan that see her monthly earnings rise by at least 200%. In case Mayer meets all targets set for 2012, she would witness her monthly earnings rise by a maximum of 400%. This could increment her earnings by $2 million to $4million more per annum.

Mayer will also be entitled to stock options worth $12 million subjected to the approval of the compensation committee. Through 2014, there will be $14 million in restricted stock units which includes $4 million in 2012, $7 million in 2013, and $3 million in 2014. This plan is to compensate Mayer for what she gave up at Google. In addition to this, there will be a $30 million retention equity award in restricted stock units (RSUs) and stock options through 2017.

All of this should be a great motivation for Mayer to step foot into her new position. However, given that Yahoo has been struggling and has observed 5 CEOs in five years, Mayer’s role will be continuously challenged.

Just for the note, Mayer’s first pay date will be July 25, 2012.

Also Read: Google’s Loss is Yahoo’s Gain. Will Marissa Mayer Make Yahoo Reputable Again?

Google Reports Earnings for Q2 2012; Revenue Jumps to $12.2 Billion

Google reported its earnings for Q2 2012, with its quarterly revenue growing to $12.2 billion. Of that, nearly $1.25 billion was due to its acquisition of Motorola, while organic growth contributed nearly 21% growth. Its overall gross margins also took a hit following the Motorola acquisition, due to much higher relative cost of revenues for the hardware business.

Google’s operating income was nearly $3.2 billion and its net income was around $2.8 billion.

Of the $12.2 billion, advertising revenue from its own website was close to $7.5 billion, while ad revenue from its network was about $3 billion. Other revenues added up to $0.44 billion, while revenue from Motorola added up to $1.25 billion.

There weren’t many surprises this earnings season; Google’s aggregate paid clicks increased 42% this quarter, while its cost-per-click declined nearly 16%. Both changes can be attributed to the increasing penetration of mobile devices and mobile search.

Traffic acquisition costs, or the portion of ad revenue shared with partners, increased from 24% of revenue to 25%.

Interestingly, Google’s cash reserves have ballooned up to almost $43 billion.

Larry Page, CEO of Google, said:

“Google standalone had a strong quarter with 21% year-on-year revenue growth, and we launched a bunch of exciting new products at I/O – in particular the Nexus 7 tablet, which has received rave reviews. This quarter is also special because Motorola is now part of the Google family, and we’re excited about the potential to build great devices for users.”

via Google

Microsoft Reports Q4 FY2012 Earnings; First Ever Loss

Microsoft has reported its earnings for Q2 2012 (Q4 FY12) and while it continues to see steady revenue growth with revenue rising to $18.06 billion, it has reported its first loss ever ($492 million), primarily due to a non-cash goodwill writedown it took due to its failed acquisition of aQuantive in 2007. If we adjust for the impact of the writedown, Microsoft would have reported a profit of more than $5 billion.

As expected the Business (Office and Enterprise) division posted revenue of $6.29 billion, up 7% year-over-year, while the Server & Tools business posted revenue of $5.09 billion, up 13%. The Windows division saw a 1% decline in revenue to $4.15 billion, as Microsoft decided to defer revenue from its Windows 8 upgrade offer to the next quarter. Entertainment & Devices continued to grow the most, with revenue increasing to $1.79 billion, up 20% year-over-year.

Online Services, as usual, continued to be a disappointment, and posted a modest increase in revenue but a massive operating loss, thanks to aQuantive and Microsoft’s other failed endeavors.

The next couple of quarters are going to be very crucial for Microsoft. Sales should be driven primarily by the launch of Windows 8 and Office 15. We also expect Entertainment and Devices revenue to be boosted by sales of the Surface tablets, and the expected launch of the next Xbox sometime in the next year.


Steve Ballmer, CEO of Microsoft, said:

“We delivered record fourth quarter and annual revenue, and we’re fast approaching the most exciting launch season in Microsoft history. Over the coming year, we’ll release the next versions of Windows, Office, Windows Server, Windows Phone, and many other products and services that will drive our business forward and provide unprecedented opportunity to our customers and partners.”

via Microsoft

Nokia Reports Q2 2012 Earnings; Loses $1 Billion

The much awaited earnings (not really) of Nokia in the second quarter of 2012 have been released, and they are disappointing. Nokia has reported an operating loss of more than $1 billion, with revenues dropping to just $9.3 billion, down nearly 20% year-over-year.

Net sales have been down across the board, with both smartphones and mobile sales showing a decline.

It sold nearly 4 million Lumia units worldwide in Q2 2012, which is in line with consensus estimates, but much lower than its competitors on Android. Even the feature phone unit volumes increased marginally to 73 million units, but Nokia hardly makes much profit on those.

It ended the quarter with nearly $5.2 billion in net cash.

Stephen Elop, Nokia’s CEO, said:

“Nokia is taking action to manage through this transition period. While Q2 was a difficult quarter, Nokia employees are demonstrating their determination to strengthen our competitiveness, improve our operating model and carefully manage our financial resources.

We shipped four million Lumia Smartphones in Q2, and we plan to provide updates to current Lumia products over time, well beyond the launch of Windows Phone 8. We believe the Windows Phone 8 launch will be an important catalyst for Lumia. During the quarter, we demonstrated stability in our feature phone business, and enhanced our competitiveness with the introduction of our first full touch Asha devices. In Location & Commerce, our business with auto-industry customers continued to grow, and we made good progress establishing our location-based platform with businesses like Yahoo!, Flickr, and Bing. We continued to strengthen our patent portfolio and filed more patents in the first half of 2012 than any previous six month period since 2007. And, we are encouraged that Nokia Siemens Networks returned to underlying operating profitability through strong execution of its focused strategy.”

At the rate Nokia is incurring operating losses, it seems like Microsoft’s cash infusions are the only thing keeping it alive.

It needs to figure out a way to make money off its Windows Phone powered Lumia devices or face oblivion. At this point, the latter seems more likely.

While it remains a leader in mobile shipments, it needs to focus on becoming a leader in the smartphone space, which offers much higher margins.

Maybe it should shift to a multi-platform strategy, and hedge its bets on Windows phone by building devices powered by Android too. After all, if Microsoft isn’t exclusive to Nokia, why should it be exclusive to Microsoft’s platform?

via Nokia