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Apple Inc. (AAPL), Google Inc (GOOG) – Big Tech Boys: Even Innovation Needs Iterations

The annual trends for Google Inc (NASDAQ:GOOG) indicate that revenue has grown 112%, from $23.65 billion in 2009 to $50.18 billion in 2012, and the net income has grown 65%, from $6.52 billion in 2009 to $10.74 billion in 2012.

The annual net profit margin has, however, declined from 27.6% in 2009 to 21.4% in 2012. Compared with 2011, revenue increased 32% and net income increased 10.27%. The quarterly trends indicate that the revenue has increased 36% YoY and 8% sequentially. The net profit margin has decreased on a YoY basis from 25.56% (Table II).

Table II

13 Weeks Ending

The annual revenue trends of Research In Motion Ltd (NASDAQ:BBRY) BlackBerry indicate how it lost out to the fresher, more innovative operating systems and applications from Apple Inc. (NASDAQ:AAPL) and Google Inc (NASDAQ:GOOG). While the market for smartphones has grown exponentially, its revenue has declined from about $14.95 billion in 2009-10 to $11.07 billion in 2012-13 (a decline of 26%). Its recently launched Z10 has received very good response and has brought some pride to the die-hard BlackBerry fans.

Importantly, most of the 1 million Z10 devices shipped (55%) were converts from other operating systems. Worldwide, Android accounts for around 70% of the smartphone market. BlackBerry can provide an alternative to this growing market and attempt to regain lost glory.

BlackBerry, meanwhile, is making a resurgence of sorts. It was wiped out of the market due to the phenomenal success of iOS and Android over the last few years. Now that Apple is looking a little jaded, it has smelt blood and is attempting to dent its market share.

In 2011-12, the revenue was $18.42 billion, indicating that the revenue declined nearly 40% in 2012-13. It had a net income of $2.45 billion in 2009-10 but reported a net loss of $646 million in 2012-13. The quarterly trends indicate that while revenue has declined significantly YoY, the margins have started to turn positive over the last two quarters (Table III).

Years of erosion in market share has made the company significantly weak. However, it still has no debt on books and has cash of $2.65 billion. It is trading at a discount to its book value per share of $18.36.

Table III


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