Third Quarter 2015: How are the Biggest Players Doing?

Graphic:Simon Cunningham
Graphic:Simon Cunningham

The quarterly reports of Amazon, Google, Apple, and Microsoft are always eagerly awaited as they mirror the overall mood of a whole industry. Even more important is a glance at revenue, profit, and future focus. A lot has happened over the past weeks: Google has reorganized into “Alphabet”, Microsoft has officially launched Windows 10, and Amazon has started new and buried failed experiments.

Microsoft Just Acceptable

Microsoft’s sales figures give no reason for rejoicing. Despite the release of Windows 10, turnover fell by 12 percent compared to the previous year. Microsoft has been struggling with its financial direction for a while now. Even though revenues fell profits rose by 2 percent to $4.6 billion. Microsoft’s employees however shouldn’t be too happy as the company intends to lay off 1,000 of them to be better prepared for the future.

Prospectively Microsoft will probably focus even more on the products that have already been successful during this quarter: Office 365, Dynamics (CRM), and Intelligent Cloud are the growth engines of the software and hardware manufacturer. Especially the strong-selling Christmas quarter will show whether and how Windows 10 is going to influence Microsoft’s business figures in the future. The sales figures of xBox One will also play an important role in this. The present report has tactfully kept them secret.

Amazon Makes Profit Again

Despite the recently terminated project “Destinations” Amazon manages to report a profit for the third quarter. Since Amazon’s brisk activity is commonly known they just don’t bother to make a secret of any failed experiments – as Fire Phone shows. Profits rose by 23% to $25.36 billion. Especially the sector “Amazon Web Services” has rapidly grown over the past months and contributed sales of $2.1 billion.

While Amazon had to struggle with the company’s highest loss of $437 million during the previous year, they report a profit of $79 million this year. Currently there’s a lot of rumour about Amazon’s future concerning their efforts of establishing themselves as an autonomous delivery service.

Google aka Alphabet Growing Steadily

The report of the third quarter in 2015 is also the first report for the new holding Alphabet. The company reports revenues of $18.7 billion and a profit of $2.7 billion. Google CFO Ruth Porat states that especially mobile search is the main reason for the positive figures. The quarterly report doesn’t name Google as an independent segment yet. This is only supposed to be done in the upcoming report.

So far the reorganisation from Google to Alphabet hasn’t affected the company’s financial positioning negatively. Google’s founders rather show that even a cutting edge company isn’t immune to structural changes for the sake of flexibility.

iPhone top – iPad flop

Compared to the third quarter 2015, Apple managed to increase their profits by 31 percent to $11.12 billion. Revenues rose from $42.12 billion to $51.5 billion mainly on account of one product: the company generated more than 60% of turnover with the iPhone. Compared with this, the sales figures of iPads dropped significantly. During the prior-year quarter Apple sold 12.3 million iPad devices whereas only 9.8 million were sold during the past quarter. In comparison: iPhone sales rose from 39.2 million to 48 million devices.

Apple’s doing well, no doubt. But the decline of iPad sales gives rise to speculations about the company’s future positioning. Still, Apple understands the Christmas quarter as a chance to sell more iPads in order to maintain their position on the tablet market especially towards Samsung. This is not least due to the new version of the tablet iPad Pro. The fourth quarter will also be exciting with respect to initial figures concerning Apple Music. The present report didn’t deal with this issue because the service, launched on June 30, offers a three-month trial period which is why there aren’t any valid figures yet.

Preparing for Christmas

Amazon, Google, and Apple are still on course for further success – “The Winner Takes It All”, one could say. Not entirely, since the quarterly reports still cause some pain here and there, whether it be cancelled experiments at Amazon or Apple’s low iPad sales figures. Microsoft’s shoe pinches a little harder: revenues drop, profits rise – thanks to strict austerity and partly massive redundancies. But for 2015 the issue’s not over yet as Christmas will push up revenues considerably once again.

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