Apple still a "computer hardware" company?

In one of our last post we have asked ourselves, if it is still appropriate to group Apple under the "computer hardware" sub-industry.

 

Has Apple become more and more a software company over the course of the last years?

Personal impressions might lead one to think so. iTunes and the App-Store could make you think that these are the real money printing machines. And an iPad or iPhone is not really a "computer".

 

Let's look at the facts

In order to find our what fraction of Apples (AAPL) revenue comes from "software" vs. "hardware" we take a look at the last annual report from Apple. This means we are are going to measure the relative contribution of each product category to Apples total net sales. Once we transform that data into a nice chart we end up with the following...

A closer look at the earnings season

In our previous post we looked at the different sectors and sub-industries, that make up the S & P 500 index. Now we take a closer look at a "typical" earnings season and focus on some individual sub-industries. In our example below we are only looking at stocks belonging to the financials sector and in particular only three different sub-industries: Banks, Diversified financial services and REITs. The chart shows the number of S&P 500 companies filing their earnings results each day colored by the sub-industry.

A look at Industry Sectors and Sub-Industries

Industry Sectors

The S & P 500 companies can be divided in to 10 sectors:

• Consumer Discretionary (82)
• Consumer Staples (42)
• Energy (41)
• Financials (84)
• Health Care (53)
• Industrials (63)
• Information Technology (66)
• Materials (29)
• Telecommunications Services (7)
• Utilities (33)

Many different companies (stocks) belong to each of these sectors, as you can see from the numbers in brackets (counting only the S&P 500 companies). In order to further distinguish different companies in each sector, the stocks are grouped in sub-industries...

A look at the typical earnings season (for stocks)

Let's have a look at the typical earnings season.

We divide the year in four quarters like: January-March,  April-June, July-September and October-December. For the sake of simplicity we assume all four quarters are equal (they probably are not equal, but let's anyway assume it.) Next we look at each week for that quarter and count the number of S&P 500 companies, which are filing their quarterly or annual reports in that week. (We focus on the S&P 500 to keep things simple again.) If we plot that analysis in a nice chart we get something like this...