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Category: Apple

Broadcom fourth-quarter profit, revenue top analysts' forecasts

Broadcom earnings top analysts' expectations

Apple Inc. sold 37 million iPhones and 15 million iPads during its record holiday quarter. Those are also happy numbers for Irvine-based Broadcom Corp., which makes microchips for the popular Apple devices and many others.

Broadcom reported a better-than-expected fourth quarter Tuesday, beating Wall Street estimates for quarterly revenue and earnings per share despite enduring profit and sales declines from the same period a year earlier.

The company's stock rose 1.98%, or $0.68, to $35.02 in after-hours trading following its earnings announcement. Since Jan. 1, the company's stock has risen 17.44%, a welcome jump after a rough 2011 that saw that company's stock drop 33%, from $43 to $29.

The market for semiconductor chips was bumpy in 2011, and Broadcom saw declining consumer interest in digital television sets, one of the products for which it makes microchips. The industry has also been recovering from major flooding in Thailand that led to a shortage of hard disk drives used by many computing devices.

Still, the company's leadership is optimistic, projecting revenue for the current quarter of between $1.7 billion and $1.8 billion, above the $1.73 billion analysts expect.

"Broadcom delivered solid results in 2011, as we gained significant market share, secured record design wins across our businesses, and delivered record revenue and cash flow from operations," Scott McGregor, Broadcom's chief executive, said in a statement. "We will remain focused on product innovation and engineering execution that position us to grow faster than the industry."

Broadcom has about 20 lines of business, making communications chips for smartphones, tablets, televisions, set-top boxes and large-scale Internet servers. To stay competitive in the fast-moving electronics business, the company often buys smaller firms to acquire their chip design technology and know-how, and wraps the new teams into its main design business to work alongside other engineers from around the globe. It has acquired 46 companies since its founding in 1991.

The company reported $1.82 billion in revenue for the quarter, higher than the Wall Street consensus of $1.8 billion but a 6.4% decrease from the same period a year earlier. Its adjusted earnings per share were 68 cents -- Wall Street expected 65 cents -- a 25% decline from the fourth quarter of 2010.

[Correction, 4:55 p.m., An earlier version of this post said Broadcom saw declining user interest in set-top boxes.  The company mentioned a slide in the demand for its digital televisions as a reason for revenue decline, not set-top boxes.]

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Photo: A Broadcom mobile multimedia circuit board in 2010. Credit: Mark Boster/Los Angeles Times

Apple vs. Samsung: Galaxy Tab 10.1 sales ban upheld in Germany

Samsung Galaxy Tab 10.1

Samsung was dealt a loss in its ongoing patent battle with Apple as the South Korean electronics maker's request to overturn a ban on the sale of its Galaxy Tab 10.1 tablet in Germany was denied.

A Dusseldorf regional appeals court upheld the August 2011 sales injunction of the Galaxy Tab 10.1 and said that Samsung's Galaxy Tab 8.9 also should be banned from being sold, according to a report on the website FOSS Patents by patent expert Florian Mueller.

Although the decision hurts Samsung, the ruling may also be a setback for Apple. The reasoning behind the court's decision wasn't because of Apple's claims that the Galaxy Tab 10.1 infringes on the design patents for the iPad tablet. Rather, "the appeals court based its decision on a violation of German unfair competition law," Mueller reported.

The injunction against Galaxy Tab 10.1 sales in Germany cited Apple's design patents as the reasoning for pulling the Samsung tablet off store shelves.

In an effort to not miss out on the growing tablet market in Germany, Samsung redesigned the Galaxy Tab 10.1 and then re-released a new German version called the Galaxy Tab 10.1N, which is allowed to be sold, though Apple has requested a sales ban on that product too.

The Dusseldorf appeals court ruling is the latest in an international fight between Samsung, Apple and their respective teams of lawyers. Last week, Apple was denied a requested sales ban on the Galaxy Tab 10.1 in the Netherlands, where the two companies are locked in a patent battle.

Earlier this month, Apple filed two new patent suits against Samsung in Germany, seeking a ban on 10 Samsung phones and five tablets. Last month, a U.S. district court in San Jose denied Apple's request for a ban on the Galaxy Tab 10.1 before a July trial on Apple's lawsuit against Samsung in that court.

In December, a temporary ban on the Samsung tablet in Australia expired in a related suit between the two tech giants. The Australian dispute is set to go to trial in March, and other suits have been filed across Europe and Asia.

While the two companies are rivals and suing to block the sales of one another's products, Samsung and Apple are also business partners. Samsung, for example, manufactures the Apple-designed A4 and A5 processors found in the iPhone 4, iPhone 4S, iPad 2 and iPod Touch, among other components, such as flash memory, inside of many Apple devices.

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Photo: A Samsung Electronics' Galaxy Tab 10.1 tablet on display this month at a company showroom in Seoul. Credit: SeongJoon Cho/Bloomberg

Apple hires John Browett, of UK's Dixons, to head retail business

BrowettFor Apple Inc.'s newly appointed head of retail, the Genius Bar is high.

The company said on Tuesday it had hired John Browett, chief executive of European technology retailer Dixons, to head Apple's global fleet of 361 stores, starting in April.  Apple's fast-growing chain of stores pulled in $6.1 billion in sales last quarter, a nearly 60% jump over the same period a year ago, and accounting for 13% of the company's revenue.

Apple stores are known for their clean, spacious look, attractive architecture, and attentive customer service members.  The company also has a penchant for opening the stores in marquee locations, including New York's Grand Central Station, which took the wraps off of an Apple store in December.

Meanwhile Dixons stores, like the PC World pictured here, are reminiscent of U.S. chains Best Buy and Fry's Electronics; lots of square footage, row upon row of shelves packed with products and, frequently, bright primary color schemes. (At Best Buy, the employees are known as "Blue Shirts.")

The apparent gap between that aesthetic and the minimalist, elegant look and feel of Apple stores led some observers to wonder whether Browett's approach might clash with Apple's. 

But Tim Cook, Apple's chief executive and Browett's new boss, wasn't worried.

“Our retail stores are all about customer service, and John shares that commitment like no one else we’ve met,” Cook said in a statement.

Browett replaces Ron Johnson, who built Apple's retail chain into what it is today, and who left last June to become chief executive of J.C. Penney, and who is trying to simplify the way the old-line department chain works (among the strategies for its 1,100 stores: fewer coupons, fewer sales and lower overall prices). 

Browett will move in the other direction, from a chain of 1,200 stores that operate across Europe and sell products from hundreds of manufacturers, to a network of smaller storefronts that sell a relative handful of products, nearly all of them from Apple.

Apple executives are likely betting that Browett's knack for retail isn't reflected by Dixons stock performance. The company's stock prices have dropped more than 90% during Browett's tenure, which began in 2007.

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Photo: John Browett will take on his new job at Apple as senior vice president of retail in April.  Credit: Associated Press

Obama and Romney campaigns use Square for fundraising

Square

Barack Obama's use of social media is credited with helping him reach out to voters in a groundbreaking way that helped him win the 2008 presidential race. In 2012, the Obama campaign is eying a new way to reach voters and donors too -- Square.

The president's reelection campaign, as first reported by Politico, is outfitting its staff across the U.S. with the small plastic smartphone credit card readers and mobile payment apps from Square, the San Francisco start-up run by Twitter co-founder Jack Dorsey.

But just as the Obama campaign isn't alone in its embracing of social media this year, it too isn't alone in deploying Square for easier, faster fundraising on the campaign trail. On Tuesday, Republican Mitt Romney's campaign announced it too would be using Square for fundraising in Florida, where Romney is facing rivals Newt Gingrich, Ron Paul and Rick Santorum in a Republican primary.

"We have plans to roll it out nationally but right now we're using Square just in Florida as a sort of beta test," said Zac Moffatt, the Romney campaign's digital director. "The challenge on this sort of thing is never with the technology, it's with the compliance. We're making sure everything we're doing follows fundraising rules and is compliant with the FEC [Federal Election Commission] and that it works well. So, for now, were just focusing on making it all work on this smaller scale, but we'd like to scale this out in time, the right way."

Moffatt said the Romney campaign has been talking to Square about how to best implement the company's card reader and app for "probably about six months. This is one of the challenges we face relative to the Obama campaign -- we have only so much manpower. So we've had to plan this out the right way so that we're using the resources we have in an effective way."

To aid its ability to scale-up its use of Square, the Romney campaign is considering developing its own Square-compatibly app that a supporter could download to their smartphone to make a donation or possibly even collect donations on behalf of the campaign -- but that's an idea that hasn't been finalized just yet, Moffatt said.

The campaign looked to Square for fundraising because of the company's ability to turn a smartphone into what is essentially a mobile cash register with a simple app download and a Square card reader in the headphone jack.

"Ease of use is a big part of why we're using Square," he said. "Anything that reduces the barrier for entry is a No. 1 priority for us. Our apps, well that's something to think through. We still have some things to figure out -- whether or not the Apple is going to take 30% of a donation or not, details like that. But we're always looking to get as close to one touch donations as we can."

For the sake of convenience, Moffatt said, all of the Romney's campaign's Square usage will be iPhone based for now, though Android phones may be added in the future. The "beta test" will take place Tuesday night at the Romney campaign's election party in Florida, he said.

"There will be thousands of people there, so we'll be using Square for merchandise sales and fundraising," Moffatt said. "There will be lots of things like this in 2012 and the question always is, does this technology work for us? We have a lot faith this could be something pretty powerful for us moving forward."

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Photo: A demo of Square's card reader and iPhone app in action. Credit: Square

Demand for iPhones in China could skyrocket, analyst says

Cleanup of Apple store in Beijing after riots related to iPhone 4S launch

What do tenacious chief executives dream about during their four nightly hours of fitful sleep?

How about a world in which hundreds of millions of people desperately want to buy your product -- so much so that riots break out in long lines while they wait in front of your stores. Meanwhile, although you're already the world leader when it comes to high-speed, high-efficiency manufacturing, your legions of factories simply cannot churn out enough iPhones to satisfy demand.

Oops, I let the cat out of the bag there. Because yes, there's a good chance Apple Inc. Chief Executive Tim Cook is having a version of this very dream -- a kind of nightmare of success in which you fear that a huge opportunity right under your nose is simply too huge to take advantage of.

For some context, Apple sold 72 million iPhones in its fiscal 2011, a staggering number that required all the muscle of the world's most valuable technology company, as well as a network of Asian factories pumping out the devices at a breakneck pace. The sales came from more than 100 countries.

Now Chinese consumers may want to buy nearly that many iPhones all by themselves.

That may well happen, says Morgan Stanley analyst Katy Huberty, who in a note to investors guessed that Apple may soon be selling 57 million iPhones annually in China, capturing 60% of the projected market for smartphone buyers there. That would be a sixfold increase from the 10 million iPhones Chinese consumers bought in 2011. 

The pent-up demand for the iPhone in China is hard to overestimate. The nation's leading carrier, China Mobile, has 650 million mobile subscribers, according to Huberty (compared with about 200 million for second-place China Unicom, which offers the iPhone). China Mobile does not technically support the iPhone because its network isn't compatible. But that hasn't stopped 10 million of its customers from finding ways to use the device anyway.

Starting this year, China Mobile may flip on its next generation 4G mobile network. If analysts are correct, that upgrade might prove beneficial for the iPhone 5. The next version of the device, which observers guess may hit stores in the summer, is likely to work on the faster 4G networks.

That day may well bring "double happiness" to the folks in Cupertino, Calif.

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Photo: Workers clean the windows of an Apple store in Beijing this month. Customers who had waited overnight for the launch of the iPhone 4S turned angry and pelted the flagship store with eggs after it failed to open. Credit: ChinaFotoPress / Getty Images

Apple's Tim Cook responds to accounts of poor factory conditions

A person injured at a Foxconn facility arrives at a hospital last year
Apple Inc.'s chief executive responded to a wave of negative attention to conditions at overseas factories that make its products, saying the insinuation that Apple doesn't care about the welfare of its workers is "offensive."

"Unfortunately, some people are questioning Apple’s values today," Tim Cook wrote in an e-mail to Apple employees. "Any accident is deeply troubling, and any issue with working conditions is cause for concern."

A series of articles in the New York Times has brought new focus on Apple's highly profitable production strategy, which relies heavily on Chinese workers who live in dormlike factories and spend many hours assembling devices. The safety records and working conditions in those factories have been questioned, and Apple's labor practices received intense scrutiny in 2010, when more than a dozen workers at  Chinese iPhone plants committed suicide

The later New York Times article quoted former Apple and Foxconn employees saying that Apple prioritized profit and production speed above worker welfare. 

The company was trying to address problems in its factories, one of the sources said, “but most people would still be really disturbed if they saw where their iPhone comes from.”

In Cook's note, first published by 9to5Mac, he said that Apple was a world leader in improving overseas working conditions, and will continue to work hard to find and fix problems.

"We will continue to dig deeper, and we will undoubtedly find more issues," Cook wrote.  "What we will not do — and never have done — is stand still or turn a blind eye to problems in our supply chain. On this you have my word."

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Image: A person injured by an explosion at the Foxconn factory in May 2011 arrives at the Sichuan People's Hospital in Chengdu in southwest China. Credit: Associated Press.

IPad down to 58% of tablet sales as Android catches up

Tablet_consumer

When asked if the emergence of new, lower-cost tablets was affecting the success of the iPad this week, Apple Inc. Chief Executive Tim Cook said he wasn't seeing it.

"I looked at the data, particularly in the U.S., on a weekly basis after Amazon launched the Kindle Fire, and I wouldn't -- in my view there wasn't an obvious effect on the numbers plus or minus," Cook said.

But one clear minus was Apple's declining share of the growing tablet market. Despite gang-buster sales last quarter, the iPad has lost more than 10 percentage points of market share to rival Android tablets since the fourth quarter of 2010, according to a new report from research firm Strategy Analytics.

The iPad dropped to 57.6% of the tablets sold during the most recent fourth quarter, from 68.2% a year earlier, while Android rose to 39.1% from 29.0% a year ago, the report said. While Apple shipped 15.4 million iPads during the quarter, Android makers shipped 10.5 million tablets, more than tripling the 3.1 million they shipped a year earlier.

The Android surge was led primarily by tablets from Amazon and Samsung, according to Strategy Analytics' Neil Mawston.

"Android is so far proving relatively popular with tablet manufacturers despite nagging concerns about fragmentation of Android’s operating system, user-interface and app store ecosystem,” Mawston wrote in a release attached to the report.

The report also noted that global tablet shipments rose to 66.9 million units in 2011, nearly quadrupling the 18.6 million shipped in 2010.  Devices "shipped" are those that manufacturers sell to retailers, and do not always represent final consumer sales numbers, especially when tablet makers overestimate the demand for their products.  But Mawston said the tablet shipment numbers in this case were a fair representation of the number consumers bought.

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Image: Tim Perkins checks out the $199 tablet from Amazon.com at a Best Buy store in L.A. Credit: Lawrence K. Ho / Los Angeles Times

Motorola sues Apple over patents, probably with Google's blessing

Android-apple

The power of mobile technology: Never before have consumers been able to hold so many lawsuits in their hand.

Motorola Mobility Holdings Inc. has just thrown another baton in the smartphone lawsuit parade that has stretched to courtrooms across the globe, as phone-makers sue one another over similarities in their mobile devices, which are packed with patent-protected circuits and widgets from dozens of companies.

Motorola has  filed suit against Apple Inc., purveyor of the mega-blockbuster iPhone (the device lifted Apple to $46 billion in sales in its most recent quarter).  Apple is an increasingly bitter rival of Google Inc., which agreed to buy Motorola in August, a deal that is still awaiting regulatory clearance.

As patent observer Florian Mueller noted, Google probably had to approve Motorola's lawsuit, given that part of the buyout terms appear to forbid Motorola from filing lawsuits without Google's explicit permission.  Google has not directly sued or been sued by Apple in this matter -- the two compaies are fighting their legal war by proxy.

Phones that run Google's Android operating system have collectively outsold the iPhone, and Apple is none too happy about that.  The Cupertino electronics maker has initiated a flurry of lawsuits against Android phone manufacturers, including Samsung Electronics and HTC Corp., alleging that the companies "slavishly copied" the iPhone's signature look.

But Apple is finding that big legal wins are hard to come by.

Now Motorola is trying to make things even more difficult for its rival. In its second action against Apple in the U.S. District Court in the Southern District of Florida, the company wants the court to ban iPhone sales.  Motorola alleges that Apple devices infringe on six of its patents, including one for a phone with a "concealed antenna," and another about keeping data on "multiple pagers" synchronized.  Motorola, as children of the 1990s will recall, made a lot of pagers -- they still do.

For updates in this saga, make sure to keep your pagers on.

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Harvard study finds the iPad can be a pain in the neck

Ipad

Apple sold a record breaking 15.43 million iPads in the last three months of 2011, which means a lot of people are starting to use tablet computers. And with last week's news that Apple is planning to bring textbooks to the iPad -- well, that's a lot more people who may start to use tablets, too.

But, do they know how to use them safely?

A new study published by researchers from the Harvard School of Public Health, in conjunction with researchers at Microsoft (a long-time Apple rival), is the first of its kind to examine the physical effects on the head, neck and shoulders of spending time staring at a tablet.

The good news is that it is not all bad news. The researchers found that people are more inclined to move around and shift positions when they use a tablet compared with people who are sitting at a desktop computer. That's definitely good. However, tablet users that hold the device almost at their lap, or rest the tablet in a case on their lap, are putting a lot of strain on the neck muscles -- much more than someone using a laptop or desktop computer.

"If you think about your position when you are hunched over looking down, your head is hanging out over space, so you are using your neck muscles to support the weight," said Jack Dennerlein, director of the Harvard Occupational Biomechanics Laboratory, and lead author of the paper.

Definitely not good.

In the paper, published earlier this month in the peer reviewed "Work: A Journal of Prevention, Assessment, and Rehabilitation," the researchers identified four ways that people use tablets — the lap-hand (holding the tablet down at your lap), lap-case (resting the tablet in a case on your lap), table-case (resting the tablet in its case on a shallow angle on a table) and table-movie (resting the tablet at a steep angle on a table).

They concluded that the best position is the table-movie position because it is the only position in which the user's posture approached neutral. All the other positions put a lot of strain on the user's neck muscles.

Dennerlein said those who use tablets should make sure to move around as much as possible -- "Don't get stuck in one position!" he said. The next most important thing is finding a good case that allows you to prop up your tablet at the most comfortable angle. He added that companies that distribute tablet computers to their employees should make sure to give out cases as well, in order to prevent injuries.

Next up, Dennerlein and his team plan to tackle the effect of tablet computing on the arms and wrist.

One additional note: When we reached out to Apple to see if they had any comment on the ergonomics on using the iPad, a spokesperson pointed us to a large section on ergonomics on Apple's website. The section is impressive, but the suggestions and diagrams are all related to desktop computers, and the site did not have any recommendations on how to most safely use a tablet. We called the rep to see if we had missed anything, but we didn't hear back by press time.

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Photo: A model looking at her iPad in a position that the Harvard study says is bad for your neck. Credit: Markus Schreiber / Associated Press

As Apple shares jump, firm briefly passes Exxon as most valuable

Applechina

Apple Inc.'s blowout quarter has pushed the electronics maker back into a neck-and-neck race with Exxon Mobil Corp. for the title of the world's most valuable company.

On Wednesday, Apple's stock opened at $454, nearly 7% higher than it had closed on Tuesday, and an all-time high for the company. That put its market value at north of $418 billion, surpassing Exxon Mobil, which had a slower start to its trading day as its market value shrank to around $413 billion.

But the two later switched places as Apple shares erased some of their gains and Exxon climbed back into first place with a market cap of $416 billion, about a billion ahead of Apple.

[Update, 11:06 a.m.: Apple is back on top, $417 billion to $415 billion.]

Apple has passed Exxon a few times over the last year, only to be leapfrogged once again by the oil company.  Both companies have seen their stock price and market value shoot up in the list six months.  In August, when Apple first passed Exxon, the companies' market value was each closer to $339 billion.

On Tuesday, Apple said that during its holiday quarter it had sold 37 million iPhones and 15 million iPads, both sales records for the company, and far outstripping analysts' expectations.  Chief executive Tim Cook said Apple had been having trouble keeping up with demand for the new iPhone 4S.

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Photo: Thousands of Chinese customers queue up outside an Apple store in Beijing.  Credit: AFP/Getty Images

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