Apple Inc. (AAPL): The Revenue King

I think one of the most telling figures we can look at is Apple’s gross margin. In 2012, 53% of Apple’s revenues were derived from the iPhone. This is a device that requires parts, technology, and labor to produce, and yet their 2012 gross margins were 43.9%. Google is a company that acquires 79.2% of its revenues from ads, and its 2012 gross margins were 58.9%.

Google only generated $296 million through apps in 2012. Apple generated nearly $8.1 billion through iTunes and iOS Apps. While these figures are combined, let’s break it down for perspective. $296 million is only 3.65% of Apple Inc. (NASDAQ:AAPL)’s $8.1 billion. Surely iTunes didn’t account for 96.5% of those revenues. After all, there were nearly 20 billion iOS downloads in 2012 alone.

Are revenues really important? For a company, absolutely. However, if we look at it from an investor’s view, which company provides the most bang for you buck? Both companies have seen annual increases for over a decade in earnings per share, revenues, and net income. Apple does offer a 2% dividend yield — Google doesn’t offer dividends. Google offers a 5.3% FCF yield while Apple’s is 12.45%. Obviously, Apple is the cheaper of the two companies, but in recent months its performance has obviously been worse. So, Apple Inc. (NASDAQ:AAPL) may offer more bang for your buck, but no one knows how low the stock will fall.

The Foolish Bottom Line…

Apple and Google are both great companies. They have both changed the way we view certain things, whether it be smartphones or how we ‘surf the web.’ Value investors should be ecstatic at how cheap the company has become with its recent fall, but they shouldn’t overlook Google, which is fairly priced. The one thing we do know: Apple will find ways to generate revenue one way or another.

The article Apple: The Revenue King originally appeared on Fool.com and is written by Tyler Wofford.

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