Apple’s success takes toll on other companies

Associated Press

NEW YORK

Apple is set to report another record quarterly profit today, continuing the relentless string of results that’s made it the world’s most-valuable company. Those profits don’t come out of thin air: A range of businesses — from the company’s wireless carrier friends to its PC-making foes — are seeing their profits melt away and flow to Apple’s bottom line.

Apple’s success is good for the U.S. economy, and some businesses, such as software developers and memory-chip makers, have benefited from the disruption Apple is causing. But its enormous gains have resulted in others’ pains, sometimes in unexpected places.

AT&T Inc., for instance, took a chance on Apple’s unproven phone in 2007, but the company might be regretting that decision. Since it became the first U.S. phone company to carry the iPhone, its stock is down 25 percent. Apple’s is up 415 percent.

Best Buy has sold Apple products off and on since the late 1990s, but analysts now see Apple as a major threat to the U.S.’s only remaining national big-box electronics chain.

Worst off, of course, are rival phone makers. Apple has just 8 percent of the global phone market but makes about 80 percent of the industry’s operating profits.

Wall Street analysts expect Apple Inc. to post a profit of $9.2 billion for the January to March quarter when it reports today. That’s roughly in line with the profit expected from the world’s largest oil company, Exxon Mobil Corp.

The majority of the profit will come from iPhone sales, especially now that three of the four national U.S. wireless carriers — AT&T, Sprint and Verizon — sell the phone.

But, for a phone company, selling an iPhone is a bit of a gamble. The company pays Apple an average of $659 for iPhones and then sells them to consumers for between $50 and $200.