Apple CEO and CFO see broad global economic ‘weakening’

“Following fiscal Q1 results that missed expectations on the top line, Apple [yesterday] evening held a conference call with CEO Tim Cook and CFO Luca Maestri in which the two addressed a broad weakening in global economies,” Tiernan Ray reports for Barron’s.

“Asked about the company’s outlook for the quarter, Maestri said growth in revenue was being hit by the rising U.S. dollar — to the tune of 4 percentage points,” Ray reports. “However, he also talked about broad weakness in the global economy: ‘The macroeconomic environment is weakening, particularly the commodity-driven nations, such as Russia, Brazil, Canada, Australia, clearly the economy is weaker than a year ago. One of the things we have done to respond to respond has been to increase the price of some of our products in certain international markets. That has protected our margins both in December and in our guidance, but inevitably over time, the higher prices affect demand. So we are capturing that in our guidance. These are the major reasons.'”

“Cook, asked about the ability to keep selling the iPhone globally, remarked that it is ‘now a dramatically different macro-environment’ from what it was a year ago,” Ray reports. “‘From the currency point of view, we’ve had to adjust pricing in several of these markets,’ added Cook. But he quickly added that the company was feeling the effect of ‘melees in virtually every country in the world.'”

Read more in the full article here.

MacDailyNews Take: There’s no such thing as a free lunch.

Although things are fairly bleak in various countries, from Russia to Brazil, and some other economies tied to — oil-based economies — we do believe that this too shall pass, and that these countries will be great places, and we want to serve customers there. We are not retrenching, we don’t believe in that. Fortunately we are strong enough to continue investing. The downside of economic stress is that some asset prices get cheaper and that sort of thing, this is exactly the period that you want to invest and do so confidently. — Apple CEO Tim Cook, January 26, 2016

SEE ALSO:
Most Apple analysts maintain positive ratings, but cut price targets – January 27, 2015
Piper Jaffray: iPhone resume growth in 2016 despite poor macroeconomy – January 27, 2015
Apple highlights services in search of Wall Street’s love – January 26, 2016
Apple reaps $18.4 billion quarterly profit, the largest ever recorded by a single public corporation – January 26, 2016
Apple beats on earnings; sets all-time records for revenue, net income, and EPS – January 26, 2016
MacDailyNews presents live notes from Apple’s Q116 Conference Call – January 26, 2016
Apple beats Street with all-time record quarterly earnings – January 26, 2016

7 Comments

        1. You wish… Chinese economy seems to be growing noticeably faster than the US.

          Americans can only wish to have that rate of growth. While it may be a dream of American presidents to have the growth rate of China, that will simply never happen with the current American system.

          1. Oh come on. China’s growth is easy as it’s still developing. Lots of cheap labour left to exploit. Lots of people to take advantage of.

            It has little to do with the system, my friend. It has everything to do with the fact that your average American is [globally] quite wealthy because of the system. It’s not perfect, of course… far from it. It’s a system based on greed and there is plenty of inequality built into it… but you can’t compare economic growth with China with a straight face and blame it on the American system.

            A better indicator might be average GDP / person. In the US it’s $54k pp. Canada, by comparison is $50k ( in 2012, Canada’s GDP per person was higher than the US for the 1st time since 1976 ). Russia’s is $13k. China’s is ~$7k and most of its wealth is more concentrated.

        2. Where do you come up with this BS, kent?

          The US president would love nothing more than for Apple and all other US corporations to conduct all their manufacturing here. But it’s not in his power, and Congress has passed bills allowing multinational business to trade with practically no barriers.

          Nixon, a man I assume you admire, was instrumental in trying to open up diplomatic relations with the commies, because his advisors thought that increased trade would lead to liberalization of Chinese government. It didn’t happen — the Party still has a firm hold of the nation. The Chinese people enjoy only the illusion of freedom by having more consumerism than ever, but they are economic slaves.

          The Party in China is showing that, while corrupt and non-democratic, they can still attract corporate business by just undercutting prices of everyone else in the world, by any means necessary. Outsourcing to China has absolutely nothing to do with the US president and everything to do with the greed of corporate leaders, Wall Street, and indiscriminate investors who place profits above principles.

      1. China didn’t become a large economy until they began employing capitalistic practices and allowing ownership of property (two very un-Communist principles). Unfortunately, the Communists still have a stranglehold and property ownership only goes to the government-approved elites through a very corrupt system.

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