Why Apple CEO Cook is talking about the dollar and the yuan

“Given the bad news Apple CEO Tim Cook had to deliver last week — about the first of what could be several consecutive quarters of declining iPhone sales — we shouldn’t be surprised that he tried to shift attention Tuesday from Apple’s falling revenues to the turmoil in the currency markets,” Philip Elmer-DeWitt reports for Fortune.

“According to Cook,” P.E.D. reports, “Apple’s anemic 2% revenue growth in the December quarter would have been more like 8% it hadn’t been for the rising value of the dollars Apple pays suppliers for iPhone parts and the falling value of the currencies that overseas customers use to buy those iPhones.”

“What should matter to investors is how management deals with the challenge. The company’s response so far has been to raise prices in markets where local currencies are weakening. As a result, Apple will probably sell fewer devices in those markets, but it should come out of the crisis with its profit margins intact,” P.E.D. writes. “And that, it seems, is what matters to Tim Cook.”

Read more in the full article here.

MacDailyNews Take: Apple just posted a $18.4 billion quarterly profit, the largest ever recorded by a single public corporation. We think the company will manage to survive past the current quarter’s tough compare in terms of iPhone unit sales.

SEE ALSO:
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Piper Jaffray: iPhone to resume growth in 2016 despite poor macroeconomy – January 27, 2015
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

10 Comments

  1. These currency fluctuations affect all companies who trade globally, but for some unfathomable reason, they’re only considered to be a problem for Apple.

    My feeling is that Apple is better prepared for these events than most and therefore is prepared to talk about it while other companies appear to be pretending that nothing unusual is happening.

    1. Other companies don’t hold margins to be the most important thing and price things according to the local market.

      The obsession with margins is crazy. Sometimes you have to reduce margins in a specified to price a product appropriately to local conditions.

      In other words, when you’re a global company, you can’t only translate what US consumers pay. In fact, if anything, the stronger dollar should mean the iPhone goes DOWN in price in the US.

  2. Funny – a lot of companies deal with these headwinds, a lot and yet there stocks continue to chug higher, being a great CEO and a great operation person are two completely different things – beginning to think Tim does not posses both qualities – Wallstreet is definitely not buying what he is selling !!

  3. What hasn’t been talked about is that Apple made huge gains in sales when the iPhone 6 and 6 plus were released in 2014. Apple maintained that level of unit sales in 2015 with the S versions. It is very hard to grow YOY when the year before saw massive growth.

  4. The problem Apple is what have you done for me lately and the problem I had when I was in school. Once you got all A’s you could never get a B+. You are always expected to do better when you reach a point you can’t. Somehow if you still get all A’s or heaven forbid a B+ the stock market considers you a failure. But if you get all C’s but the market believes someday you will be an A student they just know it, you are rewarded (or bribed) to get those A’s someday

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