“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.
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It cost Apple $5Billion, which would have made Apple beat wall st’s expectations.
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.
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.
Meanwhile, Xerox report it continues to be in decline after loses for the 15th straight quarter and wants to break the company in half.
Losses. Sorry.
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 !!
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.
When the going gets tough, the tough gets going. Now we can see what’s Tim Cook is made of.
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
great job