Apple earnings calls are usually a time for celebration and gloating, but for the first time in over a decade the company is poised to post declining profits.
Tim Cook warned Wall Street that this would likely happen due to declining iPhone sales. Have we really reached “peak iPhone”?
Analysts and reporters will be grilling Cook and Apple CFO Luca Maestri during today’s Q2 2016 earnings call. Investors will be looking for signs that Apple still has room to grow. And Cult of Mac will be right here, liveblogging the entire Apple earnings call — and translating the financial gibberish — when the big event starts at 2 p.m. Pacific.
Get in on the action below:
Tim finishes by saying he’s optimistic that people in the US will demand tax code reform.
And that’s it…
“The most important thing for us is we want to have a great customer experience,” says Tim Cook referring to Apple’s increasingly profitable Services category.
The purchase value of the install base of Services grew 27% during the quarter. It’s currently worth $10 billion and could be one of the biggest tech companies in the world on its own.
Apple has 35 stores open in China right with plans to open 5 more next quarter. LTE adoption is growing strong, so Apple is still optimistic about future sales growth in the country.
If Apple had the same upgrade rate on the iPhone 6s as it did on the iPhone 6 “it would be time for a huge party,” says Cook.
“There was a huge difference.”
“We’re thrilled with the response we’ve seen on it,” Cook says. “It is clear that there is a demand there even much beyond what we’ve thought.”
Re: iPad Mini: “One of the challenges with the tablet market is that the replacement cycle is materially different than the smartphone market.”
Tim Cook – NO! I don’t think so.
Is the iPhone SE the new iPad Mini?
Apple has a few hurdles to overcome in India to spark growth, says Tim Cook.
The LTE rollout in India just really begins this year, so we’ll begin to see really good networks come up in India that will help unleash more sales than 3G and 2G networks.
Building sales channels is another obstacle. Carriers don’t sell phones in India, so you have to expand your retail footprint. Apple’s been working on that for a few years, but has more to do to tap into what is now the third largest smartphone market in the world.
Tim Cook says that the company has not yet begun to work on India.
So the iPhone SE is going to be a hit? I want to believe.
Tim says the iPhone SE attracts two types of customers: 1) People who want the best tech in a smaller package, 2) People who want an iPhone but can’t afford the top tier product.
There are more people that fit into category #1 than Apple expected and that may have played into demand exceeding supply.
“It’s great to see the overwhelming demand for it,” said Cook.
When it comes to mergers and acquisitions, Tim says Apple isn’t afraid to go larger than previous purchases like Beats etc. If the technology is good (i.e. the product can improve an existing Apple product or accelerate the company’s entry into a new category) and the people are compatible, Apple will consider buying a company. “It’s more about the strategic fit,” he says.
Tim Cook says the smartphone market is currently not growing, “however my view of that is that it’s an overhang of the macroeconomic environment around the world.” Cook says he’s confident that it will pass and that sales will grow again soon.
Stupid mighty dollar.
Apple is projecting declining profits next quarter too. Revenue grew 33% last year thanks to the huge demand of the iPhone 6. The macro environment is super tough right now though says Luca, and the strong US dollar is another problem for Apple.
Looking forward, Luca says they had such a good June last year that the next report might also be disappointing.
90 percent of Apple’s cash holdings are outside the U.S. Wow.
Precisely, Evan – no one needs a new iPad. They’re almost too good to replace every cycle. My iPad Air 2 is totally useful.
I could use a new iPad. I’m live blogging this from an iPad mini 4. It makes me feels claustrophobic.
I’m really happy with my iPad Air 2, and I’m not sure I need a new one for a while. You did TOO WELL, Apple.
iPad has the market cornered, but no one is buying new ones.
Services kept Apple’s butt out of the fire.
Just think about that shirt he’s wearing in his pic. It’s loud enough to wake up anyone.
I love Luca’s voice, but the way he talks about the economics puts me straight to sleep every call.
One company just makes minimalist, elegant brake pads.
Apple made 15 acquisitions in the past quarter. Most of them are still a secret.
I always get goosebumps when Tim talks about Apple’s magic pipeline.
Tim Cook turns on the hype before handing the mic to Luca.
“The future of Apple is very bright. Our product pipeline has amazing innovations in store.”
I need one right now, Lewis.
Now the iPad talking points. Sales are slumping, but it’s awesome! TBH though, how often do you really need a new iPad?
iPad is the king of the declining tablet market, it seems. People love the new one, but we’re not super sold on the “laptop replacement” bit. Although I wrote like four articles on my phone when my internet went out last week.
Demand for the iPhone SE exceeds supply right now. No numbers again. Apple is working to meet the demand and attract more customers into the ecosystem.
Cook says he sees Apple Watch as a seasonal device like the iPod (i.e. a gift that sells big around the holidays). Still would like to hear some hard numbers.
Nope! Moving on to the SE.
Maybe we’ll get Apple Watch numbers, and SE will be the new one they’re hiding.
Apple Watch unit sales ‘met our expectations’ in the quarter. But no specific numbers other than it’s the best selling and most loved smartphone in the world. Sales in its first year were greater than iPhone sales in its first year.
Apple Pay has 1 million new users per week? I used it to buy pizza last week, so that was cool.
Apple Music has more than 13 million paying subscribers. Watch out Spotify.
India is doing great. iPhone sales were up 56% and Apple doesn’t even have an official store there yet.
Apple’s 95 percent iPhone loyalty rate is “the highest ever recorded for any smartphone.” Sorry, crappy HTC Hero that was my first smartphone.
Upgrade rate for iPhone 6s cycle is lower than the iPhone 6 cycle, but higher than the iPhone 5s upgrade cycle.
“We added a huge number of Android switchers and new to Mac customers,” says Tim. He didn’t provide specific numbers though.
Tim Cook sounds like he needs a cough drop. Someone get Tim a ricola.
It is on! (Stop coughing!)
The iPad is doing horribly despite the release of the iPad Pros (big and little). Sales are down 40 percent over the last two years. I’m not sure it’s a hardware problem though.
If you want to listen along, hit the Apple events page.
At least the music is good – “Caribou” by Silver, then “She Just Likes to Fight,” by Four Tet, and now “High Hopes” by Onra
10 minutes until Tim Cook has to explain to investors why his company only managed to bring in $50 billion and only has $233 billion in the bank.
Apple didn’t break out iPhone SE sales numbers, but apparently it wasn’t a giant hit. Maybe we’ll hear more during the earnings call.
Apple’s performance in Greater China was remarkably bad this quarter. Revenue from the area was down 26%
Earnings briefing is out, and so is Buster’s report: iPhone sales slump breaks Apple’s 13-year growth streak. So, not great news.
For a bit of perspective on past Q2 earnings, and what “peak iPhone” might look like, here are iPhone unit sales from previous years.
2016: 51.2 million
2015: 61.2 million
2014: 43.7 million
2013: 37.4 million
2012: 35.1 million
2011: 18.6 million
Here’s hoping Luca’s suave Italian accent helps soothe investors and the stock price — currently $104.35 — doesn’t tank TOO hard.
BTW, in case you’re not familiar with Luca Maestri — here’s a picture of Apple’s CFO. He’ll be the guy with the suave Italian accent. Everybody knows what Tim Cook looks like.
The awful, terrible, horrible numbers that reveal Apple “only” sold 50 million-plus iPhones?
We should have the actual numbers any minute, right Buster?
The ‘economic headwinds’ of winter froze Apple’s growth. Can’t wait to hear Luca and Tim drone on and on about currency issues and other junk.
Right-o. But now we finally get to see just how bad “peak iPhone” really is. (Hint: Not that bad.)
Last time, it was actually winter.
Last time, Apple was all “winter is coming” — well winter is finally here.
Not long enough.
Hey, we’re back!
Has it already been three months since the last (mostly boring) earnings numbers?