If you look at what the Tame Apple Press is saying about the result, they are using words like “record sales” “Iphone sales surge” to describe them. However in this case analysts were not fooled and in a phone conference afterwards took Cook to the cleaners.
The main reason was that Apple released its iPhone earlier in China this year and padded out its bottom line with figures that last year would have arrived in the next quarter. Apple claimed net income rose to $11.2 billion in the quarter that ended on September 26, compared with $8.47 billion. Net sales rose to $51.5 billion, up 22 per cent from a year earlier.
This was slightly better than the $51.1 billion analysts predicted. However the difference can be explained by an earlier launch of the iPhone in China, so that they fitted into these sales figures.
The company sold 48 million iPhones during the quarter, a 22 percent jump from last year and slightly more than the 47.9 million analysts’ forecasted. This is hardly a surge and the early launch in China explains this increase. The reality was that that figures were static or less than previous years.
China remains crucial for Apple’s continued growth. On paper sales in Greater China, which includes Hong Kong and Taiwan, nearly doubled to $12.5 billion, though they were slightly lower than in the fiscal third quarter.
The conference call saw Cook more on the ropes. iPad sales dropped to 9.8 million units, down 20 per cent from a year earlier and 10 per cent from the previous quarter. Macintosh sales rose 3 percent to 5.7 million units but this figure was much lower than expected. Apple Watch sales are still being kept a secret which means they are bad.
Analysts were concerned with Apple’s ability to continue growing strongly into 2016. If you factored in the early China launch it could mean that Apple’s next quarter figures will be much lower. With Tablet sales falling an iWatch sales not worth mentioning, Jobs’ Mob is in a difficult position. Analysts appear to realise it, Apple must know it, so why isn’t the press telling us that?
Analyst comments, when they were reported, were negative or mediocre. Tuong Nguyen, a principal analyst at Gartner said he was skeptical and wary about how much more market share Apple can gain in emerging markets. He did not think that more consumers in those markets could buy costly phones.
Morningstar analyst Brian Colello said the forecast was slightly below expectations but investors were pricing in a worse outcome, which was why the stock initially rose after hours only to slump when reality hit home.
Daniel Ives, an analyst at FBR Capital Markets said that the results were expecting negative predictions from Cook, but got a positive December outlook.
What is perhaps annoying is that by some clever footwork Cook and co have managed to stay off the day of reckoning until the next quarter. This will give the company some time to think of something new. But if sales continue to slow and the China market proves saturated then Apple will report a huge drop next time. These figures will be seen as the cracks appearing in the dam.
