On its face, the earnings conference call was a cordial one for Apple. But it was sure interesting listening to investors from major institutions simultaneously kowtow to CEO Tim Cook while hounding him for specific reasons as to why quarterly earnings fell for the first time since 2003.

And yet, there was more behind the 13 percent drop than you know.

While iPhone unit sales have dropped 16 percent to 51.2 million, iPad sales declined 19 percent to 10.25 million. Mac sales fell by 9 percent to 4 million units. We should note that the figures don’t reflect products introduced this quarter. Tim Cook, though, is excited about consumer response to the new devices — namely, the iPhone SE — and expects a better spring quarter for Cupertino in part because of it.

iphone se review pics (18)

“We’re thrilled with the response we’ve seen on [the iPhone SE],” Cook said. “We’re attracting customers that we previously didn’t attract, that’s great.”

Product pricing pressures will continue to push down with the introduction of the iPhone SE’s lower sales price and with a planned reduction of higher-end iPhone inventory — a cut valued at some $2 billion. We can surely expect to see the average iPhone sales price drop like a rock from this quarter’s reported $642.

Strictly speaking about the lack of iPhone growth, Cook said the iPhone 6s was “a lot lower” than the iPhone 6 in terms of time-relative sales, but “slightly higher” than the iPhone 5s — he put more emphasis on the latter measure. The executive is also confident that the company’s products can fight smartphone saturation in developed markets, characterizing it as “good room for growth.” There’s also optimism on iPad sales next quarter as we’re told to see the best year-on sales comparison in “some time.”


Halfway around the globe, it seems that the Chinese market (made up of Hong Kong, Taiwan and the mainland) has weakened, but only slightly and after last year’s growth of 81 percent. The hardest hit business was in Hong Kong thanks to a pegged currency exchange with the strong US Dollar. Still, the situation is “a lot more stable than what’s the common view of it.” The mainland will see five new Apple Stores this coming quarter, bringing the total to 40 outlets.

Apple saw better times in India with a 56 percent jump in sales with growth expected as the nation develops its LTE network and the company improves relations with a deeply entangled web of retailers.

In terms of services, the value of Apple’s install base grew 20 percent over the year, now worth $10 billion. If there’s one thing Apple knows how to do in its ecosystem, it is to capitalize on every last bit of it.

And the company can afford to take a long position on services like Apple Pay, currently only a blip in the numbers — it reported cash reserves of $232 billion this quarter. Even with a revenue dip, it netted income of $10.5 billion.


The enormity of all these numbers gives off the impression that Infinite Loop cannot be sunk. It’ll take more than natural decay to kill the giant off quick. But if investors are looking for sonic growth to feed off of, it won’t be from this company in the near future. And that’s what the “death of Apple” is all about.

Source: Apple

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