Tim Cook: Apple Saw 'Great Improvement' in China in Q3 2019

[MacRumors]

Thanks to trade-in programs and other promotions, Apple saw significant improvement in iPhone sales in China, Apple CEO Tim Cook said today during today's earnings call covering the third fiscal quarter of 2019.

Cook said that Apple saw "great improvement" in China, returning to growth in constant currency in Greater China with improvements in year-over-year iPhone performance compared to the last two quarters.

We're happy with our performance across the board, including a return to growth in mainland China. We accomplished this despite strong headwinds from foreign exchange, which impacted the top-line growth rate by 300 points compared to a year ago, equivalent to $1.5 billion of revenue. In constant currency, our revenue grew in all five of our geographic segments.

Cook went on to say that Apple is "encouraged" by the results of the initiatives it launched earlier this year, with the company seeing a strong customer response to in-store trade-in and financing programs. iPhone in retail and online stores returned to growth on a year-over-year basis in June, said Cook, and the active installed base of iPhone users reached a new all-time high.

Despite the improvements, iPhone revenue was down during the quarter. The iPhone brought in $26 billion, down from $29.5 billion in the third quarter of 2018. For the first time, the iPhone was responsible for less than half of Apple's revenue, with services and wearables making up for the decline in sales.

Cook said that later this year, Apple has "several new products" that it can't wait to share with customers, without going into details. Apple also has multiple services on the horizon, including Apple Card (coming in August), Apple Arcade, and Apple TV+.

Article Link: Tim Cook: Apple Saw 'Great Improvement' in China in Q3 2019

 

[saudade]

Glad i bought many apple stocks back in 2007 easy money

 

[Bawstun]

“Great improvement” is codespeak for only a -4.X% decline instead of the double digits in the -20%’s of the last two quarters, lol.

 

[5105973]

Good news for investors.

It’s hard for me as a consumer to care. So I don’t. I think I’m a bit on China overload where Apple is concerned. Tim seems enamored of their market in a way that seems almost personal. Maybe it’s my imagination but I think I see more animation and enthusiasm when he is talking about China related topics than I detect in his speech about other aspects of Apple’s business.

But it’s an interesting tidbit of business news after so many news articles highlighting their struggles in China. I really hadn’t expected any of their initiatives to work because I thought their problems in China went beyond price sensitivity.

 

[Bawstun]

Good news for investors.

It’s hard for me as a consumer to care. So I don’t. I think I’m a bit on China overload where Apple is concerned. Tim seems enamored of their market in a way that seems almost personal. Maybe it’s my imagination but I think I see more animation and enthusiasm when he is talking about China related topics than I detect in his speech about other aspects of Apple’s business.

But it’s an interesting tidbit of business news after so many news articles highlighting their struggles in China. I really hadn’t expected any of their initiatives to work because I thought their problems in China went beyond price sensitivity.

Sales declined over 4% in China. It hasn’t worked, it’s just media spin. I mean, compared to the 20%+ decline of the past two quarters, I guess a 4.% loss is an improvement, technically, but it’s still a loss and hasn’t been reversed into a gain. I doubt they ever will.

 

[code-m]

Good news for investors.

It’s hard for me as a consumer to care. So I don’t. I think I’m a bit on China overload where Apple is concerned. Tim seems enamored of their market in a way that seems almost personal. Maybe it’s my imagination but I think I see more animation and enthusiasm when he is talking about China related topics than I detect in his speech about other aspects of Apple’s business.

But it’s an interesting tidbit of business news after so many news articles highlighting their struggles in China. I really hadn’t expected any of their initiatives to work because I thought their problems in China went beyond price sensitivity.

iPhones are manufactured in China, as there are no tariffs (I don’t believe) as it ships from China to its local stores or direct from factory, I am surprised Apple does not sell these cheaper as there is no shipping by sea or air to contribute to the overhead.

 

[now i see it]

Cook said that later this year, Apple has "several new products" that it can't wait to share with customers, without going into details.

did someone leave a broken record spinning on the turntable?

 

[Mactendo]

Sales declined over 4% in China.

But he says ‘return to growth’?

 

[Mactendo]

as it ships from China to its local stores or direct from factory, I am surprised Apple does not sell these cheaper as there is no shipping by sea or air to contribute to the overhead.

If Apple sold iPhones there cheaper on purpose, then the gray market would export them to other countries.
There is already an issue with phones from Hong Kong being resold to China, because in Hong Kong iPhones are cheaper due to lower local taxes.

 

[masotime]

Despite the improvements, iPhone revenue was down during the quarter. The iPhone brought in $26 million, down from $29.5 billion in the third quarter of 2018.

I'm guessing that should be $26 billion

 

[code-m]

If Apple sold iPhones there cheaper on purpose, then the gray market would export them to other countries.
There is already an issue with phones from Hong Kong being resold to China, because in Hong Kong iPhones are cheaper due to lower local taxes.

Would it not cut into any savings by shipping these to other countries. Plus a declaration has to be submitted upon entry. Am I missing something. I am aware when iPhone was not offered in China and people would purchase in USA and sell it for a premium due to high demand and no availability and Apple eventually closed that short lived opportunity.
[doublepost=1564530677][/doublepost]

But he says ‘return to growth’?

What would be interesting is if the Chinese government is subsidizing the tariffs to build in China and when shipped to USA it’s like tariffs were not enforced.

China owns a lot of USA debt, they are in it for the long haul not the short stint of a term or two. If Apple does have to adjust for tariffs it is still the buyer being penalized.

 

[Mactendo]

Would it not cut into any savings by shipping these to other countries. Plus a declaration has to be submitted upon entry. Am I missing something. I am aware when iPhone was not offered in China and people would purchase in USA and sell it for a premium due to high demand and no availability and Apple eventually closed that short lived opportunity.

Those who resell iPhones usually do not pay import taxes. It’s an illegal business. So in the end it will be still cheaper than the iPhone in a local Apple store.

 

[69Mustang]

But he says ‘return to growth’?

You have to know how to interpret C-Suite speak. iPhone sales were down 20% in China last quarter. They are only down 4% this quarter. -20% to -4% is a 16 point increase, thus a return to growth. He's technically right. The language is ambiguous enough for the layman to infer that he means "return to growth" as in a return to positive numbers, not smaller negative numbers.

 

[Mactendo]

You have to know how to interpret C-Suite speak. iPhone sales were down 20% in China last quarter. They are only down 4% this quarter. -20% to -4% is a 16 point increase, thus a return to growth. He's technically right. The language is ambiguous enough for the layman to infer that he means "return to growth" as in a return to positive numbers, not smaller negative numbers.

I get it, but it’s kinda... very perverted...

Sales were 100 units, the next quarter sales were 80 units (20% less), the next quarter sales are 77 units and it’s being called a return to growth...

 

[code-m]

Those who resell iPhones usually do not pay import taxes. It’s an illegal business. So in the end it will be still cheaper than the iPhone in a local Apple store.

If this is well known is anything being done by the authorities to stop it.

 

[69Mustang]

I get it, but it’s kinda... very perverted...

Sales were 100 units, the next quarter sales were 80 units (20% less), the next quarter sales are 77 units and it’s being called a return to growth...

That's the way it's always been. Plain spoken language has no place in business. Never has. Probably never will. Unfortunate, I know.

 

[Mactendo]

If this is well known is anything being done by the authorities to stop it.

Just as with any other criminal activity... Sometimes authorities win, sometimes not.

 

[code-m]

Just as with any other criminal activity... Sometimes authorities win, sometimes not.

Oh well, I didn’t know that was still happening.

 

[Mactendo]

Oh well, I didn’t know that was still happening.

This year it may be slightly on the rise, cause China got exclusive dual physical SIM iPhone models while the rest of the world has models with a physical SIM and eSIM.

 

[OriginalMacRat]

Glad i bought many apple stocks back in 2007 easy money

Only if you sell it before the next recession.

 

[Wanted797]

“Despite the improvements, iPhone revenue was down during the quarter. The iPhone brought in $26 million, down from $29.5 billion in the third quarter of 2018.”

Ill assume that’s a typo?

 

[RickInHouston]

Only if you sell it before the next recession.

And then there's that pesky cost basis for when you cash out.

 

[code-m]

This year it may be slightly on the rise, cause China got exclusive dual physical SIM iPhone models while the rest of the world has models with a physical SIM and eSIM.

Some dual physical SIM is a better option, I is a shame that Apple only offers it in China as it would cut down on the SKU’s it has to carry.

 

[iZac]

iPhones are manufactured in China, as there are no tariffs (I don’t believe) as it ships from China to its local stores or direct from factory, I am surprised Apple does not sell these cheaper as there is no shipping by sea or air to contribute to the overhead.

When I bought the new mac mini here in Shanghai it was delivered with an import sticker/notice on the box, even though it was made in (and I was tracking it from) Shenzen.

I actually think there're somehow considered imported goods here, no idea how the taxation works though.

 

[BuddyTronic]

Sales declined over 4% in China. It hasn’t worked, it’s just media spin. I mean, compared to the 20%+ decline of the past two quarters, I guess a 4.% loss is an improvement, technically, but it’s still a loss and hasn’t been reversed into a gain. I doubt they ever will.

The data for the quarter can be viewed on a time axis. Tim Cook doesn’t give that kind of data, but he said “accelerating” and “return to growth”. Likely, the data showed that at the end of the quarter.

Would Cook give such strong forward guidance if things were as gloomy as you say? It might be illegal for him to do so. This is serious stuff. He must tell the truth.

Your negatively biased statements are easy to spot.