Apple finally released its fourth-quarter 2015 financial results early on the 27th. Did the stock price drop in the end? The answer is no. According to Apple's latest report, the company generated $75.9 billion in global revenue (approximately NT$2.57 trillion) and a net profit of $18.4 billion (around NT$622.05 billion). Despite these strong numbers, CEO Tim Cook still seems uneasy, saying he can't sleep at night.
What's worrying Cook? Two key factors: mobile phones and China. First, Apple's mobile device sales may be reaching a plateau. This quarter, the company sold 74.8 million iPhones, marking the highest sales growth since the iPhone's launch, but with a growth rate of just under 1%. Meanwhile, iPad sales dropped sharply by 21% compared to the same period last year. Cook warned that the next quarter could be challenging, raising concerns about Apple possibly facing its first single-quarter revenue decline in 13 years.
The issue might lie in China. While Apple’s revenues in Japan and the U.S. declined, sales in Greater China continued to grow, making up 24% of total revenue. A foreign businessman close to Apple in Beijing remarked that although Apple may dislike the Chinese market for its strict rules, it actually relies heavily on this "brutal but delicious" market. Without China, Apple would have faced a more severe revenue decline long ago.
During the last earnings call, Cook claimed that Apple performed well in China, aside from media criticism. However, as one of Apple's most pro-China executives, he now admits that economic challenges like the renminbi's depreciation and stock market instability could threaten Apple's future in the region. “The global economy is facing an unprecedented extreme situation,†Cook said during the conference call, noting that economic weakness was particularly visible in Hong Kong.
Analyst Guo Mingxi from KGI also expressed similar concerns. In a recent report, he suggested that the new iPhone and iPad won’t be Apple’s saviors this year. He predicted that iPhone shipments in the first quarter of this year will drop by 44.2% compared to the same period last year, with annual shipments falling by 29.7%, totaling only 43 million units.
Cook is now trying to separate Apple from broader market issues. When asked if the smartphone market was saturated, he dismissed the idea, highlighting Apple’s 76% growth in India last season—the best performance ever. However, according to Counterpoint Research, Apple sold 1.7 million smartphones in India throughout the year, with nearly half sold in the fourth quarter. This surge was partly due to a 50% discount on the iPhone 5s (about NT$11,000).
Apple’s pricing strategy has made the iPhone one of the most resilient devices in the market. According to ezPrice data, the market price of the iPhone 5s in Taiwan fell by less than a third over two years, while its second-hand value remained higher than in India. It shows how far Apple is willing to go to capture market share in India, even breaking its usual pricing principles.
Apple controls over 90% of the profits in the mobile phone industry and is known for strict supply chain management. If Apple continues to lower prices, who will absorb the rising costs? A senior executive from a Taiwanese Apple supplier sighed helplessly and said, “Everyone is in my heart.â€
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