Apple CEO Tim Cook says China is doing just fine. At least, for Apple.
On the company’s earnings call Tuesday afternoon, Cook was asked if he saw any slow down in China.
The short answer: No.
“Frankly if I were to shut off my web and shut off the TV and just look at how many customers are coming into our stores regardless of whether they’re buying, how many people are coming online, and in addition looking at our sales trends, I wouldn’t know that there was any economic issue at all in China. And so I don’t know how unusual we are with that, I think there’s a misunderstanding probably, particularly in the western world, about China’s economy, which contributes to the confusion.”
In other words, if Tim Cook didn’t read about bad news in China, then he’d have no idea anything was wrong because it’s all good for Apple.
Apple reported a solid quarter overall. It earned $US11.1 billion in net income on $US51.5 billion in revenue, driven by sales of 48 million iPhones. All of those numbers were roughly in line with expectations.
Coming into the earnings report, people were curious to see how its growth in China held up.
China has been one of the major economic stories this summer as its economy is hitting a rough patch. Here’s a quick run down of the headlines on China:
- Its market collapsed.
- The government devalued its currency to prop up exports.
- Its central bank cut interest rates.
- Its growth is at its lowest point in 25 years.
With China in trouble, a lot of people worried that Apple would be in trouble. China has been a major driver of Apple’s growth in the past 12 months. Here’s a look at what it’s done:
- In fiscal Q1, sales in Greater China were up 70% year/year, compared to 30% for the company as a whole.
- In fiscal Q2, sales in Greater China were up 71% year/year, compared to 27% for the company as a whole.
- In fiscal Q3, sales in Greater China were up 112% year/year, compared to 33% for the company as a whole.
- In fiscal Q4 (which is the quarter Apple just reported), sales in Greater China were up 99% compared to 22% for the company as a whole.
Cook says the iPhone grew 87% year-over-year, and it was the number one selling phone in China. The iPhone 6 Plus was the number 3 selling phone in China. He also noted that if you exclude the iPhone from China’s smartphone sales, the market contracted. This means the iPhone is growing in China, while Android smartphone sales are in decline.
For anyone worried about Apple in China, this should provide a level of assurance.
Cook cautioned that he doesn’t think Apple can withstand major economic shocks in China, but he said right now, “You really can’t tell the difference, if you look at our daily and weekly numbers.”
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