Friday, July 26, 2013

Apple Misdirection During Earnings Call

You may have seen a lot of misleading headlines about Apple's Q3 2013 results. There was nothing good in those results. It's true that they beat (some of) Wall Street expectations... but that in no way implies the results contained good news.

Apple should be ashamed of their blatant attempt to misdirect the bad news in the results. It is one thing to "put a good face" on things, it is another to intentionally take the bad news and make it look like good news by cherry picking data - shareholders deserve better treatment. I'll focus on 4 points, but I suspect there are many others in the call and in the Q&A that followed.

Here's a link to the transcript of the call:

Apple Inc AAPL Q3 2013 Earnings Call Transcript - Morningstar

In the call transcript, Apple states, "We sold 31.2 million iPhones compared to 26 million in the year ago quarter, an increase of 5.2 million or 20%."
This statement is true, but what they didn't say was that the market grew at 52.3%. Basically they grew, but much slower than the market. Yet I've seen numerous reports saying that this was record-breaking. Again, true, but the "record" pales in comparison to the rest of the market.

IDC: iPhone shipment growth slows as smartphone market expansion accelerates in Q2

Apple states, "iPhone 5 remains by far the most popular iPhone, but we were also very happy with sales of iPhone 4 and 4S."
This statement is true, but what they didn't say was that the iPhone 5 was only about 50% of sales. The 2 and 3 year old 4S and 4 made up half of sales (30% and 20% respectively). This is in stark contrast of earlier times.

iPhone 5 accounts for half of Apple's smartphone sales, iPhone 4S takes 30%

Apple then gives a lot of very specific statistics that make things sound like the iPhone is selling well. Those specific figures might well be true... but overall the Apple percentage of the world wide market dropped over 3% year-over-year. Essentially Apple was cherry picking numbers in order to look good.

Apple hits three-year low in smartphone marketshare, shipment figures reveal

Apple then ends with: "We are very excited about the upcoming releases of the stunning new iOS 7 and OS X Mavericks and we are very hard at work on some amazing new products that we will introduce in the fall and across 2014."
Note the "across 2014". While one expects that Apple will refresh its Mac line with Haswell processors (a good but not spectacular thing).... the link below is the latest rumors about its best-selling iPad-mini not being refreshed until 2014. Imagine, Apple is going to let Android steal a whole holiday season! This is a holiday season where Android will be shipping tablets in sizes from 5 inches to 21 inches. Will have several tablets with integrated keyboards. Will have all-in-one and laptop versions. And that is just the stuff that is already announced. If the rumor about iPad-minis is true, Apple will be slaughtered this holiday season. (Probably will happen anyway, the iPad line is stale and overpriced.) And I agree that customers will be "stunned" by iOS 7... just not in a good way.

New low-cost iPad mini expected to debut alongside Retina model in 2014

Here are other people's take on Apple's earnings call:

These 'smartphone saturation' stats could prove Apple wrong - CNBC

Demand Woes Bite Apple Earnings as Profit Falls 22% -

Apple's Strong iPhone Sales Mask Falling Revenue Per Unit As Gross Margins Contract - Forbes

Apple Q3 2013 Sees Revenue Plunge In China To $4.6B, Down 43% On Q2, Amid Weaker International Sales | TechCrunch

iPhone sales soar but lackluster earnings put pressure on Apple - San Jose Mercury News

Miscellaneous Apple News

Apple's developer site has now been down over a week! In other words no one can even submit an app update! This is a whole new level of Apple cloud incompetence.
Apple lays out plans to resurrect developer site, services | Apple - CNET News

Really, this extends beyond Samsung... Apple has been mean to a lot of suppliers...
Apple Inc.'s Feud With Samsung Puts Future Innovation at Risk

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