Apple sees 'lots of positives' and significant profits in China

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Following previous declines in Apple's revenues in Greater China, CEO Tim Cook says the company has taken several successful steps to turn that around in the company's fourth quarter of 2019.

China Wind Farm
The Concord Jingtang Wind Farm in Hunan Province is part of Apple's Clean Energy Fund. | Source: Apple


Speaking to analysts on a financial earnings call on Wednesday, Cook said that Apple sees "lots of positives" and repeated that the company "feels good" about its business in China. Despite previous declines in the region, he said that Apple has taken multiple steps to address losses and, in combination, these are turning the company's fortunes around.

"We had a very good September and the lead of that is the reception of the iPhone 11, and iPhone 11 Pro and 11 Pro Max," he said. "We feel really good about how we've gotten started there."

"As you can tell from the numbers," he continued, "we've significantly improved since the beginning of the year, we've gone from minus well into the 20s [percent] to minus two last quarter and if you look at that in constant currency, we actually grew one. And so there's a very slight growth there. We obviously want that to be better, but we feel good about how we're doing."

Repeating that the new iPhones have been "extremely well received there," Cook said that these products were part of several simultaneous steps that the company has undertaken to reverse downward trends in China.

"I think it's a combination of things that have turned things around," he said. "I think the trade tension is less and that clearly looks positive right now with the comments we've been reading in the press."

"[Also] the things that we've done from a pricing and monthly payments point of view, and trade-in, getting the trade-in program up and running, all of these things have moved the dial," he said. "And so it's sort of the sum of all of that."

Cook wanted to stress that despite his having focused on the iPhone in particular, there was more going on in China.

"[Our] Services grew double-digit," he explained. "We began to see more gaming approvals in the quarter, or I should say some key gaming approvals as it's not all about quantity, but about which ones."

"Also wearables are doing so great at a company level, and they're doing even better in China. And so lots of positives there," he concluded.

China is an important growth region for Apple, which has largely tapped out mature markets like the U.S. and Europe. Greater China is the company's third-largest market and accounted for $11.13 billion of $64 billion of total revenue over the quarter. That number is down from the $11.4 billion Apple's China business posted last year.

Comments

  • Reply 1 of 5
    tzeshantzeshan Posts: 2,351member
    If FCC voted to ban Huawei smartphones for sale in US on Nov 17 China could retaliate by banning iPhone sales in China. 
  • Reply 2 of 5
    If China retaliates then Apple could move their plants out to Vietnam, India, etc. within a couple of Q's. There go the supply chains
    mwhitecat52watto_cobra
  • Reply 3 of 5
    GeorgeBMacGeorgeBMac Posts: 11,421member
    Separately, it's been reported (by Reuters) that "Apple’s market share in China slipped to 5% from 7% in the year-ago" while Huawei's portion of the market increased due to a Chinese patriotic response to Trump's trade war and Apple's no-show 5G phone.

    And, Apple's position may continue to slide in that country as China makes a push to lead the world in 5G technology while the U.S. and Apple lag.

    In fact, China will be rolling out 5G in a massive way starting tomorrow.  According to Reuters:

    "China's state telecoms to launch 5G services on Friday

    China Mobile’s, China Unicom and China Telecom’s said on their websites and online stores that 5G plans, which start from as low as 128 yuan a month, will be available from Friday, allowing Chinese consumers nationwide to use the ultra-fast mobile internet service.

    “China will have the largest commercial operating 5G network in the world on Friday, and the scale of its network and the price of its 5G services will have a pivotal impact throughout the supply chain,” Bernstein said in a report this week.

    Authorities have said that they plan to install over 50,000 5G base stations across 50 Chinese cities in the country by the end of this year, and that big cities, including Beijing, Shanghai, Guangzhou, and Hangzhou, are already covered by the 5G network.

    Chinese companies from Xiaomi to Huawei have also unveiled new products in anticipation of the 5G roll out, with Huawei saying that it anticipates to start seeing a revenue uplift from the sector next year.

    Smartphone marker Xiaomi said earlier this month that it plans to launch more than 10 5G phones next year and that there was a fear in the industry that consumers would stop buying 4G models."

    https://www.reuters.com/article/us-china-telco-5g/chinas-state-telecoms-to-launch-5g-services-on-friday-idUSKBN1XA0JC


    Meanwhile Apple insists:  "We don't need no stinkin' 5G phones!" while simultaneously recognizing that the Chinese market is a critical component of its future.
    It appears that both Apple and the U.S. as a whole are falling behind:  The U.S. is blocking the leader in 5G technology while Apple is trying to sell 4G phones in a 5G world.







  • Reply 4 of 5
    avon b7avon b7 Posts: 6,339member
    Separately, it's been reported (by Reuters) that "Apple’s market share in China slipped to 5% from 7% in the year-ago" while Huawei's portion of the market increased due to a Chinese patriotic response to Trump's trade war and Apple's no-show 5G phone.

    And, Apple's position may continue to slide in that country as China makes a push to lead the world in 5G technology while the U.S. and Apple lag.

    In fact, China will be rolling out 5G in a massive way starting tomorrow.  According to Reuters:

    "China's state telecoms to launch 5G services on Friday

    China Mobile’s, China Unicom and China Telecom’s said on their websites and online stores that 5G plans, which start from as low as 128 yuan a month, will be available from Friday, allowing Chinese consumers nationwide to use the ultra-fast mobile internet service.

    “China will have the largest commercial operating 5G network in the world on Friday, and the scale of its network and the price of its 5G services will have a pivotal impact throughout the supply chain,” Bernstein said in a report this week.

    Authorities have said that they plan to install over 50,000 5G base stations across 50 Chinese cities in the country by the end of this year, and that big cities, including Beijing, Shanghai, Guangzhou, and Hangzhou, are already covered by the 5G network.

    Chinese companies from Xiaomi to Huawei have also unveiled new products in anticipation of the 5G roll out, with Huawei saying that it anticipates to start seeing a revenue uplift from the sector next year.

    Smartphone marker Xiaomi said earlier this month that it plans to launch more than 10 5G phones next year and that there was a fear in the industry that consumers would stop buying 4G models."

    https://www.reuters.com/article/us-china-telco-5g/chinas-state-telecoms-to-launch-5g-services-on-friday-idUSKBN1XA0JC


    Meanwhile Apple insists:  "We don't need no stinkin' 5G phones!" while simultaneously recognizing that the Chinese market is a critical component of its future.
    It appears that both Apple and the U.S. as a whole are falling behind:  The U.S. is blocking the leader in 5G technology while Apple is trying to sell 4G phones in a 5G world.







    You are correct.

    There are people saying 5G isn't widespread enough to be of use. That, from a marketing perspective is completely irrelevant.

    If marketing efforts pay off, more 5G phones will be sold, in spite of infrastructure. As you quoted, the 'fear that people could stop buying 4G' is quite real.

    Presently, price is a key factor for 5G Phones. That factor will become far less important around MWC2019. Very soon.

    China had announced long ago that it was accelerating (its already fast plans) to role out 5G.

    Trump's entity list did little to Huawei in real terms this year. They just hit 200,000,000 phones sold (a full two months earlier than they did last year). Revenues are up and U.S technology has been eradicated from its 5G base stations, causing major impacts to U.S companies which will lose revenue and have less to invest in technology going forward.

    Xilinx, for example, has reluctantly had to eliminate Huawei revenues from its forecasts this year:

    https://www.cnbc.com/2019/10/24/huawei-exposure-roils-xilinxs-revenue-forecast.html

    Almost resigned to the fact that that Huawei business is going elsewhere and not likely to come back and, ironically for the U.S government, the Huawei money in this case is being pumped back into Chinese companies to further develop their technology.

    This situation is rinsed and repeated worldwide as Huawei strengthens ties with global suppliers as it pumps over 10 billion dollars (that used to enter the U.S every year) into companies that are direct competitors of their U.S counterparts.






    edited October 2019 GeorgeBMac
  • Reply 5 of 5
    tzeshantzeshan Posts: 2,351member
    shrave10 said:
    If China retaliates then Apple could move their plants out to Vietnam, India, etc. within a couple of Q's. There go the supply chains
    Most of the suppliers are not in China. TSM is in Taiwan. Toshiba is in Japan. China supplies one million cheap assembling workers Trump is desperately asking Apple to bring back to US. 
    GeorgeBMac
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