Apple Is Doing Nothing With Its $206 Billion Cash Pile. Here’s a Possible …

29 Oct 2015 | Author: | No comments yet »

Apple India sales slow as consumers wait for offers.

No matter. In its annual securities filing for the fiscal year ended Sept. 26, Apple said it generated operating income of $23 billion in greater China—a region that includes Taiwan and Hong Kong—more than double its profit of $11.04 billion in the prior year.

Sales of the iPhone in South Asia, mainly India, grew 35 per cent in the quarter to September as customers deferred purchases ahead of the launch of Apple’s iPhone 6s. The slower growth – a third of the nearly 93 per cent growth rate registered in the previous quarter – was also due to consumers waiting for offers during the festival season that began in October. “Apple fanboys were waiting for iPhone 6s and were not upgrading their devices.

Also, customers generally wait for festival discounts, both offline and online,” said Vishal Tripathi, analyst at technology researcher Gartner. “I was really impressed last quarter with our progress in Vietnam and Indonesia and India, among others,” Tim Cook, chief executive officer, told investors on Tuesday. “Also from the currency’s point of view and the weak global economies, we do not overly focus on this. The world’s biggest company reported on Tuesday that it saw a year-over-year increase of 99% on iPhone sales in China on otherwise strong results, assuaging investor worries that the country’s economic turbulence in the past few months might have hurt demand in the country where Apple has been growing its business most. Apple has grown so far beyond the size of any other major corporation that its success can only be judged against the very high bar that the company has already set for itself. Tim Cook is apparently really going for the hard sell with Apple Music, even though the streaming service has received 6.5 million subscribers since launching in June. China is now a major growth engine for Apple, propelled by an emerging middle class with increasing disposable income and a deal last year with the country’s biggest wireless carrier, China Mobile Ltd.

Another 8.5 million are taking part the month-long free trial. “We love music, and the new Apple Music service puts an incredible experience at every fan’s fingertips,” Eddy Cue, Apple’s senior vice president of Internet Software and Services, said in a statement back in June. “All the ways people love enjoying music come together in one app—a revolutionary streaming service, live worldwide radio and an exciting way for fans to connect with artists.” It’s the most popular music service after Spotify, but looks like Apple wants to surpass them because Siri will make you feel guilty when you want a little fun fact from the music business. The difference in cost between the base models in the US and India is around Rs 20,000, which has forced customers to defer purchases of these smartphones. “It is a bit early to tell, because the phones are out there just for four weeks. Obviously, when we increase prices around the world, it is normal to see some impact on sales, but so far we are encouraged by the response,” said Luca Maestri, chief financial officer of Apple, in reply to an analyst’s query on the demand scenario for iPhones in countries such as India. China has become so important to Apple that the company’s stock plunged last month amid concerns that a slowing Chinese economy could dampen demand for its products.

The company also significantly beat analyst expectations on earnings with $1.96 per share to $1.88 averaged Wall Street predictions and posted revenue of $51.5 billion, above an analyst consensus of $51.1 billion. After selling a record number of iPhone 6S’s in the phone’s first weekend, Apple also reported a quarterly total of 48 million units sold, falling just shy of an average analyst prediction of 48.5 million. But the company’s forecast of holiday season sales, which were expected to be slower than some analysts had predicted, stoked fears that the strong growth in iPhone sales — which account for the vast majority of the Cupertino company’s revenue — may eventually flag. Notably, about 30% of iPhone sales came from customers lured away from Apple’s chief rival Google Android — a new record for switchovers, CEO Tim Cook said in an earnings call on Tuesday.

Revenues from watch sales were once again lumped in with those of Beats headphones, iPods and Apple TV in Apple’s “other products” category, which notched $3.05 billion total. The fretting was enough to prompt Cook to take the unusual step of reassuring investors in a message that nothing had changed the company’s “fundamental view” on China.

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