You can’t get too comfortable… Apple was crowned America’s best-run company last year, but now it’s covered in bruises. Last week, Jefferies downgraded Apple from “hold” to “underperform,” and JPMorgan lowered its price target. To turn things around, Apple will need to deliver strong holiday sales #s and a cheery outlook.

https://sherwood.news/snacks/tech/ahead-of-its-earnings-apple-is-off-to-a-terrible-2025-and-lagging-its-big/?utm_source=snacks&utm_medium=email&utm_campaign=snacks_20250127&utm_content=5e876ad7b7fe7229f289662ea5190a18

Ahead of its earnings, Apple is off to a terrible 2025 and lagging its Big Tech peers

You can’t get too comfortable… Apple was crowned America’s best-run company last year, but now it’s covered in bruises. Last week, Jefferies downgraded Apple from “hold” to “underperform,” and JPMorgan lowered its price target. To turn things around, Apple will need to deliver strong holiday sales #s and a cheery outlook.  https://sherwood.news/snacks/tech/ahead-of-its-earnings-apple-is-off-to-a-terrible-2025-and-lagging-its-big/?utm_source=snacks&utm_medium=email&utm_campaign=snacks_20250127&utm_content=5e876ad7b7fe7229f289662ea5190a18

Cyril

Apple had good news and bad news when it reported December-quarter results on Thursday. The bad news was that revenues from China—Apple’s second-biggest market—shrank 11%, almost certainly a result of Apple losing share in smartphones to local rivals such as Huawei. Indeed, iPhone revenues globally shrank 0.8% in the quarter. 

The good news is that despite the falloff in China, Apple’s top line expanded 4%, thanks to solid growth in sales of both Macs and iPads, as well as another sterling quarter for services, the segment that includes Apple Music, Apple TV+ and AppleCare. Net profit rose 7% to $36.3 billion. Apple shares rose 3% in after-hours trading. All in all, it wasn’t a bad quarter for a mature, barely growing company.

Still, it’s hard to overlook the warning sign that those results are flashing. The quarterly decline in China is part of a long-term trend. China revenues for Apple shrank 7.7% in 2024 and 2.2% in 2023, as patriotic fervor prompted people to switch to local phone brands. While the iPhone finished the December quarter with the leading market share in China, according to IDC, its edge over the No. 2 player, Vivo, narrowed to just 0.2 percentage points from 4.3 a year earlier.

It’s hard to see what will change this dynamic. The same patriotic switch to homegrown brands seems likely to continue. Product improvements that Apple is banking on to boost iPhone sales globally face challenges in China. While Apple has begun rolling out new artificial intelligence features in many countries, in China it has little choice but to offer an AI model developed by a local company, for regulatory reasons. And as we reported here, Apple has had issues on that front. Meanwhile, the company is planning a new thin version of the iPhone this year, but the device could run into problems in China, as we explained here.

All that means China could be a long-term headwind for Apple, masking otherwise positive signs. For instance, the slight dip in iPhone revenues in the quarter obscured what could otherwise have been an upbeat report. CEO Tim Cook said on today’s earnings call that iPhone sales in regions where the AI features had been introduced outperformed sales in regions without AI. 

There’s no question that China is now Apple’s biggest Achilles’ heel.

Apple had good news and bad news when it reported December-quarter results on Thursday. The bad news was that revenues from China—Apple’s second-biggest market—shrank 11%, almost certainly a result of Apple losing share in smartphones to local rivals such as Huawei. Indeed, iPhone revenues globally shrank 0.8% in the quarter.   The good news is that despite the falloff in China, Apple’s top line expanded 4%, thanks to solid growth in sales of both Macs and iPads, as well as another sterling quarter for services, the segment that includes Apple Music, Apple TV+ and AppleCare. Net profit rose 7% to $36.3 billion. Apple shares rose 3% in after-hours trading. All in all, it wasn’t a bad quarter for a mature, barely growing company.  Still, it’s hard to overlook the warning sign that those results are flashing. The quarterly decline in China is part of a long-term trend. China revenues for Apple shrank 7.7% in 2024 and 2.2% in 2023, as patriotic fervor prompted people to switch to local phone brands. While the iPhone finished the December quarter with the leading market share in China, according to IDC, its edge over the No. 2 player, Vivo, narrowed to just 0.2 percentage points from 4.3 a year earlier.  It’s hard to see what will change this dynamic. The same patriotic switch to homegrown brands seems likely to continue. Product improvements that Apple is banking on to boost iPhone sales globally face challenges in China. While Apple has begun rolling out new artificial intelligence features in many countries, in China it has little choice but to offer an AI model developed by a local company, for regulatory reasons. And as we reported here, Apple has had issues on that front. Meanwhile, the company is planning a new thin version of the iPhone this year, but the device could run into problems in China, as we explained here.  All that means China could be a long-term headwind for Apple, masking otherwise positive signs. For instance, the slight dip in iPhone revenues in the quarter obscured what could otherwise have been an upbeat report. CEO Tim Cook said on today’s earnings call that iPhone sales in regions where the AI features had been introduced outperformed sales in regions without AI.   There’s no question that China is now Apple’s biggest Achilles’ heel.

Bobby

Apple was dethroned as the top smartphone seller in China last year, slipping to third behind domestic rivals Vivo and Huawei. iPhone shipments in China fell 17% on the year and dipped globally, and Apple stock plunged last week. It’s not alone: sales of foreign smartphones in China have dropped for four straight months, dinging Apple and Samsung. The trend has Apple racing for solutions, like offering rare iPhone discounts in the country.

https://sherwood.news/business/apple-stock-down-3-percent-loses-top-spot-in-china-sales/

Apple was dethroned as the top smartphone seller in China last year, slipping to third behind domestic rivals Vivo and Huawei. iPhone shipments in China fell 17% on the year and dipped globally, and Apple stock plunged last week. It’s not alone: sales of foreign smartphones in China have dropped for four straight months, dinging Apple and Samsung. The trend has Apple racing for solutions, like offering rare iPhone discounts in the country.  https://sherwood.news/business/apple-stock-down-3-percent-loses-top-spot-in-china-sales/

Cyril

A group of likeminded people in Gadgets are talking about this.