Mikey Campbell
Apple revenues exhibited regional growth in China over the first fiscal quarter of 2016, but currency headwinds clipped the company's wings, prompting the release of so-called "supplemental material" to explain what some might view as concerning trends.
Of the $75.9 billion in quarterly revenue Apple raked in over its first fiscal quarter, $29.3 billion came from the U.S., down 4 percent from the same time last year. More importantly, Greater China generated $18.4 billion, up 14 percent year over year, to become Apple's second-most lucrative market. Those numbers would have been higher if it wasn't for extremely volatile currency rates, CEO Tim Cook said.
For the first time, Apple prepared "supplemental material" with its earnings report, specifically pointing out the currency headwinds it's facing abroad. According to the company's calculations, $100 of non-U.S. dollar revenue in the fourth quarter of 2014 is worth only $85 today. In "constant currency," quarter one revenue would have been $5 billion higher, or an 8 percent year-over-year increase, Apple says.
The issue was the first topic Cook addressed during an earnings conference call on Tuesday. Cook noted the beginnings of softness in Greater China, specifically in Hong Kong, but said Apple plans to push forward in the region.
Applying constant currency arithmetic to regional revenues still shows the Americas down 1 percent with $30.2 billion, but offers a slight bump to China at $19 billion, up 17 percent year over year. The region that benefits the most, or suffered the most depending on how the data is perceived, was Europe. As reported, European revenue stood at $17.9 billion, up 4 percent from last year, but constant currency calculations bring that number up to $20.2 billion, a boost of 18 percent.
Finally, Japan revenue was $4.8 billion for the quarter, down 12 percent year over year. In constant currency terms, Japan brought in $5.3 billion to end the three-month period down only 4 percent.
AppleInsider Staff
Malcolm Owen
Oliver Haslam
Andrew O'Hara
Wesley Hilliard
William Gallagher
Christine McKee
5 Comments
Well, first time to first comment, then here's another personal first to say : Döömed ! ( No /s flag but 2 Sarcästic Umlaüts. )
One thing you can be sure about when talking about exchange rates in terms of 'constant currency' is that it's going to change.
Strange. None of the trolls wanted to post on this thread. I guess the data is too clean, and the point is positive, so they will go elsewhere. I would think revenue (constant currency) up 8%, with earnings higher, isn't the doom & gloom that everyone wants.
I expect the USD is likely to hit is peak this year, so 2016+ there will be some currency tailwinds. But again, why talk about that!
One thing I don't get. Nearly all of the iPhone's component costs are in Asian depreciated currencies. So if the US dollar gains big, the raw cost for Apple for the most part goes down a similar percentage (R&D is separately expensed in US dollars). It would seem then to maintain the current profit margin, the iPhone costs could be relatively constant in the rest of the world and actually go down in the US! Granted there are undoubtedly multi-year component contracts, but ultimately they parallel the exchange rate.