Apple executives have remained silent on several sensitive issues. Recently, Apple reported a 6% increase in revenue, reaching $94.9 billion for the fiscal fourth quarter ending on September 28, with adjusted earnings per share rising by 12%. During Apple’s quarterly conference call, CEO Tim Cook praised new products such as the iPhone 16 lineup, the new Apple Watch, AirPods’ hearing aid capabilities, Apple TV+’s successes, and the generative AI functionality of Apple Intelligence.
However, on certain topics, the executives were less forthcoming. Here are three matters Apple prefers not to discuss:
Near-term iPhone Sales Growth: For the next quarter ending in December 2024, Apple expects revenue growth in the low- to mid-single digits year over year, with services revenue increasing at a rate similar to the nearly 13% growth seen in fiscal year 2024. CFO Luca Maestri, when questioned about iPhone sales projections for the December quarter, declined to comment. CEO Tim Cook also refrained from projecting beyond the current quarter, noting only that Apple Intelligence is "a compelling upgrade reason" and highlighting the rapid adoption of iOS 18.1. Previously, Apple has been more transparent about anticipated iPhone sales growth, but the phased introduction of new AI features may complicate accurate sales predictions.
Impact of Potential Tariffs: Bank of America analyst Wamsi Mohan inquired about Apple’s preparedness for potential tariffs following upcoming elections. Cook avoided speculation on the issue. Apple’s recent annual 10-K filing acknowledges that tariffs or international trade restrictions could significantly impact the company, given that most manufacturing occurs outside the U.S., notably in countries like China, India, Japan, South Korea, Taiwan, and Vietnam.
- Relationship with Google: Alphabet’s Google reportedly pays Apple approximately $20 billion annually to serve as the default search engine in Safari. However, a federal ruling in August deemed Google’s search monopoly illegal, potentially jeopardizing this agreement. J.P. Morgan analyst Samik Chatterjee asked Cook about the lawsuit’s implications for Apple, but Cook opted not to speculate on ongoing legal matters. There are possibilities that Apple could partner with another search engine provider, such as Microsoft Bing, though matching the current financial terms might prove challenging.
These unanswered questions have an impact on Apple’s investment appeal. Nonetheless, iPhone sales are expected to rise in upcoming quarters, supported by consumer interest in Apple Intelligence. The company is likely implementing strategies to mitigate potential tariff impacts, and is presumably planning how to address any changes in its agreement with Google. While Apple is currently reticent on these topics, it will eventually have to address at least the issue of iPhone sales.
