Apple's Low Energy Earnings
Tariffs. AI. The EU. The App Store. Antitrust.
Apple has never been under assault on more fronts than they are right now. I suppose being the most valuable company in the world makes some of that inevitable. But a few of those are nightmares of Apple's own making too. Regardless, you'd think such peril would make for a good earnings call at least. But you'd be wrong.
I tuned into the call yesterday and honestly it was the worst one I've listened to from Apple – and I've listened to countless ones over the past 20 years. Yes, Tim Cook had some data points to share in order to calm nerves around tariffs – as you'd hope the person who is perhaps the foremost expert in big company operations in the world would. But the interesting data points he brought to share – that most of the current crop of US iPhones were made in India (with most of the other devices meant for the US coming from Vietnam) – he shared ahead of the call in an interview with CNBC.
The call itself was a very slow, stilted reading of the quarterly facts. It didn't help that the quarter itself was decidedly boring – a small beat here, a small miss there – a trend, but something Apple actually must be happy about this quarter given the tariff situation. Apple loves to tout records in such earnings, and their records are getting pretty granular: record EPS for the March quarter. Congrats guys. Oh yes, and record Services revenue. But they actually missed the mark there after years of the segment being the key bright spot, and the only obvious vector for growth going forward.
They slightly beat the iPhone mark, which is all that continues to matter anyway.
But things got really dire during the Q&A. Given the App Store ruling that came down like a hammer yesterday, you'd think that would be top of mind for everyone. Not the Wall Street analysts who ask questions on such calls. It wasn't until 40 minutes into that call that Cook was finally asked to address the situation. But because the question was weirdly worded around "alternate app stores" in the EU, Cook easily deflected it and said less than nothing. A few questions later, someone else tried to broach the topic more directly, directing the question at (still new) CFO Kevan Parekh, who sounded decidedly more awake than Cook on the call. But Cook jumped in to take it: ”The case yesterday we strongly disagree with.” He noted that they were complying for now while they appeal. Which was the exact same canned answer that Apple PR gave over and over again yesterday on the topic. He was filibustering with filler.
At least there was a hint of inflection on "strongly" here, as it was the only sign of a pulse I heard the entire call out of Cook. Parekh had nothing to add.
With regard to Siri, Cook simply noted that "we need more time to complete our work on these features" – specifically talking about the "personalized Siri", while rattling off – for a second time – all of the other small features that Apple did ship with Apple Intelligence. This man had memorized them all, including the recent language roll-outs. When pressed for a bit more color about the AI situation and what happened internally: "We are making progress." That's it.
The same was true when Cook was continually pushed for more on the tariffs. He just kept noting his earlier comments about the country of origin blend and repeating that he wouldn't try to predict the future. They threw out the bone in terms of a potential $900M hit to their numbers if everything stays the same as it is right now. But it won't. And Apple is undoubtedly sandbagging there.
Honestly, the entire call just felt off. Weird. Obviously, Apple executives are famous for stonewalling. And Tim Cook in particular is a master at deflection. But he usually brings an energy to these calls. And an excitement about the numbers. Not today. It really seemed like he could not get off the call quickly enough.
I don't know if Tim Cook has a cold or all these battles are just wearing him down. Everyone is entitled to an off day, of course. But oof, that was a slog.