Apple’s quarterly earnings calls don’t usually set pulses racing. Typically, they’re a deep dive into sales figures and explanations of how currency fluctuations or economic headwinds are impacting the bottom line. Without the excitement of new product launches, they can be rather dull affairs. However, the upcoming earnings call promises to be different, largely due to what can only be described as a challenging year for the tech giant.
To summarise, Apple has faced several hurdles:
- AI Delays: The fully Apple Intelligence-integrated Siri has been delayed, with the company admitting its current capabilities aren’t up to par. This puts Apple behind in the crucial AI race, lacking a solid, competitive offering.
- Executive Shake-Up: A reshuffling of executives occurred to try and get Siri and Apple Intelligence back on track.
- Foldable Phone Competition: While the world awaits a foldable iPhone, competitors have been releasing impressive flexible phones.
- Vision Pro Struggles: The Vision Pro remains an expensive, niche product that hasn’t captured mainstream consumer interest.
- Tariff Pressures: Potential tariffs are looming, putting pressure on Apple and its partners, potentially leading to price increases.
- US Manufacturing Demands: Apple has faced pressure to begin manufacturing iPhones in the United States.
In short, Apple has a lot to address. While the initial part of the earnings call, led by CFO Kevan Parekh and CEO Tim Cook, will likely focus on profits, operating expenses, capital, and stock splits, the open question and answer session with analysts is where things could get interesting. Analysts are expected to press Cook and his team on a number of key issues.
Key Topics for Analyst Scrutiny
Here’s a breakdown of the topics analysts are likely to probe:
1. AI and Apple Intelligence:
As previously mentioned, Apple is lagging in the AI race. Promises of an updated Siri “in the coming year” offer little comfort, especially since that timeframe could stretch into the future. Analysts will undoubtedly demand specifics. While Cook is unlikely to be pinned down, he may offer assurances that a Siri capable of competing with rivals will arrive sooner rather than later.
Analysts may also quiz Cook on Apple’s overall AI strategy, which some believe is too cautious. Competitors are forging ahead with AI development, and with advanced forms of AI on the horizon, Apple can’t afford a slow and steady approach. Further delays could have significant consequences.
2. New Products:
During every earnings call, analysts try to glean information about upcoming products. While Cook never explicitly reveals details, he often refers vaguely to “the best lineup ever” of future technologies. His enthusiasm can often hint at what to expect and whether these products will have a significant impact.
3. Vision Pro: Hype and Reality:
Despite the Vision Pro’s underwhelming sales, it remains a powerful and impressive piece of technology. Cook is expected to highlight consumer and enterprise interest, as well as recent content successes. However, analysts will likely press Cook to ascertain whether he will admit that Vision Pro, at its current price, will never be a true consumer product.
4. Augmented Reality (AR) and the Possibility of “iGlasses”:
A natural follow-up would be a return to discussions about Apple’s AR ambitions. Apple’s wearable portfolio cannot remain limited to watches and earbuds, especially with competitors making strides with smart glasses. While challenges remain in developing high-quality lenses without bulky frames, analysts might try to push Cook into mentioning future “iGlasses”.
5. Thinner and Bendable Phones:
Rumours suggest Apple will release its thinnest iPhone ever. Cook will not name this product, but he could mention “new form factors,” which could refer to a thinner model and, possibly, a foldable iPhone. In both areas, Apple is behind competitors, who boast impressive foldable designs and admirably thin handsets. Analysts will want reassurance that Apple has a response.
6. Tariffs and US-Based Manufacturing:
Cook will likely avoid discussing US-based manufacturing, tariffs, or political relations. However, analysts will press for projections on how tariffs might affect the pricing of iPhones and other Apple devices. Cook might offer some general commentary, reiterating Apple’s preparedness for supply chain fluctuations and component pricing pressures, assuring everyone that Apple has a plan for this uncertain future.
He might also highlight Apple’s efforts to diversify manufacturing beyond China and point to investments in the US, including manufacturing training programmes. However, this may not satisfy those who advocate for full iPhone production within the United States.
Finally, Cook will likely promote the significant changes coming to Apple’s major platforms and the impact of new technologies. These updates promise to change how users interact with these platforms.
Overall, this earnings call has the potential to be eventful, perhaps even contentious. It’s certainly one to watch.
