Two key themes emerged from our analysis of Apple’s prior earnings call as well as commentary from competitors and Apple’s supply chain partners.
Samsung(7/30): "Sales of Galaxy S9 and S9+ fell short of our target amid a slowing premium smartphone market and rising competition among flagship models."
Knowles(7/24): "In Korea, while our share remained stable, sales were lower than the year ago period, reflecting subdued demand for this customer’s flagship handset"
Knowles(7/24): (re:Samsung) "We’re still expecting this customer to be down year-over-year for the full year"
Skyworks(7/19): "Samsung hasn’t been as strong as other large accounts."
Knowles(7/24): "At our largest customer (Apple), microphone shipments increased significantly from the year ago period. Our share across all products at this customer remain strong, and we expect full year 2018 growth form this customer versus the year ago period, with peak shipments anticipated in Q3."
Knowles(7/24: "Capacity utilization was pretty high in Q2, maybe higher than normal, as we’re building inventory in anticipation of a strong second half."
“I think my own view is that China and the US have this unavoidable mutuality where China only wins if the US wins and the US only wins if China wins and the world only wins if China and the US win.”
Apple is coming off a good March quarter in China, with no apparent impact of trade concerns...yet: "In greater China and Japan, revenue was up more than 20%"
1. Overall results: Amenity score of 68 was the same as the prior two quarters, and compared favorably vs Samsung's Amenity Score of 17(-44% QoQ).
Services part of the story was gaining steam:
"Q2 was our best quarter ever for services and momentum there continues to be incredibly strong."
"Our services business is growing dramatically"
2. Market share gains vs Samsung were validated:
"iPhone had a very strong quarter. Revenue was up 20% year-over-year and our active installed base grew by double-digits"
"Given the industry numbers that we’ve seen, it’s clear that we picked up global market share and picked up market share in several countries"
3. China/tariffs still optimistic but acknowledges risk:
"Of course the risk associated with more of a macroeconomic issue such as an economic slowdown in one or more countries or currency fluctuations that are related to tariffs is very difficult to quantify. We’re optimistic, as I’ve been the whole time, that this will get sorted out because there is an inescapable mutuality between the US and China that sort of serves as a magnet to bring both countries together, that each country can only prosper if the other does and of course the world needs both US and China to prosper for the world to do well."
4. Services remains a highlight:
"Services revenue was an all-time record and the underlying growth rate of the services business was a terrific 28% over last year."
"Given the momentum that we’re seeing across the board, we feel great about our current services, but obviously we’re also thrilled about our pipeline that have some new services in it as well."
5. Where were the negatives? Of the few negative extractions, a common thread was currency headwinds:
"During the September quarter this year we also have about 30bps of headwind from foreign exchange again because the dollar has appreciated recently."
"As you know, foreign exchange has been a very significant headwind over the last three-plus years"
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This communication does not represent investment advice. Transcript text provided by S&P Global Market Intelligence.
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