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Tim Cook: What's Good For the US Dollar Is Bad For Apple
theodp writes: For years," Charles Erwin Wilson famously said back in the day, "I thought what was good for our country was good for General Motors, and vice versa." That was then. This is now. The Washington Post reports that a strong U.S. dollar is the biggest threat to Apple's business around the world. "The dollar has shot up about 22 percent against a trade-weighted basket of other currencies since the middle of 2014," explains Matt O'Brien. "And in Apple's case, that's meant what would have been $100 of foreign sales in September 2014 was just $85 by the end of 2015. That's not good when you get two-thirds of your revenue overseas." Apple blamed the strength of the dollar compared to other currencies for costing it $5 billion in revenue, "For perspective, that difference is the size of an average Fortune 500 company," quipped CEO Tim Cook.
Having a strong currency is not always entirely in the national good. Sure, it's generally better than a weak currency (which is often a sign of political instability and a lack of international confidence in a country's prospects), but it does cause its own kind of problems. In particular, it can hurt exporters, as it costs overseas customers more to buy their goods.
The strength of the Deutsche Mark was often problematic for German industry. That's one of the reasons why Germany has been so enthusiastic about adopting the Euro, which gives it a significantly "weaker" currency than it would have otherwise, and locks it into currency parity with most of the rest of its regional bloc.
Tim, iPhone sales are down for two reasons
1. The smart phone market is over-saturated.
2. Every bugger that wants an iPhone, has an iPhone.
Stop trying to claim that things like sotck market fluctuations, El Nino, IS or Zika are to blame.
Summation 2
They produce all their products overseas, they sell most of their products overseas, and they hide all their money overseas.
What part of this company is American anyway?
Further Apple doesn't bring its foreign profits home anyway, so what does it care how much its earnings would be in USD? It has Irish bank accounts rammed full of iPhone money (that the nice Irish govt didn't charge them tax on either), while constantly moaning that it can't bring any of that into USD unless Uncle Sam gives a big tax discount.
To confuse the Apple Troll mods, I'll add that Google is just as bad, and recently got exposed for doing a 'deal' with the UK govt to contribute a little bit towards us plebs.
As an IT person, it is hard to have any sympathy for Apple. They have so much cash, and could step into so many markets... but they have all but abandoned the enterprise sector (no XSan, no XServe, no rack-friendly models [1].)
Apple has been a toy maker for so long, they think they can continue to do so. Sony had this attitude back in the late 1990s... but then just got steamrollered. If Apple is to have long-term stability, they need to use some of that large cash stash, and either spin off an enterprise company or make a division for this. Think desktops, servers, and applications that can replace Exchange, Active Directory, and other items. Apple would also need to work like other sane companies and give roadmaps out. (For example, I can go to IBM, Oracle, HP, sign a NDA, and see what is going to happen in the next 3-5 years, product-wise. With Apple, you can't do this.)
With people related to the Fed like Marc Faber saying that there will never be a bull market in his lifetime, Apple needs to start battening hatches for the oncoming storm. Regardless of the economy, enterprise sales are a solid income, and it is easier to convince one CFO to pay for 100,000 Macs than it is to convince 100,000 consumers to buy one Mac apiece in a bad economy.
I hate doomsaying, even as an AC, but winter is coming, and the handwriting is on the wall. Apple needs to shift from iPhones and consumer toys back to meat-and-potatoes products (not just Macs, but infrastructure) in order to stay relevant in 5-10 years.
Perhaps virtualization. Build ESXi into the BIOS, slam some DRAC/iLO functionality onto machines, and this might shake things up in that market. Especially if Apple added Infiniband or Thunderbolt connections between blades and chassis, and Isilon-like OneFS functionality, so each blade could use another's HDD, with redundancy by drive, blade, and chassis built in. This is what MS is doing with Storage Spaces Direct, but the difference between 10gigE and Infiniband or Thunderbolt for cross-connects is significant.
Apple is sitting on a lot of cool stuff. Not just for making toys, but actually being able to play in the adult world where regardless of the economy, businesses still will be upgrading.
[1] No, a Mac Mini is not an enterprise geared machine. A Mac Pro can be racked with a third party kit (and take up a ton of space)... but that is a lot of kludging compared to a 1U XServe, or a rack and blade system. Especially if Apple actually went balls-out and used some of that cash to turn OS X into a virtualization platform (The XSan filesystem is still present and usable for clustering), or made some applications that could compete where MS is only present.
It has Irish bank accounts rammed full of iPhone money
And that's why a strong US dollar hurts them; it's not just lost revenue on future sales, its lost value of past revenue.
while constantly moaning that it can't bring any of that into USD unless Uncle Sam gives a big tax discount.
And good ol' Uncle Sam's response was to bolster the local economy and boost the value of the US dollar, basically saying "it's better to pay taxes when the exchange rate is high than play stupid games until it tanks".
I don't say it often, but when I do, I mean it: The US Government made the right call. I'm sure Apple has lost more value in the money they've kept overseas by now than they'd have paid in taxes, hopefully that is a lesson learned.
APK quotes people (including myself) without context and should not be trusted. Just thought you should know.
I would add especially when they hoard those profits overseas and don't pay taxes on them.
As an IT person, I have never seen this much salt outside of the Dead Sea.
Are you that butthurt that Apple killed XServe? Apple would be suicidal to get involved in servers. Referencing IBM in terms of hardware is a joke. Sun is a moldering corpse, kept alive merely because Oracle needs more places to sell licenses. HP is a pale imitation of what it once was. Even Dell is feeling the heat. Commodity hardware and the cloud is gutting Enterprise(tm) sales.
You reference the desktop, and that's hilarious. You can't swing a dead hipster around the valley without causing several thousand programmers to drop their Macbook Pros - to say nothing of the stranglehold on design and creative work. And the desktop market as some sort of "insurance" to "ride out the stom"? Growth is stagnant there. The real money is in what's supplanting it - mobile devices.
Guess what Apple's kind of sort of in to?
XServe died because it was useless and nobody was buying.
Let it go.
Tim Cook has fucked Apple up since he has been in charge and he needs to resign.
You're an idiot. Tim has done a brilliant job of leading Apple, and they've grown at an incredible pace for a company their size. I remember people like you saying the same thing about Steve.
-jcr
The only title of honor that a tyrant can grant is "Enemy of the State."
just like people do.
No actually people don't. Many people aren't in fact sociopaths and are happy to simply earn a normal living and pay taxes in the normal way without attempting to jump through vast hoops with offshore accounts and etc to avoid contributing to society.
Many people actually understand that civilsation is built on taxes and can think beyond MINE MINE MINE MINE.
SJW n. One who posts facts.
just like people do.
No actually people don't. Many people aren't in fact sociopaths and are happy to simply earn a normal living and pay taxes in the normal way without attempting to jump through vast hoops with offshore accounts and etc to avoid contributing to society.
Many people actually understand that civilsation is built on taxes and can think beyond MINE MINE MINE MINE.
You're missing the point here. People are those that are rich enough to also hide their money overseas to avoid taxes. The rest of us are just consumers (i.e. not people). 8-)