Tim Cook: We're Seeing 'Extreme Conditions Unlike Anything We've Experienced Before' in the Global Economy
What’s keeping the CEO of a company that just reported the most profitable quarter in history up at night?
For Apple Inc.'s Tim Cook, it’s the “economic challenges all over the world.”
“This is a huge accomplishment for our company especially given the turbulent world around us,” said Cook, immediately after running through the company’s quarterly financial highlights on a conference call.
Ever since the surprise devaluation of the Chinese yuan in August, the potential for a hard landing in the world’s second-largest economy has been front-of-mind for investors.
Cook did nothing to assuage those concerns. While pointing out that Apple had been performing quite well in China last summer—unlike some other firms—he suggested that the forward outlook was not nearly as bright.
“Notwithstanding these record results, we began to see some signs of economic softness in Greater China earlier this month, most notably in Hong Kong,” he said.
Meanwhile, other major markets for Apple, including Brazil, Russia, Japan, Canada, southeast Asia, Turkey, and the eurozone have been roiled by slow economic growth, the downturn in commodities prices, and weakening currencies.
“Our results are particularly impressive given the challenging global macroeconomic environment,” said Cook. “We’re seeing extreme conditions unlike anything we’ve experienced before just about everywhere we look.”
For Apple, which generates roughly two-thirds of its revenues outside the U.S., this is no small matter. The lofty U.S. greenback crimped revenues received abroad, with Cook specifically citing the adverse effect of weakness in the British pound, euro, Canadian dollar, Aussie dollar, Mexican peso, Turkish lira, Brazilian real, and Russian ruble.
According to Cook, these foreign exchange fluctuations shaved 15 percent off revenues the tech powerhouse earned abroad relative to its fiscal fourth quarter.