Apple CEO Tim Cook says investors and analysts alike have been over-reacting to its recently reported second quarter results in which the iPhone maker posted a decline in revenue for the first time in 13 years.
Since Apple posted its results at the end of last month, media and analysts alike have been proclaiming the death of Apple. It’s a reaction that Cook is describing as rather ridiculous.
The iPhone maker posted second quarter revenue of $50.6 billion, down from $58 billion in the year-ago quarter and missing analysts estimates by $1.4 billion. Wall Street was expecting revenue of $52 billion and earnings per share of $2. Apple’s actual earnings per share came in at $1.90.
“To put that in perspective, the $10 billion is more than any other company makes,” Cook told CNBC’s Mad Money host Jim Cramer. “So it was a pretty good quarter, but not up to the street’s expectations, clearly.”
Another factor in the equation is that Apple customers are upgrading at a lower rate than they did in 2015, but still higher than in 2014, giving Apple an “abnormally high upgrade rate last year because people bought into the iPhone 6.”
That, combined with currency rates and macroeconomic issues, affected the company’s bottom line in the just-past quarter, Cook said.
“The most important thing is that customers love our products,” he added. “They are using them and the satisfaction has never been higher, the loyalty rates have never been higher. That is what is really important for us. That is the most important thing for the long-term of Apple.”
Cook said the upcoming iPhones, which the company traditionally debuts in September, are so great, it will convince iPhone users to upgrade.
Cramer, a self-professed iPhone junkie who uses an iPhone 6, said his current Smartphone already had everything he needs.
“We’re going to give you things you can’t live without that you just don’t know you need today, Cook replied with a smile.
Cook also said he is optimistic about the future of iPhone sales in China and India. In China, Cook said, the middle class is expected to jump to nearly 500 million in the next five years, making it a market ripe for Apple’s products.
“This is an unprecedented growth of the middle class,” Cook said. “I could not be more optimistic about China.”
India, meanwhile, will be the most populace country in the world by 2022 and the population is young, Cook said, adding that, with LTE beginning its roll out this year, there is huge market potential there for Apple.