UK love affair with Apple continues while European sales struggle

UK love affair with Apple continues while European sales struggle

Summary: Apple is struggling to live up to its own sales expectations in Europe, but its devices are still performing well in the UK

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British buyers snapped up Apple products at a healthy pace in the last three months, providing a bright spot in an otherwise tough European market for Apple.

In its third-quarter results on Wednesday, Apple revealed that it has seen a slowdown in key product lines, such as the iPhone and the Mac, in some regions — leading the tech giant to miss analysts' target for revenue by $2bn, coming in at $35bn (£22.6bn).

Apple iPhone
Apple's products are still selling well in the UK, despite some difficulties in Europe.

Despite that overall miss, however, the company continued to perform well in the UK, unlike its sales in the rest of Europe.

"The geography that did not perform well was Europe. Europe was essentially flat, slightly positive year-on-year, and that really hampered our total results," Apple's chief executive Tim Cook said on an analyst conference call.

"The UK was relatively solid at 30-percent growth, but France and Greece and Italy were particularly poor, and Germany was ultimately a single-digit positive growth for the quarter," he noted.

European sales of Apple's Mac products fell by 10 percent quarter-on-quarter. The Mac range fared better in the US, growing 25 percent and helping to offset a 23-percent decrease in unit sales in the Asia-Pacific region.

"Eastern Europe was strong, materially stronger than Western Europe. But obviously, the Western European countries drive the preponderance of the revenue in that segment. So we're certainly seeing a slowdown in business in that area," Cook said.

Globally, iPhone sales were up 28 percent to 26 million units, with gains in the US, Japan and China. In addition, iPad sales far exceeded expectations at around 17 million units — a year-on-year increase of 84 percent.

Carolina Milanesi, mobile analyst at Gartner, echoed Cook's words, noting how closely Apple's bottom line is tied to sales of the iPhone.

"Like in 3Q11, Apple's earnings today show how much its overall revenue is iPhone dependent," Milanesi said in a tweet.

Topics: Apple, iPhone, iPad, Smartphones

Ben Woods

About Ben Woods

With several years' experience covering everything in the world of telecoms and mobility, Ben's your man if it involves a smartphone, tablet, laptop, or any other piece of tech small enough to carry around with you.

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23 comments
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  • The UK may have been dumb enough for libor but at least they werent dumb

    enough to join the euro. Now that France has become a political basket case there's going to be even more pressure on germany to save all the socialist countries and the germans are going to wish they had avoided the euro too.
    Johnny Vegas
    • All bailout countries are not socialist.

      This is a myth, that all the bailout countries are full of lazy socialists. Germany is more socialist than some of the countries that are being bailed out. Germany has less working hours and longer holidays than Ireland for example. That and the low corporate tax is why so many multinationals are based here. The problems in Ireland are related to a small club of bankers, developers and politicians who built up a property bubble and landed the state with unmanagable debt which many ordinary hard working people had no hand in creating. Another fact is the so called business friendly economies like the USA and Great Britain have higher debt levels than their socially progressive counterparts like Denmark and Sweden. Social progression in developed economies is not the cause of this financial crisis, reckless greed and short term opportunism is the primary cause.
      Captain Planet
      • More 'socialist' than all of them, actually

        The three countries in Europe with the biggest welfare states (after-tax social spending by the public sector, as a share of GDP) are France (1st), Germany (2nd) and Sweden (3rd). Ireland has the smallest welfare state in the EU (even smaller than the US, I think), and Spain, Greece and Portugal are also below the EU average (but Greece has got the highest military spending as a share of GDP, which contributes to its budget problems). The only potential crisis country with a large welfare state is Italy.

        The US obsession with 'socialism' is strange. No country in Europe is anything close to being socialist (i.e. public ownership of the means of production). Socialism disappeared from Europe with the fall of the USSR. Most social spending (the welfare state) is just redistribution from people of working age to the young (children and students) and the old (pensioners).
        WilErz
        • Fox News

          Also, when we say "Socialist" we don't actually mean Communist, and we don't mean what Fox News means. European "Socialist" Governments are nothing like the imaginings of Fox News.
          jeremychappell
          • It depends on the country

            In Northern/Central Europe, the moderate left are normally called 'social democrats' or 'democratic socialists', not 'socialists', and they aren't socialists in any meaningful sense. In Germany, the SPD abandoned socialism as a goal in the 1960s, to become electable, and the Scandinavian social democrats abandoned it even earlier.

            In Northern countries, 'socialist' tends to refer to small far-left parties, which are closer to traditional socialism, but still democratic, and not really socialist. It's different in France, where their mainstream social democratic party is just called the Socialist Party (Parti socialiste). I think Southern Europe is more like France, i.e. 'socialist' means what in the North is called 'social democratic'.

            In the former socialist countries of Central/Eastern Europe, the old Soviet puppet regimes are usually referred to as 'socialist', not 'communist' (at least I've never heard anyone from the region call the old regimes 'communist'). Also, the ruling party of the DDR was called the Sozialistische Einheitspartei Deutschlands (Socialist Unity Party of Germany), not the Communist Party as in some other countries.
            WilErz
      • The U.S. ceased being a "business friendly" country a long time ago,

        when the corporate tax rates and income tax rates and other taxes that "punish" wealth, were enacted. And, it's not just taxes that make the U.S. a country that is hostile to business; it's also the massive number of regulations which zap productivity and create a lot of barriers against growth.

        So, with high tax rates and an unending number of regulations, the U.S. is not the "friendly to business environment" which many people wrongly perceive.

        The U.S. has become massively socialist, and so have many European countries, and, that is where the damage to the economies is coming from. That can't be denied, and the correlation between the creeping socialism and the downsizing of the, at one time, great economies, can be easily seen.
        adornoe
        • Anonymous again?

          The id is "Adornoe".

          Why is the system not "liking" my id?
          adornoe
        • Hmm...

          That must be how those right wingers running China are beating us...

          Seriously - step away from the Fox News.
          jeremychappell
          • Is that the only thing that creeps into your mind? FOX?

            Try a more intelligent answer to the question or issue next time. Blaming FOX for anything and everything, is a cowardly way out for anyone, and a method which screams: "I got nothing", therefore, let me bring up "FOX".
            adornoe
          • BTW, jeremychappell, how is China beating us at anything?

            They're still a very oppressive government, with a population that is under complete control, and anything and everything that happens there, is via its government. The only thing they lead at, is population. It's economy is still, overall, a third world economy.
            adornoe
        • High taxes don't really matter for 'business friendliness'

          Denmark has the highest taxes in the OECD, and it's also usually ranked as one of the most business friendly countries. More generally, the best performing economics in Europe are the Northern economies where taxes and public spending are high, not the Southern economies where both tend to be lower.

          Businesses in developed countries have to pay high wages, so they need highly educated/trained workers. Education and training, especially continual retraining of workers who become unemployed, is expensive, so you need high taxes to pay for it.

          In underdeveloped countries where businesses are just after cheap labour, it's different, and low taxes can make a big difference. However, it would be crazy for a developed country to try to compete for those jobs. Even if you cut taxes to zero, workers in a developed economy are still going to be much more expensive.
          WilErz
          • Bogus comparisons...

            Tiny countries, with city-sized populations, can't be compared to the economy of a giant country, where everything and every problem presents a much bigger challenge. It's like comparing mountains to anthills.

            And, high taxes ALWAYS matter when it comes to the health of a country and its economy. Physical infrastructure, and defense, and a justice system, are the only things that a government should be responsible for, and taxing for that purpose is the only mandate that government has. Social programs, including education, are best handled at the local level, and even better by the private sector.

            The taxes and the massive regulations are the reason that the U.S. and the western economies, are no longer thriving and are actually shrinking. All things are relative, and, even if the U.S. has a lowered tax rate for businesses, other countries have beaten the U.S. with lower tax rates, which, makes them more attractive to do business in. And then, those countries become a lot more attractive when their regulations are not as intrusive and not as costly as they are in the U.S., so, DUH!, it's a no-brainer as to why businesses would want to ship operations and jobs to those countries that are a lot more hospitable to businesses. If the U.S. has a corporate tax rate of 35-39%, and Canada has a tax rate of 15%, which country is more attractive for businesses? That could amount to a huge amount of cash to many larger companies. And, so would the savings from a lot less regulations.
            adornoe
          • Total nonsense

            For something like a business-friendly environment, the size of the country is completely irrelevant.

            More developed countries have slower growth rates of GDP per hour worked than less developed countries because a less developed country can 'catch up' by importing technology. Maybe you'd rather live in a low-tax country like Turkey or Mexico than in a high-tax country like Germany or Sweden, but that's just your preference.

            As for the on-going economic crisis in Western economies, the countries that are in crisis are the low-tax countries of Southern Europe, not the high-tax countries of Northern Europe. You can't bring up some nonsense about size either, since a lot of the low-tax European countries in crisis are small.

            To take one example, Ireland is even smaller than Denmark, and has very low tax rates, including predatory corporation taxes (i.e. they're deliberately set much lower than in the rest of the EU, to attract business away from other EU countries). By your logic, Ireland should be a paradise. Instead, the Irish private sector (banks, property developers) created a massive bubble, which later burst, creating a depression. Whilst the 'socialist' economies like Denmark are growing, the Irish economy is projected to shrink this year, and Irish unemployment is almost 15%. So much for low taxes. (Mind you, high taxes do not magically solve economic problems either, but nor are they the cause.)
            WilErz
          • I could also add ...

            ... that most of the regulation in the EU (actually, the majority of all legislation) comes from the EU level, not from national governments. The EU is bigger both in population and GDP than the US, so your size argument doesn't work.

            Somehow, having to implement massive amounts of EU regulations from Brussels hasn't crippled Germany or the rest of Northern Europe. Blaming regulations from Washington for the US's problems is a cop out.

            The US's problems, like those of Ireland, are mostly a result of a massive property bubble that inflated in the early- to mid-2000s, and then burst. Unfortunately, asset bubbles are a natural result of the interaction of human psychology and markets. They're as old as markets themselves, and nobody has yet found a way to prevent them (except with central planning, but that 'cure' is much worse than the disease).

            I'm not a fan of George W. Bush, but when he explained the US economic crisis by saying that 'Wall Street got drunk', he was a lot closer to the truth than anyone who thinks 'high' taxes caused it. In fact, US income tax is very low compared with the 1950s/1960s, when the top income tax rate was 90%.
            WilErz
          • The EU is suffering, collectively, from the many socialist policies

            which have been instituted in individual countries for decades. Just because they now present a unified front as the "EU" does not reduce the effects of the socialism which predated the current makeup of the continent. Greece and France and Spain and Italy, and others, were too lackadaisical about workers' rights, without concern about what those policies would do to businesses. Businesses are where income comes from, and, if they're not looked after, the income for workers, even at government level, won't be there to maintain a government, nor the general population.
            adornoe
          • One can't get away from the fact that, smaller is easier to manage than

            large countries.

            Problems on a small scale are always easier to manage, and sometime eradicate completely. The problems of a mid-size city, are easier than those of a major city, and those of a tiny city are also a lot less to deal with than those of a mid-size or major city. Same goes for countries, and the tax rates, while important for growth or lack thereof, might not be as stifling in a small country.

            Nevertheless, tax rates are very important, and, even those countries which seem to be immune to high taxes, will eventually begin to feel the pressure. It takes decades for the effect of high-taxation and socialist policies to begin to be felt. The U.S. was doing quite well at the beginning of the high taxes environment and at the beginning of the oppressive regulations culture, but, it took time for the effects to be felt, and now, they are for certain being felt. Common sense says that, anytime money is taken out of an economy, by way of taxes or regulations or high wages, that that economy will suffer the consequences down the line, no matter what the size of the economy.
            adornoe
    • Economics...

      You're missing the bigger point. The German economy is the biggest in the Eurozone, and as such has benefitted from the (comparative) weakness of the Euro, the smaller economies of the Eurozone have suffered as the German economy kept the Euro (comparatively) high.

      Look at it this way, if Germany had its own currency it would have risen faster then the Euro did. If other Eurozone countries had their own currencies they would have traded lower compared to the Euro. The Euro behaved like an "average" between then a pure German currency would have performed and where are more typical Eurozone single currency would have.

      This made it far easier for Germany to be competitive, and far harder for other Eurozone countries. It's akin to how China kept its currency consistently low to distort its global competitiveness.

      To view it as "socialist vs non-socialist" is missing the bigger point. The Euro benefitted Germany, and hindered other Eurozone countries. That isn't to say there hasn't been mismanagement in some Eurozone countries, there has, but not all.

      Do you mean "LIBOR"?! Or are you referring to Labour?
      jeremychappell
  • Revenue

    So they had a revenue of $35 billion instead of the projected $37 billion. If only I had that kind of misfortune!
    DJL64
    • You fail to see a potential pattern, which is what the investors look at

      when they decide to put their money into a company, or to keep it there. As an outsider, and one that might not have much money invested in a stock like Apple, the 35 instead of 37 billion may not seem like a big concern, but, Apple executives and Wall Street wont be as dismissive about a 2 billion dollar "miss" in earnings.
      adornoe
      • Projection overshoot

        You are aware this is still growth? Also the next iPhone, iPad, and even iMac are likely to ship in the latter half of the year... If I was giving stock advice (which I'm not) I'd say: "strong buy".
        jeremychappell