eXtensions - Sunday 4 May 2025
By Graham K. Rogers
Apple has just produced its Q2 2025 financial report and the figures are more than respectable, despite the obvious headwinds that tariffs brought. The long-running case against Epic in the USA did not go Apple's way, with Apple castigated for the cover-up, and one executive accused of lying by the judge.
Despite the burden of tariffs that has affected US companies and consumers, this week, Apple reported fairly good figures. It seems to have taken some juggling of supply lines and this is likely to be extended into the future. MacDaily News provided a basic transcript of the Conference Call, in reverse chronological order (start at the bottom of the page). Jason Snell (6 Colors) provides a more comprehensive version with statements from (and questions fielded by) CEO Tim Cook and CFO Kevan Parekh. As usual this is worth taking time over.
Most of the questions concerned tariffs understandably, but towards the end, Richard Kramer of Arete Research brought in the Epic case (see below), linking it with litigation around Google's antitrust case. Cook was form that he disagreed with the outcome and confirmed that Apple will appeal. And that was all there was on the court case. This is not going away. The press release on the results is as follows:
Apple today announced financial results for its fiscal 2025 second quarter ended March 29, 2025. The Company posted quarterly revenue of $95.4 billion, up 5 percent year over year, and quarterly diluted earnings per share of $1.65, up 8 percent year over year."Today Apple is reporting strong quarterly results, including double-digit growth in Services," said Tim Cook, Apple's CEO. "We were happy to welcome iPhone 16e to our lineup, and to introduce powerful new Macs and iPads that take advantage of the extraordinary capabilities of Apple silicon. And we were proud to announce that we've cut our carbon emissions by 60 percent over the past decade."
"Our March quarter business performance drove EPS growth of 8 percent and $24 billion in operating cash flow, allowing us to return $29 billion to shareholders," said Kevan Parekh, Apple's CFO. "And thanks to our high levels of customer loyalty and satisfaction, our installed base of active devices once again reached a new all-time high across all product categories and geographic segments."
Apple's board of directors has declared a cash dividend of $0.26 per share of the Company's common stock, an increase of 4 percent. The dividend is payable on May 15, 2025 to shareholders of record as of the close of business on May 12, 2025. The board of directors has also authorized an additional program to repurchase up to $100 billion of the Company's common stock.
Tim Cook is a skilled operator when it comes to the supply chain. The way it appears the supplier context has changed from a China-centric approach, where after all the skills that Apple needs for manufacturing have long been available, to a wider picture that includes more of Asia. Devices are now being assembled in South-east Asia, particularly Vietnam; and in South Asia, where even now new manufacturing facilities are being brought into use.
The comments online have focused on the US markets, but sales of Apple products occur worldwide and 57.27%% of Apple's revenue in 2024 was not from the USA ($390.8B total; $167B, USA David Curry, Business of Apps). It has been like this for several years now. If I understand how these tariffs are applied, that means, an iPhone made in China, but sold here in Thailand will have no additional taxes or tariffs applied. On the contrary, an iPhone made in China would have a massive tariff fee applied in the USA, while the tariff on one made in India would be significantly lower.
By establishing new manufacturing faciulities in conjunction with companies like Foxconn, TSMC, Samsung et al (Julie Young, Investopedia) Apple will be able to move its products in such a way that the lowest fees will be applied. For some markets, there will be none levied, apart from the normal local taxes. Here that would mean an import tax and VAT (7%) on the sale to the user.
There is also the question of Tim Cook's relationship with the President. Like many billionaires he made a generous contribution to the inauguration funding, although this seems to have gone sour for a couple (Bezos and Zuckerberg, for example), with the position of Musk being questioned daily. Many think that this will not last long. For Cook, Apple and other companies heavily involved in technology this has fared a little better, especially in the short term. Apple's juggling of distribution and taking a financial hit themselves has also ensured sales have continued to be high. The President is notoriously volatile so who knows when, or how, this will all pan out. Cook, however, is still in the limelight there, praising the President, albeit attending a conference of moguls by teleconference rather than in person (William Gallgher, AppleInsider).
There are several reports online about the Q2 2025 results. Here are links to those that I found useful:
That last item in the list also mentions the results of a court case (that Apple insists it will appeal) that seems to have gone wrong for the company in a significant way. Apple lost its long-time case against Epic Games who have immediately provided information to developers on how to avoid charges from subscriptions. However the ways in which this was lost are likely to reverberate for some time. Not only is the judgement of Cook being questioned, but the whole moral high ground that Apple has claimed for years with the way the App Store has crumbled. In addition, the judge is livid that an Apple executive, Vice President of Finance, Alex Roman, lied under oath - that will bring its own problems - but that the Court also holds Apple in contempt. Not a good way to end the week.
It took me a couple of days to look through all the reports. In my opinion, one of the better summaries of the case comes from Jason Snell (Six Colors), who reports objectively and does not gloss over the culpability, naming CEO Tim Cook, Luca Maestri and Vice President of Finance, Alex Roman, who the judge says "outright lied under oath" multiple times."
This is not a good look for Apple. While I prefer the security of the walled garden that the App Store provides, some practices, particularly regarding subscriptions, have been questioned in recent years and it now appears the actions have been questionable. With a probable perjury, there is a chance that an Apple executive might face jail time; and this must also put Cook's tenure in doubt. Apple will of course appeal the findings. That may be little more than a delaying tactic at this stage.
TechCrunch (Sarah Perez) has a number of the comments from the judge (I can hardly wait to read the whole transcript), including one where she accuses Roman of outright lying, but this also caught my attention: "Phillip Schiller had advocated that Apple comply with the Injunction, but Tim Cook ignored Schiller and instead allowed Chief Financial Officer Luca Maestri and his finance team to convince him otherwise." The court has referred the matter to the US Attorney . Only recently we reported that Maestri ignored Tim Cook's permission for the AI group to buy several servers for its AI development program and slashed the budget by half. That decision cost Apple a lot in terms of the way in which the AI has been slowed. Apple may want to look carefully at that.
The court holds Apple in contempt which will bring penalties, and notes that, "As always, the coverup made it worse."
One of the many commentators using this case as a springboard looks at how Apple behaves generally to its users. Jason Cross (MacWorld) writes (in his article, Once again, Apple has to be forced to do the right thing), "I'm starting to think that Apple leadership doesn't know what people want anymore. Too many hardware lines are stuck in an endless cycle of "the same as last year but just a little better." I think the hardware is OK, and prefer incremental changes, but the software is these days in more need of some loving care.
There have been too many arbitrary changes - my bête noire is Photos on the Mac which I use because of the way it synchronizes to iCloud and my other devices. The different interfaces (iOS/iPadOS and macOS) are not ideal: the tools fail to match and they work in a limited fashion. For tools like Straighten, Perspective, and (especially) Repair, I usually switch to Photomator on the iPad Pro which does a far better (and user-friendly) job. I keep asking, does anyone at Apple ask if users want these changes, and if so, has anyone at Apple tried them out? Cross does make some good points here. Even I am beginning to think that the head honchos at Cupertino are tone deaf.
In a related article, Jason Snell (Six Colors) has produced his annual Report Card on how Apple fares in the enterprise. My thanks to TidBits for the original heads-up. Businesses have different needs compared to home users (and small offices), but there are some useful comments here, from Snell and from some of those affected. They note how the hardware is of a high quality, but that the software is weak.
Graham K. Rogers teaches at the Faculty of Engineering, Mahidol University in Thailand. He wrote in the Bangkok Post, Database supplement on IT subjects. For the last seven years of Database he wrote a column on Apple and Macs. After 3 years writing a column in the Life supplement, he is now no longer associated with the Bangkok Post. He can be followed on X (@extensions_th). The RSS feed for the articles is http://www.extensions.in.th/ext_link.xml - copy and paste into your feed reader.
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