The last time Apple had bad financial news to report, the Cincinnati Bengals had just picked Carson Palmer as the No. 1 player in the NFL Draft, Johnny Depp was only a few short weeks away from making his debut as Jack Sparrow in the Pirates of the Caribbean series, and Twitter didn’t even exist.
So when Apple recently suffered its first revenue decline in 13 years after sales of its ubiquitous iPhones fell for the first time ever, the company was in unfamiliar territory in terms of how it would report those results to the media and industry analysts.
The two biggest questions Apple had to immediately address: 1) What caused the decline? and 2) Is this a sign of things to come?
Apple’s answers: 1) The global economy and 2) No.
After stating in a press release, “Our team executed extremely well in the face of strong macroeconomic headwinds,” Apple CEO Tim Cook went on to say in an earnings call, “My view of that is it’s an overhang of the macroeconomic environment in many places in the world, and we’re very optimistic that this too shall pass.”
How did these comments play in the press and on Wall Street? Not so well:
- “Apple missed by a mile,” said USA Today markets and stocks reporter Matt Krantz in a video accompanying a story headlined “Apple shares plunge 7% on first drop in iPhone sales ever.”
- New York Times technology reporter Vindu Goel wrote that Apple’s financial woes were “a casualty of Apple’s already immense size, weakness in key markets like China and a lack of another hot product to pry open the wallets of customers.”
Throughout its history, Apple has been better at creating excitement for its products than just about any other company on the planet. Right out of the gate, Cook should have played that trump card when he discussed Apple’s revenue slip. Instead of blaming Apple’s revenue decline on vague “macroeconomic headwinds,” Cook should have simply owned up to it and then described why the new products in Apple’s pipeline will make sure it doesn’t happen again.
And that’s exactly what Apple’s head honcho did six days later in an interview on CNBC with “Mad Money’s” Jim Cramer on CNBC: “We’ve got great innovation in the pipelines, new iPhones…,” Cook told Cramer. “…We’re going to give you things you can’t live without that you don’t know you need today. That’s always been the objective of Apple…To do things that really enrich people’s lives. That you look back on and you wonder how did I live without this.”