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Instant Reaction: Apple Beats on Sales and Earnings · Bloomberg Intelligence

0:02
Speaker 1: Bloomberg Audio Studios, podcasts, radio news. Apple second quarter revenue
0:10
Speaker 1: ninety point seventy five billion. That's slightly better than the
0:12
Speaker 1: forecast of ninety point three to three billion. iPhone revenue
0:15
Speaker 1: forty five point ninety six billions, slightly above the estimate
0:18
Speaker 1: of forty five point seventy six billion. The company here's
0:21
Speaker 1: a big one to buy back additional one hundred and
0:23
Speaker 1: ten billion dollars worth of shares and boosting its quarterly dividend.
0:28
Speaker 1: That's the Apple playbook, and it is now up two
0:30
Speaker 1: point three percent. Initial reaction here in the after mark, Yeah.
0:33
Speaker 2: I was going to say, who cares about those other numbers.
0:35
Speaker 2: It's that buyback of additional one hundred and ten billion
0:37
Speaker 2: dollars of shares and boosting that quarterly dividend that certainly
0:40
Speaker 2: has investors expected. Some additional color here. Second quarter Greater
0:44
Speaker 2: China revenue Carol sixteen point three seven billion. Even though
0:48
Speaker 2: that was a decline of over eight percent year over year,
0:50
Speaker 2: it still did beat estimates of fifteen point eight seven
0:53
Speaker 2: billion dollars. Second quarter revenue coming in above estimates at
0:56
Speaker 2: ninety point seventy five billion. Estimates are for ninety point
0:59
Speaker 2: three to three iPhone revenue also coming in above estimates
1:02
Speaker 2: forty five point nine to six billion. Estimates were forty
1:05
Speaker 2: five point seven six billion dollars.
1:07
Speaker 1: Apple raising that dividend to twenty five cents a share
1:10
Speaker 1: from the previous dividend of twenty four cents a share.
1:13
Speaker 1: So just to keep in mind that we start, you know, slowly.
1:16
Speaker 1: We've seen all of these big tech companies, the Magnificent
1:19
Speaker 1: seven offering up things like a dividend and so on.
1:21
Speaker 2: Our own Mark German all over this story. Here's his take. Initially,
1:24
Speaker 2: Apple sales decline less sharply than feared last quarter, held
1:27
Speaker 2: by stronger than expected demand in China, sparking optimism that
1:30
Speaker 2: the company slow down, maybe easing. Apple also set it
1:33
Speaker 2: expects three turned sales growth in the current period, with
1:36
Speaker 2: revenue climbing by a percentage in the low single digits.
1:39
Speaker 2: That's according to Luka Maistri, the company's CFO. He told
1:43
Speaker 2: ut Bloomberg Television's Emily Chang in an interview.
1:45
Speaker 1: All right, so let's get some analysis right now. Our
1:47
Speaker 1: own Ana Agrana is standing by of our Bloomberg intelligence
1:50
Speaker 1: team on RAG. You've got the numbers, and of course
1:53
Speaker 1: the additional big buy back of one hundred and ten
1:56
Speaker 1: billion dollars worth of share, boosting its quarterly dividend. But
1:58
Speaker 1: it looks like, you know, they came in either online
2:02
Speaker 1: or better than expected. But what's your smart take on this?
2:05
Speaker 3: Yeah, I would say anything. The number that stands out
2:07
Speaker 3: really is that the decline in China was not as
2:10
Speaker 3: bad as I guess it was communicated before, so slightly
2:14
Speaker 3: better than before, but it's still overall still a negative number.
2:18
Speaker 3: There is no and then you know, we will find
2:20
Speaker 3: out on the conference call whether they make a comment
2:22
Speaker 3: or not, or what kind of guidance they give for
2:24
Speaker 3: next quarter. But overall, I would say the results were
2:27
Speaker 3: okay compared to I'd say going into the quarter when
2:31
Speaker 3: the pessimism is very high.
2:33
Speaker 2: What's the big headline here? Is it the boarder proving
2:35
Speaker 2: plans to buy back an additional one hundred and ten
2:37
Speaker 2: billion dollars worth of company stocks? Is it Apple increasing
2:40
Speaker 2: its dividend four percent to twenty five cents a share?
2:43
Speaker 2: Are those the numbers that investors should be focused on
2:45
Speaker 2: right now?
2:46
Speaker 3: I would have been expecting, you know, them to buy
2:49
Speaker 3: at least one hundred million dollars of stock every year.
2:51
Speaker 3: So that's you know, to me at a table stake
2:54
Speaker 3: ten billion. Yeah, it's just it's just normal. I really
2:56
Speaker 3: need to know where the growth is going to come from,
2:58
Speaker 3: and you know, how our things shaping up for the
3:01
Speaker 3: second half of the year. And but most importantly, what
3:03
Speaker 3: are they doing in the AI of you know, arena
3:06
Speaker 3: at this point and what kind of features should we
3:08
Speaker 3: expect going forward.
3:10
Speaker 1: So remind us to Honora, this company typically doesn't release
3:13
Speaker 1: the outlook in their call. I forget. I mean you
3:16
Speaker 1: talk about it on the call, but not in the release, correct.
3:18
Speaker 3: Yeah, that's not in the release. They're going to give
3:20
Speaker 3: some indication about each of the product lines on the call.
3:23
Speaker 3: So when we look at these results, you know, services
3:25
Speaker 3: is good, you know, iPhone modestly better, you know overall,
3:29
Speaker 3: I would say, in line to slightly better quarter. But
3:32
Speaker 3: it all boils down to the commentary on the conference
3:35
Speaker 3: call about how the things shaping up in the current quarter.
3:39
Speaker 1: So if they are talking down China in particular, or
3:43
Speaker 1: revenues or overall, that is going to get you concerned.
3:46
Speaker 3: Yeah, I mean that is going to you know all
3:48
Speaker 3: the all the you know, the current you would say,
3:50
Speaker 3: the minor beat will be all offset by if there
3:53
Speaker 3: are any comments negative comments about you know, continued weakness
3:57
Speaker 3: of the iPhone in the third quarter, because remember, if
3:59
Speaker 3: we consensus right now, iPhone revenue for next quarter is
4:03
Speaker 3: supposed to be down two percent. Now, remember in this
4:06
Speaker 3: quarter was down ten percent, So we need to know
4:08
Speaker 3: whether that two minus two percent holds true or are
4:11
Speaker 3: we going to see better than that in line or worse.
4:14
Speaker 2: Shear's higher in the after hours right now by about
4:16
Speaker 2: four percent. Fair to say, we're seeing this reaction as
4:19
Speaker 2: a result of just expectations being so low going into
4:22
Speaker 2: this exactly.
4:22
Speaker 3: Yeah, yeah, absolutely, this is this is a true game
4:25
Speaker 3: of where pessimism has been so high and they go
4:28
Speaker 3: out and you know, beat by a slight amount. But
4:31
Speaker 3: again I will give you my final verdict after the call.
4:34
Speaker 1: Yeah, and we're also seeing where we said Greater China
4:36
Speaker 1: revenue better than expected, it was still about a billion
4:39
Speaker 1: and a half low a year ago. Sales are down considerably.
4:42
Speaker 1: Also in Japan, the rest of Asia Pacific, and in
4:45
Speaker 1: the Americas. The lone bright spot seems to be some
4:47
Speaker 1: minor growth in Europe. You know, it's interesting on surveillance
4:50
Speaker 1: this morning, Ana Rag Tom Keane asking one of his guests,
4:54
Speaker 1: is this a growth stock? Is this a value stock?
4:56
Speaker 1: How do you think about it? I know you don't
4:57
Speaker 1: give stock recommendations, but in terms of the growth metrics,
5:01
Speaker 1: it's always big numbers. But is it big growth numbers
5:04
Speaker 1: anymore when it comes to Apple.
5:06
Speaker 3: No, we don't think it's good growth numbers for Apple
5:08
Speaker 3: at all, only because I think the big spike we
5:11
Speaker 3: saw during the pandemic, people buying a lot of iPads,
5:14
Speaker 3: computers or AirPods, all of that is now, you know,
5:17
Speaker 3: basically you could say haunting them. We are coming into
5:20
Speaker 3: a world where Apple's growth rate is going to hover
5:23
Speaker 3: somewhere between zero to five percent for at least the
5:25
Speaker 3: next two to three years. Now that's a good case.
5:28
Speaker 3: We really need to get make sure that the China
5:31
Speaker 3: situation is handled, even if even before we can make
5:35
Speaker 3: that claim. Otherwise it's going to be closer to that
5:38
Speaker 3: zero to two percent rather than closer to five percent.
5:40
Speaker 2: Honor Ragaran Mark German on the lifeblog, making the point
5:44
Speaker 2: that the company declined nearly across the board on an
5:47
Speaker 2: annual basis, despite the fact that they beat Wall Street estimates.
5:50
Speaker 2: So that's overall revenue the iPhone buy a lot, the
5:53
Speaker 2: iPad buy a lot, Wearables, home and accessories, buy a lot.
5:57
Speaker 2: The bright spots are growth and services and for the
5:59
Speaker 2: Mac to the M three due to the M three
6:02
Speaker 2: Mac book care. Let's talk services. This is a category
6:05
Speaker 2: that was fair to say, was really created under Tim
6:07
Speaker 2: Cook and it's just been an incredible growth over the
6:10
Speaker 2: last few years. What are the bright spots within services?
6:14
Speaker 3: So in our view, services is really what's holding Apple
6:17
Speaker 3: together only because it gives you in the ecosystem field.
6:20
Speaker 3: It's not easy to get out of the ecosystem and
6:23
Speaker 3: leave Apple for another product. And which is why you know,
6:25
Speaker 3: the numbers over here are truly important because you know
6:29
Speaker 3: this time they grew around close to fourteen percent if
6:32
Speaker 3: I remember correctly, that's that's better than what the company
6:35
Speaker 3: had initially you know indicated. So this is this is
6:38
Speaker 3: a growth driver. This is what provides value to the ecosystem,
6:42
Speaker 3: and we are hoping that they're going to come out
6:43
Speaker 3: and you know, talk good things about the next quatter
6:46
Speaker 3: also from services, because this is the only growth drivate
6:49
Speaker 3: left of this point.
6:49
Speaker 1: Hey Anna rok, how much of now it's just under
6:52
Speaker 1: a four percent gain here in the aftermarket for shares
6:54
Speaker 1: of Apple. How much of it is at a relief
6:56
Speaker 1: that it wasn't worse than expected, especially when it comes
6:59
Speaker 1: to what's going on in China, but also that big
7:01
Speaker 1: boost in terms of buyback and the dividend.
7:04
Speaker 3: Yeah, it is a big relief, frankly, because again, this
7:07
Speaker 3: is the one company everybody has been concerned about over
7:09
Speaker 3: the last twelve months. Now, that's why I'm saying, this
7:12
Speaker 3: is not like you know, Amazon or Microsoft beating their
7:15
Speaker 3: cloud numbers by a big amount. It's just you know,
7:17
Speaker 3: somebody saying, oh my god, it's not bad enough, It's
7:20
Speaker 3: just okay. So it's a very different sentiment. But again
7:23
Speaker 3: that's the way market behaves, Frankly, it's a game of expectations.
7:27
Speaker 1: But I mean, how much of the jump in the
7:29
Speaker 1: aftermarket is it mostly just that it wasn't worse than
7:31
Speaker 1: is expected? Or is it also a big check of
7:33
Speaker 1: the buyback.
7:34
Speaker 3: Now, the buybacks, as I said, they do about one
7:36
Speaker 3: hundred million dollars a year, so one hundred and ten
7:37
Speaker 3: billion is not a big deal.
7:39
Speaker 2: Go to quarterly dividend increasing penny.
7:42
Speaker 3: Yeah, But once again, you know, this is a technology stock.
7:45
Speaker 3: We really need to see the growth for this company
7:47
Speaker 3: to actually see their valuation go up.
7:49
Speaker 2: Okay, so what has you concerned here?
7:53
Speaker 3: I mean, I just want to know what's happening in China.
7:55
Speaker 3: Frankly we don't. This report has not has told me
7:58
Speaker 3: that the things in China are not as bad as
8:00
Speaker 3: what the street was looking at. But that doesn't mean
8:02
Speaker 3: it's still a decline.
8:03
Speaker 2: How much of an issue is it? And again Mark
8:05
Speaker 2: Krman pointing this out, Wearable's Home and Accessories a big decline,
8:08
Speaker 2: dipping nearly a billion dollars. He says it's shocking because
8:11
Speaker 2: it's the same quarter that Apple launched the Vision Pro,
8:13
Speaker 2: which is included in that category, its first major new
8:16
Speaker 2: product in nearly a decade. Bad news for Vision Pro.
8:20
Speaker 3: Yeah, we were never expecting any major contribution from that device.
8:24
Speaker 3: Think about it, three five hundred dollars. Even if you
8:26
Speaker 3: sell four hundred thousand units the entire year, which is
8:29
Speaker 3: very big, you're not going to get that much revenue
8:31
Speaker 3: boost from it. So it's not really a needle mover.
8:35
Speaker 3: The thing that actually surprised me more was that the
8:37
Speaker 3: IPID decline was very sharp. Now, this is something that
8:41
Speaker 3: I think they're going to have to explain on the call,
8:44
Speaker 3: and they're launching a new series next week. So seventeen
8:47
Speaker 3: percent decline is what I remember, you know, briefly from
8:49
Speaker 3: a couple of minutes ago. That's a big decline in iPads. Also,
8:53
Speaker 3: all right, gonna lead there.
8:54
Speaker 1: We know you've got lots going on, so appreciate your
8:56
Speaker 1: immediate response to Apple earnings. Our own Ragrana, who follows
9:01
Speaker 1: Apple for a Bloomberg Intelligence team. Apple shares, by the way,
9:04
Speaker 1: continuing to move up in the aftermarket, up about three
9:07
Speaker 1: and a half percent. We've got another great voice for
9:09
Speaker 1: us on this, Dan Morgan, senior portfolio manager at Sonova's Trust, Dan,
9:13
Speaker 1: which jumps out for you here.
9:16
Speaker 4: Well, I'm trying to come up with some great ideas
9:18
Speaker 4: different than what you've already talked about. Again, it was
9:21
Speaker 4: kind of a mixed report, I think. You know, as
9:23
Speaker 4: you were talking about earlier. The big things that stood
9:26
Speaker 4: out to me were obviously the better than better than
9:29
Speaker 4: expected numbers in China. You know, obviously iPhone a slight beat,
9:35
Speaker 4: which is a positive. But you know, Carol Timo, it's
9:38
Speaker 4: kind of interesting. I've been following Apple stock for about
9:41
Speaker 4: thirty years, and I can remember back in twenty fourteen,
9:44
Speaker 4: they had a very similar situation where everybody was very negative.
9:48
Speaker 4: They were having issues in China and the stock was
9:51
Speaker 4: really floundering.
9:52
Speaker 3: And then they came out and.
9:53
Speaker 4: They did a seven for one stock split, they raised
9:55
Speaker 4: a dividend, and they started buying more shares and everybody
9:58
Speaker 4: went crazy. So it's kind of interesting in this scenario,
10:01
Speaker 4: we see the dividend going up, and we see, as
10:04
Speaker 4: you were talking about before, an announcement of one hundred
10:07
Speaker 4: and ten a billion dollars are going to purchase at stock.
10:11
Speaker 4: It'd be interesting to see if they call up thing
10:12
Speaker 4: else on the conference call in terms of, you know,
10:15
Speaker 4: financial engineering to try to kind of reinvigorate interest back
10:18
Speaker 4: into Apple.
10:19
Speaker 1: Well, you know, I'm kind of glad you went there
10:22
Speaker 1: because I mean, and this maybe just gets to how
10:24
Speaker 1: do we classify Apple. I mean, this is a behemoth,
10:28
Speaker 1: and I feel like whenever the numbers come across, maybe
10:31
Speaker 1: the growth rate isn't there, but I mean, revenue above
10:34
Speaker 1: ninety billion dollars every time, we have to kind of
10:36
Speaker 1: dissect these numbers, Dan, and we've done it a lot
10:38
Speaker 1: of times with you. I mean, this is a company
10:40
Speaker 1: that's very entrenched globally, kind of in the consumer space,
10:44
Speaker 1: and I just I think is that enough to continue
10:47
Speaker 1: just by selling a lot of stuff? As long as
10:49
Speaker 1: they continue to sell a lot of stuff, even if
10:51
Speaker 1: the growth trajectory isn't there, still makes it an interesting
10:56
Speaker 1: and engaging company for investors.
11:00
Speaker 4: Did on the button, Carroll, I mean, just think about
11:02
Speaker 4: the new vision pro I mean, they're supposed to do
11:04
Speaker 4: four hundred million dollars in revenue alone just on that product.
11:09
Speaker 4: And I heard you just mentioned that the wearables missed,
11:12
Speaker 4: so it's kind of itching. That's more than some companies
11:14
Speaker 4: generate toil a revenue. And you're right. I mean, they
11:17
Speaker 4: have what one point five billion users you put together
11:21
Speaker 4: the whole house, it's close to two billion when you
11:23
Speaker 4: look at all the different services that they have, and
11:26
Speaker 4: it's just a tremendous cash generator. I'm sure you've talked before,
11:30
Speaker 4: what one hundred and seventy two billion dollars with marketable
11:33
Speaker 4: securities and cash. They generate free cash flow about one
11:36
Speaker 4: hundred and five hundred and seven billion. So those numbers
11:39
Speaker 4: are kind of going back to the Warrant Buffett school
11:42
Speaker 4: kind of the old security analysis they teach out to
11:44
Speaker 4: your Chicago and you know there's value in that, and
11:48
Speaker 4: even though we want to see an incredible new AI
11:51
Speaker 4: product that's just going to be like the next iPhone,
11:54
Speaker 4: it's probably not.
11:55
Speaker 3: Going to happen.
11:55
Speaker 4: And I think we just have to kind of accept
11:57
Speaker 4: that and look at the company just for what it
11:59
Speaker 4: is is and it doesn't mean they can increase your
12:01
Speaker 4: stock price through these other avenues. Does that make sense?
12:04
Speaker 2: Yeah, that makes sense. Dan, Hey, I want to keep
12:07
Speaker 2: you because I also want to bring in Markerman, Bloomberg
12:09
Speaker 2: News chief technology correspondent, who was fresh off the live blog,
12:13
Speaker 2: has the write up that you need to read about
12:16
Speaker 2: these earnings. But I do want to start at the top.
12:18
Speaker 2: Mark big picture, what sticks out to you. We've been
12:20
Speaker 2: discussing this NonStop for the past twelve minutes.
12:23
Speaker 5: Yeah, so a big picture here is that Apple's doing
12:26
Speaker 5: a little bit better than feared. Right, you still see
12:29
Speaker 5: declines across all of their segments other than the MAC
12:32
Speaker 5: and services, but a little bit better than what we
12:34
Speaker 5: had anticipated, or not what we had anticipated, but what
12:36
Speaker 5: had some it anticipated. In China, certainly a lot of
12:40
Speaker 5: optimism around artificial intelligence. But you know, the big picture
12:44
Speaker 5: here is that Apple is no longer in growth mode.
12:46
Speaker 5: They're a stable company generating as much revenue as they
12:50
Speaker 5: did the past year and the year before that and
12:51
Speaker 5: the year before that. So nothing is necessarily broken here,
12:54
Speaker 5: but they do need to figure out a way to
12:56
Speaker 5: grow in the future, and just it's very unclear how
12:58
Speaker 5: that's going to happen.
12:59
Speaker 2: Okay, that was next question for you, Mark, What is
13:02
Speaker 2: going to return Apple to growth mode? And give us
13:04
Speaker 2: a little Apple history here, like when was the last
13:06
Speaker 2: time Apple found itself in this position and what did
13:08
Speaker 2: they do to get themselves out of it.
13:10
Speaker 5: Yeah, so I'm gonna answer this question this way. The
13:12
Speaker 5: scariest line that you're going to see in Apple's press
13:15
Speaker 5: release is the wearables, home and Accessories number. That's about
13:19
Speaker 5: an eight hundred nine hundred million dollar annual decline, pretty considerable,
13:23
Speaker 5: about a ten percent decline there for that business that
13:25
Speaker 5: covers Airpod's, Apple Watch, appel TV, HomePod, you name it.
13:30
Speaker 5: Why is that so concerning? Because this is the launch
13:32
Speaker 5: quarter of the Apple Vision pro which is supposedly their
13:35
Speaker 5: future and their savior for growth. And if you're going
13:38
Speaker 5: to have that category of the Vision pros and have
13:40
Speaker 5: one of its biggest declines ever in the launch quarter
13:43
Speaker 5: of your new product. Clearly things are not going so
13:45
Speaker 5: hot in what you're betting your future on. The last
13:49
Speaker 5: time that Apple was sort of stuck in terms of
13:53
Speaker 5: lack of growth was really before the iPhone came out.
13:56
Speaker 5: So it has the company has been growing for a very, very,
13:59
Speaker 5: very long time. Right at some point momentum runs out.
14:03
Speaker 5: The momentum has run out. The good news is that
14:05
Speaker 5: it's not like they're you know, creating.
14:07
Speaker 2: Hey, Mark, real quick, I did bring that up. I
14:10
Speaker 2: saw you wrote wrote that about that in the our
14:12
Speaker 2: great live blog. Everybody should check that out as they're
14:14
Speaker 2: listening to this. And I brought that up to Honor
14:17
Speaker 2: rog and he made he made the point that, you know,
14:19
Speaker 2: the Vision pro is still very expensive, and even if
14:22
Speaker 2: they sold a ton of them, then it wouldn't have
14:25
Speaker 2: a huge impact just because it's still relatively early in
14:29
Speaker 2: the product life cycle. Why is it still so scary
14:31
Speaker 2: to you though?
14:32
Speaker 5: Oh well, I mean I look at it differently. It
14:34
Speaker 5: is so expensive, and so if they do sell a
14:36
Speaker 5: ton of them, that should generate you know, a good
14:38
Speaker 5: amount of revenue. Right and we're talking We're not talking
14:40
Speaker 5: hundreds of billions of dollars here, We're talking about an
14:43
Speaker 5: eight nine billion dollar category, So an eight hundred million
14:45
Speaker 5: dollars percent is actually quite a lot. And so if
14:49
Speaker 5: they're if they're if they want to bet a lot
14:52
Speaker 5: on this product, it's just going to have to start
14:54
Speaker 5: creating some momentum. But it's done nothing to date, and
14:57
Speaker 5: sales for these types of devices, especially at this price point,
15:00
Speaker 5: you're getting the bulk of those sales very early on
15:03
Speaker 5: in the process. You're getting them this quarter. So it
15:05
Speaker 5: only really goes down here downhill from here for the
15:08
Speaker 5: Vision Pro until they make major improvements on price.
15:11
Speaker 3: And wait, hey, still with us.
15:12
Speaker 1: We're talking with our own marker and in Bloomberg News,
15:14
Speaker 1: chief technology correspondent Dan Morgan, still with us, senior portfolio
15:17
Speaker 1: manager over at Sonovas. As we are looking at Apple
15:20
Speaker 1: shares up about six and a half or set here
15:22
Speaker 1: in the aftermarket as their second quarter revenue tops estimates
15:26
Speaker 1: and they also boost their buyback. Dan Morgan, come on
15:28
Speaker 1: in on it. You've been listening to the conversation thoughts
15:30
Speaker 1: when it comes to wearables and the Vision Pro.
15:34
Speaker 4: Yeah, I mean that was one of the mark was
15:36
Speaker 4: mentioning that was kind of one of the catalysts that
15:38
Speaker 4: people are looking out for that. Potentially Apple could start
15:41
Speaker 4: to get some momentum back in the stock. We know
15:44
Speaker 4: they've got a new tablet that's supposed to come out
15:46
Speaker 4: I guess next week in May. They've got the big
15:50
Speaker 4: Developers conference in June, and then of course they come
15:52
Speaker 4: out with iPhone sixteen and the new iOS eighteen in September.
15:57
Speaker 4: So there are going to be some opportunities down the road, guys.
15:59
Speaker 4: I know this reports as exciting as we would have
16:02
Speaker 4: hoped for for Apple to kind of reinvigorate, you know,
16:06
Speaker 4: interest in what they're doing obviously along that road. Hopefully
16:09
Speaker 4: they'll lay out some sort of AI roadmap that's a
16:11
Speaker 4: little more specific than what they have so far on
16:13
Speaker 4: the conference calls. But again, I think this is just
16:16
Speaker 4: kind of a quiet period right now for Apple, and
16:20
Speaker 4: I don't think we have to hit I don't think
16:21
Speaker 4: you'd hit the panic button if you hold chair. Let's
16:23
Speaker 4: just see how this thing plays out. Hey, Mark Germott,
16:26
Speaker 4: not everybody's in video, Mark.
16:28
Speaker 1: Germant, I'm wondering if you have a question for from
16:31
Speaker 1: Dan Morgan, who's been following you know, Apple for thirty years,
16:34
Speaker 1: seeing times when you know a lot of investors gave
16:36
Speaker 1: up on this company only to see it come roaring back.
16:38
Speaker 3: Do you have a question maybe for Dan?
16:41
Speaker 5: That's a good question. I don't have a question for Dan,
16:44
Speaker 5: but I'd love to engage in a back and forth
16:46
Speaker 5: with Dan on this. I mean, you know, I agree
16:49
Speaker 5: with you. There is no reason to panic here, Dan,
16:52
Speaker 5: especially if you're a shareholder of Apple, right. I mean,
16:54
Speaker 5: you put money into Apple. It's kind of like a bond.
16:57
Speaker 5: You're not going to lose all your cash there, right,
17:00
Speaker 5: But you're also not going to get those in Nvidia
17:02
Speaker 5: like returns. At this point. The question is how long
17:05
Speaker 5: our investors willing to wait until there's a next big thing?
17:08
Speaker 5: And what I will say is I don't anticipate there
17:10
Speaker 5: being any new next big thing on the horizon anytime soon,
17:14
Speaker 5: so we'll be looking out for that.
17:16
Speaker 2: Dan, do you anticipate any next big thing being on
17:18
Speaker 2: the horizon?
17:20
Speaker 4: I would agree with Mark one hundred percent. I mean,
17:22
Speaker 4: I remember, guys, Carol, probably I don't want to date us,
17:25
Speaker 4: but we've been around a while. You've brought up in
17:27
Speaker 4: the nineteen nineties, when you know, we made the migration
17:31
Speaker 4: from a client server environment and we went to the
17:34
Speaker 4: IBM compatibles, and everybody was into Gateway and Dell and
17:37
Speaker 4: HP and all the big PC makers were going crazy,
17:40
Speaker 4: and Apple was almost ready to go bankrupt. I mean,
17:43
Speaker 4: they had a very you know, very niche group of
17:46
Speaker 4: people that bought Max and then in two thousand and
17:48
Speaker 4: seven they came out with the iPhone, and a couple
17:50
Speaker 4: of years before that they came out with the iPod
17:53
Speaker 4: and the rest is history. So Apple's been down before,
17:56
Speaker 4: and Apples had setbacks and been through periods of time
17:59
Speaker 4: with when people kind of film aside and you know,
18:03
Speaker 4: we'll just see where they are ten years from now.
18:04
Speaker 4: That's all I can say.
18:05
Speaker 2: Hey, I just want to end with Mark on AI,
18:07
Speaker 2: because ten years from now, I know that Apple would
18:10
Speaker 2: love to be a leader when it comes to.
18:11
Speaker 1: AI, I will be replaced by AI.
18:13
Speaker 2: Hey maybe, Mark, what's the vision? What's the vision that
18:16
Speaker 2: internally they're talking about it Apple when it comes to AI,
18:19
Speaker 2: lay it out for us.
18:20
Speaker 5: The vision of AI is integration, deep integration into hardware,
18:25
Speaker 5: privacy and security, and really not an Apple designed chapot
18:29
Speaker 5: like you've seen from Chat, GPT, open AI, Google, Gemini, Microsoft,
18:35
Speaker 5: you name it. This is about integrated into the phone.
18:38
Speaker 5: I'll give you an example. We're on this call, my
18:40
Speaker 5: phone's in my pocket. I probably missed twenty notifications depple
18:44
Speaker 5: earning season. I'll take my phone out of my pocket
18:46
Speaker 5: when this is done, and it'll catch me up with
18:48
Speaker 5: some AI and tell me everything I missed. That's the
18:51
Speaker 5: type of AI feature to think about if you're when
18:54
Speaker 5: you're expecting AI features from Apple summaries, useful day to
18:58
Speaker 5: day tools based on artificial intelligence, not sort of twenty
19:02
Speaker 5: one questions.
19:03
Speaker 2: I mean that's Apple's DNA, right, all about enhancing the
19:05
Speaker 2: value of the hardware and getting you to buy that
19:08
Speaker 2: next phone.
19:09
Speaker 1: Dan Morgan thirty seconds left here, so something like that.
19:12
Speaker 1: How does as AI is integrated into the Apple model
19:15
Speaker 1: and they figure out, you know, how to monetize it.
19:18
Speaker 1: How important is that in terms of maybe making the
19:21
Speaker 1: growth trajectory change? And again, just kint about thirty seconds.
19:25
Speaker 4: I mean it's huge, Carol. You know, as Mark was
19:27
Speaker 4: mentioning when they have taken a dive into the chip space,
19:30
Speaker 4: they're creating their own silicon. They do have a product
19:33
Speaker 4: they're working on called Ajax, which is kind of like
19:35
Speaker 4: a chat GPT, but it's on your phone. So there
19:38
Speaker 4: are things they are doing, but as Mark was saying,
19:40
Speaker 4: it's all integrated into the iOS, into the phone. It's
19:43
Speaker 4: not going to be some new product that we've never
19:46
Speaker 4: heard of that just comes out of left field.
19:48
Speaker 1: All right, Well, I know I can't live without my iPhone,
19:50
Speaker 1: so bring it on, all right, guys, thank you so much.
19:53
Speaker 1: Mark German, Bloomberg News Chief Technology correspondent, Dan Morgan, senior
19:57
Speaker 1: portfolio manager at Sonva's trust on Apple stock is up
20:00
Speaker 1: about six and a half percent here