Latest / Bloomberg Intelligence / Instant Reaction: Intel and Apple Earnings Results

Transcript

Instant Reaction: Intel and Apple Earnings Results · Bloomberg Intelligence

• 0:02
  Speaker 1: Bloomberg Audio, studios, podcasts, radio news.
• 0:07
  Speaker 2: Shares of Intel are just surging as we speak right now.
• 0:11
  Speaker 2: Taking a look at shares in the after hours, they
• 0:13
  Speaker 2: were up as much as fifteen percent. This after the
• 0:16
  Speaker 2: company gave a fourth quarter revenue forecast slightly above estimates.
• 0:19
  Speaker 2: It sparked optimism that it's capable of reclaiming some lost
• 0:23
  Speaker 2: market share. Shares are just absolutely surging right now. Remember
• 0:27
  Speaker 2: shares down going into this print, close to sixty percent.
• 0:31
  Speaker 2: We got with us Ed Ludlow joining us from our
• 0:35
  Speaker 2: San Francisco bureau. I know he's looking closely at these
• 0:38
  Speaker 2: results because he's got a chat with Pat Gelsinger coming
• 0:40
  Speaker 2: up at six pm Wall Street Time, a special edition
• 0:43
  Speaker 2: of Bloomberg Technology on Bloomberg TV, Bloomberg Radio, YouTube, and
• 0:47
  Speaker 2: Bloomberg Originals. We'll get to that in just a minute. First, though,
• 0:52
  Speaker 2: Ed expectations were pretty low going into this print.
• 0:56
  Speaker 1: Yeah, and there's a lot to unpick here.
• 0:57
  Speaker 3: It's not straightforward because in the core to gone, Intel,
• 1:01
  Speaker 3: which was previously like one of the world's leading chip makers,
• 1:05
  Speaker 3: has given us a mixed bag. Its data centerships business
• 1:09
  Speaker 3: did better than expected, but it's PC business where it
• 1:12
  Speaker 3: has historically been the leader did worse. The answer to
• 1:15
  Speaker 3: that is customers had inventories and they worked through backlogs.
• 1:20
  Speaker 3: And when we speak to Pat later, I think there's
• 1:22
  Speaker 3: a discussion to be had about the future of Intel
• 1:24
  Speaker 3: and the PC market. But the most important thing to
• 1:27
  Speaker 3: note is the stock is up significantly and after hours,
• 1:30
  Speaker 3: and that is in spite of almost three billion dollars
• 1:33
  Speaker 3: of impairment charges that Intel took relating to headcount reduction
• 1:38
  Speaker 3: canceled projects. And what's so interesting about that is if
• 1:41
  Speaker 3: you look at the estimates going into this quarter, and
• 1:45
  Speaker 3: lists on Wall Street had not factored that in.
• 1:47
  Speaker 1: So it's a surprise, a negative surprise.
• 1:50
  Speaker 3: And even so the stock is up significantly because, as
• 1:53
  Speaker 3: you point out, the top line of the story is
• 1:55
  Speaker 3: maybe there's some hope here for Intel.
• 1:57
  Speaker 2: It is there. There's also a headline ed and I'm
• 1:59
  Speaker 2: just getting caught up. I know you've made some time
• 2:01
  Speaker 2: to look at this, but there's the news is coming
• 2:04
  Speaker 2: fast and furious. They're reducing headcount by sixteen five hundred employees.
• 2:08
  Speaker 2: Is that on top of the other headcount productions this year.
• 2:12
  Speaker 3: This is a confirmation of the previously stated plan for
• 2:16
  Speaker 3: headcount reduction, and that the literal update is that the
• 2:21
  Speaker 3: Audit Committee of Intel, a section of its board, has
• 2:25
  Speaker 3: approved that plan. So the number is final sixteen thy
• 2:29
  Speaker 3: five hundred staff to be cut. And again I go
• 2:32
  Speaker 3: back to the impairment charges. If you look at the
• 2:35
  Speaker 3: adjusted loss per share in the quarter gone much much
• 2:38
  Speaker 3: wider than anyone on the Wall Street had anticipated. And
• 2:42
  Speaker 3: a part of that was that the impairment charges it
• 2:44
  Speaker 3: disclosed relative to headcount reduction, but there's other things in there.
• 2:49
  Speaker 3: They just hadn't factored that in for this quarter. Intel
• 2:52
  Speaker 3: wasn't able to guide for it into this quarter. So
• 2:55
  Speaker 3: it's a timing and an accounting issue, which you know
• 2:58
  Speaker 3: sometimes can be a bit dry.
• 3:00
  Speaker 1: There's much more to discuss.
• 3:01
  Speaker 2: Okay, well' speina, much more to discuss. The Intel CEO
• 3:04
  Speaker 2: Pat Gelsinger, who you're going to speak with a little
• 3:06
  Speaker 2: later today, saying in a statement that he intends to
• 3:09
  Speaker 2: keep the company together. Yeah, he says that distinct, but
• 3:13
  Speaker 2: better together is the strategy. The context for this is
• 3:17
  Speaker 2: is reporting from earlier this year that said they were
• 3:20
  Speaker 2: exploring a separation of parts of the company.
• 3:23
  Speaker 1: So it's complicated.
• 3:25
  Speaker 3: And first off, the headlines from Pat Gelsinger were a
• 3:28
  Speaker 3: part of a brief conversation that our colleague and King
• 3:31
  Speaker 3: had with him on the phone. And the context is, yes,
• 3:36
  Speaker 3: Intel is a chip company. It offers chip products processes
• 3:41
  Speaker 3: that go into computers and data centers and other business areas.
• 3:45
  Speaker 3: But it also has a manufacturing business, which historically the
• 3:48
  Speaker 3: reason that Intel was so good at chips is it
• 3:51
  Speaker 3: built them or manufactured them for itself. As many of
• 3:55
  Speaker 3: your listeners have learned in the last two or three years,
• 3:57
  Speaker 3: there's a company in Taiwan called TSMC that has basically
• 4:01
  Speaker 3: taken over the vast majority of cutting edge chip manufacturing
• 4:05
  Speaker 3: on a contract basis for everyone else, and Intel had
• 4:09
  Speaker 3: really fallen behind. But Intel's ambition is to have a
• 4:12
  Speaker 3: company where it has its own products, it manufactures its
• 4:15
  Speaker 3: own products, but it also wants to manufacture chips with others,
• 4:18
  Speaker 3: just like TSMC does. And that's a long answer, but
• 4:21
  Speaker 3: the short of it is, this is Pat Gelsinger saying, yes,
• 4:25
  Speaker 3: we're going to run the company that way to separate divisions,
• 4:28
  Speaker 3: but no, we're not going to sell off one part
• 4:30
  Speaker 3: to a third party or be acquired by a third party.
• 4:33
  Speaker 3: That's kind of reading between the lines because he was
• 4:36
  Speaker 3: not explicit.
• 4:38
  Speaker 4: Ed. You have to wonder how much patience investors have
• 4:42
  Speaker 4: right now to see this turnaround play out, because, like
• 4:47
  Speaker 4: Tim had mentioned, Intel stock is down almost sixty percent
• 4:51
  Speaker 4: year to date. So what do we know right now
• 4:54
  Speaker 4: about just how urgent the need for the turnaround is.
• 4:58
  Speaker 4: When you think about the share price.
• 5:01
  Speaker 3: I mean, do we have to wait for those listening
• 5:04
  Speaker 3: on radio. I'm looking at a chart and the line
• 5:06
  Speaker 3: goes straight up in the air with a thirteen percent
• 5:09
  Speaker 3: next to it, And if you're watching on YouTube, maybe
• 5:11
  Speaker 3: we can put the chart up. And it's an astonishing
• 5:14
  Speaker 3: market reaction because of the pain of the quarter gone
• 5:17
  Speaker 3: that I just told you, and what Intel told us
• 5:20
  Speaker 3: for the final three months of this year is here's
• 5:22
  Speaker 3: a range of revenues we think we're going to have.
• 5:24
  Speaker 3: At the midpoint of that range, it was just slightly
• 5:27
  Speaker 3: ahead of consensus estimates. But the market is you know,
• 5:30
  Speaker 3: what's the saying, you guys that the investors vote with
• 5:33
  Speaker 3: their feet, right, And you know, I think that's the
• 5:37
  Speaker 3: read here. They look at the commentary from Intel and say,
• 5:40
  Speaker 3: you've done some really painful things in the quarters gone.
• 5:42
  Speaker 3: You've let go of a lot of people canceled a
• 5:45
  Speaker 3: lot of projects. You had a pretty rough quarter in
• 5:47
  Speaker 3: your PC business where you were once a leader and
• 5:49
  Speaker 3: you've fallen behind. But as we look to the next
• 5:52
  Speaker 3: three months and beyond that, there are signs that you
• 5:54
  Speaker 3: might be turning a corner here. And that's great because
• 5:57
  Speaker 3: that gives us a lot to ask Pat Gelsinger about
• 6:00
  Speaker 3: to today.
• 6:01
  Speaker 2: Don't give away the questions, ed, I would never ask
• 6:03
  Speaker 2: you to do that, but what is top of mind
• 6:06
  Speaker 2: for you ahead of this conversation, especially given that you
• 6:09
  Speaker 2: got to read a little bit of what Ian's conversation
• 6:12
  Speaker 2: went with him earlier, and then also you get the
• 6:14
  Speaker 2: most recent numbers that we're talking about right now.
• 6:16
  Speaker 3: Yeah, because of the analyst call as well, and you
• 6:18
  Speaker 3: never know what's going to come up in an analyst call.
• 6:21
  Speaker 3: There's definitely a technology to discussion to have here. You know,
• 6:24
  Speaker 3: one of the interesting parts of Qualcomm, or the report
• 6:28
  Speaker 3: that Qualcomm was Qualcom was interested in buying some all
• 6:32
  Speaker 3: of Intel, is that they had made inroads themselves into
• 6:36
  Speaker 3: the PC market where Intel had once been dominant. And
• 6:41
  Speaker 3: you know, a theoretical idea that came out of that is,
• 6:43
  Speaker 3: why would Qualcom want to buy Intel if they're doing
• 6:45
  Speaker 3: so well on their own, But you could flip that
• 6:48
  Speaker 3: on its head and say, the story of twenty twenty
• 6:50
  Speaker 3: four has been about the AIPC PC laptops that have
• 6:55
  Speaker 3: new chips in them that are not made by Intel.
• 6:57
  Speaker 3: So when's Intel going to come to the races on that?
• 7:00
  Speaker 3: And in fact, a number of our audience, but also
• 7:02
  Speaker 3: like executives in the world of tech, have asked me
• 7:04
  Speaker 3: to ask Pat about that issue, because if Intel's so
• 7:07
  Speaker 3: good at PC chips, why is it not doing the
• 7:10
  Speaker 3: latest thing? These are technology questions, but I think we
• 7:13
  Speaker 3: should probably be explicit. Was Intel or was Intel not
• 7:17
  Speaker 3: approached by some of its peers about an acquisition?
• 7:20
  Speaker 1: Simple stuff.
• 7:23
  Speaker 4: Ed In just three minutes, we should be getting Apple's
• 7:27
  Speaker 4: earnings reports.
• 7:28
  Speaker 1: What goodness?
• 7:29
  Speaker 4: What should people be watching hump for for the iPhone?
• 7:33
  Speaker 3: Yeah, iPhone sixteen and China very simple, leading product, most
• 7:39
  Speaker 3: important market, and that's probably what it will come down to.
• 7:42
  Speaker 4: Will those iPhone sixteen's are they flying off the shelves?
• 7:46
  Speaker 3: So we've learned in the newsroom a really painful lesson
• 7:49
  Speaker 3: this year, which is treat the third party data with caution.
• 7:54
  Speaker 3: You guys will probably have done it on the show
• 7:56
  Speaker 3: right these stories about some of the market researchers, who
• 7:59
  Speaker 3: is you report saying the first six weeks of iPhone
• 8:02
  Speaker 3: sixteen sales are down relative to the first six weeks
• 8:05
  Speaker 3: of iPhone fifteen according to xyz data set Counterpoint research
• 8:09
  Speaker 3: is one.
• 8:10
  Speaker 1: But there's also evidence that in recent.
• 8:12
  Speaker 3: Quarters, Apple's actual data has proven the third party data
• 8:15
  Speaker 3: to be off the mark a little bit. And there's
• 8:18
  Speaker 3: a very interesting phenomena happening in China. Apple won't make
• 8:23
  Speaker 3: its latest generf generative AI tech available in China for
• 8:27
  Speaker 3: some time until the regulator says it's okay. But there
• 8:30
  Speaker 3: is evidence that the consumer in China is buying the
• 8:32
  Speaker 3: iPhone anyway in anticipation they might have access at some
• 8:36
  Speaker 3: point to like the latest and greatest software, which I
• 8:39
  Speaker 3: think is so interesting. Right, You're buying something without having
• 8:42
  Speaker 3: been able to experience it and like look at it
• 8:45
  Speaker 3: because it's not available in that market.
• 8:47
  Speaker 2: Yeah, okay, So okay, let's talk a little bit about China.
• 8:50
  Speaker 2: Just thirty seconds here, ed because these numbers are coming
• 8:52
  Speaker 2: out in thirty seconds. Sure, what are the numbers we
• 8:55
  Speaker 2: need to see in China indicate that that Apple is
• 8:57
  Speaker 2: not losing market share to Samsung show me and the.
• 9:01
  Speaker 3: Like numbers or commentary, so they'll report something for Gray
• 9:04
  Speaker 3: to China. They won't be as sort of candid about
• 9:07
  Speaker 3: category specific stuff, but on the call they would tell
• 9:10
  Speaker 3: us how they think they do or rank in that market.
• 9:14
  Speaker 2: Okay, we're going to get numbers from Apple in just
• 9:16
  Speaker 2: about fifteen seconds. Going into today, shares for the year
• 9:21
  Speaker 2: up seventeen percent, so underperforming the S and P five
• 9:25
  Speaker 2: hundred shares today down one point eight percent. We are
• 9:29
  Speaker 2: getting a slew of earnings continuing and now we're getting
• 9:33
  Speaker 2: Apple results. Bear with me while I bring these up.
• 9:36
  Speaker 2: Fourth quarter revenue meets estimates coming in at ninety four
• 9:40
  Speaker 2: point nine three billion dollars. Estimates were for ninety four
• 9:43
  Speaker 2: point three six billion dollars. As we look at the
• 9:46
  Speaker 2: different parts of the reportable categories, services revenue for the
• 9:49
  Speaker 2: fourth quarter coming in below estimates, twenty four point nine
• 9:52
  Speaker 2: to seven billion. Estimates for twenty five point two seven
• 9:55
  Speaker 2: billion fourth quarter earnings per share coming in way below
• 9:59
  Speaker 2: estimate and are not excuse me, not below estimates below
• 10:02
  Speaker 2: what they were last year ninety seven cents versus one
• 10:04
  Speaker 2: dollar and forty six year over year fourth quarter revenue
• 10:07
  Speaker 2: once again beating estimates, coming in at ninety four point
• 10:10
  Speaker 2: nine three billion dollars. Estimates were for ninety four point
• 10:13
  Speaker 2: three six billion dollars. Apple also declaring a cash dividend
• 10:17
  Speaker 2: of twenty five cents per share.
• 10:19
  Speaker 1: That's I'm not done that much.
• 10:21
  Speaker 2: Okay. Let's look at fourth quarter iPhone revenue coming in
• 10:25
  Speaker 2: above estimates at forty six point twenty two billion.
• 10:28
  Speaker 1: Estimate.
• 10:28
  Speaker 2: Weres for forty five billion dollars, fourth quarter Greater China
• 10:31
  Speaker 2: revenue coming in just shy of estimates fifteen point zero
• 10:34
  Speaker 2: three billion dollars. Estimates are for fifteen point eight billion.
• 10:38
  Speaker 4: Dollars, and their fourth quarter Wearables, Home and Accessories slightly
• 10:42
  Speaker 4: missing estimates nine billion dollars. The MAC revenue seven point
• 10:46
  Speaker 4: seventy four billion, right in line with estimates, and iPad
• 10:49
  Speaker 4: revenue slightly below estimates six point ninety five billion versus
• 10:53
  Speaker 4: estimates of seven billion. The red headline crossing the Bloomberg
• 10:57
  Speaker 4: terminal is that the Apple fourth quarter Greater China revenue
• 11:02
  Speaker 4: missed estimates. It's fifteen point oh three billion versus estimates
• 11:06
  Speaker 4: of fifteen point eight billion.
• 11:07
  Speaker 2: Yeah, that was a that's a pretty significant miss right there.
• 11:11
  Speaker 2: Seeing shares bounce around a little. They were higher when
• 11:13
  Speaker 2: these numbers came out. Now they're down about one point
• 11:16
  Speaker 2: three percent. Some of these certainly worth repeating. Fourth quarter
• 11:19
  Speaker 2: iPhone revenue coming in above estimates at forty six point
• 11:22
  Speaker 2: two to two billion dollars, fourth quarter revenue coming in
• 11:25
  Speaker 2: at ninety four billion, ninety four point ninety three billion
• 11:29
  Speaker 2: dollars above estimates, but fourth quarter Greater China revenue coming
• 11:32
  Speaker 2: in below estimates. I do want to go back to
• 11:34
  Speaker 2: Ed Ludlow, who's standing by in San Francisco. He's only
• 11:37
  Speaker 2: had two minutes to look at these numbers China. That
• 11:40
  Speaker 2: certainly seems like a story here.
• 11:41
  Speaker 3: Ed, Yeah, I mean you want wonderful summary. I mean, all,
• 11:45
  Speaker 3: how do you follow that? But I think that that's
• 11:47
  Speaker 3: the simple calculus. Overall iPhone revenue beat right, Greater China
• 11:51
  Speaker 3: slightly missed. It's not until the analyst call that you
• 11:54
  Speaker 3: get the commentary. It's usually from the CFO rather than
• 11:58
  Speaker 3: Tim Kirk that says, actually, by category or products are
• 12:03
  Speaker 3: be it iPhone, mac wearables, here's how we did, and
• 12:06
  Speaker 3: in that explanation we will find out did iPhone grow
• 12:09
  Speaker 3: in China or not? It's interesting, you know the miss
• 12:14
  Speaker 3: is it's a miss, you know, it's slight. The only
• 12:19
  Speaker 3: other thing that I point out is that you have
• 12:21
  Speaker 3: to read between the lines a bit. And the Apple
• 12:23
  Speaker 3: once again has a new record high of number of
• 12:26
  Speaker 3: installed devices around the world. That's the number of people
• 12:29
  Speaker 3: with an Apple hardware product or device somewhere in the world.
• 12:34
  Speaker 1: It's growing. But where in particular, which product line. That's
• 12:37
  Speaker 1: kind of the question next.
• 12:38
  Speaker 2: But that's an important number because increasingly, as people hold
• 12:41
  Speaker 2: onto these devices for longer, the more of them that
• 12:43
  Speaker 2: are out there, the more people are spending on services
• 12:46
  Speaker 2: like Apple TV plus, Apple Music, iCloud and the like.
• 12:50
  Speaker 2: I know, I'm certainly not buying new devices right now,
• 12:53
  Speaker 2: but I'm still spending each month quite a bit on
• 12:55
  Speaker 2: Apple and Apple loves that it's a high margin business.
• 12:58
  Speaker 1: Yeah, the timing of this very interesting.
• 13:00
  Speaker 3: So in the release they talk about the rollout of
• 13:02
  Speaker 3: Apple Intelligence, which is staggered. As Mark German has reported
• 13:07
  Speaker 3: here at Bloomberg News. Apple Intelligence is the company's proprietary
• 13:12
  Speaker 3: AI or generative AI offering. It's a suite of software
• 13:15
  Speaker 3: tools in iOS that can do various things. This past week,
• 13:20
  Speaker 3: I was offered to upgrade MYOS to eighteen point one.
• 13:23
  Speaker 3: Then I was put on a wait list for Apple Intelligence.
• 13:26
  Speaker 3: That's all lot preamble to say, we don't know anything
• 13:29
  Speaker 3: from this release. And you noted that services missed right,
• 13:33
  Speaker 3: that all this work they put in AI and all
• 13:35
  Speaker 3: of the delay translates to consumers spending more money within
• 13:38
  Speaker 3: the iOS or Apple ecosystem. And I know that many
• 13:41
  Speaker 3: analysts investors are going to be listening carefully for that.
• 13:45
  Speaker 2: Let's go through some of these numbers again. If you're
• 13:47
  Speaker 2: just joining us. Apple shares down about one point seven
• 13:50
  Speaker 2: percent in the after hours. They reported just about four
• 13:53
  Speaker 2: minutes ago, five minutes ago, our fourth quarter revenue came
• 13:56
  Speaker 2: in above estimates at ninety four point ninety three billion dollars.
• 14:00
  Speaker 2: Quarter iPhone revenue came in above estimates at forty six
• 14:03
  Speaker 2: point two two billion dollars. That's a billion dollars more
• 14:06
  Speaker 2: than what analysts were expecting. Fourth quarter greater China revenue,
• 14:09
  Speaker 2: though coming in below estimates, Does that mean the iPhone
• 14:12
  Speaker 2: sixteen is a huge success ad.
• 14:15
  Speaker 3: You have to read between the lines again until an
• 14:17
  Speaker 3: executive says it definitively on the call, you don't know.
• 14:21
  Speaker 3: But there were other areas that were a bit of
• 14:23
  Speaker 3: a surprise, right. iPad was a surprising miss despite having
• 14:27
  Speaker 3: released new generations.
• 14:29
  Speaker 1: So take that.
• 14:30
  Speaker 3: MAC revenue came in at one hundred million more than
• 14:32
  Speaker 3: the same period a year ago, or maybe sequentially in
• 14:36
  Speaker 3: line with expectations, so that's not giving a surprise contribution.
• 14:40
  Speaker 3: What's left we know revenue services revenue missed, maybe iPhone.
• 14:44
  Speaker 2: Piecing it together, well, how much of the iPhone sixteen
• 14:46
  Speaker 2: was sold in this most recent quarter? Like, do we that? No,
• 14:50
  Speaker 2: we do in terms of availability.
• 14:53
  Speaker 3: So in terms of availability, I'm trying to go through
• 14:56
  Speaker 3: the tank, you and the thing to look at the
• 14:57
  Speaker 3: inventory number because that's the next place that I can.
• 15:00
  Speaker 3: I can't find it yet because to me with another one,
• 15:02
  Speaker 3: and I'll try catch.
• 15:03
  Speaker 2: Out, Okay, So I'll give you some time to look
• 15:04
  Speaker 2: for that. The reason I always am interested in that
• 15:07
  Speaker 2: is because they announced this thing in September, goes on
• 15:09
  Speaker 2: sale a few weeks later. The quarter ends after only
• 15:13
  Speaker 2: a couple weeks after that, iPhone goes on sale. In
• 15:16
  Speaker 2: some years Emily, they haven't even been able to put
• 15:19
  Speaker 2: the new phone on sale before the quarter of learning.
• 15:22
  Speaker 2: So it's just a question of okay, how many people
• 15:25
  Speaker 2: were buying the old iPhone versus the new iPhone right
• 15:28
  Speaker 2: here as an indication of how well is that new
• 15:31
  Speaker 2: model selling.
• 15:32
  Speaker 4: I'll also add Tim that we are seeing Apple stock
• 15:35
  Speaker 4: extending some losses. You know, nothing huge here, and it is.
• 15:40
  Speaker 4: It has only been six minutes since Arnais came out,
• 15:42
  Speaker 4: but we do now see shares of Apple down about
• 15:45
  Speaker 4: one point seven percent, despite the fact that fourth quarter
• 15:49
  Speaker 4: revenue met estimates and was still up six percent year
• 15:53
  Speaker 4: over year, and also that service revenue up twelve percent
• 15:57
  Speaker 4: year over year but did slightly miss estimates.
• 16:00
  Speaker 2: Taking a look now at our live blog. If you
• 16:02
  Speaker 2: have access to this on the Bloomberg terminal, do check
• 16:05
  Speaker 2: it out our own. Mark German, adding to what Ed
• 16:09
  Speaker 2: said that iprad is a surprising miss, coming out just
• 16:11
  Speaker 2: shy of seven billion, despite the release of that new
• 16:13
  Speaker 2: iPad Pro and iPad Air models earlier this year. That
• 16:16
  Speaker 2: new iPad Mini released this month unlikely to help materially.
• 16:20
  Speaker 2: Mark Kerman also writing that the Mac came in with
• 16:22
  Speaker 2: about one hundred million dollars annual revenue increase, meeting Wall
• 16:25
  Speaker 2: Street estimates of seven point seven billion dollars. New Max
• 16:28
  Speaker 2: released this week should help that product segment in the
• 16:30
  Speaker 2: current quarter, and I want to go back to you.
• 16:33
  Speaker 2: I know you've been diving into that ten Q speed
• 16:36
  Speaker 2: reading it. What sticks out to you from there.
• 16:39
  Speaker 3: Well, not the inventries. They're basically very similar to the
• 16:42
  Speaker 3: same period a year ago. So I'm going to spend
• 16:44
  Speaker 3: a bit more time pondering that. You know, a story
• 16:48
  Speaker 3: of the megacaps so far in twenty twenty four has
• 16:51
  Speaker 3: been sweetness for shareholders and this is more dry stuff.
• 16:56
  Speaker 3: But you know that your audience on this show, whether
• 16:59
  Speaker 3: they're listening or watching, there are so many different types
• 17:02
  Speaker 3: of Apple investors out there where the role of a
• 17:04
  Speaker 3: dividend or shareholder returns is really important. And so whatever's
• 17:08
  Speaker 3: happening with any given products line or category, Remember this
• 17:13
  Speaker 3: Apple is a cash machine twenty seven billion dollars of
• 17:16
  Speaker 3: operating cash flow generated in the quarter. Hence they're able
• 17:20
  Speaker 3: to return relatively the same twenty nine billion dollars back
• 17:23
  Speaker 3: to investors. The differences is that in prior quarters, when
• 17:27
  Speaker 3: we've seen a sweetener like a divvy or a boost
• 17:30
  Speaker 3: into a buyback program, that's been a great thing for investors,
• 17:34
  Speaker 3: they've responded positively. On EM's note, just then, the stock
• 17:38
  Speaker 3: isn't really responding to that, right, there isn't some sort
• 17:41
  Speaker 3: of relief in that sense, knowing that the bar too
• 17:44
  Speaker 3: is high.
• 17:44
  Speaker 4: Yeah, and you bring up a really good point that
• 17:47
  Speaker 4: I know you said it's dry, but it's not as
• 17:48
  Speaker 4: dry to me. I interview a lot of I know,
• 17:51
  Speaker 4: full managers.
• 17:52
  Speaker 2: This is a nice little mix for you.
• 17:53
  Speaker 4: You know, people always talk about cash rich companies and
• 17:58
  Speaker 4: how those kinds of companies are despite what the macro
• 18:02
  Speaker 4: economic environment is doing. If you buy a large company
• 18:06
  Speaker 4: that has a big, strong balance sheet, no matter what
• 18:09
  Speaker 4: the FED does, no matter what other earnings do, you'll
• 18:12
  Speaker 4: be safe. And I think that sentiment has really carried
• 18:15
  Speaker 4: these mega tex stocks this year, all the volatility.
• 18:19
  Speaker 3: It's important because again there's a badge of honor for
• 18:22
  Speaker 3: many that comes with holding Apple stock, whether you're the
• 18:24
  Speaker 3: smallest retail investor or the giant on Wall Street.
• 18:26
  Speaker 1: That's been the case for so long.
• 18:29
  Speaker 3: But at the end of the day, you have in
• 18:32
  Speaker 3: the world of technology, two main operating systems for smartphones
• 18:35
  Speaker 3: iOS and the iPhone, and then Android, where a number
• 18:38
  Speaker 3: of handset makers are involved. And it comes back to
• 18:42
  Speaker 3: what's happened to Apple, and the cores are just gone.
• 18:44
  Speaker 3: It grew in every market around the world apart from
• 18:47
  Speaker 3: one greater China. Tim's question is did the iPhone do
• 18:50
  Speaker 3: great well? The question outstanding is as important as the
• 18:55
  Speaker 3: data that we've related to the audiences we don't know.
• 18:57
  Speaker 1: Let us answer the question on the call.
• 19:00
  Speaker 3: The iPhone grow in China and all of these things
• 19:02
  Speaker 3: investors take into account just as much as they do
• 19:05
  Speaker 3: the sweeteners that have put before them.
• 19:07
  Speaker 2: All Right, We're going to hear from Apple executives on
• 19:10
  Speaker 2: the call a little later.
• 19:11
  Speaker 4: ED.
• 19:12
  Speaker 2: It's notable because it is I believe Luka Maistri's last
• 19:17
  Speaker 2: earnings call at Apple. He's going to be passing the
• 19:21
  Speaker 2: torch to his top deputy when the calendar turns to
• 19:25
  Speaker 2: twenty twenty five. Is that something that is meaningful to
• 19:30
  Speaker 2: you in terms of how this There's not a lot
• 19:32
  Speaker 2: of executive turnover at this company. These people have been
• 19:35
  Speaker 2: there for years. Can text you like that for us?
• 19:38
  Speaker 3: On the one hand, Kevan Perek, who's you're like right,
• 19:41
  Speaker 3: his deputy and steps up to being CFO, is a
• 19:43
  Speaker 3: known quantity because he's been there and this was telegraphed.
• 19:47
  Speaker 3: But I've often posted in the Bloomberg Top Life blog
• 19:50
  Speaker 3: it's the blog we run during these big moments that
• 19:54
  Speaker 3: it's often my Strey rather than cook that gives you
• 19:57
  Speaker 3: the information that we'd consider news. It is some more
• 20:00
  Speaker 3: granular detail about performance of a specific product in a
• 20:04
  Speaker 3: specific market, like iPhone in China. He is widely seen
• 20:09
  Speaker 3: as being a master of the margin, right you think
• 20:12
  Speaker 3: about it, talked about cash generation but the bottom line
• 20:15
  Speaker 3: in general and Apple being a highly profitable company with
• 20:18
  Speaker 3: just insane amounts of cash on the balance sheet. You know,
• 20:21
  Speaker 3: Luke and Maistreet has been a big part of that story.
• 20:24
  Speaker 3: Does can Correct have the same prowess in that field?
• 20:29
  Speaker 3: It takes some quarters to find out, but you know,
• 20:32
  Speaker 3: when you're a journalists and an investor, you become familiar
• 20:34
  Speaker 3: with these names and you listen closely when they say
• 20:37
  Speaker 3: things because you know that they choose their words with purpose.
• 20:41
  Speaker 4: Ed.
• 20:41
  Speaker 2: We're going to give you a break in just a minute.
• 20:43
  Speaker 2: But last question to you is just give us the
• 20:46
  Speaker 2: high level view of Apple for people who are just
• 20:50
  Speaker 2: joining us right now.
• 20:52
  Speaker 3: Yeah, in the quarter, Apple posted sales that were about
• 20:56
  Speaker 3: what everyone expected. They grew their sales in every geography
• 20:59
  Speaker 3: around world world apart from China. An iPhone which is
• 21:02
  Speaker 3: basically everything still for anyone that cares about Apple beat
• 21:07
  Speaker 3: estimates overall, but there's a lingering question about how it's
• 21:10
  Speaker 3: doing in China because it's such an important market. The
• 21:13
  Speaker 3: next phase, or the forward looking bit, is the work
• 21:17
  Speaker 3: they've done in AI. Working for them is a business
• 21:20
  Speaker 3: because services revenue came in a bit light.
• 21:23
  Speaker 1: Now.
• 21:23
  Speaker 3: Apple Intelligence is only just this week, last couple of
• 21:27
  Speaker 3: days been rolling out in markets like North America. It
• 21:30
  Speaker 3: is not available in the EU. It is not available
• 21:33
  Speaker 3: in China. But some explanation because we don't have it
• 21:36
  Speaker 3: in the release of how this amazing AI tech is
• 21:39
  Speaker 3: going to drive growth for them in terms of sales
• 21:41
  Speaker 3: and profit is probably the next logical thing to look at.
• 21:45
  Speaker 2: D Love though, is the cohost of Bloomberg Technology on
• 21:47
  Speaker 2: Bloomberg TV.