WEBVTT - Apple Outlook Mixed Post-Earnings on China Concerns 0:00:01.360 --> 0:00:05.680 This is Bloomberg Business Wait inside from the reporters and 0:00:05.880 --> 0:00:09.440 editors who bring you America's most trusted business magazine, plus 0:00:09.520 --> 0:00:13.680 global business, finance and tech news. The Bloomberg Business Week 0:00:13.720 --> 0:00:19.000 Podcast with Carol Messer and Tim Stenebek from Bloomberg Radio. 0:00:20.079 --> 0:00:22.720 Apple earnings just crossing the let's go through them. 0:00:22.880 --> 0:00:25.200 Yeah, fourth quarter EPs, Carol coming in above estimates at 0:00:25.239 --> 0:00:28.080 a dollar forty six, estimates for forty dollar thirty nine. 0:00:28.120 --> 0:00:30.760 So investors certainly happy to see that fourth quarter revenue 0:00:31.000 --> 0:00:33.400 eighty nine point five billion. That also beat estimates of 0:00:33.440 --> 0:00:35.000 eighty nine point three to five billion. 0:00:35.040 --> 0:00:37.160 All right, I'm looking at the stock already up about 0:00:37.159 --> 0:00:40.400 two percent here in the aftermarket. What's great about Apple 0:00:40.440 --> 0:00:42.720 is you've got to go through the different categories. Fourth 0:00:42.800 --> 0:00:46.200 quarter service revenue, that's about twenty two point thirty one billion. 0:00:46.240 --> 0:00:49.800 The estimate was for twenty one point thirty seven Wearables, 0:00:49.840 --> 0:00:53.000 home and Accessories, a little bit light, nine point thirty 0:00:53.000 --> 0:00:56.320 two billion, nine point forty one Greater China revenue. We 0:00:56.320 --> 0:00:59.400 were focused on this. It is coming in light fifteen 0:00:59.440 --> 0:01:02.560 point zero zero eight billion, and the forecast was for 0:01:02.680 --> 0:01:05.600 seventeen point zero one billion. That pop in the stock 0:01:05.600 --> 0:01:08.480 in the aftermarket not as enthusiastic. In fact, we've seen 0:01:08.480 --> 0:01:10.000 the stock go a little bit negative. It's just up 0:01:10.040 --> 0:01:14.279 about zero point six percent. iPhone revenue forty three point 0:01:14.319 --> 0:01:18.600 eight billion, that is slightly better than the street forecast 0:01:18.600 --> 0:01:21.679 of forty three point seventy three billion, But again, China 0:01:21.760 --> 0:01:25.720 revenue coming in light. iPhone revenue, it's a slight beat, 0:01:25.760 --> 0:01:29.160 called it almost inline, and fourth quarter revenue overall, it 0:01:29.240 --> 0:01:32.920 is a slight beat. Stock is now though, down about 0:01:33.000 --> 0:01:35.120 zero point five percent in the aftermarket. 0:01:35.240 --> 0:01:37.959 Services revenue reaches a new all time high. Also, Carol, 0:01:37.959 --> 0:01:40.240 we should note Apple has declared a quarterly dividend of 0:01:40.280 --> 0:01:41.880 twenty four cents per share. 0:01:42.000 --> 0:01:44.039 Well, what's interesting, though, is we were all wondering about 0:01:44.080 --> 0:01:47.440 China revenue, such an important market to this company. But 0:01:47.520 --> 0:01:49.560 keep in mind, you know, I was looking kind of 0:01:49.560 --> 0:01:52.440 going into this the comps were considered to be somewhat 0:01:52.480 --> 0:01:56.120 easy for the iPhone generally because of the production lines 0:01:56.600 --> 0:01:59.560 that were off in China. So we did see iPhone 0:01:59.600 --> 0:02:03.200 revenue generally come in strong. But we've been talking increasingly 0:02:03.200 --> 0:02:06.200 about the competition that is happening in China when it 0:02:06.240 --> 0:02:10.079 comes to smartphones generally, and that China revenue. The domestic 0:02:10.160 --> 0:02:16.280 consumer has been coming back. We certainly saw it in 0:02:16.280 --> 0:02:19.520 the Golden week, right people were traveling. But nonetheless, the 0:02:19.680 --> 0:02:23.240 China revenue fifteen point zero eight billion versus an estimate 0:02:23.280 --> 0:02:25.960 of seventeen point zero one to almost two billion dollars. 0:02:26.120 --> 0:02:26.240 Leight. 0:02:26.440 --> 0:02:29.200 Hey, somebody who's watching this just as closely as we 0:02:29.240 --> 0:02:32.880 are is Angelo Zino. He's senior equity analyst at CFRA Research. 0:02:32.919 --> 0:02:35.680 He joins us on Zoom from New York City. Angela, 0:02:35.760 --> 0:02:37.840 good to have you join us, as you always do 0:02:38.160 --> 0:02:40.919 on Apple earnings such as these. Give us an idea 0:02:40.919 --> 0:02:43.440 of the numbers that you're focused on and why you 0:02:43.440 --> 0:02:45.000 think that we're seeing the stock move like this in 0:02:45.000 --> 0:02:46.080 the after hours. 0:02:46.760 --> 0:02:49.000 Yeah, I mean, listen, I think initially kind of and 0:02:49.040 --> 0:02:51.200 we still have to look deeper into the numbers, but initially, 0:02:51.240 --> 0:02:55.160 you know, it looked good in terms of the earnings 0:02:55.320 --> 0:02:57.840 as far as well as the top line is concerned, 0:02:58.840 --> 0:03:02.280 fairly coming in line, slightly above our expectations out there. 0:03:02.680 --> 0:03:05.160 And you know, also on the services side of things, 0:03:05.160 --> 0:03:09.040 you know, reacceleration towards double digit growth, all kind of positives, 0:03:09.080 --> 0:03:11.240 and I think kind of, you know, some keys out there. 0:03:11.280 --> 0:03:14.160 Of course, you guys have highlighted the disappointment on the 0:03:14.240 --> 0:03:16.200 China side of things, so we definitely want to hear 0:03:16.240 --> 0:03:19.119 a little bit more priority and more importantly what they 0:03:19.200 --> 0:03:22.239 see for the December quarter as far as China is concerned. 0:03:22.960 --> 0:03:26.040 You know, it could just be you know, more of 0:03:26.040 --> 0:03:29.079 a comps thing as far as you know the September 0:03:29.160 --> 0:03:31.880 quarter is concerned versus a year ago, relative to when 0:03:31.880 --> 0:03:35.560 the iPhone fourteen was launched versus fifteen. But you know, 0:03:35.600 --> 0:03:37.240 we want to see what they have to say about 0:03:37.240 --> 0:03:39.640 the full quarter in terms of the December quarter as 0:03:39.680 --> 0:03:42.640 far as the holiday selling season is concerned, and of course, 0:03:42.720 --> 0:03:44.560 you know some of the headwinds that are that are 0:03:44.600 --> 0:03:47.840 notably out there, specifically some of the competitive pressures that are 0:03:47.840 --> 0:03:50.920 definitely arising, So we definitely want to hear all of 0:03:50.960 --> 0:03:53.360 that in China. Looks like it's going to be the 0:03:53.440 --> 0:03:54.440 key here on the call. 0:03:54.680 --> 0:03:57.440 Yeah, it's just interesting. Stock down two percent, and you 0:03:57.480 --> 0:03:59.440 make a really good point on the iPhone number, even 0:03:59.440 --> 0:04:03.600 though it came in I think to slightly higher our 0:04:03.640 --> 0:04:05.760 own mark German and we were talking about this earlier 0:04:06.240 --> 0:04:10.560 that it's a slight beat, but it's not impressive given 0:04:10.560 --> 0:04:12.680 that the iPhone fourteen Pro couldn't be so last well 0:04:12.720 --> 0:04:15.240 for several weeks because of the Fox cons shutdown due 0:04:15.240 --> 0:04:17.920 to COVID. So you expected that it was an easy 0:04:18.000 --> 0:04:20.159 comp that maybe it should have been an even big 0:04:20.240 --> 0:04:22.840 bigger beat. So our Mark German doing that on our 0:04:22.880 --> 0:04:25.080 live blog. We do have the stock down about one 0:04:25.120 --> 0:04:27.240 point eight percent. The outlook, as you say, is going 0:04:27.279 --> 0:04:31.960 to be very very important here specifically, what do you 0:04:31.960 --> 0:04:34.480 want to know about China? Is it just a case 0:04:34.520 --> 0:04:37.360 of the increasing competition that Apple is seeing in that 0:04:37.520 --> 0:04:38.800 massive market? 0:04:39.800 --> 0:04:42.400 Well, listen, I think we want to know specifically, we 0:04:42.440 --> 0:04:44.159 want to kind of know what was going on both 0:04:44.200 --> 0:04:46.320 on the hardware side as well as the services side 0:04:46.320 --> 0:04:49.360 of things out in China. Specifically on the hardware side 0:04:49.400 --> 0:04:52.159 of things, it is, you know, on the competitive side 0:04:52.160 --> 0:04:54.440 of things, what does that look like to them, what 0:04:54.520 --> 0:04:56.560 does the demand picture look like as far as the 0:04:56.600 --> 0:05:00.080 iPhone fifteen is concerned. And then also you know, on 0:05:00.120 --> 0:05:02.039 the other side of things, you know, they are launching 0:05:02.080 --> 0:05:04.599 kind of the new max out there that should help 0:05:04.640 --> 0:05:06.760 them here in the December quarter as well. We do 0:05:06.839 --> 0:05:08.520 think that they're going to they are going to return 0:05:08.560 --> 0:05:10.640 to growth on the max side of things in the 0:05:10.680 --> 0:05:13.400 December quarter, that should help a little bit. And then 0:05:13.440 --> 0:05:15.800 as far as services, I think it'll be important for 0:05:15.839 --> 0:05:19.160 them to continue to say that, you know, the landscape 0:05:19.200 --> 0:05:22.360 looks fairly healthy in China as far as services is concerned. 0:05:22.400 --> 0:05:24.320 But you know, at the end of the day, it 0:05:24.839 --> 0:05:27.640 really it's you know, you don't want to extrapolate too 0:05:27.760 --> 0:05:31.440 much from this one number as far as China is concerned. Right, So, 0:05:32.360 --> 0:05:34.640 and also when you think about the December quarter as 0:05:34.680 --> 0:05:38.400 well versus the December quarter a year ago, the numbers 0:05:38.400 --> 0:05:42.240 again are the comps are super easy. Our view is 0:05:42.240 --> 0:05:44.799 they are going to point towards an acceleration in terms 0:05:44.800 --> 0:05:48.960 of iPhone revenue in the December quarter versus September quarter 0:05:49.000 --> 0:05:51.640 because of those easy comps. So again, let's see what 0:05:51.640 --> 0:05:54.599 the trajectory looks like over the next kind of couple 0:05:54.600 --> 0:05:55.240 of months. 0:05:55.279 --> 0:05:56.760 I'm just going to say, go to the press release, 0:05:56.839 --> 0:05:59.839 pretty basic, pretty forward. I'm not saying anything about outlook yet. 0:06:00.240 --> 0:06:04.320 We should remind everyone that Apple's fiscal year ends at 0:06:04.360 --> 0:06:06.800 the end of September. In the December quarter that we're 0:06:06.839 --> 0:06:09.600 currently in right now, as Angela keeps referencing, is Apple's 0:06:09.640 --> 0:06:12.799 first quarter of its fiscal year. Our own Mark German 0:06:12.839 --> 0:06:15.560 pointing out on our live blog which I highly recommend, 0:06:16.120 --> 0:06:18.480 reminding us that it's a huge miss on the Mac 0:06:18.520 --> 0:06:21.120 coming in at least a billion dollars below expectations. It's 0:06:21.120 --> 0:06:24.000 no wonder. Mark writes that Apple pulled every lever it 0:06:24.080 --> 0:06:26.440 could to get the M three, MacBook Pro and iMac 0:06:26.440 --> 0:06:30.039 out the door during the holiday quarter. Angelo, what do 0:06:30.040 --> 0:06:32.560 you make of the billion dollar below expectations when it 0:06:32.600 --> 0:06:35.320 comes to the Mac and how important is that category 0:06:35.360 --> 0:06:35.719 to Apple? 0:06:36.680 --> 0:06:38.799 Yeah, I mean, we'll see if they're kind of looking 0:06:38.800 --> 0:06:42.800 at this on wine inventory, and you know, maybe they 0:06:42.839 --> 0:06:46.040 just weren't kind of pushing, pushing kind of sales through 0:06:46.080 --> 0:06:50.159 any more ahead of these new product launches. But you know, again, 0:06:50.360 --> 0:06:53.120 it was an extremely difficult comp as far as the 0:06:53.160 --> 0:06:56.200 Mac has been concerned, not only here in the September quarter, 0:06:56.240 --> 0:06:59.359 but over the last year. So you know, now that 0:06:59.440 --> 0:07:03.120 they've kind of gone through that was last four tough quarters. Again, 0:07:03.200 --> 0:07:07.200 you're now going to enter the December quarter where you're laughing, 0:07:07.279 --> 0:07:10.560 essentially at twenty nine percent or so declined from a 0:07:10.640 --> 0:07:14.360 year ago, right with those new product launches. So you know, 0:07:14.720 --> 0:07:17.080 it's weak because of those tough comps we think, as 0:07:17.120 --> 0:07:19.560 well as the fact that, hey, listen, it's not the 0:07:19.560 --> 0:07:23.040 most favorable landscape out there for piecs, even though the 0:07:23.080 --> 0:07:26.240 broader PC landscape appears to have found some sort of 0:07:26.280 --> 0:07:28.560 footing for the time being. But at the end of 0:07:28.560 --> 0:07:32.480 the day, the consumer landscape is still very challenging. In nature, 0:07:32.520 --> 0:07:35.280 but again, we want to know more clarity. They're not 0:07:35.320 --> 0:07:37.520 going to give exact numbers as far as the guidance 0:07:37.600 --> 0:07:39.880 is current concerned. It's only going to be more directional 0:07:39.880 --> 0:07:42.400 in nature. But our view it is going to be 0:07:42.840 --> 0:07:44.240 decent at least for the mask. 0:07:44.320 --> 0:07:45.680 It's funny Tim and I were just going back and 0:07:45.760 --> 0:07:47.080 forth because I'm like, wait, they're going to give an 0:07:47.080 --> 0:07:49.040 out look, and they don't do that, right, They don't, 0:07:49.360 --> 0:07:52.160 you know. But you're looking for some commentary. Stocks now 0:07:52.200 --> 0:07:54.880 down about zero point nine percent here in the aftermarket 0:07:54.920 --> 0:07:57.239 if you're just joining us, we're talking with Angelo Zeno, 0:07:57.840 --> 0:08:02.040 who covers Apple. Apple sales decline for a fourth straight quarter, 0:08:02.200 --> 0:08:04.520 marking the longest slowdown since two thousand and one, as 0:08:04.520 --> 0:08:08.400 the company struggles with sluggish demand and a shaky smartphone 0:08:08.520 --> 0:08:11.800 market in China, specifically, revenue falling to eighty nine point 0:08:11.880 --> 0:08:14.520 five billion in the fiscal fourth quarter that ended, of course, 0:08:14.600 --> 0:08:17.520 September thirtieth, compared with the average Wall Street estimate of 0:08:17.560 --> 0:08:20.080 eighty nine point four billion. Apple did not provide formal 0:08:20.080 --> 0:08:23.000 guidance for the quarter, sticking with a policy it adopted 0:08:23.120 --> 0:08:27.960 during the pandemic. It's still a law of I feel 0:08:27.960 --> 0:08:30.760 like whenever there you look at Apple, they still angelo 0:08:31.000 --> 0:08:36.439 sell so much stuff. But remind us, I mean everybody 0:08:36.480 --> 0:08:39.600 has always for decades been going after the Chinese market. 0:08:39.920 --> 0:08:42.480 You know, our Mark German says China also needs Apple. 0:08:42.800 --> 0:08:46.280 Apple employs a lot of workers still in China. So 0:08:46.840 --> 0:08:51.200 that relationship is this just maybe a slight dip, a 0:08:51.240 --> 0:08:53.960 one quarter dip or who knows? And I guess that's 0:08:54.000 --> 0:08:56.520 what we want commentary on. But how do you think 0:08:56.559 --> 0:08:59.320 about that relationship with Apple? Is it at some point 0:08:59.320 --> 0:09:02.280 it's just it's going to wind down to some extent 0:09:02.440 --> 0:09:04.040 or no? 0:09:04.080 --> 0:09:05.840 I mean we don't think it's going to wind down. 0:09:05.880 --> 0:09:08.199 I mean, when we kind of forecast Apple and China 0:09:08.240 --> 0:09:11.000 at least looking ahead, we're kind of looking for the 0:09:11.040 --> 0:09:13.720 company they essentially kind of grow in line with the 0:09:13.720 --> 0:09:16.760 smartphone market in that region. So we're no longer looking 0:09:16.800 --> 0:09:19.640 for share gain, which is something that they saw, you know, 0:09:19.679 --> 0:09:21.200 as a significant tail wind over the. 0:09:21.240 --> 0:09:21.880 Last two years. 0:09:21.960 --> 0:09:25.160 Right, Huawei exits essentially kind of exits the high end 0:09:25.160 --> 0:09:27.480 of the market because they can't get their hands on 0:09:27.520 --> 0:09:29.760 these you know, these great chips. As far as five 0:09:29.840 --> 0:09:32.800 G is concerned, Apple takes a significant amount of share. 0:09:33.080 --> 0:09:35.400 Now that you know, those tailwinds are now gone in 0:09:35.559 --> 0:09:37.920 our view, So now it's more along the lines of 0:09:38.040 --> 0:09:40.440 kind of them growing in line with the market probably 0:09:40.480 --> 0:09:43.000 at best, to be honest with you, in China. The 0:09:43.040 --> 0:09:45.720 fact of the matter, though, is the growth story isn't 0:09:45.720 --> 0:09:49.360 necessarily dead for Apple because they've got such low share 0:09:49.559 --> 0:09:51.719 in a ton of emerging regions out there. 0:09:51.800 --> 0:09:51.959 Right. 0:09:52.240 --> 0:09:54.800 India is of course a key market out there and 0:09:54.920 --> 0:09:55.520 growth op. 0:09:55.559 --> 0:09:57.959 How many people are Apple? How many people in India 0:09:57.960 --> 0:09:59.120 can afford an iPhone? 0:10:00.040 --> 0:10:03.920 Well not many, but I mean you start, well, well, 0:10:03.960 --> 0:10:05.720 there is going to be a wealth effect over the 0:10:05.760 --> 0:10:09.600 next decade in terms of India, right, I mean, similar 0:10:09.600 --> 0:10:12.600 to what we've seen in China over the last you know, 0:10:12.640 --> 0:10:14.760 two decades or so. So there is going to be 0:10:14.760 --> 0:10:18.160 a kind of Apple will grow with that that region 0:10:18.320 --> 0:10:20.840 over time. And now our view is they can probably 0:10:20.920 --> 0:10:23.079 take you know, they can probably see unit growth of 0:10:23.080 --> 0:10:25.960 about one to three percentage points on an annual basis 0:10:26.120 --> 0:10:28.760 from India alone over the next decade. So we're not 0:10:28.840 --> 0:10:32.360 necessarily looking for significant kind of growth in any given 0:10:32.440 --> 0:10:34.920 year out of India, but I think it will be 0:10:34.960 --> 0:10:39.600 an increasing contributor to Apple's business over time, and I 0:10:39.600 --> 0:10:42.400 think that is important, right, I mean, what what happens 0:10:42.440 --> 0:10:45.320 with Apple here is they're just so darn big is 0:10:45.760 --> 0:10:48.400 there's not any single kind of item that's really going 0:10:48.480 --> 0:10:50.880 to move them noteworthy. 0:10:50.360 --> 0:10:51.160 At this point in time. 0:10:51.280 --> 0:10:53.560 You can't expect to kind of you're an investor out there, 0:10:53.600 --> 0:10:55.640 don't expect to get you know, fifty to sixty percent 0:10:55.679 --> 0:10:58.120 gains on a name like this, you know, every single year. 0:10:58.160 --> 0:10:59.560 That's just not going to happen anymore. 0:10:59.640 --> 0:11:01.760 You kind of say, in this name because it's a 0:11:01.760 --> 0:11:04.520 great free cash flow generator, they can continue to see 0:11:04.800 --> 0:11:07.920 solid earnings growth of let's say, high single digit, low 0:11:08.000 --> 0:11:11.120 double digit, you know annually here over the next kind 0:11:11.160 --> 0:11:13.520 of five to seven years. And that's why you're invested 0:11:13.600 --> 0:11:16.400 in this name, not you know, necessarily because of the 0:11:16.480 --> 0:11:18.920 significant growth opportunities that are attached to them. 0:11:19.040 --> 0:11:20.400 Maybe any specific region. 0:11:20.480 --> 0:11:22.520 It's funny that you said about India. It made me 0:11:22.600 --> 0:11:25.199 look back because I'd just come across a story this 0:11:25.240 --> 0:11:28.360 past week, the Hamptons of India rises as nation's wealth 0:11:28.360 --> 0:11:30.880 boom eclipses China's. But it just talks about a new 0:11:30.880 --> 0:11:34.439 class of wealthy entrepreneurs, deal makers, you know, and the 0:11:34.559 --> 0:11:38.760 luxury market just taking off in a big way in India. 0:11:38.960 --> 0:11:42.040 So yeah, it's not the market. We've always focused on 0:11:42.080 --> 0:11:46.120 the emerging market, but it is increasingly that case. And 0:11:46.160 --> 0:11:49.280 they talk about the suspending, whether it's watches or what 0:11:49.400 --> 0:11:53.080 have you, it's taking off. Having said that, what's the 0:11:53.080 --> 0:11:54.920 thing that worries you about Apple? 0:11:57.720 --> 0:11:59.920 I mean, listen, I think at this point in time, 0:12:00.040 --> 0:12:02.559 I think China would be the biggest concern out there. 0:12:03.120 --> 0:12:05.880 What does a competitive landscape look out there? It still 0:12:05.920 --> 0:12:08.200 is twenty percent of their revenue, So I think that 0:12:08.400 --> 0:12:10.440 is kind of the key, at least here in the 0:12:10.480 --> 0:12:13.199 near term over the next kind of nine to twelve months, 0:12:13.280 --> 0:12:16.320 as far as this iPhone and fifteen cycle is concerned. 0:12:16.360 --> 0:12:18.880 So if it was us, it's on the China side 0:12:18.920 --> 0:12:20.880 of things. And then of course you've always got to 0:12:20.880 --> 0:12:23.440 worry about the regulatory landscape out there, right, you've got 0:12:23.480 --> 0:12:25.760 the digital market deck that's going to go full into 0:12:25.800 --> 0:12:29.680 effect here in Europe here in calendar twenty twenty four. 0:12:29.960 --> 0:12:31.960 No one's kind of really warned about that at this 0:12:32.080 --> 0:12:33.840 point in time. As far as kind of the big 0:12:33.880 --> 0:12:36.600 tech companies are concerned, whether or not it disrupts their 0:12:36.600 --> 0:12:38.960 business or kind of slows down the revenue trajectory on 0:12:39.040 --> 0:12:42.240 any of these individual companies remains to be seen. But 0:12:42.840 --> 0:12:45.319 regulatory pressures out there are always something you've got to 0:12:45.400 --> 0:12:47.880 keep your mind on, whether you're Apple or another company 0:12:47.880 --> 0:12:50.400 out there. But this is specifically for Apple as far 0:12:50.440 --> 0:12:52.640 as that service is business, and we know if that 0:12:52.720 --> 0:12:55.200 service business gets dented in terms of the growth that 0:12:55.280 --> 0:12:57.800 look at any point in time, that's going to result 0:12:57.840 --> 0:13:00.280 in some sort of multiple compression. And Apple shit is 0:13:00.320 --> 0:13:03.160 because it is a significantly higher margin business. It is 0:13:03.240 --> 0:13:07.160 driving a lot of the earnings trajectory here looking ahead. 0:13:07.040 --> 0:13:10.400 Angela, what's the question you'd ask Tim Cook and executives 0:13:10.400 --> 0:13:11.360 on the earnings call later? 0:13:13.480 --> 0:13:16.760 You know, I think at this point in time, you've 0:13:16.760 --> 0:13:19.680 got to ask him about the competitive outlook in terms 0:13:19.800 --> 0:13:24.600 of China, whether it's legit, whether you know he thinks 0:13:24.640 --> 0:13:28.000 that they can continue to grow in China despite kind 0:13:28.000 --> 0:13:31.600 of increasing pressures from Huawei, because if you recall before 0:13:31.679 --> 0:13:35.600 the pandemic, Huawei was probably Apple's biggest threat out there 0:13:35.640 --> 0:13:38.600 from a competitive landscape. So now they are re emerging 0:13:38.640 --> 0:13:41.840 here and we need to know whether or not Huawei 0:13:41.880 --> 0:13:44.840 is going to be a legitimate, legitimate threat here over 0:13:44.880 --> 0:13:45.839 the next couple of years. 0:13:45.960 --> 0:13:47.880 Hey, you mentioned, Okay, the stocks now down about one 0:13:47.880 --> 0:13:50.080 point three percent, it's not falling off a cliffs. 0:13:49.800 --> 0:13:52.120 Especially fair we saw today with Apple. 0:13:52.000 --> 0:13:55.040 Exactly it rallied in today's session. I'm looking at your note. 0:13:55.040 --> 0:13:57.080 You've got a twelve month price target of two twenty. 0:13:57.160 --> 0:14:00.600 You mentioned that multiple compression that needs to happen. Would 0:14:00.679 --> 0:14:03.480 you adjust your price target on the stock as a 0:14:03.520 --> 0:14:06.480 result of some of the news today. It's right now 0:14:06.600 --> 0:14:08.480 when it closed about one hundred and seventy seven, just 0:14:08.480 --> 0:14:11.000 below one seventy eight to share, Yeah. 0:14:10.840 --> 0:14:12.280 I mean we we'd kind of want to get a 0:14:12.280 --> 0:14:14.360 better idea of what the outlook here, what they have 0:14:14.480 --> 0:14:16.800 to say in terms of the December quarter is concerned, 0:14:16.880 --> 0:14:19.040 what their views are as far as the iPhone fifteen 0:14:19.040 --> 0:14:21.800 cycle is concerned, and you know, specifically what they see 0:14:21.800 --> 0:14:24.760 ahead for the services side of things. But you know 0:14:24.880 --> 0:14:27.200 that being said, you know, this is continues to be 0:14:27.240 --> 0:14:28.000 a stable ship. 0:14:28.160 --> 0:14:30.400 And as far as that as long as. 0:14:30.240 --> 0:14:33.240 That pre cash flow trajectory over the next kind of 0:14:33.240 --> 0:14:36.240 five to seven years remain intact and there's nothing from 0:14:36.520 --> 0:14:39.400 at least these initial numbers that would tell us otherwise, 0:14:39.760 --> 0:14:42.320 then I think, you know, this is a company that 0:14:42.440 --> 0:14:45.880 still is worth buying here and should speak you know, 0:14:46.320 --> 0:14:48.920 capital appreciation here over the next twelve to eighteen months. 0:14:48.960 --> 0:14:50.600 Well, and you know, I'm looking at your note. You 0:14:50.680 --> 0:14:53.400 like their pipeline, you like their spatial computing, their Apple car, 0:14:53.560 --> 0:14:55.760 their healthcare, their shift towards hardware as a service. 0:14:55.880 --> 0:14:57.280 I mean, it's a long pipeline. 0:14:57.360 --> 0:14:58.000 They have been. 0:14:57.920 --> 0:15:01.200 Expanding out right, so that the other side of the story, 0:15:01.280 --> 0:15:04.120 I mean, is this potentially a little bit of an 0:15:04.240 --> 0:15:06.920 entry point if it's down one percent or so, maybe 0:15:06.960 --> 0:15:09.000 in tomorrow's trade or in the aftermarket here. 0:15:10.000 --> 0:15:12.960 Yep, And we do see you know, some significant secular opportunities, 0:15:13.000 --> 0:15:14.600 and you kind of alluded to some of them, but 0:15:14.920 --> 0:15:17.720 the pricing, you know that they're brand and the pricing 0:15:17.760 --> 0:15:20.800 power they have, not to mention, you know, all across 0:15:20.800 --> 0:15:23.000 the globe specifically in the US, but you know, eventually, 0:15:23.080 --> 0:15:25.200 we do think they come out with foldable phones right, 0:15:25.360 --> 0:15:29.000 foldable devices across their ecosystem. That's going to help support 0:15:29.080 --> 0:15:33.120 higher asps, higher revenue trajectory for this company. So in 0:15:33.200 --> 0:15:36.080 any given cycle there, you're going to have those soft patches, 0:15:36.160 --> 0:15:39.400 especially with an iPhone fourteen and fifteen cycles as you're 0:15:39.560 --> 0:15:43.000 lapping the twelve and thirteen, which were absolutely stellar cycles 0:15:43.040 --> 0:15:45.440 and have had the five G momentum right and some 0:15:45.520 --> 0:15:47.680 of the market share gains on that side of things, 0:15:47.720 --> 0:15:49.960 So they're going to be soft cycles here and there. 0:15:50.080 --> 0:15:53.000 The iPhone fifteen will probably be one of those cycles. 0:15:53.120 --> 0:15:54.400 If you're an investor out. 0:15:54.280 --> 0:15:56.720 There that you know can't be patient with the name, 0:15:56.960 --> 0:15:59.360 then you're probably you know, you potentially get out of 0:15:59.360 --> 0:16:02.800 the name and looking for, you know, certain opportunities to 0:16:02.840 --> 0:16:06.480 get back in. But it's extremely difficult to time Apple overtime, 0:16:06.520 --> 0:16:09.640 and it's probably the most forward looking name that we cover. 0:16:09.720 --> 0:16:12.880 You're probably looking at an iPhone sixteen and seventeen cycle 0:16:12.960 --> 0:16:15.480 for many investors out there at this point in time, 0:16:15.520 --> 0:16:19.080 and what the potential for the company as far as 0:16:19.160 --> 0:16:22.280 those cycles are concerned. Where we do see higher average 0:16:22.320 --> 0:16:25.960 selling prices over time because of you know, opportunities like 0:16:26.040 --> 0:16:27.160 buldable devices. 0:16:27.280 --> 0:16:29.720 This two point seven trillion dollars stock is up almost 0:16:29.760 --> 0:16:33.480 thirty seven percent year to date, and we are looking 0:16:33.560 --> 0:16:35.800 at a little bit of selling in the after hours. 0:16:35.800 --> 0:16:38.240 But now it's just down about eight tens of percent, so. 0:16:38.200 --> 0:16:40.880 More than two percent today, Carol Session exactly. 0:16:41.000 --> 0:16:46.080 So it's like hard yours. You know, the perspective on 0:16:46.120 --> 0:16:50.040 this name is just kind of fascinating. Really appreciate. Angela Zino, 0:16:50.160 --> 0:16:53.480 Senior equity Analysts at CFI Research. On zoom in New York. 0:16:53.280 --> 0:16:57.320 City, you're listening to the Bloomberg Business Week podcast. Catch 0:16:57.360 --> 0:17:00.720 us Live weekday afternoons from three to sixty d Listen 0:17:00.800 --> 0:17:04.240 on Bloomberg dot com, the iHeartRadio app, and the Bloomberg 0:17:04.320 --> 0:17:18.960 Business app, or wants us live on YouTube. 0:17:19.800 --> 0:17:23.040 What a man he is? Michael McKee man nobody covers 0:17:23.080 --> 0:17:25.360 the economy, international economy. 0:17:25.359 --> 0:17:26.679 I'm so glad you went there. I thought you cold 0:17:26.680 --> 0:17:27.159 said what a man? 0:17:27.240 --> 0:17:28.040 J Powell is? 0:17:29.040 --> 0:17:29.600 I agree? 0:17:29.760 --> 0:17:33.480 Sorry Michael McKee, Sorry, Jay, Let's just get right to it. 0:17:33.520 --> 0:17:35.919 Michael McKee is out there in our Atlanta bureau. He's 0:17:35.960 --> 0:17:39.480 International Economics and Policy correspondent. Joining us there getting ready 0:17:39.520 --> 0:17:40.919 for a big interview, which we'll get to you in 0:17:41.000 --> 0:17:42.359 just a moment. What's with that? 0:17:44.640 --> 0:17:47.800 Go Dogs, University of Georgia. We are here in Atlanta, 0:17:47.840 --> 0:17:49.600 and of course the big game this weekend in Tennessee. 0:17:49.920 --> 0:17:52.480 Everybody's going to be focused on that here. You think 0:17:52.600 --> 0:17:55.720 jobs is important, but I mean this is as my 0:17:55.840 --> 0:17:58.680 daughter who went to UGA says, this is football, football, 0:17:58.720 --> 0:18:00.000 This is football. 0:17:59.880 --> 0:18:00.359 I love it. 0:18:00.400 --> 0:18:00.760 I love it. 0:18:00.840 --> 0:18:04.480 Well, if you had assessed the game that is monetary policy, 0:18:04.600 --> 0:18:06.159 how would you do it? In terms of what we 0:18:06.200 --> 0:18:09.560 got from Jay Powell and Company yesterday? Mike Well, I. 0:18:09.560 --> 0:18:12.119 Think the bottom line for people on Wall Street is 0:18:12.160 --> 0:18:15.080 basically that you can't at this point think the FED 0:18:15.200 --> 0:18:17.840 is done, and you can't think they're not done. You 0:18:17.880 --> 0:18:20.040 sort of have to throw as my question to Jay 0:18:20.080 --> 0:18:22.479 Boble was, you have to throw the dot plot out 0:18:22.560 --> 0:18:24.919 the window and the forecasts out the window and just 0:18:24.960 --> 0:18:28.159 basically go meeting by many and think that each meeting 0:18:28.320 --> 0:18:31.919 is live. They don't have an objective measure of data 0:18:31.920 --> 0:18:34.399 that they're using now to decide on whether they should 0:18:34.440 --> 0:18:37.400 raise rates or not. It's subjective. What does everything look 0:18:37.480 --> 0:18:40.520 like when you put it all together what does it 0:18:40.560 --> 0:18:44.680 appear to them to be telling them, And so it's 0:18:44.680 --> 0:18:48.840 going to be hard for people to really invest ahead 0:18:49.160 --> 0:18:49.640 of the FED. 0:18:49.680 --> 0:18:50.200 At this point. 0:18:50.240 --> 0:18:53.040 We'll see the markets gyrate a lot based on economic data, 0:18:53.320 --> 0:18:55.040 but really, what you think the FED is going to do, 0:18:55.480 --> 0:18:57.160