WEBVTT - Bloomberg Bonus Episode: Apple and Intel Earnings 0:00:02.520 --> 0:00:07.440 Bloomberg Audio Studios, Podcasts, radio news. 0:00:08.680 --> 0:00:12.559 This is Bloomberg Business Week with Carol Masser and Tim 0:00:12.600 --> 0:00:14.840 Stenovak on Bloomberg Radio. 0:00:16.120 --> 0:00:17.960 I want to get to some earnings because we're seeing 0:00:18.000 --> 0:00:21.439 some stocks move here in the aftermarket. Intel shares they 0:00:21.600 --> 0:00:25.200 are right now up about two percent. This is as 0:00:25.280 --> 0:00:27.080 we got in terms of some of the big headlines 0:00:27.120 --> 0:00:29.960 from Intel C's first quarter. Justin gross margin of thirty 0:00:30.000 --> 0:00:32.680 six percent, that's below with the Street was forecasting of 0:00:32.720 --> 0:00:34.920 about thirty nine point three percent. Go back to the 0:00:34.960 --> 0:00:38.280 fourth quarter, the last quarter revenues that was a beat 0:00:38.400 --> 0:00:41.680 fourteen point twenty six billion versus an estimate of thirteen 0:00:41.720 --> 0:00:45.280 point eighty one billion. And again talking about first quarter revenue, 0:00:45.320 --> 0:00:48.000 some forecasts here a bit of a range eleven point 0:00:48.040 --> 0:00:50.880 seven billion to twelve point seven billion, and that Tim 0:00:50.920 --> 0:00:53.640 compares with the street estimate of twelve point eighty five billion. 0:00:53.640 --> 0:00:56.520 But again right now we're seeing Intel up about two percent. 0:00:56.600 --> 0:00:58.680 I know they also talked about in terms of some 0:00:58.800 --> 0:01:02.240 spending right and I think basically saying they will not 0:01:02.360 --> 0:01:05.280 be spending speculatively. So I feel like some of that 0:01:05.360 --> 0:01:08.440 plays to maybe some of the commentary we've had about 0:01:08.440 --> 0:01:11.080 the AI spend maybe a rethink this past week. 0:01:11.240 --> 0:01:13.640 Reminder too, they're also looking for a new CEO at 0:01:13.640 --> 0:01:15.560 this point to take up for patkel Singer who left 0:01:15.560 --> 0:01:17.600 at the end of last year. For more, let's go 0:01:17.640 --> 0:01:20.560 to Jackie Doavolos. She's in our San Francisco bureau. She's 0:01:20.600 --> 0:01:24.560 been following this company and these numbers closely. Jackie, how 0:01:24.640 --> 0:01:25.559 is the turnaround going? 0:01:26.880 --> 0:01:29.720 Well, that's the question everyone wants to know. The key 0:01:29.800 --> 0:01:33.480 uncertainty here is who's taking over the company. You had 0:01:33.640 --> 0:01:36.400 some guidance from the CFO as to how the next 0:01:36.520 --> 0:01:38.760 quarter is going to look like, but not so much 0:01:38.800 --> 0:01:41.880 guidance on who's going to be taking the reins. And 0:01:42.120 --> 0:01:44.880 I think that's the big point of uncertainty. And if 0:01:44.920 --> 0:01:47.480 you look at shares, it's kind of a tepid response 0:01:47.560 --> 0:01:50.920 considering how much uncertainty is swirling around the company right now. 0:01:51.000 --> 0:01:54.160 But to your point, Carol, I think some of that 0:01:54.280 --> 0:01:57.920 optimism is coming in through the comments around spend. As 0:01:57.960 --> 0:02:01.800 you know, the former CEO, Pat gal Singer was ousted 0:02:02.080 --> 0:02:05.240 just last month, and big part of the reason for 0:02:05.320 --> 0:02:09.120 that was this ordinate amount of spending that the board 0:02:09.200 --> 0:02:12.359 perceived to be a drag on the company's performance. Now, 0:02:12.400 --> 0:02:14.880 we might not know who might be taking over, but 0:02:14.960 --> 0:02:17.359 what we do know is that next quarter they're looking 0:02:17.400 --> 0:02:21.080 at revenue of about eleven point seven to twelve point 0:02:21.080 --> 0:02:25.160 seven billion dollars. That's below estimates, but perhaps some of 0:02:25.200 --> 0:02:28.040 that optimism from the fact that they beat pretty well 0:02:28.120 --> 0:02:30.919 on their revenue figures for the fourth quarter is coming through. 0:02:31.440 --> 0:02:33.960 Yeah, it's interesting just looking through to some of the 0:02:34.840 --> 0:02:37.800 reporting from Ouroni and King of course, who follows the 0:02:37.880 --> 0:02:40.519 chips sector, and saying that you know, again, what you 0:02:40.560 --> 0:02:43.120 guys were just talking about investors in analyst waiting for 0:02:43.160 --> 0:02:46.359 the appointment of a new leader who will determine Intel's future. 0:02:46.360 --> 0:02:49.640 I mean, it's a big question. The company's outsource manufacturing 0:02:49.639 --> 0:02:52.680 push will not see meaningful revenue from silicon customers until 0:02:52.680 --> 0:02:55.160 twenty twenty seven. For now, the bulk of outside sales 0:02:55.200 --> 0:02:57.720 will come from packing works. So we're getting a little 0:02:57.720 --> 0:02:59.639 bit more in terms of the business here, Tim. But again, 0:02:59.800 --> 0:03:02.360 the stock, as Jackie mentioned, just pulling it up again 0:03:02.680 --> 0:03:05.200 here in the aftermarket, and the stock right now just 0:03:05.280 --> 0:03:07.320 up about one point two percent here. But it's not 0:03:07.440 --> 0:03:08.680 selling off, which is interesting. 0:03:08.720 --> 0:03:10.120 I mean, there's been a lot of selling off of 0:03:10.120 --> 0:03:13.480 the last few years with Intel to you know, when 0:03:13.480 --> 0:03:16.480 you zoom out, of course, Jackie, the data center business 0:03:16.520 --> 0:03:21.359 certainly facing competition from Nvidia and AMD their core business 0:03:21.440 --> 0:03:25.480 PC processors. How is demand there, how's competition there? 0:03:26.160 --> 0:03:29.640 Well, we got some comments from the CFO who said 0:03:29.639 --> 0:03:34.160 that competitive dynamics is a big reason why we're seeing 0:03:34.200 --> 0:03:36.480 a bit of a weaker forecast. He also cited the 0:03:36.520 --> 0:03:40.800 macro uncertainties and of course seasonal weakness. But when we 0:03:40.880 --> 0:03:44.280 go back to those competitive dynamics, who is the competition 0:03:44.440 --> 0:03:48.920 and tim You're absolutely right, those AI accelerators are the 0:03:48.960 --> 0:03:52.360 big question for investors. Can they get in here and compete? 0:03:52.400 --> 0:03:55.400 Obviously with the gold standard coming from Nvidia, it's going 0:03:55.440 --> 0:03:57.840 to take a lot of work and investment to really 0:03:57.960 --> 0:04:00.440 chip away there. But in the meantime they're also facing 0:04:00.440 --> 0:04:04.280 competition from their bread and butter in that processing personal 0:04:04.280 --> 0:04:08.760 computer processing unit. You have AMD really coming in, and 0:04:08.800 --> 0:04:12.839 then of course on the outsourcing manufacturing site, Taiwan Semiconductors 0:04:12.920 --> 0:04:15.560 is also a pretty big player now, so they're kind 0:04:15.560 --> 0:04:19.800 of facing this competition from all ends. Even you know, 0:04:19.880 --> 0:04:23.760 as we look at AI being this big opportunity for 0:04:23.880 --> 0:04:26.760 pretty much every tech player out there. Intel has really 0:04:26.800 --> 0:04:29.440 been struggling to make a name for themselves in the space. 0:04:29.800 --> 0:04:32.599 Just to rehash, Intel shares folks in the aftermarket up 0:04:32.600 --> 0:04:34.919 about one point three percent. Going to the first quarter 0:04:35.000 --> 0:04:38.040 forecast seeing revenue of eleven point seven billion to twelve 0:04:38.040 --> 0:04:40.960 point seven billion. The estimate on the street is twelve 0:04:40.960 --> 0:04:45.000 point eighty five billion, so above that. Also in terms 0:04:45.000 --> 0:04:49.960 of forecasts, he's an adjusted EPs of just flat. Estimate 0:04:50.040 --> 0:04:51.880 is for eight cents. He's a justin gross margin of 0:04:51.920 --> 0:04:54.400 thirty six percent. That's a miss too. Estimate is thirty 0:04:54.480 --> 0:04:57.080 nine point three percent. Go back to the fourth quarter 0:04:57.279 --> 0:05:00.880 and their current quarter sales and profit forcat asked falling 0:05:00.880 --> 0:05:02.919 short of analyst projections. But if we go back to 0:05:02.960 --> 0:05:06.359 the fourth quarter fourteen point two six billion, that's the 0:05:06.400 --> 0:05:09.120 revenue that's down seven point four percent year over year. 0:05:09.160 --> 0:05:11.640 The estimate on the street was thirteen point eight billion. 0:05:12.440 --> 0:05:15.120 But again the key thing as we're talking about, you know, 0:05:15.440 --> 0:05:19.200 not yet having any update on a permanent CEO. The 0:05:19.279 --> 0:05:22.920 interim co CEO David Sisner saying our first quarter one 0:05:23.160 --> 0:05:25.880 or quarter one outlook, I should say, reflects seasonal weakness 0:05:25.960 --> 0:05:31.480 magnified by macro uncertainties. Further inventory digestion, and competitive dynamics. 0:05:32.240 --> 0:05:34.920 Jackie sounds like a super full plate. We know it's 0:05:34.960 --> 0:05:37.120 been a full plate for Intel, but it still is. 0:05:37.240 --> 0:05:39.440 It's a reminder at least that it still is. 0:05:39.960 --> 0:05:43.120 One hundred percent. And as we look to the conference 0:05:43.160 --> 0:05:45.719 call with analysts, the big question is going to be 0:05:46.240 --> 0:05:51.040 not just an update for leadership, but also in this interim, 0:05:51.400 --> 0:05:53.839 what's the game plan here, because now that you're seeing 0:05:53.960 --> 0:05:57.520 kind of spend really being scrutinized after the deep Seek 0:05:57.640 --> 0:06:00.600 drama earlier this week, it's sort of effect those who 0:06:01.080 --> 0:06:04.600 might have been perhaps exempt from that kind of scrutiny 0:06:04.640 --> 0:06:08.800 before these open you know, AI, other AI developer kind 0:06:08.800 --> 0:06:11.960 of players out there, and so obviously this is nothing 0:06:12.000 --> 0:06:14.680 new for Intel, but of course I think that might 0:06:14.800 --> 0:06:17.200 be you know, some of the guidance that they want 0:06:17.320 --> 0:06:21.360 this this conservative spend, What does that mean, How does 0:06:21.400 --> 0:06:23.719 it look like in practice at a time when it 0:06:23.760 --> 0:06:26.239 is going to take investment to really kind of break 0:06:26.240 --> 0:06:29.880 into this AI space. Another thing that we'll be looking 0:06:29.920 --> 0:06:32.920 out for in the conference call, it's just any more 0:06:32.960 --> 0:06:36.360 guidance around what the company plans to do to perhaps 0:06:36.440 --> 0:06:39.000 offset some of the weaknesses in its bread and butter 0:06:39.080 --> 0:06:42.640 business in these personal computers. You know, what, what does 0:06:42.640 --> 0:06:46.400 it plan to do about this kind of new competition 0:06:46.520 --> 0:06:49.279 coming from Taiwan Semiconductors. I think That's what I'm going 0:06:49.360 --> 0:06:51.000 to be looking out for in the upcoming call. 0:06:51.279 --> 0:06:54.520 I think what still surprises me, Jackie is this is 0:06:54.560 --> 0:06:57.000 a company that has no full time CEO, and you 0:06:57.040 --> 0:06:59.200 had Pat Gelslinger out earlier this week. We talked about 0:06:59.200 --> 0:07:02.880 this with Ian King tweeting that he was buying shares 0:07:02.880 --> 0:07:06.880 of Nvidia during the down during the decline of Nvidia 0:07:07.320 --> 0:07:10.880 on Monday, he wrote about that on LinkedIn, and it 0:07:10.920 --> 0:07:12.720 was surprising to see that I'm not, you know, here 0:07:12.720 --> 0:07:16.160 to talk about Gelsinger. What I am wondering from you 0:07:16.200 --> 0:07:18.760 about is what are analysts saying about the type of 0:07:18.840 --> 0:07:21.520 leader who could come in and turn this company around? Like, 0:07:21.600 --> 0:07:23.280 who are the names? Do we have names that are 0:07:23.280 --> 0:07:26.040 being thrown around at this point? Do we have a timeline, 0:07:26.440 --> 0:07:27.000 what do we know? 0:07:28.160 --> 0:07:31.240 I don't think there's too much that we do know 0:07:31.640 --> 0:07:35.720 other than you know, the big point of scrutiny has 0:07:35.800 --> 0:07:38.560 been spend and if you're going to bring in a 0:07:38.680 --> 0:07:41.920 leader that can kind of articulate a new vision for 0:07:42.000 --> 0:07:45.119 the company still kind of, you know, bring it something 0:07:45.160 --> 0:07:50.240 that's forward looking, that is not going to be predicated 0:07:50.360 --> 0:07:52.480 on a plan that is going to take, you know, 0:07:52.600 --> 0:07:54.760 five to ten years to pan out, because I think 0:07:54.800 --> 0:07:56.600 what investors want to see is what can we do 0:07:56.680 --> 0:07:59.720 with what we have now? And you know, obviously a 0:07:59.760 --> 0:08:03.040 pet Elsinger didn't get to live out his full five 0:08:03.120 --> 0:08:05.640 year plan, but you know, he did put in in 0:08:05.760 --> 0:08:09.040 place a solid foundation that I think a new CEO 0:08:09.120 --> 0:08:11.560 can can work with. So some of the notes that 0:08:11.600 --> 0:08:14.240 we've been seeing from the street include, you know, what 0:08:14.320 --> 0:08:17.680 can be done with what foundation currently exists? 0:08:18.240 --> 0:08:19.240 Because it's not nothing. 0:08:19.320 --> 0:08:22.480 You know, some solid investments have been made, some good 0:08:22.520 --> 0:08:24.800 inroads have been made, but I think it's just a 0:08:24.800 --> 0:08:27.440 matter of kind of that conservative spend how far can 0:08:27.480 --> 0:08:27.960 that take them? 0:08:28.120 --> 0:08:30.840 Hey, all right, Jackie, thank you so much. Jackie Devallas, 0:08:30.880 --> 0:08:34.080 Bloomberg News Tech reporter joining us with the latest on Intel. 0:08:34.200 --> 0:08:36.559 Keeping a watch on it as it moves up just 0:08:36.600 --> 0:08:38.280 a little bit in the aftermarket. Do you want to 0:08:38.320 --> 0:08:42.920 mention KLA Corp. Semiconductor manufacturing equipment company up about four 0:08:42.960 --> 0:08:46.079 and a half percent in the aftermarket following its earnings, 0:08:46.559 --> 0:08:49.160 looking at what the company has to say, second quarter 0:08:49.160 --> 0:08:52.360 adjusted gross margins sixty one point seven percent, slightly better 0:08:52.440 --> 0:08:56.960 than the street expected third quarter adjusted gross margin, so 0:08:57.240 --> 0:09:01.000 looking towards the current quarter sixty one to sixty three percent. 0:09:01.040 --> 0:09:03.600 Also talking about third quarter revenue, they're looking for two 0:09:03.600 --> 0:09:07.240 point eighty five to three point fifteen million billion, excuse me, 0:09:07.320 --> 0:09:09.680 and that is better than the street expected. So that 0:09:09.720 --> 0:09:11.880 explains where you're seeing this stock up. Do not go anywhere. 0:09:11.920 --> 0:09:22.000 Apple to come in just a moment. The earnings continuing 0:09:22.080 --> 0:09:25.000 to come out. We are awaiting Apple, which is set 0:09:25.040 --> 0:09:27.320 to report in just about seven minutes at the bottom 0:09:27.360 --> 0:09:29.319 of the hour four to thirty pm Wall Street time, 0:09:29.360 --> 0:09:31.480 So as soon as they cross, we will bring them 0:09:31.520 --> 0:09:35.120 to you. A reminder of the company. We'll report for 0:09:35.240 --> 0:09:37.760 the quarter despite some head wind stepping from China, the 0:09:37.760 --> 0:09:40.720 slow rollout of in house AI future features. So there's 0:09:40.760 --> 0:09:42.920 a lot coming at us when it comes to Apple 0:09:42.960 --> 0:09:45.360 in particular, a lot coming at us when it comes 0:09:45.400 --> 0:09:47.800 to the whole tech sector. This week, Angela Zino is 0:09:47.840 --> 0:09:51.079 senior equeritly alyist over at CFRAA. He joins us from 0:09:51.120 --> 0:09:54.120 New York City. Angelo, I do want to start with 0:09:54.240 --> 0:09:59.040 Intel because they just came out certainly a big part 0:09:59.120 --> 0:10:01.480 of the semi second, but they're also going through, of course, 0:10:01.559 --> 0:10:04.960 some changes, waiting for a new CEO, new leader, a 0:10:04.960 --> 0:10:08.520 new way forward. Initial thoughts on Intel. 0:10:09.760 --> 0:10:10.920 Yeah, now, thanks for having me. 0:10:11.000 --> 0:10:13.360 So, you know, you kind of look at the results overall, 0:10:13.520 --> 0:10:16.800 and I would say they were okay. I mean, as 0:10:16.800 --> 0:10:19.360 far as the results were concerned, I think earnings about 0:10:19.400 --> 0:10:22.880 thirteen cents, sales were down seven percent, roughly kind of 0:10:23.280 --> 0:10:25.760 in line where we were expecting. I think as far 0:10:25.800 --> 0:10:27.679 as the guidance is concerned, it was definitely on the 0:10:27.760 --> 0:10:31.360 lighter side of things, but you know, nothing abysmal, nothing 0:10:31.400 --> 0:10:33.840 like we've seen in past quarters where they've kind of 0:10:34.040 --> 0:10:36.360 missed by a much wider margin. So as far as 0:10:36.400 --> 0:10:38.720 kind of the results are concerned, I think it was 0:10:38.800 --> 0:10:42.680 perfectly fine, you know, within kind of you know, segments wise. 0:10:42.720 --> 0:10:45.000 I think the client computing group, which is kind of 0:10:45.000 --> 0:10:47.720 more their their PC business was down about nine percent, 0:10:47.920 --> 0:10:49.480 and when you kind of look at their data center 0:10:49.520 --> 0:10:53.720 business down about three percent. Again, I mean, it was 0:10:53.840 --> 0:10:58.400 kind of where we had expected largely. So yeah, I 0:10:58.400 --> 0:11:00.719 mean I think it's one of those situations where this 0:11:00.760 --> 0:11:03.480 company is kind of just kind of going through the motions, 0:11:03.520 --> 0:11:05.240 and we're just kind of waiting to see kind of 0:11:05.280 --> 0:11:07.679 who that next CEO is going to be and what 0:11:07.679 --> 0:11:09.760 they have to say on the call as far as 0:11:09.840 --> 0:11:13.400 kind of cost cutting this concern here in the intermediate term, I. 0:11:13.320 --> 0:11:14.880 Could have asked you the same question I'm going to 0:11:14.920 --> 0:11:18.120 ask you Angelo anytime over the last three years, where 0:11:18.160 --> 0:11:19.400 is Intel in its turnaround? 0:11:22.360 --> 0:11:25.760 You know, it's it's a it's a tough one because, yeah, 0:11:26.000 --> 0:11:28.400 there they continue to have to kind of restart in 0:11:28.520 --> 0:11:32.240 terms of you know, where they're at, I mean you 0:11:32.320 --> 0:11:35.079 and and it's typically because of the fact that they 0:11:35.080 --> 0:11:38.240 haven't really kind of given you know, the existing leadership team, 0:11:38.440 --> 0:11:41.520 you know, enough time to kind of you know, watch 0:11:41.559 --> 0:11:43.400 their vision to really come to fruition. 0:11:43.559 --> 0:11:45.960 I think right now where we're looking at is you know, 0:11:46.200 --> 0:11:47.679 you need you need a new CEO. 0:11:47.800 --> 0:11:49.920 I think when you kind of look at their core business, 0:11:50.120 --> 0:11:52.720 it's really kind of under attack. Right on the PC 0:11:52.920 --> 0:11:54.920 side of things. You hear things like you know, ARM 0:11:54.920 --> 0:11:57.160 looking to take half the half the market. On that 0:11:57.240 --> 0:11:59.040 side of things, you got got the kind of greater 0:11:59.120 --> 0:12:01.120 competitive pressure. 0:12:00.400 --> 0:12:01.240 Going on there. 0:12:01.320 --> 0:12:03.360 You kind of look on the data center side of things, 0:12:03.400 --> 0:12:06.800 they don't have the right offerings there. I mean, CPUs 0:12:06.960 --> 0:12:08.920 are kind of a thing of the past at this 0:12:09.000 --> 0:12:11.800 point in time, and you've got you know these you know, 0:12:11.880 --> 0:12:14.800 these hyperscalers out there kind of rolling out their own 0:12:15.360 --> 0:12:19.160 CPU offerings. So it is it is a very difficult 0:12:19.160 --> 0:12:21.199 time for Intel at this point in time. There's really 0:12:21.280 --> 0:12:24.000 kind of no direction. You need that direction. So the 0:12:24.040 --> 0:12:26.720 faster you get a CEO. 0:12:26.040 --> 0:12:26.520 The better. 0:12:27.080 --> 0:12:29.240 Again, this is kind of almost a race to the bottom, 0:12:29.320 --> 0:12:32.320 it seems like right now in terms of kind of 0:12:32.320 --> 0:12:36.360 continue to continuing to course as their revenue trajectory continues 0:12:36.400 --> 0:12:39.280 to go down. I think really kind of if I'm 0:12:39.320 --> 0:12:42.199 looking at this company, it's all about how they can 0:12:42.240 --> 0:12:44.600 execute on the foundry side of things right now. If 0:12:44.640 --> 0:12:47.079 you're thinking about a turnaround going into the second half 0:12:47.120 --> 0:12:49.360 of the year, I mean, you've got eighteen A that's 0:12:49.400 --> 0:12:52.920 that's kind of been long awaited and hyped up panther Laics, 0:12:52.920 --> 0:12:54.599 it's supposed to ramp here in the second half of 0:12:54.640 --> 0:12:56.640 the year. We want to see kind of what kind 0:12:56.679 --> 0:12:59.160 of customers like, you know, start ramping on that side 0:12:59.160 --> 0:13:02.120 of things. You're not going to have a major hyperscaler 0:13:02.160 --> 0:13:04.280 out there all of a sudden just give business to Intel, 0:13:04.559 --> 0:13:07.200 they need to kind of execute on that side of things. 0:13:07.200 --> 0:13:08.920 So that's where we're at right now. I think they 0:13:08.920 --> 0:13:11.200 need to start show some sort of promise on the 0:13:11.200 --> 0:13:13.480 foundry side of things, and hopefully they can kind of 0:13:13.520 --> 0:13:14.760 gain some momentum from there. 0:13:16.520 --> 0:13:19.720 I got to tell you, I get these emails on 0:13:19.760 --> 0:13:23.800 the terminal when stories are read at like a high rate, 0:13:23.880 --> 0:13:28.360 those read spikes. People want to know about Apple. It 0:13:28.440 --> 0:13:31.480 says that to Apple that our live blog on Apple 0:13:31.520 --> 0:13:35.240 Carol is already hitting a red spike before those numbers 0:13:35.280 --> 0:13:39.360 come out. We're expecting those numbers in just about two minutes. Angelo, China, 0:13:40.280 --> 0:13:43.360 is that the biggest concern? We saw some downgrades the 0:13:43.400 --> 0:13:44.240 early part of this year. 0:13:45.280 --> 0:13:47.640 Yeah, I mean it seems like, you know, when you 0:13:47.720 --> 0:13:49.600 kind of look here over the last couple of years, 0:13:50.600 --> 0:13:53.040 January just hasn't been a good month for Apple, and 0:13:53.559 --> 0:13:54.959 you know, you can kind of say maybe a part 0:13:55.000 --> 0:13:56.959 of that is seasonality and what have you. I think 0:13:57.040 --> 0:13:59.320 obviously the other issue is you kind of look over 0:13:59.320 --> 0:14:01.920 the last two three years, the competitive pressures have. 0:14:01.960 --> 0:14:03.680 Definitely escalated out in China. 0:14:03.720 --> 0:14:06.840 I mean, Huawei has become you know, a real threat 0:14:06.920 --> 0:14:10.000 again at the high end of the market, and you know, 0:14:10.160 --> 0:14:12.480 we kind of want to know what's going on with China. 0:14:12.640 --> 0:14:15.160 It's somewhat of a black box at this point in time, 0:14:15.640 --> 0:14:17.520 and you kind of look at some of the sell 0:14:17.559 --> 0:14:20.280 through numbers that have been posted, you know, specifically by 0:14:20.320 --> 0:14:22.280 the Chinese government here late in the year. 0:14:22.480 --> 0:14:23.600 The numbers don't look good. 0:14:23.640 --> 0:14:26.200 And I think most people realize that most investors are 0:14:26.240 --> 0:14:28.960 kind of going into these numbers knowing that China or 0:14:28.960 --> 0:14:31.240 expecting that China is not going to be good. The 0:14:31.360 --> 0:14:33.480 question is how bad is it? You know, we are 0:14:33.480 --> 0:14:34.720 we kind of going to have to deal with some 0:14:34.760 --> 0:14:38.000 sort of excess inventoryous situation where they're going to start 0:14:38.000 --> 0:14:40.560 discounting more than we expect and it's going to, you know, 0:14:41.040 --> 0:14:43.680 look like an ugly March Quarter in terms of the guidance, 0:14:44.080 --> 0:14:46.080 I think that's at this point what we're looking at. 0:14:46.120 --> 0:14:47.840 But in terms of the biggest risk kind of going 0:14:47.880 --> 0:14:49.560 into the print here and as far as the March 0:14:49.640 --> 0:14:52.400 Quarter is concerned, it's absolutely China. And we also know 0:14:52.480 --> 0:14:54.880 as far as the March Quarter guidance is concerned, it's 0:14:54.920 --> 0:14:56.560 going to be someone on the weaker side of things 0:14:56.600 --> 0:14:58.480 because of the four X uncertainties, you. 0:14:58.400 --> 0:15:02.080 Know, Angela. We're just about forty seconds away from those 0:15:02.240 --> 0:15:04.760 Apple earnings. Stocks down about five percent. We know it's 0:15:04.760 --> 0:15:08.520 been lagging some of it's tech brethren. If you will, 0:15:09.120 --> 0:15:11.880 question is kind of what's next for Apple? What could 0:15:11.920 --> 0:15:15.280 they say today that might give some indication of what's next. 0:15:15.320 --> 0:15:17.280 They've started to give some clues. Just got about twenty 0:15:17.320 --> 0:15:17.880 seconds here. 0:15:18.800 --> 0:15:21.040 I think the hope is that you get a better 0:15:21.080 --> 0:15:23.960 than fear type number really on China. I think that's 0:15:24.040 --> 0:15:25.600 kind of the big thing. And then of course on 0:15:25.600 --> 0:15:27.680 the services side of things, you want to make sure 0:15:27.720 --> 0:15:30.320 that that's running on all cylinders. We're going to hopefully 0:15:30.360 --> 0:15:32.840 continue to get double digit growth. And I think if 0:15:32.840 --> 0:15:34.360 you can kind of get you know, those two kind 0:15:34.400 --> 0:15:36.920 of things running, I think that should be enough as 0:15:36.960 --> 0:15:38.960 far as kind of where the stock is at and 0:15:38.960 --> 0:15:39.960 the pullback that we've seen. 0:15:40.160 --> 0:15:42.440 All right, folks, we're talking with Angelo's, you know, senior 0:15:42.440 --> 0:15:45.040 equity analyst over at CFR Research. He's going to stay 0:15:45.080 --> 0:15:47.320 with us as we get ready for those Apple earnings 0:15:47.360 --> 0:15:49.880 and they are crossing. So let's go through some of 0:15:49.880 --> 0:15:52.480 the numbers. First quarter revenue one hundred and twenty four 0:15:52.480 --> 0:15:56.040 point three billion. That is just a hair better than 0:15:56.080 --> 0:15:58.560 what the street was expecting. One hundred and twenty four 0:15:58.600 --> 0:16:00.760 point one billion is what the street was looking for. 0:16:01.280 --> 0:16:04.480 Products revenue ninety seven point ninety six billion, that's up 0:16:04.520 --> 0:16:06.920 about one point six percent year over year. Ten that's 0:16:06.920 --> 0:16:10.080 a little bit light. Ninety eight point zero two billion. 0:16:10.160 --> 0:16:13.440 You break it down. iPhone, the all important iPhone number, 0:16:14.200 --> 0:16:17.720 sixty nine point fourteen billion, that is down year over year. 0:16:18.200 --> 0:16:20.800 Estimate was for seventy one point zero four billion. 0:16:20.680 --> 0:16:23.040 And then you keep going down at China revenue, big 0:16:23.040 --> 0:16:26.520 miss there, estimates for twenty one point six billion dollars 0:16:26.760 --> 0:16:30.000 that came in at eighteen point five to one billion dollars. Wearables, 0:16:30.000 --> 0:16:33.080 home and accessories coming in just shy of estimates. MAC 0:16:33.160 --> 0:16:37.000 revenue coming in above estimates, iPad revenue coming in above estimates. 0:16:37.200 --> 0:16:40.760 First quarter products revenue coming in shi of estimates. But Carol, 0:16:40.880 --> 0:16:43.280 what we're talking about right now, iPhone revenue coming in 0:16:43.360 --> 0:16:46.120 light sixty nine point one four billion versus estimates of 0:16:46.160 --> 0:16:49.360 seventy one billion, and that China number significantly lower than 0:16:49.360 --> 0:16:51.760 analysts one to see coming in at eighteen point five 0:16:51.800 --> 0:16:52.440 to one billion. 0:16:52.560 --> 0:16:55.160 Apple also maintaining its cash dividend of twenty five cents 0:16:55.160 --> 0:16:57.360 a share. I should say the stock has been bouncing 0:16:57.400 --> 0:17:01.400 around in the aftermarket. We've seen it up about one percent. 0:17:01.520 --> 0:17:03.920 Right now, it's just up about six tenths of a 0:17:03.960 --> 0:17:08.000 percent of half a percent. Angelo Zeno come on in 0:17:08.000 --> 0:17:13.080 initial thoughts on the first headlines off of this earnings release. 0:17:14.240 --> 0:17:16.320 Yeah, I mean, I think this is kind of a 0:17:16.359 --> 0:17:20.880 situation where, you know, execution was I think as good 0:17:20.880 --> 0:17:22.280 as you could have asked for. I mean, as far 0:17:22.280 --> 0:17:24.639 as the top line is concerned, roughly in line. I 0:17:24.640 --> 0:17:26.760 think the expectation again was about you know, one hundred 0:17:26.760 --> 0:17:29.159 and twenty four billion, so you're looking at what was 0:17:29.160 --> 0:17:31.040 it maybe three point eight percent or close to four 0:17:31.040 --> 0:17:33.960 percent growth, let's call it, as far as kind of 0:17:33.960 --> 0:17:35.880 on a year of a year growth rate. And I mean, 0:17:36.280 --> 0:17:39.560 I think Tim kind of highlighted the iPhone numbers were 0:17:39.560 --> 0:17:43.040 definitely a disappointment and the China numbers, so it's definitely 0:17:43.240 --> 0:17:46.760 a China iPhone problem as far as the quarter is concerned, 0:17:46.760 --> 0:17:50.400 and why we missed. And again, the expectations going into 0:17:50.440 --> 0:17:53.280 the quarter was it was going to be a challenge, 0:17:53.320 --> 0:17:54.920 and the fact that they had been able to kind 0:17:54.960 --> 0:17:58.720 of navigate and still meet the numbers despite those issues, 0:17:59.720 --> 0:18:01.480 I think kind of helps maybe do you risk the 0:18:01.520 --> 0:18:03.760 stock at least when you kind of look at the 0:18:04.080 --> 0:18:06.000 numbers this quarter. I mean, we'll see what the March 0:18:06.040 --> 0:18:08.960 quarter guidance is going to look like. But my guess 0:18:09.000 --> 0:18:11.560 is you're going to continue to see the further weakness 0:18:11.600 --> 0:18:13.400 on the China iPhone side of things. 0:18:13.520 --> 0:18:17.840 Angelo, how much of the iPhone miss can you attribute 0:18:17.880 --> 0:18:22.359 to China? Is is the iPhone miss just a result 0:18:22.359 --> 0:18:22.840 of China? 0:18:24.840 --> 0:18:26.440 It seems like it, to be honest with you, just 0:18:26.480 --> 0:18:28.679 kind of giving just given the high level numbers that 0:18:28.680 --> 0:18:33.040 I'm hearing from you, it just seems like the weakness is. 0:18:33.000 --> 0:18:34.840 Really kind of you know, all China. 0:18:35.240 --> 0:18:38.600 And you know, my guess is, you know, Western markets 0:18:38.600 --> 0:18:41.920 probably held up much better what held up as as to. 0:18:41.880 --> 0:18:44.000 Be expected, and and you know, we kind. 0:18:43.840 --> 0:18:46.840 Of saw, you know, some pronounced weakness on the China 0:18:46.880 --> 0:18:49.840 side of things, and again not a surprise because a 0:18:49.880 --> 0:18:52.280 lot of the sell through numbers that had you know, 0:18:52.320 --> 0:18:55.720 come out from China, you know, was looking you know, 0:18:56.160 --> 0:18:58.680 essentially it was kind of pointing towards double digit declines 0:18:58.760 --> 0:19:01.560 out of kind of the eye phone business. So that's 0:19:01.680 --> 0:19:04.639 essentially what you've got. So it's it's pretty brutal, but 0:19:05.520 --> 0:19:08.760 not necessarily a complete surprise given some of the indications 0:19:08.800 --> 0:19:10.280 we got going into the numbers. 0:19:10.080 --> 0:19:12.800 All right, the three bright spots, iPad, MAC, and services. 0:19:12.800 --> 0:19:15.240 The iPad and MAC. The year over year services is 0:19:15.280 --> 0:19:19.040 at an all time record. What's interesting too, all time 0:19:19.520 --> 0:19:21.560 revenue record too as well, one hundred and twenty four 0:19:21.560 --> 0:19:25.199 point three billion and narrowly beating Wall Street estimates. Again, 0:19:25.320 --> 0:19:28.040 a huge miss for China when it comes to Apple 0:19:28.119 --> 0:19:31.199 eighteen point five billion versus twenty one point six billion 0:19:31.560 --> 0:19:33.879