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Speaker 1: Global business news twenty four hours a day at Bloomberg

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Speaker 1: This is a Bloomberg Business flag from Bloomberg World Handwaters.

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Speaker 1: I'm Charlie Howlett. Stocks are lower. This update brought to

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Speaker 1: you by the American Arbitration Association. Business disputes are inevitable.

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Speaker 1: in alternative dispute resolution for over eighty five years. Learn

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Speaker 1: more at a d R dot org. Now let's head

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Speaker 1: over to the First Word breaking news desk for today's

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Speaker 1: afternoon call. And here he is, Bill Maloney. Good afternoon, Charlie.

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Speaker 1: US stocks are down, but half paired some of their losses.

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Speaker 1: DALL is currently lower by fifty six points as to

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Speaker 1: be dropped seven and NAZAC falls forty six at one point,

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Speaker 1: the Dallas down a hundred and thirty points. The SP

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Speaker 1: five cash failed at the fifty d movie average for

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Speaker 1: a fourth day, while w t I Crew gains four percent.

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Speaker 1: It bounced from the fifty day the small cap six hundred.

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Speaker 1: It's little change in the US ten yield at one

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Speaker 1: point six one six out of tennis to be sectors

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Speaker 1: are lower, led by lasses in healthcare, technology and staples,

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Speaker 1: Energy and telecom lad down. Transports rose fifty one as

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Speaker 1: a biotechas fall, and the vix is down one point

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Speaker 1: three percent mark. Apple and Visa led to the downside,

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Speaker 1: while Caterpillar, DuPont and Chevron lead in the Dow. Live

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Speaker 1: from the first breaking news deskm Bill Maloney, Charlie all right,

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Speaker 1: thank you, Bill, and to hear live breaking news over

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Speaker 1: her Bloomberg type squawk A sq you a w K

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Speaker 1: on your terminal. I'm Charlie, Pa. That's a Bloomberg business flash.

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Speaker 1: You're listening to taking stock with pim Box and Kathleen

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Speaker 1: Hayes on Bloomberg Radio. Another potential setback for Apple, it

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Speaker 1: was found today that Apple violated the design patents of

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Speaker 1: a Chinese device maker and may have to halt sales

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Speaker 1: of its latest iPhones in they Jing. Uh So. This

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Speaker 1: also comes on the heels of a Apple Worldwide Developers

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Speaker 1: conference that many people thought you did some some new developments,

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Speaker 1: but nothing really earth shattering. Of course, that's what everyone

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Speaker 1: is looking for the next big thing from Apple. Colin

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Speaker 1: Gillis joins US now. He's director of Research and senior

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Speaker 1: technology analysts at v g C Partners based right here

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Speaker 1: in New York City. Welcome Colin Illo, Kathleen, So, tell

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Speaker 1: us more about this decision on Apple and patents and

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Speaker 1: how important is it? All right, So let's let's break

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Speaker 1: it down into into two pieces. The first one is

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Speaker 1: the specific case of the iPhone six um, yeah, being

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Speaker 1: uh possibly banned for sales and in Beijing, right because

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Speaker 1: of pan infringements. That's likely something that will be overturned,

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Speaker 1: uh when it climbs up hiring the courts. But it

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Speaker 1: shows you the problem that Apple faces doing business and

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Speaker 1: in the market that it's it's the second largest market

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Speaker 1: for Apple, right. So the first market is the United States.

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Speaker 1: The second largest market for Apple's China. And this is

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Speaker 1: a market that you're seeing revenue growth declining on a

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Speaker 1: year of year basis two quarters in a row. And

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Speaker 1: this is a risk, right, It's such an important area

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Speaker 1: for sales for the company. They've got you know, they're

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Speaker 1: opening up five more stores. You have forties stores total.

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Speaker 1: And there's always the risk that the government can change

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Speaker 1: the rules of the playing field, all right, So if

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Speaker 1: the government changes the rules of the playing field, should

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Speaker 1: that change someone's bullish call on Apple or should it

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Speaker 1: change their bearish call on Apple. Well, I think it's

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Speaker 1: obviously a big negative if that were to happen. And

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Speaker 1: I think the risks in the market um for Apple

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Speaker 1: are are high. Right, They're higher risk selling into the

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Speaker 1: Chinese market then than in the United States. And that's

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Speaker 1: just you know that, that's a fact. Right. So their

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Speaker 1: dependency on China for for growth and their dependency on

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Speaker 1: China for for revenue is something that if you're an

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Speaker 1: Apple investor, you have to be concerned about. Colin you

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Speaker 1: know that show. What was your takeaway from the Apple

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Speaker 1: Worldwide Developers Conference? Yeah, very um evolutionary in incremental, right,

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Speaker 1: And Apple's got a problem and that they mad smashing success, right,

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Speaker 1: but driving literally billions of dollars of profits from their

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Speaker 1: iPhone the revenue and they're gonna have a difficult time

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Speaker 1: coming up. Would additional revenue streams to augment that when

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Speaker 1: the smartphone market growth slows down, which is what's happening, right,

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Speaker 1: It didn't look out when we were talking about China.

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Speaker 1: The domestic competitors to Apple faces or companies like chow

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Speaker 1: Mean Walwei, there sps or you know, right, Whawa apples

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Speaker 1: average selling price. So as prices come down, right, Apple,

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Speaker 1: to maintain their margin structure, has been losing market share,

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Speaker 1: and you know that's why we've seen them rolling out

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Speaker 1: their most recent phone price that you know, four hund dollars,

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Speaker 1: trying to just to maintain a level of competition at

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Speaker 1: different price points. But it's you know, the landscape is changing,

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Speaker 1: all right, landscape is changing. Column. But let's say you're

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Speaker 1: using your smartphone to order groceries these days, You've got

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Speaker 1: another competitor that you need to pay attention to, and

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Speaker 1: that is Amazon dot Com. Turn your attention to the

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Speaker 1: grocery store battle, and particularly Amazon's entry with the Prime

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Speaker 1: Now service and the battle against such stalwart retailers as Kroger.

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Speaker 1: All right, yeah, yeah, yeah, you had another business with

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Speaker 1: a one percent margin for Amazon to just jump into.

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Speaker 1: But you know, the reality is is that groceries is

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Speaker 1: a massive market, right, you know, something you know, six

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Speaker 1: hundred seven billion dollars. So even though the margins are very,

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Speaker 1: very slim, right, it's a volume business and that's what

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Speaker 1: Amazon likes, and it's one of the few verticals that they,

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Speaker 1: you know, don't have a lot of traction in now.

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Speaker 1: Groceries are also have their own particular nuances. You need

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Speaker 1: to have refrigerated trucks, you have to have, uh, you know,

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Speaker 1: warehouses that are close to to the city. Um, it's

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Speaker 1: the major metropol in the areas, you know. But you

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Speaker 1: can see one day, I'm you know, Alexa, you know

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Speaker 1: I need milk, and bring me milk. I don't know,

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Speaker 1: I I don't Maybe I'm just so nitpicky about food

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Speaker 1: and things and I like to look at us. I

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Speaker 1: don't know, but I have ordered from Jet a couple

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Speaker 1: of times. Is Jetta threat to Amazon in any way,

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Speaker 1: shape or form um? You know, there are multiple companies

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Speaker 1: that you know, have come out and I don't view them,

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Speaker 1: you know, as a as a meaningful material threat. Uh.

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Speaker 1: But but the grocery space is going to be interesting, right,

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Speaker 1: Like I'm an active user of Fresh Tract and once

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Speaker 1: you get you know, used to ordering your groceries online,

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Speaker 1: it becomes But how do you know you're gonna get

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Speaker 1: the best tomato or the avocado with the right right,

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Speaker 1: miss Colin? So you just have to trust that they're

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Speaker 1: gonna take care of Okay, will you always take care

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Speaker 1: of us? Colin Gillis. Thank you so very much. Colin Gillis.

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Speaker 1: He is an analyst at a b C b g

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Speaker 1: C Partners, Director of Research and senior technology Analysts. You're

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Speaker 1: listening to Taking Stock on Bloomberg Radio. Coming up, we

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Speaker 1: are going to be taking a look at luxury. It's

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Speaker 1: a beautiful afternoon in New York. Would you like to

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Speaker 1: write on a yacht? Maybe we can rent one. This

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Speaker 1: is Bloomberg Radio.