WEBVTT - Tom Giles on Apple Earnings (Audio)

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<v Speaker 1>Well, let us talk about Apple cold the results just

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<v Speaker 1>barely beating analysts estimates. Here to talk about Apple's results

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<v Speaker 1>and mall we have Tom Giles, Bloomberg take editor and

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<v Speaker 1>Tom guidance from Apple. Can we fill in the gaps here?

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<v Speaker 1>What are the next couple of quarters gonna look like? Yeah, well,

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<v Speaker 1>thanks for having me. The big takeaway was that the

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<v Speaker 1>current quarter they as you said, there's not gonna be

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<v Speaker 1>any guidance. But what what what they did say is

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<v Speaker 1>that sales growth will accelerate in the current quarter. Now

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<v Speaker 1>it's a pretty low bar two percent that we had

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<v Speaker 1>in the most recent quarter, but we will see an

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<v Speaker 1>increase in the pace there. Uh so an important and

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<v Speaker 1>and you know the shares did rise in late trading,

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<v Speaker 1>So the market took away that Apple so far is

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<v Speaker 1>weathering the downturn relatively well. Um. And they even though

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<v Speaker 1>they missed on a couple of their different products, they

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<v Speaker 1>missed analysts estimates, they did uh surpass Wall Streets projections

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<v Speaker 1>on the iPhone, which is their biggest product, all important product,

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<v Speaker 1>and they were able to um uh, they were able

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<v Speaker 1>to uh surpass the expectations. What they said there was

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<v Speaker 1>that they're not seeing a rollback in demand for the iPhone,

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<v Speaker 1>and in fact, they still continue to suffer from supply constraints. Um,

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<v Speaker 1>so they're not seeing at this point that recession fears

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<v Speaker 1>and inflation pressures here in the US and elsewhere are

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<v Speaker 1>affecting demand for that. You know, as Tim Cook put

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<v Speaker 1>it on the call, we really didn't test the outer

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<v Speaker 1>limits of of demand for the phone just because there

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<v Speaker 1>worthy supply constraints. Is this company still so heavily reliant

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<v Speaker 1>on the phone that it's kind of make or break

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<v Speaker 1>when you're talking about the iPhone? What about the Max?

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<v Speaker 1>What about some of the things that are purchased through

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<v Speaker 1>the apps or or wearables? I mean, is there a

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<v Speaker 1>diversification in the portfolio to absorb any disappointment with iPhone sales?

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<v Speaker 1>Or is that not even a part of the story

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<v Speaker 1>here there it's really a company that's about a phone. No,

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<v Speaker 1>it is definitely part of the story. Um, they have

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<v Speaker 1>become overly reliant on it. This is a theme that

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<v Speaker 1>analysts and investors have come back to time and time again. Um,

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<v Speaker 1>the Mac. You mentioned the Mac. The they missed projections

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<v Speaker 1>on the map on Mac sales. Again, they were tripped

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<v Speaker 1>up by supply constraints there UM, in particular the lockdowns

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<v Speaker 1>in Shanghai, China. We're a real issue when it comes

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<v Speaker 1>to Mac production, So UH, they weren't able to you know,

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<v Speaker 1>pull it out on that side of things. UM iPad

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<v Speaker 1>as well services. UM came in a little bit below

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<v Speaker 1>Projections and services in a really important area for Tim

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<v Speaker 1>Cook right now. He is targeting, you know, that to

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<v Speaker 1>become a very big part of their overall sales. This

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<v Speaker 1>is this is the kinds of things that you buy

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<v Speaker 1>in the app store, this is Apple TV, etcetera. He

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<v Speaker 1>spent time on the call talking about how their their

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<v Speaker 1>new shows, their new shows are critically acclaimed, their winning awards, UM,

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<v Speaker 1>and they are doing everything they can to make Apple

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<v Speaker 1>services and attractive product. Came in a little bit low

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<v Speaker 1>on the revenue side. In that regard, he talked about

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<v Speaker 1>digital advertising softness. He talked about UM, which is a

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<v Speaker 1>theme that we've seen with Meta, It's a theme we

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<v Speaker 1>saw with app Alphabet UM. Digital advertisers are really concerned

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<v Speaker 1>about UM pullbacks and consumer spending and they are tightening

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<v Speaker 1>their marketing budgets. So that's that that UH, is a

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<v Speaker 1>factor that affected Apple in in the most recent quarter.

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<v Speaker 1>A couple other things of note. Foreign exchange headwinds were

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<v Speaker 1>an issue. UM. The supply as I said before, the

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<v Speaker 1>UH supply chain constraints UH. The good news there UH

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<v Speaker 1>lucam history. The CFO said, those are going to abate

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<v Speaker 1>in the current quarter. They're not going to be as

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<v Speaker 1>bad as they were in the most recent quarter. We'll see.

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<v Speaker 1>Tim Cook was talking about investing through downtowns as well.

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<v Speaker 1>It's a strategy that he says has worked for them

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<v Speaker 1>in the past, but also about being deliberate about where

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<v Speaker 1>they invest. Does he mean services when he's talking about this,

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<v Speaker 1>what is he speaking to you specifically? Particularly we're talking

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<v Speaker 1>about a slowdown in UH in in hiring UM. That's

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<v Speaker 1>an area that the big tech companies UM have invested

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<v Speaker 1>heavily in, and one after another, Apple included are tapping

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<v Speaker 1>the brakes on the pace at which they hire. Their

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<v Speaker 1>being more strategic, more deliberate. Speaking of the hiring a story,

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<v Speaker 1>I'm wondering where they are with respect to remote working

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<v Speaker 1>and allowing their employees. I remember Cook at one point

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<v Speaker 1>in the pandemic kind of pounding the table saying it's

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<v Speaker 1>important for this culture to have everyone in house. Have

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<v Speaker 1>they moved away from that thinking. There's there's certain there

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<v Speaker 1>are certain products that Apple puts out that where you

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<v Speaker 1>really need people in the office where you need collaboration.

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<v Speaker 1>When you're working on a piece of hardware, which is

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<v Speaker 1>which is a big part of the Apple's revenue base. Uh,

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<v Speaker 1>you really want people in a room together collaborating working

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<v Speaker 1>on that software. There's a lot more flexibility. Tim Cook

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<v Speaker 1>has said he wants people uh back in the office.

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<v Speaker 1>Not every day. Uh, but that's certainly something that they

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<v Speaker 1>that they have been asking for and some employees are

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<v Speaker 1>chasing at it. Uh go quickly. Um. Yeah, look, we

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<v Speaker 1>just got shares off of leaving in percent today. What

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<v Speaker 1>analysts saying about the outlook twenty seconds? Yeah, right now.

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<v Speaker 1>The immediate response to the results was a very positive one. Um,

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<v Speaker 1>and will look for analyst reports tomorrow to see what

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<v Speaker 1>people think after the current quarter. All right, Tom, stuff

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<v Speaker 1>always a pleasure. Thanks for being with us, Tom Giles.

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<v Speaker 1>There he is Bloomberg's tech editor, joining us from San

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<v Speaker 1>Francisco here on Daybreak Asia