WEBVTT - Instant Reaction: Apple Shares Gain as Sales Top Estimates

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news. This is a breaking

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<v Speaker 1>news update from Bloomberg. Instant reaction and analysis from our

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<v Speaker 1>three thousand journalists and analysts around the world. Apple shares

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<v Speaker 1>actually moving into the moving into the green. Carol hours

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<v Speaker 1>up just ever so slightly, three four tons of one percent.

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<v Speaker 2>Don't see a new headline, but yeah, investors coming in

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<v Speaker 2>as stocks up about zero point two point three percent here.

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<v Speaker 1>Okay, Well, there were some beats and there were some misses.

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<v Speaker 1>Let's start with the missus fourth quarter Greater China revenue

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<v Speaker 1>A big, big miss there, fourteen point four nine billion dollars.

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<v Speaker 1>The estimus for sixteen point four to three billion dollars

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<v Speaker 1>overall revenue, though coming in above one hundred billion dollars

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<v Speaker 1>that for the first time ever for the September quarter

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<v Speaker 1>Greater China revenue twelve percent below CONCESSUS estimate. Services came

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<v Speaker 1>in with a nice beat. Another miss, surprisingly, the iPhone

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<v Speaker 1>forty nine point zero three billion versus forty nine point

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<v Speaker 1>three billion dollars.

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<v Speaker 2>Yeah, Mark German saying operating expensive expenses which everyone is

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<v Speaker 2>now closely watching. Things to Meta came in line with

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<v Speaker 2>expectations of fifteen point nine one billion. I'm sure we

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<v Speaker 2>will hear more about investing on the call that's coming

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<v Speaker 2>from our Mark German, who covers Apple so closely and

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<v Speaker 2>looks at consumer tech overall. Let's get to it with

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<v Speaker 2>Jay Goldberg. He's senior analysts semiconductors and Electronics at Seaport

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<v Speaker 2>Research Partners. He's got to buy on Apple joining us

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<v Speaker 2>from San Francisco. Take it away, Apple, what do you think?

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<v Speaker 3>Yeah, it looks it looks okay. It's it's not perfect,

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<v Speaker 3>it's not totally clean, but it's it's got some good stuff.

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<v Speaker 3>It's got some you know, okay stuff.

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<v Speaker 1>The yeah, go ahead, Carol, Well what's good?

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<v Speaker 2>What's okay?

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<v Speaker 3>I mean, just going against my numbers, it looks like

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<v Speaker 3>services is much stronger than I expected. iPhone was good,

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<v Speaker 3>iPad was surprisingly good. I don't know if anyone tracks

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<v Speaker 3>that anymore, but iPad was good and gross margins were

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<v Speaker 3>better than expected. I've been a little cautious about gross

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<v Speaker 3>margins and consumer companies lately because memory prices are going up.

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<v Speaker 3>But that's not I don't see that in Apple's numbers. So,

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<v Speaker 3>you know, the China stuff. You pointed that out. I

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<v Speaker 3>think that's that's concerning not entirely surprising.

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<v Speaker 1>It's not surprising twelve percent below consensus. Why so it

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<v Speaker 1>surprised some people?

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<v Speaker 3>Uh yeah, I mean just given the state of the world,

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<v Speaker 3>I think I think expecting too much from an American

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<v Speaker 3>company selling you to China right now is is going

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<v Speaker 3>to always disappoint. But you know, hopefully we have a

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<v Speaker 3>trade deal and that all goes away.

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<v Speaker 1>It's a trade truce, I think, is the way that

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<v Speaker 1>we heard about it today. Trade is a trade truce,

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<v Speaker 1>and not for that to go away.

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<v Speaker 3>I think. So I think more and more practically what

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<v Speaker 3>was going on in China is the iPad, the iPhone

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<v Speaker 3>error is not available there. It's hard to get here.

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<v Speaker 3>Production that hasn't fully ramped yet, and I think that's

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<v Speaker 3>going to be the real hit, right And this is Apple.

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<v Speaker 3>They know how to get their supply chain in time

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<v Speaker 3>for the year end holiday shopping season, and I don't

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<v Speaker 3>think I've had I don't think the iPhone Air is

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<v Speaker 3>readily available in China, so I think that will that

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<v Speaker 3>will help. And so if you're a Chinese consumer, you're

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<v Speaker 3>looking at it, you see the iPhone Air coming, You're

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<v Speaker 3>going to hold off on your iPhone purchases now and

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<v Speaker 3>wait for that all right.

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<v Speaker 2>Shares of Apple now up about one percent here in

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<v Speaker 2>the aftermarket, so bounce it around, no doubt about it.

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<v Speaker 2>Are Mark German on our live blog, who covers Apple

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<v Speaker 2>and often is breaking exclusives on the company, noting that

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<v Speaker 2>while China is harsh, they are likely pleased investors. They

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<v Speaker 2>are likely pleased with the overall revenue growth of eight percent,

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<v Speaker 2>the giant services number, that's something Jaye just pointed out,

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<v Speaker 2>and the six percent year over year iPhone growth overall

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<v Speaker 2>a solid quarter, So top of mind for you, Like,

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<v Speaker 2>what is it that you would what do you want

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<v Speaker 2>to know more from when it comes to Apple here, jay.

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<v Speaker 3>I think I'm willing to wait on the AI story.

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<v Speaker 3>I know your previous guest was talking about that, and

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<v Speaker 3>he's absolutely right. The AI story is important for Apple,

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<v Speaker 3>but I don't think it's important today. I can wait

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<v Speaker 3>six months, nine months, a year for them to sort

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<v Speaker 3>it out, right when remember when Apple Maps launched whatever

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<v Speaker 3>ten years ago? It was terrible, it was a joke.

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<v Speaker 3>Now I use Apple Maps more than I use Google Maps.

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<v Speaker 3>It's gotten it's gotten better. Sometimes Apple just takes a

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<v Speaker 3>while to get there, So I'm okay waiting with it.

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<v Speaker 3>They need to solve it, that's really important, but they

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<v Speaker 3>don't need to solve it this quarter. I would like

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<v Speaker 3>to just hear them talk about supply chain and what's

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<v Speaker 3>going on in China, and you know what's driving What

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<v Speaker 3>are the dynamics of the iPhone business? I think that's

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<v Speaker 3>the most important.

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<v Speaker 1>Is there a compelling reason for people to upgrade to seventeen?

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<v Speaker 1>To the iPhone seventeen?

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<v Speaker 3>I think the air is pretty intriguing. I'm on the fence.

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<v Speaker 3>I usually upgrade every year. I think I'm gonna hold

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<v Speaker 3>out though, because I'm pretty surey're gonna have a foldable

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<v Speaker 3>phone next year, so that'll be exciting. But I think that,

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<v Speaker 3>you know, everyone I talked to has the air is

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<v Speaker 3>just it raves about it, like they're enthusiastic about this

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<v Speaker 3>iPhone in a way that I haven't heard people be

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<v Speaker 3>enthusiastic about an iPhone in many years.

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<v Speaker 2>Just to rehash, we've got now shares of Apple up

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<v Speaker 2>about one point eight percent here in the after market.

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<v Speaker 2>So this is despite those disappointing sales in China, which

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<v Speaker 2>did fall short of analyst estimates, but strong over sales

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<v Speaker 2>in the overall sales in the period. Hey, let's go

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<v Speaker 2>to our LA bureau for a moment. We're going to

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<v Speaker 2>come back to Jay Goldberg in just a minute or two.

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<v Speaker 2>Marcus Bloomberg, news Managing editor for Global Consumer Technology. He

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<v Speaker 2>is out there in our LA bureau, mark fascinating in

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<v Speaker 2>a short period of time, twelve minutes to see the

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<v Speaker 2>stock being sold off a little bit to now rallying

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<v Speaker 2>almost two percent. Walk us through this quarter. What stands

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<v Speaker 2>out here?

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<v Speaker 4>Yeah, what stands out here is iPhone obviously grew tremendously

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<v Speaker 4>six percent year over year. They beat in nearly every

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<v Speaker 4>product category except the iPad. Had an extremely slight miss

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<v Speaker 4>on Wall Street forecast, and again those are just forecast

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<v Speaker 4>numbers that get made up anyways, so I don't think

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<v Speaker 4>too big of a deal there. The big one, though,

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<v Speaker 4>is a big decline in miss in Greater China. I

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<v Speaker 4>think some of that can be attributed to the iPhone

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<v Speaker 4>Air delay, which was not expected, and they originally announced

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<v Speaker 4>the iPhone Air they anticipated a September release alongside the

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<v Speaker 4>other models. That model has been doing decently in China

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<v Speaker 4>since it was released just about a week ago.

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<v Speaker 2>Now.

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<v Speaker 4>The other thing to point out is the seesaw you saw.

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<v Speaker 4>Originally the stock dipped on the China development and maybe

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<v Speaker 4>iPhone sales weren't as strong as some had anticipated. But

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<v Speaker 4>Tim Cook told news outlets that got pre briefed on

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<v Speaker 4>the Apple earnings results earlier today that the December quarter

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<v Speaker 4>would grow ten to twelve percent on an annual basis,

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<v Speaker 4>which is obviously a fantastic jump for them. That is

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<v Speaker 4>a year over year growth on holiday period we have

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<v Speaker 4>not seen for a very long time, and Apple hasn't

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<v Speaker 4>provided guidance in a very long time because of COVID

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<v Speaker 4>and everything that's happened since then. So it's pretty significant.

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<v Speaker 1>Yeah, shares up two point nine percent as we speak

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<v Speaker 1>right now. Mark, just one more question for you, and

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<v Speaker 1>I know you got to run on China and a

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<v Speaker 1>big miss on China. You said it's not too surprising

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<v Speaker 1>yet still came in twelve percent below consensus estimates. Is

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<v Speaker 1>I'm not going to say Apples should throw in the

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<v Speaker 1>towel in China, but how vulnerable is Apple in China?

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<v Speaker 4>They're certainly vulnerable in China, but they have obviously a

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<v Speaker 4>big retail portfolio there of about fifty stores. As I've

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<v Speaker 4>said multiple times, they need to start launching products that

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<v Speaker 4>are specific to the Chinese market. They still don't have

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<v Speaker 4>their AI strategy together in China, and so we'll see

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<v Speaker 4>once AI is implemented in iPhones in China next year,

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<v Speaker 4>if that begins helping turn some things around, and we'll

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<v Speaker 4>see we're going to have some pent up demand in

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<v Speaker 4>China now for the current court or the first court

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<v Speaker 4>or the holiday period because the iPhone Air didn't go

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<v Speaker 4>on sale in September during the September period.

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<v Speaker 2>All right, Mark, we know you got to run over

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<v Speaker 2>to the TV side, so appreciate you jumping on with us.

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<v Speaker 2>Mark German, he's Bloomberg News Maaging editor for Global Consumer Tech. Really,

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<v Speaker 2>as we remind everybody, our go to on Apple breaking

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<v Speaker 2>all these exclusives, and right now the stock is trending

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<v Speaker 2>higher now up about three point five percent. I will

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<v Speaker 2>point out that Mark mentioned some news that the chief

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<v Speaker 2>financial officer had shared with some various media outlets. I'm

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<v Speaker 2>just looking at the Financial Times and again just going

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<v Speaker 2>back to that Apple gave a bullish outlook for its

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<v Speaker 2>crucial holiday sales period, reported record annual profit today, the

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<v Speaker 2>CFO Kevin Perrick, saying Apple expects total company revenue to

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<v Speaker 2>grow ten to twelve percent year over year in the

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<v Speaker 2>three months to December, with iPhone revenue growing double digits.

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<v Speaker 2>So that's what Mark was talking about, and that is

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<v Speaker 2>probably why we are seeing Apple shares do that turnaround now,

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<v Speaker 2>up almost four percent in the after market. Yeah.

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<v Speaker 1>Yeah, pretty remarkable to see the turnaround, but you know

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<v Speaker 1>that's what happens, and you get more detail from executives.

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<v Speaker 1>The call hasn't even started yet, so we'll wait for

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<v Speaker 1>the call also to start and maybe we'll see some

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<v Speaker 1>more movement there too. Just to repeat. Fourth quarter iPad

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<v Speaker 1>revenue coming in ever so slightly below estimates at six

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<v Speaker 1>point nine five billion dollars. Products revenue coming in above estimates.

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<v Speaker 1>Greater China revenue a big miss there, fourteen point four

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<v Speaker 1>nine billion dollars, twelve percent below consensus estimates of sixteen

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<v Speaker 1>point four to three billion dollars. Fourth quarter earnings per

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<v Speaker 1>share coming in above estimates at one dollar and eighty

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<v Speaker 1>five cents, MAC revenue beating at eight point seven three

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<v Speaker 1>billion dollars. Fourth quarter services revenue also a beat there,

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<v Speaker 1>twenty eight point seventy five billion dollars.

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<v Speaker 2>Try to turn around in the after market trade,