Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is a breaking
Speaker 1: news update from Bloomberg. Instant reaction and analysis from our
Speaker 1: three thousand journalists and analysts around the world. Apple shares
Speaker 1: actually moving into the moving into the green. Carol hours
Speaker 1: up just ever so slightly, three four tons of one percent.
Speaker 2: Don't see a new headline, but yeah, investors coming in
Speaker 2: as stocks up about zero point two point three percent here.
Speaker 1: Okay, Well, there were some beats and there were some misses.
Speaker 1: Let's start with the missus fourth quarter Greater China revenue
Speaker 1: A big, big miss there, fourteen point four nine billion dollars.
Speaker 1: The estimus for sixteen point four to three billion dollars
Speaker 1: overall revenue, though coming in above one hundred billion dollars
Speaker 1: that for the first time ever for the September quarter
Speaker 1: Greater China revenue twelve percent below CONCESSUS estimate. Services came
Speaker 1: in with a nice beat. Another miss, surprisingly, the iPhone
Speaker 1: forty nine point zero three billion versus forty nine point
Speaker 1: three billion dollars.
Speaker 2: Yeah, Mark German saying operating expensive expenses which everyone is
Speaker 2: now closely watching. Things to Meta came in line with
Speaker 2: expectations of fifteen point nine one billion. I'm sure we
Speaker 2: will hear more about investing on the call that's coming
Speaker 2: from our Mark German, who covers Apple so closely and
Speaker 2: looks at consumer tech overall. Let's get to it with
Speaker 2: Jay Goldberg. He's senior analysts semiconductors and Electronics at Seaport
Speaker 2: Research Partners. He's got to buy on Apple joining us
Speaker 2: from San Francisco. Take it away, Apple, what do you think?
Speaker 3: Yeah, it looks it looks okay. It's it's not perfect,
Speaker 3: it's not totally clean, but it's it's got some good stuff.
Speaker 3: It's got some you know, okay stuff.
Speaker 1: The yeah, go ahead, Carol, Well what's good?
Speaker 2: What's okay?
Speaker 3: I mean, just going against my numbers, it looks like
Speaker 3: services is much stronger than I expected. iPhone was good,
Speaker 3: iPad was surprisingly good. I don't know if anyone tracks
Speaker 3: that anymore, but iPad was good and gross margins were
Speaker 3: better than expected. I've been a little cautious about gross
Speaker 3: margins and consumer companies lately because memory prices are going up.
Speaker 3: But that's not I don't see that in Apple's numbers. So,
Speaker 3: you know, the China stuff. You pointed that out. I
Speaker 3: think that's that's concerning not entirely surprising.
Speaker 1: It's not surprising twelve percent below consensus. Why so it
Speaker 1: surprised some people?
Speaker 3: Uh yeah, I mean just given the state of the world,
Speaker 3: I think I think expecting too much from an American
Speaker 3: company selling you to China right now is is going
Speaker 3: to always disappoint. But you know, hopefully we have a
Speaker 3: trade deal and that all goes away.
Speaker 1: It's a trade truce, I think, is the way that
Speaker 1: we heard about it today. Trade is a trade truce,
Speaker 1: and not for that to go away.
Speaker 3: I think. So I think more and more practically what
Speaker 3: was going on in China is the iPad, the iPhone
Speaker 3: error is not available there. It's hard to get here.
Speaker 3: Production that hasn't fully ramped yet, and I think that's
Speaker 3: going to be the real hit, right And this is Apple.
Speaker 3: They know how to get their supply chain in time
Speaker 3: for the year end holiday shopping season, and I don't
Speaker 3: think I've had I don't think the iPhone Air is
Speaker 3: readily available in China, so I think that will that
Speaker 3: will help. And so if you're a Chinese consumer, you're
Speaker 3: looking at it, you see the iPhone Air coming, You're
Speaker 3: going to hold off on your iPhone purchases now and
Speaker 3: wait for that all right.
Speaker 2: Shares of Apple now up about one percent here in
Speaker 2: the aftermarket, so bounce it around, no doubt about it.
Speaker 2: Are Mark German on our live blog, who covers Apple
Speaker 2: and often is breaking exclusives on the company, noting that
Speaker 2: while China is harsh, they are likely pleased investors. They
Speaker 2: are likely pleased with the overall revenue growth of eight percent,
Speaker 2: the giant services number, that's something Jaye just pointed out,
Speaker 2: and the six percent year over year iPhone growth overall
Speaker 2: a solid quarter, So top of mind for you, Like,
Speaker 2: what is it that you would what do you want
Speaker 2: to know more from when it comes to Apple here, jay.
Speaker 3: I think I'm willing to wait on the AI story.
Speaker 3: I know your previous guest was talking about that, and
Speaker 3: he's absolutely right. The AI story is important for Apple,
Speaker 3: but I don't think it's important today. I can wait
Speaker 3: six months, nine months, a year for them to sort
Speaker 3: it out, right when remember when Apple Maps launched whatever
Speaker 3: ten years ago? It was terrible, it was a joke.
Speaker 3: Now I use Apple Maps more than I use Google Maps.
Speaker 3: It's gotten it's gotten better. Sometimes Apple just takes a
Speaker 3: while to get there, So I'm okay waiting with it.
Speaker 3: They need to solve it, that's really important, but they
Speaker 3: don't need to solve it this quarter. I would like
Speaker 3: to just hear them talk about supply chain and what's
Speaker 3: going on in China, and you know what's driving What
Speaker 3: are the dynamics of the iPhone business? I think that's
Speaker 3: the most important.
Speaker 1: Is there a compelling reason for people to upgrade to seventeen?
Speaker 1: To the iPhone seventeen?
Speaker 3: I think the air is pretty intriguing. I'm on the fence.
Speaker 3: I usually upgrade every year. I think I'm gonna hold
Speaker 3: out though, because I'm pretty surey're gonna have a foldable
Speaker 3: phone next year, so that'll be exciting. But I think that,
Speaker 3: you know, everyone I talked to has the air is
Speaker 3: just it raves about it, like they're enthusiastic about this
Speaker 3: iPhone in a way that I haven't heard people be
Speaker 3: enthusiastic about an iPhone in many years.
Speaker 2: Just to rehash, we've got now shares of Apple up
Speaker 2: about one point eight percent here in the after market.
Speaker 2: So this is despite those disappointing sales in China, which
Speaker 2: did fall short of analyst estimates, but strong over sales
Speaker 2: in the overall sales in the period. Hey, let's go
Speaker 2: to our LA bureau for a moment. We're going to
Speaker 2: come back to Jay Goldberg in just a minute or two.
Speaker 2: Marcus Bloomberg, news Managing editor for Global Consumer Technology. He
Speaker 2: is out there in our LA bureau, mark fascinating in
Speaker 2: a short period of time, twelve minutes to see the
Speaker 2: stock being sold off a little bit to now rallying
Speaker 2: almost two percent. Walk us through this quarter. What stands
Speaker 2: out here?
Speaker 4: Yeah, what stands out here is iPhone obviously grew tremendously
Speaker 4: six percent year over year. They beat in nearly every
Speaker 4: product category except the iPad. Had an extremely slight miss
Speaker 4: on Wall Street forecast, and again those are just forecast
Speaker 4: numbers that get made up anyways, so I don't think
Speaker 4: too big of a deal there. The big one, though,
Speaker 4: is a big decline in miss in Greater China. I
Speaker 4: think some of that can be attributed to the iPhone
Speaker 4: Air delay, which was not expected, and they originally announced
Speaker 4: the iPhone Air they anticipated a September release alongside the
Speaker 4: other models. That model has been doing decently in China
Speaker 4: since it was released just about a week ago.
Speaker 2: Now.
Speaker 4: The other thing to point out is the seesaw you saw.
Speaker 4: Originally the stock dipped on the China development and maybe
Speaker 4: iPhone sales weren't as strong as some had anticipated. But
Speaker 4: Tim Cook told news outlets that got pre briefed on
Speaker 4: the Apple earnings results earlier today that the December quarter
Speaker 4: would grow ten to twelve percent on an annual basis,
Speaker 4: which is obviously a fantastic jump for them. That is
Speaker 4: a year over year growth on holiday period we have
Speaker 4: not seen for a very long time, and Apple hasn't
Speaker 4: provided guidance in a very long time because of COVID
Speaker 4: and everything that's happened since then. So it's pretty significant.
Speaker 1: Yeah, shares up two point nine percent as we speak
Speaker 1: right now. Mark, just one more question for you, and
Speaker 1: I know you got to run on China and a
Speaker 1: big miss on China. You said it's not too surprising
Speaker 1: yet still came in twelve percent below consensus estimates. Is
Speaker 1: I'm not going to say Apples should throw in the
Speaker 1: towel in China, but how vulnerable is Apple in China?
Speaker 4: They're certainly vulnerable in China, but they have obviously a
Speaker 4: big retail portfolio there of about fifty stores. As I've
Speaker 4: said multiple times, they need to start launching products that
Speaker 4: are specific to the Chinese market. They still don't have
Speaker 4: their AI strategy together in China, and so we'll see
Speaker 4: once AI is implemented in iPhones in China next year,
Speaker 4: if that begins helping turn some things around, and we'll
Speaker 4: see we're going to have some pent up demand in
Speaker 4: China now for the current court or the first court
Speaker 4: or the holiday period because the iPhone Air didn't go
Speaker 4: on sale in September during the September period.
Speaker 2: All right, Mark, we know you got to run over
Speaker 2: to the TV side, so appreciate you jumping on with us.
Speaker 2: Mark German, he's Bloomberg News Maaging editor for Global Consumer Tech. Really,
Speaker 2: as we remind everybody, our go to on Apple breaking
Speaker 2: all these exclusives, and right now the stock is trending
Speaker 2: higher now up about three point five percent. I will
Speaker 2: point out that Mark mentioned some news that the chief
Speaker 2: financial officer had shared with some various media outlets. I'm
Speaker 2: just looking at the Financial Times and again just going
Speaker 2: back to that Apple gave a bullish outlook for its
Speaker 2: crucial holiday sales period, reported record annual profit today, the
Speaker 2: CFO Kevin Perrick, saying Apple expects total company revenue to
Speaker 2: grow ten to twelve percent year over year in the
Speaker 2: three months to December, with iPhone revenue growing double digits.
Speaker 2: So that's what Mark was talking about, and that is
Speaker 2: probably why we are seeing Apple shares do that turnaround now,
Speaker 2: up almost four percent in the after market. Yeah.
Speaker 1: Yeah, pretty remarkable to see the turnaround, but you know
Speaker 1: that's what happens, and you get more detail from executives.
Speaker 1: The call hasn't even started yet, so we'll wait for
Speaker 1: the call also to start and maybe we'll see some
Speaker 1: more movement there too. Just to repeat. Fourth quarter iPad
Speaker 1: revenue coming in ever so slightly below estimates at six
Speaker 1: point nine five billion dollars. Products revenue coming in above estimates.
Speaker 1: Greater China revenue a big miss there, fourteen point four
Speaker 1: nine billion dollars, twelve percent below consensus estimates of sixteen
Speaker 1: point four to three billion dollars. Fourth quarter earnings per
Speaker 1: share coming in above estimates at one dollar and eighty
Speaker 1: five cents, MAC revenue beating at eight point seven three
Speaker 1: billion dollars. Fourth quarter services revenue also a beat there,
Speaker 1: twenty eight point seventy five billion dollars.
Speaker 2: Try to turn around in the after market trade,