Bloomberg Bonus Episode: Apple and Intel Earnings

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 that Wall Street expected, and a big miss for the 0:19:33.920 --> 0:19:37.240 iPhone sixty nine point one billion dollars versus seventy one 0:19:37.240 --> 0:19:42.480 billion dollars expected. And you know, initial reaction Angelo in 0:19:42.560 --> 0:19:45.560 terms of the share price. Initially we saw pop and 0:19:45.600 --> 0:19:47.760 then we saw the stock move down just down to 0:19:47.840 --> 0:19:51.880 here a hare at this point, you know, a lot 0:19:51.880 --> 0:19:54.280 of when we talk about Apple is we are saying 0:19:54.320 --> 0:19:57.119 what's the next big thing? Right and certainly if the 0:19:57.200 --> 0:20:01.520 iPhone is you know, certainly shoring business a still a 0:20:01.680 --> 0:20:04.560 very big business. But maybe some questions about China growth 0:20:04.600 --> 0:20:07.240 going forward. But where do you want to see the 0:20:07.280 --> 0:20:10.239 company move into? Where are the new opportunities in your 0:20:10.359 --> 0:20:11.080 view for Apple. 0:20:12.160 --> 0:20:14.680 Yeah, I mean, listen, I think, you know, we need 0:20:14.720 --> 0:20:17.000 to continue to see good growth on the services side 0:20:17.000 --> 0:20:19.440 of things, and then to continue to innovate and come 0:20:19.480 --> 0:20:21.880 out with new offerings on the services side of things. 0:20:22.600 --> 0:20:25.679 And I think that business will naturally continue to grow 0:20:26.040 --> 0:20:28.080 due to a number of factors. But you know, as 0:20:28.119 --> 0:20:29.960 far as kind of what we're looking for here over 0:20:30.000 --> 0:20:32.000 the next couple of quarters, I don't think you should 0:20:32.000 --> 0:20:34.560 forget about Apple Intelligence. I think that's still a very 0:20:34.560 --> 0:20:36.560 important part of this story. We've kind of seen the 0:20:36.600 --> 0:20:40.040 first two trunches of Apple Intelligence really roll out. The 0:20:40.080 --> 0:20:42.080 first trunch well, you know, was really a non event. 0:20:42.320 --> 0:20:44.640 I actually think, you know, and I have the iPhone sixteen. 0:20:44.720 --> 0:20:46.480 I actually really liked let a number of the other 0:20:46.600 --> 0:20:49.199 upgrades on the second trunch out there. I mean, I 0:20:49.280 --> 0:20:52.000 use kind of visual intelligence all the time. Not crazy 0:20:52.000 --> 0:20:54.879 about gen moji's and what have you, but you know, 0:20:55.080 --> 0:20:57.280 I think there were a number of decent features out there, 0:20:57.320 --> 0:21:00.359 specifically on the visual intelligence ide thinks I think Grounds 0:21:00.440 --> 0:21:03.399 was great. I think the chat, GPT and integration is 0:21:03.440 --> 0:21:05.520 super helpful for someone that just kind of you know, 0:21:05.920 --> 0:21:07.879 looking to do stuff, you know, on the fly on 0:21:07.920 --> 0:21:10.520 their phone. So I just don't think the consumer is 0:21:10.520 --> 0:21:13.040 well aware of it obviously, and we're still at a 0:21:13.040 --> 0:21:15.800 point where you know, most of kind of the installed 0:21:15.840 --> 0:21:18.720 base doesn't have access or even knows about Apple Apple 0:21:18.800 --> 0:21:20.840 Intelligence at this point in time. We'll get kind of 0:21:20.840 --> 0:21:24.240 the the third you know, trunch here in the coming months, 0:21:24.280 --> 0:21:26.040 and I think that's really going to help in terms 0:21:26.040 --> 0:21:29.119 of the serie integration and what Apple can kind of 0:21:29.119 --> 0:21:32.040 demonstrate across kind of the app store and what have you. 0:21:32.400 --> 0:21:34.320 And then you know, clearly, you know, we kind of 0:21:34.359 --> 0:21:38.080 want to see how that reflects across the rest of 0:21:38.119 --> 0:21:42.280 the ecosystem as they kind of throw this out internationally, 0:21:42.440 --> 0:21:44.760 what kind of partnerships they can kind of announce out 0:21:44.760 --> 0:21:47.439 in China. Does that make a difference in China in 0:21:47.520 --> 0:21:50.119 terms of kind of helping the demand outlook, because I 0:21:50.160 --> 0:21:52.640 do think a big problem with with Apple right now 0:21:52.680 --> 0:21:54.840 in China is the fact that they don't have AI 0:21:54.960 --> 0:21:58.520 capabilities where you know, obviously they're they're China peers do 0:21:59.280 --> 0:22:02.320 don't have a full device out there where their peers do. 0:22:02.440 --> 0:22:04.600 And hopefully, you know, we see something on the foldable 0:22:04.640 --> 0:22:07.679 side of things here over the next kind of two years, 0:22:07.680 --> 0:22:09.639 So you know, where I'd like to see them go 0:22:09.880 --> 0:22:12.760 is kind of, you know, start evolving their ecosystem where 0:22:12.840 --> 0:22:16.080 they could find some success, at least in China, because 0:22:16.119 --> 0:22:18.160 at this point in time, you know, what they've got 0:22:18.160 --> 0:22:19.960 in terms of their offering in China is just not 0:22:20.000 --> 0:22:20.240 going to. 0:22:20.240 --> 0:22:22.120 Cut it all right, Going to leave it on that note, 0:22:22.160 --> 0:22:25.400 Angela's you know, he's senior equity analyst at CFR Research 0:22:25.480 --> 0:22:27.159 joining us in New York City. Do you want to 0:22:27.200 --> 0:22:31.520 mention Tim Cook? In the earnings release and the statement 0:22:32.040 --> 0:22:35.960 called it the company's best quarter ever at Apple. He 0:22:36.000 --> 0:22:38.840 also said, through the power of Apple Silicon, we're unlocking 0:22:38.840 --> 0:22:42.440 new possibilities for our users with Apple Intelligence, which makes 0:22:42.440 --> 0:22:45.120 apps and experiences even better and more personal. We're excited 0:22:45.119 --> 0:22:47.800 that Apple Intelligence will be available and even more languages 0:22:47.840 --> 0:22:51.640 this April. So Tim is certainly choosing to highlight that 0:22:51.680 --> 0:22:54.320 we should point out. Apple shares though after an initial 0:22:54.400 --> 0:22:58.400 pop right after the earnings release here in the aftermarket, 0:22:58.760 --> 0:22:59.879 are now pretty much flat. 0:23:00.040 --> 0:23:02.280 Yeah, no mention of China in that statement, which certainly 0:23:02.359 --> 0:23:05.920 will be a focus of investors on that call when 0:23:05.920 --> 0:23:08.320 it does begin in just a few minutes. It's certainly 0:23:08.320 --> 0:23:11.800 a focus for Caroline High. She's a Bloomberg Technology co host. 0:23:11.880 --> 0:23:14.240 She joins us here in the Bloomberg Interactive Brokers studio. 0:23:14.960 --> 0:23:18.280 Two big misses today Caroline highphone revenue coming in about 0:23:18.280 --> 0:23:20.520 two billion dollars shi of estimates, and then greater China 0:23:20.520 --> 0:23:23.600 revenue coming in about three billion dollars shi of estimates. 0:23:24.040 --> 0:23:27.199 Does Apple need to change its strategy in China? Or 0:23:27.240 --> 0:23:30.560 do investors need to adjust their expectations about China? 0:23:30.680 --> 0:23:32.480 Do we need to get more comfortable with their selling 0:23:32.680 --> 0:23:35.119 fewer phones but in a higher average selling price. And 0:23:35.200 --> 0:23:38.600 I think that's perhaps where they're trying to educate people towards. 0:23:38.960 --> 0:23:39.520 Is that in China? 0:23:39.640 --> 0:23:40.240 Is that everywhere? 0:23:40.720 --> 0:23:41.280 Well, I mean it. 0:23:41.280 --> 0:23:43.280 Feels like everywhere, but we do still have the slightly 0:23:43.560 --> 0:23:46.399 cheaper phones that are available in the US, but we 0:23:46.480 --> 0:23:49.400 don't have the rampant sort of competition that you do 0:23:49.480 --> 0:23:51.320 have with a Huawei and with some of the local 0:23:51.320 --> 0:23:53.439 operators that are in China that are just managing to 0:23:53.440 --> 0:23:57.600 produce far more sophisticateated phones and a much lower price point. 0:23:57.880 --> 0:24:02.000 And also there's some national patriotic fervor that's going on 0:24:02.040 --> 0:24:04.880 and wanting to buy your locally made phones. So they 0:24:04.960 --> 0:24:08.200 have been educating us and I think counterpoint research. For example, 0:24:08.600 --> 0:24:10.160 front run the fact that they're going to have had 0:24:10.160 --> 0:24:14.520 a dismal general amount sold eighteen percent rejection they thought 0:24:14.560 --> 0:24:17.240 in terms of phone sold, But if the average selling 0:24:17.240 --> 0:24:19.680 price is picking up, you're not going to be hurting 0:24:19.720 --> 0:24:21.960 quite so bad. But look, ultimately we've seen it's a 0:24:22.000 --> 0:24:25.119 big miss. They're growing in every region outside of China, 0:24:25.560 --> 0:24:28.359 and even the America's Japan was pretty good, but really 0:24:28.480 --> 0:24:30.399 China has been that real weak point, and we have 0:24:30.440 --> 0:24:32.080 to perhaps see that the company is just going to 0:24:32.080 --> 0:24:33.719 try and retrain us to think about them as a 0:24:33.760 --> 0:24:38.040 services company, as an Apple Intelligence company. And look, with 0:24:38.080 --> 0:24:40.320 iPhones missing as well, maybe we have to start to 0:24:40.320 --> 0:24:42.200 think is this really always going to be the juggernaut 0:24:42.200 --> 0:24:42.760 we thought it was? 0:24:42.880 --> 0:24:45.399 What about Apple Intelligence? Right? We have certainly heard so 0:24:45.480 --> 0:24:48.280 much from the company, Tim Cook singling it out also 0:24:48.920 --> 0:24:52.199 on the release and in a statement, So how is 0:24:52.200 --> 0:24:55.560 the world thinking about Apple Intelligence and its opportunities? 0:24:55.760 --> 0:24:57.560 I mean, what what that's far? 0:24:58.520 --> 0:25:00.480 I mean, of course I want to have fun in 0:25:00.880 --> 0:25:04.040 a Gen Moji, but ultimately I'm going to be upgrading 0:25:04.080 --> 0:25:06.360 my phone for that. No, I probably have gone ungraded 0:25:06.400 --> 0:25:09.000 to an iPhone sixteen because my darn camera is broken 0:25:09.040 --> 0:25:10.280 and I want to get a better camera, and I 0:25:10.320 --> 0:25:12.200 want to get a slimmer phone. But I wouldn't have 0:25:12.240 --> 0:25:14.480 gone for it for Apple Intelligence largely because look, I 0:25:14.480 --> 0:25:17.320 can integrate Google and to upgrade there and have it 0:25:17.920 --> 0:25:20.240 magicing my emails and making life a little bit more 0:25:20.320 --> 0:25:24.080 sophisticated there, and compared to Samsung, it is not able 0:25:24.119 --> 0:25:27.040 to innovate in the way that Samsung's adapted to Alphabet's 0:25:27.080 --> 0:25:29.840 offering Open Ai. Though, I think the winning formula for 0:25:29.880 --> 0:25:33.680 Apple Intelligence going forward is that it hasn't spent billions 0:25:33.720 --> 0:25:35.760 on its own large language model. It's gone in bed 0:25:35.760 --> 0:25:37.720 with open Ai, and open Ai is probably gonna have 0:25:37.720 --> 0:25:40.399 to get a lot cheaper because of what's happening with Deeze. 0:25:40.800 --> 0:25:42.880 Caroline h Have you been watching Severance? 0:25:43.960 --> 0:25:44.080 No? 0:25:44.160 --> 0:25:44.679 I haven't. 0:25:44.880 --> 0:25:46.800 Okay, Well, I'm. 0:25:46.680 --> 0:25:48.480 Too busy on the jacket, holl the day of the Jackal. 0:25:48.720 --> 0:25:53.199 It's it's a huge investment by Apple, huge marketing, push 0:25:53.640 --> 0:25:57.000 services revenue a bright spot for the company. Yes, coming 0:25:57.000 --> 0:26:00.200 in at twenty six point three four billion dollars, it's 0:26:00.200 --> 0:26:02.800 for twenty six point one billion. I bring up Severance 0:26:02.840 --> 0:26:06.840 because that's part of the services category. This is a 0:26:06.920 --> 0:26:11.919 high margin business for Apple, the services social TVs TVs. 0:26:11.960 --> 0:26:17.080 But the services category. Yeah, does does services growth and 0:26:17.160 --> 0:26:21.520 strength ever offset weakness in China or for MyPhone? Well? 0:26:21.560 --> 0:26:23.720 I think it's interesting. Then the new COFO who has 0:26:23.800 --> 0:26:26.120 just taken on the role. He's a long time Apple executive, 0:26:26.160 --> 0:26:28.320 but he's just taken on the role in January, is 0:26:28.320 --> 0:26:31.680 really talking up about sort of the installed base, because 0:26:31.720 --> 0:26:33.879 that's where they want you to think the amount of 0:26:34.920 --> 0:26:38.159 max iPads phones that we all own. They say that 0:26:38.160 --> 0:26:40.320 we now have an installed base of active devices that 0:26:40.400 --> 0:26:43.480 reached an all time high across all products and geographic segments. 0:26:43.640 --> 0:26:47.120 Suddenly the services bigot wheel just flies. And then when 0:26:47.119 --> 0:26:50.280 you're getting into payments, when you're getting into interoperability, of course, 0:26:50.320 --> 0:26:52.880 services just becomes ever more necessary. 0:26:52.480 --> 0:26:55.520 For I mean, I probably pay Apple more each year 0:26:55.800 --> 0:26:58.280 between between the memory. 0:26:59.520 --> 0:27:01.200 Yeah, what about the app store? 0:27:01.240 --> 0:27:04.560 I do wonder with some regulatory perspective, we heard it 0:27:04.600 --> 0:27:07.360 from Microsoft yesterday, Well was it Meta yesterday talk. 0:27:07.200 --> 0:27:08.040 Singling out EU. 0:27:08.200 --> 0:27:09.840 But how much are they going to have to change 0:27:09.840 --> 0:27:11.399 the business model when it comes to the revenue They 0:27:11.440 --> 0:27:13.480 can just skim away from an app store when it 0:27:13.520 --> 0:27:16.280 think about how it's treating its own consumers and whether 0:27:16.320 --> 0:27:18.040 we're being fairly treated across the world. 0:27:18.119 --> 0:27:19.280 I mean, what do you want to know and what 0:27:19.280 --> 0:27:20.159 do you want to hear from them? 0:27:20.200 --> 0:27:20.600 On the car? 0:27:20.800 --> 0:27:22.440 Is it just China or is it other things? 0:27:23.280 --> 0:27:25.800 I think, what is your next big innovation? Is it 0:27:25.840 --> 0:27:26.600 about the home? 0:27:26.840 --> 0:27:29.720 Because look, the Vision Pro looks cute, but are we 0:27:29.800 --> 0:27:32.600 all spending thousands on it? No, it hasn't been the 0:27:32.760 --> 0:27:35.240 R and D winner for them this yet, but it 0:27:35.359 --> 0:27:37.600 might have spin offs when they can tell about how 0:27:37.680 --> 0:27:39.880 much they've iterated there to bring it to what they're 0:27:39.880 --> 0:27:42.200 going to do with the home, the video screens, the robotics. 0:27:42.240 --> 0:27:44.439 We're going to see how they can become evanmore integrale. 0:27:44.520 --> 0:27:47.400 We need another winning product. It wasn't cars, the Vision Pro, 0:27:47.560 --> 0:27:50.320 not yet, But what about twenty twenty five is some 0:27:50.400 --> 0:27:51.520 new unleashed hardware. 0:27:51.560 --> 0:27:53.600 I'm amazer not more entrenched in the home. I mean, 0:27:53.640 --> 0:27:56.040 I know in my home it's such an Apple household, 0:27:56.080 --> 0:27:56.639 but it's not. 0:27:57.040 --> 0:27:59.080 We're a Google home household. 0:27:59.240 --> 0:28:01.160 We are too. We are too, and so I'm kind 0:28:01.160 --> 0:28:02.880 of amazed that they have kind of waited so long 0:28:02.920 --> 0:28:04.159 to get into the home market. 0:28:04.280 --> 0:28:06.760 Yeah, it would be certainly that would be an interesting 0:28:06.760 --> 0:28:09.320 product category from them. What about something more akin to 0:28:09.800 --> 0:28:12.679 metas glasses that we spoke about yesterday, and if they 0:28:12.720 --> 0:28:15.600 were to come out with something that is less vision 0:28:15.680 --> 0:28:19.359 pro oculous and more sort of like low profile Rabia, 0:28:19.359 --> 0:28:19.800 because that. 0:28:19.800 --> 0:28:20.840 Was the irritation for many. 0:28:20.960 --> 0:28:23.439 Was it the fact that you've basically got a huge battery, 0:28:23.480 --> 0:28:24.720 we connected to you and it just. 0:28:24.680 --> 0:28:25.760 So harding around. 0:28:27.119 --> 0:28:29.840 The tried and tested formula of Apple is let everyone 0:28:29.840 --> 0:28:32.320 else play and then you come in and win the 0:28:32.400 --> 0:28:34.840 day with something beautiful sneak and everyone jumps on board. 0:28:34.880 --> 0:28:36.760 So maybe that is the winning formula for the home 0:28:36.800 --> 0:28:38.920 and when it will be for glasses and they'll start 0:28:38.920 --> 0:28:39.400 to dabble in. 0:28:39.480 --> 0:28:40.960 I mean, Tim Cook's got nice pair of glasses. 0:28:41.000 --> 0:28:42.920 I wonder if he wants to start making them and 0:28:43.360 --> 0:28:46.400 we suit you down to the ground, Tim, But I 0:28:46.440 --> 0:28:48.280 do think that they do. They're always going to be 0:28:48.320 --> 0:28:50.640 slightly slower off the mark. Then come and bring in 0:28:50.720 --> 0:28:52.600 what it. They haven't got a foldable phone yet. Look, 0:28:52.640 --> 0:28:56.280 Samsung has plenty on the market. Everyone's been wanting to 0:28:56.320 --> 0:28:58.880 get a smaller form factor. They're just waiting until they 0:28:58.880 --> 0:29:01.040 can perfect. So you don't get a crease in it. 0:29:01.080 --> 0:29:02.720 So I do wonder whether it's gonna take a little 0:29:02.720 --> 0:29:03.160 bit of time. 0:29:03.320 --> 0:29:05.840 You know, we have talked with Mark I guess about 0:29:05.880 --> 0:29:08.560 just how the overall market here in the United States 0:29:08.600 --> 0:29:10.960 is so overweighted to some of these big tech companies. 0:29:11.000 --> 0:29:14.200 And I am curious though they are important, right when 0:29:14.240 --> 0:29:16.560 you look at kind of the numbers that they bring in, 0:29:16.760 --> 0:29:19.360 how twenty four million, I mean, it's just extraordinary, even 0:29:19.440 --> 0:29:22.400 when we say right, maybe right, it's extraordinary. So how 0:29:22.440 --> 0:29:25.320 are you thinking about this week of some of these 0:29:25.360 --> 0:29:27.440 big tech names and the results that we've had. 0:29:28.280 --> 0:29:31.800 Thing they've done all right, considering Monday and the deep 0:29:31.840 --> 0:29:35.480 seeky whiplash that we had, and I thought the spend. 0:29:35.160 --> 0:29:37.320 Would be so much more under consideration. 0:29:37.440 --> 0:29:40.680 But I think Satia, even though Microsoft saw a big 0:29:40.760 --> 0:29:43.480 hit today, Satia managed to sort of thread the needle 0:29:43.480 --> 0:29:47.360 that look, we're already offering our one on on our foundry, 0:29:47.400 --> 0:29:50.400 IAI foundry, come to us find the best models. We'll 0:29:50.400 --> 0:29:52.880 also be able to we have our issue as supply, 0:29:52.960 --> 0:29:54.840 we've got to continue to invest. So they managed to 0:29:54.920 --> 0:29:58.440 vindicate a spending. I think Meta did a phenomenal job 0:29:58.440 --> 0:30:04.560 of just talking up with such pompous, like grandiose ideas that. 0:30:04.600 --> 0:30:05.400 Won everyone over. 0:30:05.640 --> 0:30:07.800 You know, musted the same, the fact that actually the 0:30:07.880 --> 0:30:11.040 numbers look pretty ugly. But he's so optimistic about Optimist, 0:30:11.040 --> 0:30:14.240 he's so optimistic about FSD that we managed to be 0:30:14.280 --> 0:30:16.760 blindsided by the idea that actually the plans are there, 0:30:16.800 --> 0:30:18.760 the money is being well spent, and we're still committed 0:30:18.800 --> 0:30:21.560 to these companies. So ultimately, I think they've managed to 0:30:21.680 --> 0:30:24.320 navigate a pretty rocky period Apple. The fact that it's 0:30:24.320 --> 0:30:27.040 flat Microsoft's been really the only real pain point here. 0:30:27.160 --> 0:30:29.800 St Micro had another problem ever in Europe as well. 0:30:30.040 --> 0:30:32.240 I look towards Alphabet and Amazon. Can they vindicate the 0:30:32.240 --> 0:30:33.560 amounts of money that they're going to have to save. 0:30:33.640 --> 0:30:35.200 I'm not going to put words in Mark Umman's mouth, 0:30:35.240 --> 0:30:36.840 but he spent plenty of time over the last few 0:30:36.840 --> 0:30:40.600 months on our program really criticizing Apple for. 0:30:40.560 --> 0:30:42.120 Its AI is and it's analysts. 0:30:42.160 --> 0:30:48.280 He loves to criticize the analyst. 0:30:45.840 --> 0:30:48.800 AI and you know, a question about slow rolling AI 0:30:48.960 --> 0:30:52.640 and to what extent this actually is something that's not 0:30:52.680 --> 0:30:56.680 just incremental but is actually meaningful. When do we start 0:30:56.680 --> 0:30:59.600 to see Apple intelligence really flourish. 0:30:59.720 --> 0:31:03.200 I think they're signaling it signaling in the even the 0:31:03.240 --> 0:31:05.840 press release saying that more languages are coming in April, 0:31:06.320 --> 0:31:10.680 we will be making it further integrated. It's also interesting 0:31:10.720 --> 0:31:12.760 when they bring these things without us even knowing, like 0:31:12.800 --> 0:31:15.520 the news that they brought starlink and the fact that 0:31:15.600 --> 0:31:17.800 we can now use with it, they just hide in 0:31:17.840 --> 0:31:19.600 these little operating system grades. 0:31:21.040 --> 0:31:23.600 So example, publicly acknowledge that, I know Mark Grimman reported 0:31:23.600 --> 0:31:23.880 that it was. 0:31:23.840 --> 0:31:24.360 Going to happen. 0:31:24.360 --> 0:31:26.760 I think T Mobile CEO came on and talked about it, 0:31:26.800 --> 0:31:29.360 and it's just that ultimately they do slow roll. They 0:31:29.360 --> 0:31:32.120 don't perhaps they realize that they need to speak to 0:31:32.160 --> 0:31:33.080 the investor. 0:31:32.720 --> 0:31:33.840 Base about intelligence. 0:31:33.880 --> 0:31:36.040 They're going to talk about how they're really managing to 0:31:36.040 --> 0:31:39.840 infuse it in a more seamless manner. But to you 0:31:39.920 --> 0:31:41.520 and I as a consumer, I think they just don't 0:31:41.520 --> 0:31:43.160 want to stress test it too much. They want to 0:31:43.200 --> 0:31:46.680 slowly have us naturally absorbing it and making our life 0:31:46.720 --> 0:31:49.920 simpler and simpler. But thus far, like a little summari 0:31:50.080 --> 0:31:52.720 of my email hasn't changed my life. 0:31:52.560 --> 0:31:53.080 All that much. 0:31:53.200 --> 0:31:56.120 Yeah, exactly. I just want to remind everybody that we 0:31:56.160 --> 0:32:00.360 do see Apple shares fluctuating in the aftermarket. Apple as 0:32:00.360 --> 0:32:02.960 our Mark German Reports posted sales that were slightly better 0:32:02.960 --> 0:32:05.600 than analysts estimated, even as the iPhone and sales in 0:32:05.680 --> 0:32:10.080 China were weaker than anticipated. Caroline, just talking about that 0:32:10.120 --> 0:32:13.000 revenue number, it did rise four percent to one hundred 0:32:13.040 --> 0:32:15.560 and twenty four point three billion in the fiscal first quarter. 0:32:16.320 --> 0:32:18.920 Analysts had estimated one hundred and twenty four point one, so, 0:32:19.320 --> 0:32:21.640 you know, coming in just a hair better than what 0:32:21.800 --> 0:32:25.600 the street was forecasting. But again concerns over China and 0:32:25.680 --> 0:32:29.400 Apples struggling there stacks up about four tenths of a 0:32:29.480 --> 0:32:34.040 percent here in the aftermarket. Yeah, I just think, you know, 0:32:34.080 --> 0:32:36.800 it's interesting to see after what a crazy week that 0:32:36.840 --> 0:32:39.840 we've seen. I feel like with technology that the stock 0:32:39.960 --> 0:32:40.840 is just kind of flat. 0:32:40.960 --> 0:32:43.640 Yeah, we priced it in, and remember great point, it 0:32:43.720 --> 0:32:46.760 was kind of beaten up running into this. We'd had 0:32:46.840 --> 0:32:50.080 five analyst downgrades right in the last month or so, 0:32:50.400 --> 0:32:53.320 and unlike in Nvidia that has zero cells, there have 0:32:53.400 --> 0:32:55.320 been a few creeping into Apples, So I think people 0:32:55.320 --> 0:32:57.600 had started to price in the China weakness. 0:32:57.600 --> 0:32:59.200 Interestingly made the point to. 0:32:59.320 --> 0:33:02.480 Like all the going to sell us cheaper price points 0:33:03.040 --> 0:33:05.320 they are, according to Mark Gumman, going to be focusing 0:33:05.400 --> 0:33:07.800 on the iPhone SE, which is the cheaper around five 0:33:07.880 --> 0:33:10.600 hundred dollars offering that's going to come in April March. 0:33:10.720 --> 0:33:13.120 Maybe that's going to pull more people perhaps away from 0:33:13.160 --> 0:33:15.880 the Samsung's and the Android offerings. Maybe we get the cheaper, 0:33:15.880 --> 0:33:19.040 lower end Airpod's making a dent. But all of this 0:33:19.080 --> 0:33:21.360 I think had just been guided. We knew that Apple 0:33:22.000 --> 0:33:24.600 was going to have a terrible time in China, and 0:33:24.680 --> 0:33:27.200 Apple Intelligences isn't there yet, and people have really been 0:33:27.240 --> 0:33:32.560 complaining about the latest os, like use cases, the way 0:33:32.560 --> 0:33:34.520 in which the phone just doesn't feel as slick. 0:33:34.280 --> 0:33:34.800 As it used to. 0:33:35.480 --> 0:33:39.160 Are we going to start hearing more chatter about Tim 0:33:39.200 --> 0:33:41.720 Cook and a succession plan. We've been talking a lot 0:33:41.720 --> 0:33:44.680 about Intel and what Intel does post Gal Singer, and. 0:33:44.600 --> 0:33:46.040 They've got some big issues they do. 0:33:47.200 --> 0:33:49.120 Tim Cook has been an Apple since nineteen ninety eight, 0:33:49.120 --> 0:33:50.880 he's been CEO since twenty eleven. 0:33:51.240 --> 0:33:52.320 What's the succession plan? 0:33:52.560 --> 0:33:54.880 And they've just had a CFO come into the MITS 0:33:54.920 --> 0:33:57.720 who's been trained up from within. I don't think anyone 0:33:57.760 --> 0:34:00.520 feels that Tim's going anywhere soon. He navigates the first 0:34:00.520 --> 0:34:05.960 Trump administration so swiftly and seamlessly worked well to be 0:34:05.960 --> 0:34:08.120 able to protect his business that of course is so 0:34:08.200 --> 0:34:10.799 dependent on China, not just from a selling perspective, but 0:34:10.840 --> 0:34:13.640 it's more from a production perspective. What do tarifs mean 0:34:13.680 --> 0:34:15.919 for him? So I think in this next administration can't 0:34:16.640 --> 0:34:18.919 I wouldn't ever bet that he's going to hand over 0:34:19.120 --> 0:34:21.120 the baton anytime soon. But I think that is a 0:34:21.200 --> 0:34:23.000 key question that people are gonna be asking who from 0:34:23.000 --> 0:34:24.480 within has been groomed up, because. 0:34:24.280 --> 0:34:25.799 Remember they lost a lot of talent as well. 0:34:25.880 --> 0:34:27.759 Johnny E's left, and a lot of people seem to 0:34:27.760 --> 0:34:30.040 move from the engineering the product development side of things. 0:34:30.280 --> 0:34:33.759 All right, fascinating stuff, Caroline, thank you again. Second day 0:34:33.800 --> 0:34:36.880 like making anyways sense of all the big tech earnings. 0:34:36.960 --> 0:34:39.680 As we said, Caroline Hyde is co host of Bloomberg 0:34:39.719 --> 0:34:43.239 Technology on Bloomberg TV. Catch It. They'll continue coverage of 0:34:43.280 --> 0:34:45.200 all the earnings this week. That'll be at eleven am 0:34:45.200 --> 0:34:48.160 Wall Street time tomorrow on Bloomberg TV. Right now, tim 0:34:48.200 --> 0:34:50.360 Apple shares just down about one quarter of one percent.