Instant Reaction: Apple Slides After Supply Shortages Hurt Its Sales Forecast

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Covering Apple Punam Goyle with us from Bloomberg Intelligence, Anaragrana
as well an Edla Lowe, host of Bloomberg Tech. So
let's get to the numbers. Third quarter revenue one hundred
and nine point forty two billion.
That's a bap.
One hundred and eight point eighty five is what the
street was expecting. Third quarter EPs two dollars two cents
a share. That is definitely above what the street was
forecasting of a dollar eighty nine a share. If we
go to third quarter products revenue seventy eight point sixty
eight billion, that two is better than the street estimate
of seventy seven point twenty five billion. Services revenue thirty
point seven to four billion, a little bit light thirty
one point thirty six billion. Am. And again we're kind
of highlighting here on the Bloomberg what we call our
red sticky, our red headlines. Third quarter revenue again better
than what the street was forecasting, one hundred and nine
point forty two billion versus one hundred and eight point
eighty five billion. We're now getting iPhone revenue as well.
Tim, Yeah, the headline's crossing fast and furious. I'phoned revenue
coming in above estimates at fifty four point two five
billion dollars the estimates for fifty three point six billion dollars.
Shares Apple down about two point four percent in the
after hours. Apple also declaring a cash dividend of twenty
seven dollars a share. Third quarter Great of China revenue
coming in shy of estimates at eighteen point eight two
billion dollars. The estimate was for nineteen point five eight
billion dollars. Apple shares falling about two point four percent
in the post market. When these numbers crossed, they did
shoot higher, ever so slightly. You know, watch the after
hours carefully and with caution. We haven't heard yet what
they're going to say on the call. Very light commentary too,
as Apple is wont to do in their press release,
just saying that the company's proud to report the strongest
June quarter ever with double digit revenue growth across iPhone,
Mac and services and in every geographic segment.
This is Tim Cook setting June quarter records for both
EPs and operating cash flow. Still here with our team,
ed Lolo, I want to bring you back in here.
I know you're just kind of going through the numbers.
Two initial thoughts here. Again, we continue to see this
dockdown about two and a half percent here in the aftermarket.
Yeah, it's a slight beat against consensus or expectations across
the board. Other in iPad, I see a miss, and
then in services I see a miss on gross margin
coming in at fifty point one percent. Apple does explain
that there was roughly two percentage points benefit gross margin
from tariffree funds, so we can we can re litigate
that on the accounting side. But EPs therefore includes an
eleven cent benefit from those tariffree funds. But that's what
I see, you know, Tim summed it up. Well. The
Greater China will be a question, right, But I see
iPad miss and services miss. Services more likely to concern.
If it's a miss, then iPad maybe, but otherwise strong.
Yeah.
Mark German is going to join us too for the
conversation in a little bit. But he's also pointing at
gross gross margins slightly above what Wall Street wanted. But
again the stock down about two percent, but let's not
forget the stock has been on quite a rally so
far this year. What you're looking for plex.
Yeah, I am. I want to bring in on a
rag on rog.
I know that you expected that the string of strong
iPhone results would continue this quarter next given the company
hasn't raised prices for smartphones, has your view changed at
all given what we've seen in the last few minutes
with with with these numbers coming out.
No, there was a beat on the iPhone number, so
that's there. But here is the kicker, and I'm looking
at gross malogeins which was also pretty decent, which was
a Now that's a surprise.
Because you would have made the memory price right.
Memory process to start to think. The only place where
I see slight hiccup is great to China. So we'll
find out what happened here. But it's a very minor way, boy,
very minor miss.
Are you saying that Apple doesn't need to raise prices
because their margins are intact?
I hope see for their sake, if they can figure
out not to raise iPhone lower end prices, it's going
to be very good for them. I think you have
to raise prices first of all, because the memory costs
are very high. But I think you and we think
it's better to do it on the higher end phones
because you know, people like you are not sensitive to
and you know, another few hundred dollars on an iPhone promac.
So it's not going to that's not going to be
the difference that.
We can make to be.
See, that's another reason why they did that. That's another
reason why they did that. So the thing is, I
think there is one more good quarter of iPhone coming in,
but then things get harder for them next year because
then comparisons get tough. You know, this is not a
company you can grow iPhone twenty two percent year after year.
You know, this is not a brand new product. This
is a replacement cycle story. So you could see a
little bit of a push for people pulling forward some
of these things, but things are going to get hard
next year when you I didn't do tougher competisons.
I want to bring in marker Emeni's back with US.
Apple shares down in the after hours. Marcus Bloomberg, news
managing at IT for Global Consumer Tech. You were live
blogging while you were on TV. Yes, what's what's your take.
My take is that the iPhone number looks great. My
take is that the Mac number looks amazing. My take
is at services a little soft, and the China number
missed the estimate we have here on the Bloomberg terminal.
But at the same time, that is, you know, pretty
nice growth on an annual basis. Where they were sort
of I guess in the toilet in China a couple
of years ago and last year, but they've totally rebounded there.
It's going to be interesting to see how the foldable
iPhone performs there as a status symbol well north of
two grand, so I think it's going to be a
hot product there, especially because foldibles are taking over the
smartphone market in China.
Yeah, I know you're going to buy a foldable phone
as or Sam, We'll be first in line. So is
it the light services in China that's moving the stock lower?
I mean, I know stock was twenty up to more
than twenty two percent going into this prem.
Yes, yes, I mean they smashed Mac right, But like,
I don't think investors have fully grasped the importance of
the Mac at this point. I mean, it sort of
feels like an afterthought. Compared to the iPhone and the iPad.
The iPad is always light. Wearables have been light for
a couple of years now because they haven't really done
a ton there, but that is going to accelerate big
time over the next three years with these AI devices.
Glasses are going to shoot those numbers up.
You think people will buy those? I do.
I think you'll buy them too. Tell me about them, Well,
they're going the Apple is not going necessarily after the
smartphone market. They're looking to create glasses that people want
to wear, just like the Apple Watch replace the traditional
watch market. They think that their smart glasses are going
to replace sort of the low end to mid tier
glasses market, not the Maison Bonets of the world, but
you know, the Eslar, Luxaticas of the world. So they're
really going to go after those brands there. They'll have
cameras built in, I'll do all the stuff that Meta does,
but a little bit more premium and apply because it'll
integrate with your iPhone, whereas they've really held back iPhone
integration with the metaglasses over the past couple of years.
Actually create something that is competitive in terms of share
at the company that moves the needle in terms of
the iPhone. Does something else finally come over in terms
of contributing more to the bottom line as the top line?
You know, I think Turnis will be CEO for the
next fifteen years, unless again, something goes wrong that we're
not expecting. And someone asked me earlier today on one
of the programs, what's going to be the most important
product in Turnas's tenure, and I, to their surprise, said
the iPhone. I think it's going to be the case
that we're always going to carry something in our pocket.
The iPhone or something like it is always going to
be at the center of everything, and then we're going
to be augmented by glasses, watches, earbuds, you name it.
But at some point there will be a transition to
be had. I just don't see it anytime in the
near future.
Has Apple given up on the Vision Pro?
It's on
the back burners of all back burners at this point.
There's a revamped version that's lighter in development. I don't
anticipate it before the end of twenty eight or early
twenty nine. Could go further back from that because they
have been heavily prioritizing this glasses push smart glasses with
no display, smart glasses.
With ar display.
They've got a long roadmap of multiple generations ahead of
both of those categories, and you'll see them introduce the
glasses strategies early is June of next year.
What do you want to hear on the call.
I want to hear about the memory shortage. I know
it's not sexy, but investors are interested in that. I
want to hear about Tim Cook's thoughts on how the
transition is going. Most importantly, I want to hear Turnas's
vision for Apple. Are we going to hear that on
this call or we're going to hear that on the
next call? Probably not. These guys don't really say anything.
I'm laughing because you know, you shared with us earlier
about John Turnas and Tim Cook being dressed identically, Like,
you know, his vision is going to be whatever Tim
Cook says the vision is.
Is it going to be? Is it is that?
What it's going to be?
Yeah?
No, I think that. I mean he's going to come
in and make major changes to the company, just like
you know Steve Jobs, arguably one of the greatest CEOs
and visionaries of all time. Tim Cook came in there.
It's not like you took a wrecking ball, but he
shook things up pretty quickly. He was the one who
instated the buyback program, he was the one who instated
environmental initiatives. He was the one who instated and tons
of new product lines. And you can bet Turnus is
going to do the same thing. And so we'll see
how long that takes. But he's not going to come
on and say he's going to do things differently than
his predecessor. He's going to go on and say how
incredible Tim Cook has done. And even if I do
half of what you do, it'll be a success.
Yeah, five trillion dollar marketcap pretty close to and expectations
were high going into this prend What's the question that
if you were able to ask a question on the
call today, what would it be?
If I were able to answer or ask a question,
I would straight up ask Turnas, what is your vision
for the future of this company? How are you going
to get to this next stage of growth? And how
are you going to create an AI devices strategy? Well,
I mean the good news is I don't get a
question because the bad news is he wouldn't answer.
That, and just I was keeping track, that was three questions.
Well, you know, I'm a journalist.
That's what these analysts do too.
But if he's not going to answer a question about
vision and you kind of know that, where else would
you what else would you want to know?
I would want to drill down into his operational expertise
and get his viewpoint as someone who's not from the
operations department about the memory shortage, how long he sees
that running for, and what work is going on internally
to solve that other than just hiking prices.