Good morning. I'm Brian Curtis.
And I'm Doug Prisner. Here are the stories we're following today.
Well, the US and the huties have been exchanging attacks, said Baxter. Is all over that story and has more from the nine to sixty newsroom in San Francisco.
Yeah, that's right, Brian. US Command says it intercepted a surface to air missile aimed at US forces, than several hours later intercepted and a ship missile fire toward the Gulf of Aiden and then shot down three drones. Then it says it later struck what it says was a drone control station and ten one way drones in Hooty controlled areas of Yemen. The waight continues for what could be more involved attack. Defense Secretary Lloyd Austin here.
You know, I don't think the the adversaries are of a one and done mindset, and so they have a lot of capability. I have a lot more.
Former Deputy to the Secretary of Defense Mick mulroy on ABC says the attack will have to be at Iran infrastructure and says the delayed response could mean something very significant.
I am quite frankly a little confused because I think the Pentagon and certainly when I was there, and I don't think it's changed much, always has targets ready to go for the President of the United States to italiate, especially when it's a near costant attack on US forces.
Now, Senator Lensing Graham is calling for a military strike inside Iran aimed at oil.
The only way that will change our behavior and stop killing Americans and attacking our troops and trying to bomb ships in the Red Sea is for Joe Biden to hit their all infrastructure and start killing their soldiers inside of Iran.
And Bloomberg US national security reporter Nick Wadams on Balance of Power says, the strategy shows that there must be back channel negotiations going on otherwise it's a bit confusing, but the targets are clear.
Iranian back proxies in Syria and Iraq. There's a real reluctance to go after Iran despite pressure from Republicans within Iranian territory, for fear that that would essentially ignite a
direct conflict for there ins. So this balancing act where the administration wants to signal that the killing of the three US soldiers over the weekend will not be allowed to stand while also trying to avoid the very confrontation and broader regional conflict that President Biden has said for so many weeks he wants to avoid.
And he says won't be the end whatever happens now. White House is calling it a new tool. President Biden's new executive order will sanction those committing violence against Palestinians in the West Bank. For Israeli settlers are being sanctioned today. NSC Officer John Kirby says, individuals.
There's no plans to target with sanctions, say Israeli government officials at this time.
Yeah, sanctions will prohibit them from accessing US financial systems. Senate negotiators closing in on a deal that would address the southern border and send aid to Israel and Ukraine. Senate majority of Leader Chuck Schumer says a package by Sunday with a vote next week. And looky here today mark sixty years since this scored their first Billboard Hot one hundred number one.
The Beatles base say to.
Me, everybody saying in San Francisco, I'm at Baxcer, this is Bloomberg, Bryan.
If we were only old enough to have been there. Wow, what an exciting time ed. Thank you. We'll get to news again a little bit later in the hour. Now it's time for the top business stories of the hour. Well. As mentioned, Apple reported a deepening slump in China during the holiday quarter. Sales in China dropped thirteen percent to twenty point eight billion dollars, and that's even as total
iPhone sales were actually stronger than expected. Bloomberg's Emily Chang spoke with Apple's CFO Luca Mastream about China shortly after those earnings came out.
He said that there, you know, we say, saw a record number, a record install base. They're still seeing strong growth in upgraders. But again, you know, you know, this is a market that folks have been very concerned about, based on replacement cycles, based on you know, bands, on foreign technology in the workplace. There you know, reports that Apple is cutting the price of the iPhone in China.
So definitely a market to watch.
As always, Bloomberg Examinly Chang Maystreet also warned that Apple sales growth may not last. It will be hard to compare Apple's current quarter with the period from a year earlier. We mentioned that Apple stock had traded down in after hours, it's a little more mixed for the suppliers. How to look at four or five suppliers, Doug, and many of them are trading higher, but a few, particularly in Taiwan like Honhai, a little bit lower.
So we also heard after the belt from Meta Platforms. Boy did this company shower the market with some positive news to begin with. For the fourth quarter, sales were up twenty five percent, profits tripled. Doesn't stop there, because Meta announced its first ever quarterly dividend of fifty cents and the company increased its stock buyback by fifty billion billion. Here's David Kirkpatrick. He's the editor in chief at Teconomy Media.
Nothing matters more to Zuckerberg than his image. He was deeply humiliated yesterday in the Senate. I wouldn't be at all surprised if they were not sure whether they were going to announce a dividend and or a big buyback today until they saw how he was treated in the Senate. And he was treated very badly. So they had to put all their wood behind the era.
All the wood behind the arrow. Fifteen percent higher in late US trading. That's where a Meta Platforms traded in the late session. David Kirkpatrick, by the way, is the editor in chief at Teconomy Media.
Right well, Amazon reported strong sales and also gave an operating income outlook that surpassed estimates. It's a sign that CEO Andy Jasse's cost cutting and focus on profitable services
is reshaping the company. Operating income for the period ending in March will be eight billion to twelve billion knots of very wide range, but the midpoint of that is higher than what analysts had estimated, which is nine point one two billion, and all of that is on the back of sales of as much as one hundred and forty three point five billion dollars. So these are big numbers. Let's get some context and some understanding here. Reaction from Bloomberg Intelligence is punum goil.
I do think the real nice numbers here were on the operating income side. Right We saw a big beat there, and that's I think thanks to two things. One, the awus business had back operating margins and also advertising, which had twenty seven percent growth. Keep in mind that that segment has a fifty percent operating margin. So really, I think the beat that we're going to see from Amazon and operating margin will come a lot from advertising as that continues to drive superior growth.
Bloomberg Intelligence is punum goil there the show's climb to a high have one seventy four to fifty in extended trading, they were up about seven to eight percent for most of that time. The stock has gained five point one percent this year up and till this period, after jumping eighty one percent in twenty twenty three. But we all remember when it was down so significantly in twenty twenty two. Well, let's get to our guest now, Bloomberg Technology reporter Jackie Devalos,
and she joins us here live on the program. Let's go back to Apple for a moment, because China a big focus, and that's what we're all about Bloomberg Daybreak Asia. I want to give some context here. Apple services revenue at twenty three billion dollars is higher than the total iPhone sales in China. So I'm curious from your standpoint whether or not that tells us more in terms of the context, tells us more about the China business or the services one's going up and one's going down.
The China business, we have to understand, is extremely important for Apple the services segment, remember that includes the app store and streaming platforms. That's really high revenue dollars coming in, and that posted about twenty three billion dollars during the holiday period. It was up about eleven percent, and you know, it still came in under analysts expectations that China business, though there had been some weakness already baked into the
estimates going in. But when we saw the numbers today, they were about three billion dollars short. And that's a really big miss when you think about just that scale and the importance for Apple to see that kind of weakness coming from one of one of its most important markets was assigned for concern for investors.
For sure, You're absolutely right that decline was widely expected, and it's tied to Chinese government agencies and state back firms telling employees, hey, don't bring an iPhone to work. I mean, those instructions have been very very clear. They've been instead encouraged to use the local brand. So let's talk a little bit about competition from a company like Huawei. Is that to be an increasing factor that Apple is going to have to kind of deal with here as
we go forward. When when Apple considers it's business in China one hundred percent.
If we look at some of the high points that the company had when it came to the iPhone, it you know, largely beat on on that front, bringing in revenue about sixty nine points of it. But you know, it also had the help that it had released a new version of the iPhone. When you think about that increased competition like you mentioned from Huawei, it's only going to be able to manage some of these kind of geopolitical tensions that end up showing up through some of
these restrictions. So much so at some point you're going to see perhaps the company make more statements about how it's not just diversifying, but maybe putting more capital and focus on other lines of business to smooth out some of that rockiness coming from China. And on that note, you know, so let's take a look at one of the areas that it is investing in quite heavily. This is the eve of the Vision Pro headset release. That
is one of the areas that's new to Apple. We think about the company as like this major innovator, and on this front, it's sort of a newbie. We're all really excited about that. But when it comes to your point, like you know, competition's going to come from a few angles. It's entering this new market and we'll see what comes of that. Augmented reality is a really expensive venture but also one of the most innovative fronts we have right now in tech.
Well, we have to remember that the iPhone actually passed those competitors in China to become the number one smartphone seller in China last year. What's happening in China is a little bit outside of Apple's control in some sense. The economy is stumbled. Policy is very uneven, and again, as Doug mentioned, even government officials are telling people don't bring your iPhone to work. So that's one that's going
to play out. It'll be very interesting. Let's switch to Amazon a little bit and talk about what they achieved. You know, you've got cost cutting at a time when they are jacking up sales. It's good for the for the stock price, isn't it?
Totally? And it was one of the one of the more bright spots in tech, especially when you had a competitor in the cloud space and in the advertising space. Alphabet earlier this week kind of disappointing. Amazon really gained on both fronts, and you saw them really talk about that cost the cost cutting benefits that it's been able to reap over the last couple quarters. It's been a
pretty bloody season really the past year for tech. That operating income came in or it's expected to come in at about eight billion and twelve billion for the coming quarter. That was just, you know, right above what analysts are expecting. So that outlook, you know, also country to that bulled sentiment that we saw in shares after earnings.
Yeah, well, speaking of bullying sentiment, I think we have to talk a little bit about Meta platforms, and I think David Kirkpatrick, we just played a clip of something that David had to say a moment ago talking about the reaction yesterday as a result of mister Zuckerberg's testimony before the Senate committee today, we learned that the company has increased at stock a buyback planed by fifty billion dollars and at the same time announced its first dividend
of fifty cents a share. And what David was saying is going into maybe the testimony yesterday, you could imagine Meta doing one or the other but not both, And he asked the question whether or not it was possible to imagine this kind of largess that Meta bestowed on the market today having to do with the challenges that mister Zuckerberg faced in that testimony yesterday. You think that's a fair statement.
You have to wonder if it was a diversion act of some kind, because it was pretty painful to watch that hearing yesterday, and it was a long time coming. You've seen so much great reporting from Bloomberg, included about just the negative effects that the social media platform can have on young people, and the other hand, you know, we're focusing on the revenue that it generates. So you got to wonder was he taking a victory lap, But just looking at the numbers, he certainly could if we're
just looking at the numbers alone. Not only were profits ahead of estimates, revenue came in head of estimates. And it's interesting how this was kind of a different type of China story. CFO Susan Lee said that that strong increase in revenue in the fourth quarter was largely due by high spending in China from advertisers in that region, as well as AI recommended video CUN so you're kind of seeing a different story than we saw on Apple.
It does highlight an interesting point though, that the big megacap tech companies are starting to behave more like the old line companies in terms of dividends and buybacks. Is that a trend that we would expect to continue?
You know? I think so, because these companies are reaching a point of maturity, and when that happens, you know, it has only so many areas where it can spend its money. It starts rewarding investors with these dividends. Apples an interesting ones. You know, they've been doling out dividends for a while, and some of these other tech companies have kind of reached a similar stage as well.
This is Bloomberg Daybreak Asia, your morning brief on the stories making news from Hong Kong to Singapore and Wall Street.
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And I'm Doug Chrisner. Join us again tomorrow for all the news you need to start your day right here on Bloomberg day Break Asia