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You're listening to Bloomberg Business Week with krol Messer and Tim Stenebek on Bloomberg Radio and Television. All right here, the Apple numbers third quarter revenue coming in above estimates at eighty five point seven eight billion dollars. Estimates were for eighty four point four to six billion. Third quarter iPhone revenue coming in above estimates at thirty nine point
three billion. Estimates are for thirty eight point nine to five billion third quarter Great Greater China revenue coming in below estimates. That one certainly watched very closely fourteen point seven three billion dollars. But we did see third quarter services revenue come in above estimates at twenty four point twenty one billion dollars. Shares of Apple bouncing around in the after hours. They were at first hire when these numbers first cross, now down about one percent.
Yeah, they are bouncing kind of flat, if you will, right, They're bouncing around here. So we're trying to make sense of it. So let's get to it with our co host of Bloomberg Technology on Bloomberg Television, Ed La La. Here in our Bloomberg Interactive Broker studio up, Big Week, Big Day ed first Blush, What are you taking away from.
THEE I kind of alluded to this in the preview in the top Live blog. Great beat for iPhone revenue in the quarter, which is interesting because we're pre sixteen.
Yeah, like, why are people buying phones right now? They should be waiting right.
There was a lot of waiting in markets like China that they were buying the fifteen generation with the intention of holding onto it. And then I go to the grater China revenue missing estimates and the third party data. Third party data is not always right, but he did tell us that Apple was slipping in greater China.
Is the IDC data, the IDC data.
There's counterpoint research, there's loads, But my point is that there was worried they would They did really face domestic pressure on the handset market there, and you always look to China as a point of focus. So you have to read between the lines because on the earnings call, CFO Lookame Street often addresses that issue head on how they did in the market in China, specifically.
Erning's for share, earnings for share coming in one dollars and forty cents per share. That beat estimates of one dollar and thirty five cents, So a beat.
There as well.
Yeah, I don't know, you know, I'm looking at kind of our right through buyer mark Erman, you know, marking a return to revenue growth last quarter, he says, topping analyst estimates, indicating that upgraded iPads and a strong services business helped make up for some of those headwinds in China. So sales were up five percent to eighty five point eight billion in that fiscal third quarter, the iPhone maker, saying, putting out that statement, analyst had predicted eighty four point
five So that's a beat. Three months ago, the CFO had said the company would grow by a percentage in the low single digits during the period. So some comparisons there. Again, just quick check on what Apple's doing here in the aftermarket, pulling it up here on my Bloomberg and because we said it's been bouncing around here, it's now up about two percent here in the aftermarket. Keep in mind, Apples up about thirteen percent so far in twenty twenty four.
Okay, overall revenue beat, iPhone revenue beat, MAC revenue beat, iPad revenue beat, wearables, homes and accessories also beat, so looking pretty good. There was that miss on China. Of course, Tim Cook saying in a statement that Apple's reporting a new June quarter revenue record of eighty five point eight billion,
up five percent from a year ago. Talking about announcing software platforms at WWDC, Apple Intelligence ed, Apple Intelligence, what's the question that investors are going to be looking to the answer for the fun the call.
Actually important to us what investors are looking for a lot of people looked at what the Apple Intelligence was and said, actually, it's fantastic. They understand the logic that what Apple wants to do is make the things already on iOS better. That's based on the conversations I've had with investors. The thing is that they had already accepted to a large extent, because it's priced into the stock
that it's not ready for the primetime. It's not like here, and so I do think that it's going to be interesting to get some very specific detail from the call on geographic rollout, generation of iPhone roll out.
Mark German has reported on all of this right.
The delay by a few weeks post iOS eighteen generation software update, But that's what investors are looking at. They're trying to do the math on what prompts and individuals buy a new iPhone or up their subscription to Apple services, because how compelling that product is.
That's it.
Yeah, exactly. Well, like you know, we said, I'm going to buy a new phone. I know, postling he's going to buy a new phone.
I know.
I look at the end of the year all the money that goes out to Apple and all the various services and cloud storage and so on and so far.
Well, here the CFO taking notes right now, Carol. Two new phones will be sold in the fourth quarter or third quarter of the year.
Now, it's kind of interesting, right exactly. And you know, I'm looking at our live blog too. There isn't a single mention of the Vision Pro and Apple's earnings release. The thirty five hundred dollar our headset is Apple's first major new product in nearly a decade. There's not a ton left in the cupboard in terms of innovation with the company canceling itself driving card Viebruary. That's coming from our Mark Garment.
What's interesting is that there's a post from Ed Lovelow in the live blog.
How did he do that?
While he's here in our studio with us.
Yeah, I mean the fingers move fast to and the mouth sometimes.
How are you thinking about We've been talking with you throughout the week about the tech reporting set, you know, season and the big megacap tech companies that have reported. How are you thinking about them? I don't know that there's one trend line to do.
There is a trend line excluding Apple, which is capital expenditures. And what's so interesting is, like I was talking a bit about this in the blog earlier, Apple's capex is always low. A lot of investors always bemoaned it's cash balance. You know, it's so ginormous, right. I look at the release and I see Apple's board of directors declares a
cash dividends of twenty five cents per share. There's one really important thing when you cover a stock like this, you need to remind yourself how widely held is the stock around the world.
Yes, there are many.
Institutional investors that hold it in volume. One of them was on my show today, Denny Fish of Janis. Think all the individuals that buy Apple stock because they think it's prestigious. I always find that fascinating. So little divvy goes a long way.
It does go a long way. Hey, listen, we've been reading his comments along with Ed's on the blog. We read a story on Apple. Let's bring a bit. Mark German is Bloomberg News chief technology correspondent. We call them our Apple guru joining us right now. Coming off of earnings, Mark walk us through what you think the Bloomberg audience needs to know about this release.
Yeah, the through line here is that Apple be across the board in every product category iPhone, iPad, wearables, home and accessories, mac and services. So nice beats across the board. There still the iPhone one percent year of a year decline, not terrible, especially given that we are going into the new iPhone season. The other thing to note though is Greater China. Greater China's down about six percent. This came in both below expectations and obviously is an annual decline.
That's something that I think a lot of analysts and investors are going to want to take a look at. Why is China's performance continuing to decline. Apple does say though that they still see this as an improvement over the China situation in the first half of the year, but still this is not great. Looking ahead, we're going to want to know any color that Apple may have on its call about how they're thinking they're going to
do in the current quarter. The fourth quarter. The new iPhone line, the sixteen, will go on sale towards the very end of Q four, towards the end of September, so that's going to be a significant moment obviously contribute quite significantly to the bottom line in the current period, which obviously we're looking ahead at that. Another thing I want to call out is the iPad. iPad grew twenty four percent, not entirely a surprise. I'm surprised that Wall
Street estimated so low on the iPad. Let's not forget that Apple hadn't released a new version of the iPad for about a year and a half and then released two major versions of the new iPad in May, along with major updates to their accessories. So no surprise there.
Mark. They're not giving guidance anymore for the current quarter, But what do you expect them in terms of color to give about how sales are going to be in the current quarter. And then you know, obviously they're not going to talk about new iPhones that haven't been announced yet, but what kind of tidbits could we get.
Well, it's anyone's guess what they're going to say. I'm not going to speculate. It really can go, you know, one way or another.
They could.
They're probably going to give some sort of indicator of how the iPhone is going to do in the fourth quarter, and there's really three options they're going to say. You know, let me take a step back. There's really two options of what they're going to say on the skull. Either going to say that the iPhone performance for Q four is going to be in line with iPhone performance in Q four last year, or they're going to say iPhone performance will accelerate in Q four in comparison to last year.
If they don't say either of those things, I think it's a pretty good indicator that they think it's probably going to decline a little bit, or they're not entirely sure. They're probably not going to come out and say that in the iPhone launch cord or the iPhone is going to do more poorly than it did last year.
Hey, Mark, it's unbelievable that you and I are speaking on Bloomberg Radio and simultaneously blogging live on the Bloomberg terminal. There are going to be terminals subscribers around the world that just understand what's happening. One thing I'd love to do with you, and I know it's hard, is the math on China. You know you get that three Q iPhone B and then the weakness in Greater China.
Is it likely to be.
Products specific in terms of iPhone or where does Apple tend to point to us when they have a specific geographic weakness.
Well, the thing is is Apple never really gets into geographic weakness on a product ed product basis. What they have said over the past several quarters as people have asked about the declines in China is that these declines are not due to the iPhone. Now, they're not saying what those other products are that are contributing to the declines. Whether it's the iPad, whether it's the Math, whether it's wearables. They're not sharing that information, So who knows what they're
going to tell us this time. I believe personally that it does have to do with the iPhone and some of the softness we're seeing there. A lot of people are buying Huawei Vivo Opah, the local phonemakers instead of the iPhone. At this point, so I would say this has to do with the iPhone this quarter. Whether or not Apple's going to come out and say that that's another story.
We're talking with Mark German, We're talking with Ed Ludlow. Apple third quarter iPhone revenue that's a beat. Third quarter Greater China revenue that was a miss. Third quarter revenue overall, that was a beat. Mark in terms of AI and Apple Intelligence, which they showed off a lot at the Developers conference in June. What would be a question that you'd want to know about that. I know they're still developing, they're working on it, but what do you want to know?
I want to know if they think it's going to drive sales, because I can tell you after using it for the past few days or so, I don't think there's any reason why anyone should buy a new iPhone based solely on the new features that are currently available or will be available from Apple Intelligence at the get go. I happen to think that Apple Intelligence is really a late twenty twenty five story, and maybe next year is one of that's going to drive sales, but the current
incarnation it shouldn't be a sales driver. Quite frankly, based on their marketing and some some ridiculous comments I've seen from Wall Street analysts and others who cover Apple. Maybe they'll still grow based on it. Some people will be just appointed if they buy the iPhone based on Apple intelligence, at least from the beginning.
Ed come on back in here to remind us about capex and why CAPEX should be looked at differently with Apple than with that Microsoft Alphabet, Amazon and Meta just.
Because historically capital expenditures for Apple are just kind of a non event. They're not at the ten percentage point to twenty percentage point range that the hyperscalers have, particularly in the current environment. Right, It's just not a part of their story. And Mark always correct me if I'm wrong. But what I find so interesting about Apple strategy is the cost of where they're trying to get to, which is Apple intelligence.
Think about the partnerships, right.
You know, Apple is not as hyper focused on the building of its own large language model. It has some activity there, but it partners with open ai, so open ai takes the R and D cost. How does Apple facilitate its cloud It relies on GCP Google Cloud platform, you know, and Google does its own R and D investment on the silicon side, and I find that so interesting, And you know that's why I'm a tongue in you know,
you guys know what I'm like, tongue in cheek. But it's why I post in the blog about the divvy and about cash generation and the growing balance sheet because investors always say, I wonder what they'll do with that one day.
Do you know what I mean?
Like, well, listen, they say, during the quarter of our record business performance generated EPs growth of eleven percent, nearly twenty nine billion in operating cash flow, allowing us to
return over thirty two billion to shareholders. I mean, I always think about this mark whenever we talk with you, and whenever we talk with that I mean, just the law of large numbers when it comes to Apple specifically, as you continue to look at this this report and release, I don't know what should we leave our investors with. What do you think that they should be thinking at top of mind when it comes to Apple.
I'll simplify it for you. From a financial standpoint, everything is just fine, right, a little bit of concern in China. But my concerns about Apple aren't the financials today. It's that this company is not pushing out products at the pace that they used to. I'm simply not seeing that game changing innovation that we used to see. I'm simply not seeing them leap frog ahead of the competition. I'm
seeing a lot of response to the competition. Like with Apple Intelligence, I'm seeing something that's not as good as the competition with Apple Intelligence. I'm seeing them add features to iOS that Android has had for a number of years. I'm seeing really impressive new technology like the Vision Pro that's not a product, it's more of a prototype or developer kit.
Yeah.
So I'm concerned about Apple products right now, and obviously products hardware surprives this company.
Yeah, so long term Mark, because you have such a good view into the pipeline, much to the chagrin of Apple, I imagine no car coming Vision Pro, as you mentioned the live blog, not even mentioned in this report.
Is that right? That's right?
So what is the big picture for the pipeline over the next five years.
I think we're probably two or three years away from a bigger new product push, whether that's augmented reality glasses, foldable phones, new types of touchscreen devices, new home devices, new macs. But I'm not seeing anything in the next two to three years that you know is going to be a game changer, right, division pro technology is a game changer. Nobody wants it. It's too heavy, it's too expensive, there's no content.
All Right, we're gonna leave it there. Listen your gem. You have so much going on and so appreciate it. Markerman, he's Bloomberg News chief technology correspondent joining us out there from the West Coast. We're not gonna let Ed lad logo yet because Ed, you know, we lean on you like we lean on Mark. I feel like we've been going through a lot of the tech news.
That's why we flew him out to New York this week on the.
On the Bloomberg Jet, the good and the bad of the big tech that have been reporting.
Yeah, that's a really, really smart question.
So there's one thing that I learned very quickly, which was Microsoft, do not miss Wall Street estimates.
That won't go well for you.
And I think that it's because we've just about the money machine, but now the investors are really starting to do the math on it. You know, the Capex number was everything. I think I even Heardy and King on the phone to you just say couples of expenditures and then hang up. It's because with that you can basically do the math on the timing of sales growth from bottom line growth from artificial intelligence, and then you can sort of extrapolay it out further afield. That's why Amazon's
so interesting. Until the call, we're not really going to know if it's a capex issue for AI or if their retail business wasn't very good.
It's a really great point. Yeah, right, Like you need to know these details.
Amazon in the after hours. Now as we do wait for details from that call. Down five point seven percent.
I'm like, do we want to they'll let them go? I guess we need to.
Yeah, we gotta let them go because we got another interview to do.
Well.
I just got a day's point. So on the CFO call, there's a media call that's just started with Amazon. Amazon spent thirty five billion dollars on capital expenditures in the first half of twenty twenty four, So we don't have a number for the quarter, but it was thirty five billion in one h and it will be more than that in two h which is largely due to investments.
In AWS infrastructure. So I think I answered that question.
We did answer it. Astin answered all right, Kit, I listen. Thank you so much, So great to have him here on the East Coast this week, the co host of Bloomberg Technology on Bloomberg TV. Catch them eleven am Wall Street Time, Monday through Friday on Bloomberg Television. Of course, the one and only Edla Love