Bloomberg Audio, studios, podcasts, radio news.
Shares of Intel are just surging as we speak right now. Taking a look at shares in the after hours, they were up as much as fifteen percent. This after the company gave a fourth quarter revenue forecast slightly above estimates. It sparked optimism that it's capable of reclaiming some lost market share. Shares are just absolutely surging right now. Remember shares down going into this print, close to sixty percent. We got with us Ed Ludlow joining us from our
San Francisco bureau. I know he's looking closely at these results because he's got a chat with Pat Gelsinger coming up at six pm Wall Street Time, a special edition of Bloomberg Technology on Bloomberg TV, Bloomberg Radio, YouTube, and Bloomberg Originals. We'll get to that in just a minute. First, though, Ed expectations were pretty low going into this print.
Yeah, and there's a lot to unpick here.
It's not straightforward because in the core to gone, Intel, which was previously like one of the world's leading chip makers, has given us a mixed bag. Its data centerships business did better than expected, but it's PC business where it has historically been the leader did worse. The answer to that is customers had inventories and they worked through backlogs. And when we speak to Pat later, I think there's a discussion to be had about the future of Intel
and the PC market. But the most important thing to note is the stock is up significantly and after hours, and that is in spite of almost three billion dollars of impairment charges that Intel took relating to headcount reduction canceled projects. And what's so interesting about that is if you look at the estimates going into this quarter, and lists on Wall Street had not factored that in.
So it's a surprise, a negative surprise.
And even so the stock is up significantly because, as you point out, the top line of the story is maybe there's some hope here for Intel.
It is there. There's also a headline ed and I'm just getting caught up. I know you've made some time to look at this, but there's the news is coming fast and furious. They're reducing headcount by sixteen five hundred employees. Is that on top of the other headcount productions this year.
This is a confirmation of the previously stated plan for headcount reduction, and that the literal update is that the Audit Committee of Intel, a section of its board, has approved that plan. So the number is final sixteen thy five hundred staff to be cut. And again I go back to the impairment charges. If you look at the adjusted loss per share in the quarter gone much much
wider than anyone on the Wall Street had anticipated. And a part of that was that the impairment charges it disclosed relative to headcount reduction, but there's other things in there. They just hadn't factored that in for this quarter. Intel wasn't able to guide for it into this quarter. So it's a timing and an accounting issue, which you know sometimes can be a bit dry.
There's much more to discuss.
Okay, well' speina, much more to discuss. The Intel CEO Pat Gelsinger, who you're going to speak with a little later today, saying in a statement that he intends to keep the company together. Yeah, he says that distinct, but better together is the strategy. The context for this is is reporting from earlier this year that said they were exploring a separation of parts of the company.
So it's complicated.
And first off, the headlines from Pat Gelsinger were a part of a brief conversation that our colleague and King had with him on the phone. And the context is, yes, Intel is a chip company. It offers chip products processes that go into computers and data centers and other business areas. But it also has a manufacturing business, which historically the reason that Intel was so good at chips is it
built them or manufactured them for itself. As many of your listeners have learned in the last two or three years, there's a company in Taiwan called TSMC that has basically taken over the vast majority of cutting edge chip manufacturing on a contract basis for everyone else, and Intel had really fallen behind. But Intel's ambition is to have a company where it has its own products, it manufactures its own products, but it also wants to manufacture chips with others,
just like TSMC does. And that's a long answer, but the short of it is, this is Pat Gelsinger saying, yes, we're going to run the company that way to separate divisions, but no, we're not going to sell off one part to a third party or be acquired by a third party. That's kind of reading between the lines because he was not explicit.
Ed. You have to wonder how much patience investors have right now to see this turnaround play out, because, like Tim had mentioned, Intel stock is down almost sixty percent year to date. So what do we know right now about just how urgent the need for the turnaround is. When you think about the share price.
I mean, do we have to wait for those listening on radio. I'm looking at a chart and the line goes straight up in the air with a thirteen percent next to it, And if you're watching on YouTube, maybe we can put the chart up. And it's an astonishing market reaction because of the pain of the quarter gone that I just told you, and what Intel told us for the final three months of this year is here's a range of revenues we think we're going to have. At the midpoint of that range, it was just slightly
ahead of consensus estimates. But the market is you know, what's the saying, you guys that the investors vote with their feet, right, And you know, I think that's the read here. They look at the commentary from Intel and say, you've done some really painful things in the quarters gone. You've let go of a lot of people canceled a lot of projects. You had a pretty rough quarter in your PC business where you were once a leader and
you've fallen behind. But as we look to the next three months and beyond that, there are signs that you might be turning a corner here. And that's great because that gives us a lot to ask Pat Gelsinger about to today.
Don't give away the questions, ed, I would never ask you to do that, but what is top of mind for you ahead of this conversation, especially given that you got to read a little bit of what Ian's conversation went with him earlier, and then also you get the most recent numbers that we're talking about right now.
Yeah, because of the analyst call as well, and you never know what's going to come up in an analyst call. There's definitely a technology to discussion to have here. You know, one of the interesting parts of Qualcomm, or the report that Qualcomm was Qualcom was interested in buying some all of Intel, is that they had made inroads themselves into
the PC market where Intel had once been dominant. And you know, a theoretical idea that came out of that is, why would Qualcom want to buy Intel if they're doing so well on their own, But you could flip that on its head and say, the story of twenty twenty four has been about the AIPC PC laptops that have new chips in them that are not made by Intel. So when's Intel going to come to the races on that?
And in fact, a number of our audience, but also like executives in the world of tech, have asked me to ask Pat about that issue, because if Intel's so good at PC chips, why is it not doing the latest thing? These are technology questions, but I think we should probably be explicit. Was Intel or was Intel not approached by some of its peers about an acquisition?
Simple stuff.
Ed In just three minutes, we should be getting Apple's earnings reports.
What goodness?
What should people be watching hump for for the iPhone?
Yeah, iPhone sixteen and China very simple, leading product, most important market, and that's probably what it will come down to.
Will those iPhone sixteen's are they flying off the shelves?
So we've learned in the newsroom a really painful lesson this year, which is treat the third party data with caution. You guys will probably have done it on the show right these stories about some of the market researchers, who is you report saying the first six weeks of iPhone sixteen sales are down relative to the first six weeks of iPhone fifteen according to xyz data set Counterpoint research is one.
But there's also evidence that in recent.
Quarters, Apple's actual data has proven the third party data to be off the mark a little bit. And there's a very interesting phenomena happening in China. Apple won't make its latest generf generative AI tech available in China for some time until the regulator says it's okay. But there is evidence that the consumer in China is buying the iPhone anyway in anticipation they might have access at some point to like the latest and greatest software, which I
think is so interesting. Right, You're buying something without having been able to experience it and like look at it because it's not available in that market.
Yeah, okay, So okay, let's talk a little bit about China. Just thirty seconds here, ed because these numbers are coming out in thirty seconds. Sure, what are the numbers we need to see in China indicate that that Apple is not losing market share to Samsung show me and the.
Like numbers or commentary, so they'll report something for Gray to China. They won't be as sort of candid about category specific stuff, but on the call they would tell us how they think they do or rank in that market.
Okay, we're going to get numbers from Apple in just about fifteen seconds. Going into today, shares for the year up seventeen percent, so underperforming the S and P five hundred shares today down one point eight percent. We are getting a slew of earnings continuing and now we're getting Apple results. Bear with me while I bring these up. Fourth quarter revenue meets estimates coming in at ninety four point nine three billion dollars. Estimates were for ninety four
point three six billion dollars. As we look at the different parts of the reportable categories, services revenue for the fourth quarter coming in below estimates, twenty four point nine
to seven billion. Estimates for twenty five point two seven billion fourth quarter earnings per share coming in way below estimate and are not excuse me, not below estimates below what they were last year ninety seven cents versus one dollar and forty six year over year fourth quarter revenue once again beating estimates, coming in at ninety four point nine three billion dollars. Estimates were for ninety four point
three six billion dollars. Apple also declaring a cash dividend of twenty five cents per share.
That's I'm not done that much.
Okay. Let's look at fourth quarter iPhone revenue coming in above estimates at forty six point twenty two billion.
Estimate.
Weres for forty five billion dollars, fourth quarter Greater China revenue coming in just shy of estimates fifteen point zero three billion dollars. Estimates are for fifteen point eight billion.
Dollars, and their fourth quarter Wearables, Home and Accessories slightly missing estimates nine billion dollars. The MAC revenue seven point seventy four billion, right in line with estimates, and iPad revenue slightly below estimates six point ninety five billion versus estimates of seven billion. The red headline crossing the Bloomberg terminal is that the Apple fourth quarter Greater China revenue
missed estimates. It's fifteen point oh three billion versus estimates of fifteen point eight billion.
Yeah, that was a that's a pretty significant miss right there. Seeing shares bounce around a little. They were higher when these numbers came out. Now they're down about one point
three percent. Some of these certainly worth repeating. Fourth quarter iPhone revenue coming in above estimates at forty six point two to two billion dollars, fourth quarter revenue coming in at ninety four billion, ninety four point ninety three billion dollars above estimates, but fourth quarter Greater China revenue coming in below estimates. I do want to go back to Ed Ludlow, who's standing by in San Francisco. He's only
had two minutes to look at these numbers China. That certainly seems like a story here.
Ed, Yeah, I mean you want wonderful summary. I mean, all, how do you follow that? But I think that that's the simple calculus. Overall iPhone revenue beat right, Greater China slightly missed. It's not until the analyst call that you get the commentary. It's usually from the CFO rather than Tim Kirk that says, actually, by category or products are be it iPhone, mac wearables, here's how we did, and in that explanation we will find out did iPhone grow
in China or not? It's interesting, you know the miss is it's a miss, you know, it's slight. The only other thing that I point out is that you have to read between the lines a bit. And the Apple once again has a new record high of number of installed devices around the world. That's the number of people with an Apple hardware product or device somewhere in the world.
It's growing. But where in particular, which product line. That's kind of the question next.
But that's an important number because increasingly, as people hold onto these devices for longer, the more of them that are out there, the more people are spending on services like Apple TV plus, Apple Music, iCloud and the like. I know, I'm certainly not buying new devices right now, but I'm still spending each month quite a bit on Apple and Apple loves that it's a high margin business.
Yeah, the timing of this very interesting.
So in the release they talk about the rollout of Apple Intelligence, which is staggered. As Mark German has reported here at Bloomberg News. Apple Intelligence is the company's proprietary AI or generative AI offering. It's a suite of software tools in iOS that can do various things. This past week, I was offered to upgrade MYOS to eighteen point one. Then I was put on a wait list for Apple Intelligence. That's all lot preamble to say, we don't know anything
from this release. And you noted that services missed right, that all this work they put in AI and all of the delay translates to consumers spending more money within the iOS or Apple ecosystem. And I know that many analysts investors are going to be listening carefully for that.
Let's go through some of these numbers again. If you're just joining us. Apple shares down about one point seven percent in the after hours. They reported just about four minutes ago, five minutes ago, our fourth quarter revenue came in above estimates at ninety four point ninety three billion dollars. Quarter iPhone revenue came in above estimates at forty six point two two billion dollars. That's a billion dollars more
than what analysts were expecting. Fourth quarter greater China revenue, though coming in below estimates, Does that mean the iPhone sixteen is a huge success ad.
You have to read between the lines again until an executive says it definitively on the call, you don't know. But there were other areas that were a bit of a surprise, right. iPad was a surprising miss despite having released new generations.
So take that.
MAC revenue came in at one hundred million more than the same period a year ago, or maybe sequentially in line with expectations, so that's not giving a surprise contribution. What's left we know revenue services revenue missed, maybe iPhone.
Piecing it together, well, how much of the iPhone sixteen was sold in this most recent quarter? Like, do we that? No, we do in terms of availability.
So in terms of availability, I'm trying to go through the tank, you and the thing to look at the inventory number because that's the next place that I can. I can't find it yet because to me with another one, and I'll try catch.
Out, Okay, So I'll give you some time to look for that. The reason I always am interested in that is because they announced this thing in September, goes on sale a few weeks later. The quarter ends after only a couple weeks after that, iPhone goes on sale. In some years Emily, they haven't even been able to put the new phone on sale before the quarter of learning.
So it's just a question of okay, how many people were buying the old iPhone versus the new iPhone right here as an indication of how well is that new model selling.
I'll also add Tim that we are seeing Apple stock extending some losses. You know, nothing huge here, and it is. It has only been six minutes since Arnais came out, but we do now see shares of Apple down about one point seven percent, despite the fact that fourth quarter revenue met estimates and was still up six percent year over year, and also that service revenue up twelve percent year over year but did slightly miss estimates.
Taking a look now at our live blog. If you have access to this on the Bloomberg terminal, do check it out our own. Mark German, adding to what Ed said that iprad is a surprising miss, coming out just shy of seven billion, despite the release of that new iPad Pro and iPad Air models earlier this year. That new iPad Mini released this month unlikely to help materially. Mark Kerman also writing that the Mac came in with about one hundred million dollars annual revenue increase, meeting Wall
Street estimates of seven point seven billion dollars. New Max released this week should help that product segment in the current quarter, and I want to go back to you. I know you've been diving into that ten Q speed reading it. What sticks out to you from there.
Well, not the inventries. They're basically very similar to the same period a year ago. So I'm going to spend a bit more time pondering that. You know, a story of the megacaps so far in twenty twenty four has been sweetness for shareholders and this is more dry stuff. But you know that your audience on this show, whether they're listening or watching, there are so many different types of Apple investors out there where the role of a
dividend or shareholder returns is really important. And so whatever's happening with any given products line or category, Remember this Apple is a cash machine twenty seven billion dollars of operating cash flow generated in the quarter. Hence they're able to return relatively the same twenty nine billion dollars back to investors. The differences is that in prior quarters, when we've seen a sweetener like a divvy or a boost into a buyback program, that's been a great thing for investors,
they've responded positively. On EM's note, just then, the stock isn't really responding to that, right, there isn't some sort of relief in that sense, knowing that the bar too is high.
Yeah, and you bring up a really good point that I know you said it's dry, but it's not as dry to me. I interview a lot of I know, full managers.
This is a nice little mix for you.
You know, people always talk about cash rich companies and how those kinds of companies are despite what the macro economic environment is doing. If you buy a large company that has a big, strong balance sheet, no matter what the FED does, no matter what other earnings do, you'll be safe. And I think that sentiment has really carried these mega tex stocks this year, all the volatility.
It's important because again there's a badge of honor for many that comes with holding Apple stock, whether you're the smallest retail investor or the giant on Wall Street.
That's been the case for so long.
But at the end of the day, you have in the world of technology, two main operating systems for smartphones iOS and the iPhone, and then Android, where a number of handset makers are involved. And it comes back to what's happened to Apple, and the cores are just gone. It grew in every market around the world apart from one greater China. Tim's question is did the iPhone do great well? The question outstanding is as important as the data that we've related to the audiences we don't know.
Let us answer the question on the call.
The iPhone grow in China and all of these things investors take into account just as much as they do the sweeteners that have put before them.
All Right, We're going to hear from Apple executives on the call a little later.
ED.
It's notable because it is I believe Luka Maistri's last earnings call at Apple. He's going to be passing the torch to his top deputy when the calendar turns to twenty twenty five. Is that something that is meaningful to you in terms of how this There's not a lot of executive turnover at this company. These people have been there for years. Can text you like that for us?
On the one hand, Kevan Perek, who's you're like right, his deputy and steps up to being CFO, is a known quantity because he's been there and this was telegraphed. But I've often posted in the Bloomberg Top Life blog it's the blog we run during these big moments that it's often my Strey rather than cook that gives you the information that we'd consider news. It is some more granular detail about performance of a specific product in a
specific market, like iPhone in China. He is widely seen as being a master of the margin, right you think about it, talked about cash generation but the bottom line in general and Apple being a highly profitable company with just insane amounts of cash on the balance sheet. You know, Luke and Maistreet has been a big part of that story. Does can Correct have the same prowess in that field?
It takes some quarters to find out, but you know, when you're a journalists and an investor, you become familiar with these names and you listen closely when they say things because you know that they choose their words with purpose.
Ed.
We're going to give you a break in just a minute. But last question to you is just give us the high level view of Apple for people who are just joining us right now.
Yeah, in the quarter, Apple posted sales that were about what everyone expected. They grew their sales in every geography around world world apart from China. An iPhone which is basically everything still for anyone that cares about Apple beat estimates overall, but there's a lingering question about how it's doing in China because it's such an important market. The next phase, or the forward looking bit, is the work
they've done in AI. Working for them is a business because services revenue came in a bit light.
Now.
Apple Intelligence is only just this week, last couple of days been rolling out in markets like North America. It is not available in the EU. It is not available in China. But some explanation because we don't have it in the release of how this amazing AI tech is going to drive growth for them in terms of sales and profit is probably the next logical thing to look at.
D Love though, is the cohost of Bloomberg Technology on Bloomberg TV.