00:03:45 · Tim Stenovec, Anurag Rana, Carol Massar, Mark Gurman
[00:03:45] S2: Especially if you have people going to the Genius Bar saying, hey, this is cracked. I need a new one. I'm just kidding. I'm just kidding. But we will, like you said, we should get some, there will likely be some questions about the cracked issue. Hey, services revenue, as Carol mentioned, came in almost exactly as expected. That's a bright spot on a rock for you, I bet. [00:04:05] S3: You know, but it was somewhere in the, you know, around the 10% mark. So the question really is what kind of guidance they give. Because now, initially what used to happen was guidance was very predictable when it came to the services business. But I think it has been slowing down for the past two quarters. And if they give a guidance right around 10%, I think that's fair. But if they go out and say, well, we're going to, you know, go down, the growth rate is going to go down even more for the services business, that's not good. So I think a lot hinges on guidance this time than in the prior quarters. [00:04:35] S0: Yeah, we know that December quarter, right, is just such an important one in terms of what it means for their top line. Let's just rehash. We're talking with Anurag Rana of our Bloomberg Intelligence team. We are talking Apple already out with its earnings stock down about nine-tenths of a percentage point. Here's some of the highlights. Fourth quarter revenue, that was a beat, $ 114. [00:04:54] S1: 48 billion.
00:04:54 · Mark Gurman, Carol Massar, Tim Stenovec, Anurag Rana
[00:04:54] S1: 48 billion. [00:04:57] S0: Street estimate was $ 113. 47 billion. iPhone revenue, you know this, folks. So important to this company. $ 57. 58 billion. Street estimate was a little bit below that at $ 56. 49 billion. Fourth quarter, greater China revenue. A bit of a struggle there for the company. Still $ 17. 54 billion. Street estimate was $ 18. 75 billion. And again, the stock right now down about 1.1% here in the aftermarket. It has had quite a run, though. Since late June, we've talked about this, adding about a trillion dollar in market cap. So as Anurag, you said, what we get in terms of a guidance. [00:05:34] S2: I think China is such a big question here. I mean, when was the last time we were sitting here being like Apple beat on China? [00:05:43] S0: Well, what is the longer term story here, Anurag, with China? [00:05:46] S2: I think it was like one time in the last few quarters, truly. [00:05:49] S0: They always talk about what an important market this is for this company, but there's increasing competition. [00:05:54] S3: Yeah, but if you think of China, I mean, the last two quarters, they grew like 28%, 22%. I mean, it's a very big number in China. We are now, you could say, after one quarter, we're going to get into a point of very tough comparison of growth in China. You know, from my side, China is one of the most important stories for Apple. In terms of unit shipments, this is an area where they can sell more products than any other geography right now. [00:06:18] S1: U.S.
00:06:18 · Mark Gurman, Anurag Rana, Tim Stenovec, Carol Massar
[00:06:18] S1: U.S. [00:06:18] S3: Is a saturated market in terms of unit growth. China, they have a good market share. But it's still an area where they can gain more market share down the road. India is another area, but I think the per capita income in India is a lot lower than it is in China. So in India, it's only the middle class. And when that goes up, that's really the big story there. So China for me is one of the more important. [00:06:42] S2: What's their entry into India? I mean, for so many years, we talked about a cheaper iPhone being that entry into different emerging markets. But is it that newish laptop that's just a few hundred bucks? [00:06:54] S3: No, it is the phone. I mean, to be very honest, the product is always the phone. Let me be very, very candid about it. It's a very expensive phone. Yeah, but the thing is, like, the base model is there. You have refurbished models. You know, India is becoming a lot more affluent when it comes to the middle class. And Apple is an aspirational brand over there. And that's the discussion there. We have a lot. I mean, they have opened so many stores in the last few years. So, you know, India is becoming an extremely important part of the pie. But again, the overall contribution to Apple is still very small. And I think, you know, over the next 10 years, yes. But in the near three years, I think China remains the most important growth driver. [00:07:34] S0: What's your top question to the C-suite when it comes to Apple?
00:07:34 · Carol Massar, Anurag Rana, Tim Stenovec
[00:07:34] S0: What's your top question to the C-suite when it comes to Apple? [00:07:40] S3: Gross margins. You know, tell me how are you going to maintain gross margins over the next I would say three to four quarters with memory prices up going so high. And then what are you doing with your supply chain to ensure that people have and get the phones that they need in the right amount of time? [00:07:55] S0: All right, so appreciate it. Anurag Rana, thank you so much, of course, of our Bloomberg Intelligence team, and we'll be looking for all of his research on it. Now we've got to go to our own Mark Gurman, of course, who knows the insides and outsides of, I feel like, Apple. He is Bloomberg News Managing Editor for Global Consumer Tech, joining us from the LA Bureau. Mark, we keep reading everything you've got on the blog. [00:08:17] S2: I don't know how he's doing it. He's live blogging. He's on TV. He's on radio. [00:08:20] S0: It's his digital twin. [00:08:21] S2: He's doing it all. [00:08:22] S0: Maybe it's his digital twin. [00:08:23] S2: No, that's really Mark Gurman, I think. [00:08:25] S0: Where should we go? Where should we start when it comes to the Apple story right now?
00:08:25 · Carol Massar, Mark Gurman
[00:08:25] S0: Where should we go? Where should we start when it comes to the Apple story right now? [00:08:28] S1: Well, let me give the backdrop. No regular iPhone 18. The iPhone 18 Pro is the most minor year-over-year upgrade we've seen in a long time. Nobody can find an iPhone Duo. No iPhone Air 2. All the major fall products, the MacBook Pro with Touch, the Home View, the HomePod Mini, the Apple TV, the OLED iPad, none of them launched until the holiday quarter. Yet they still beat And they beat because of the iPhone 18 Pro. Likely also from continued demand for the iPhone 17 Pro Max and all the carrier deals you saw earlier in the quarter. So this is a phenomenal report for Apple. The big news, which I think will be less phenomenal, is the guidance for the December quarter. Given the backdrop of everything I explained, it all comes down to how the iPhone Duo is going to perform. And so far, the iPhone Duo supply is very difficult to understand. New pre-orders didn't come, aren't launching until the end of January for many buyers. You can't get them at retail stores right now unless you're an AI bot. So I'll be interested to see the commentary there and what the numbers actually turn out to be. The other piece here is Greater China and services, both either a big fall or a strong deceleration.
00:08:28 · Mark Gurman, Tim Stenovec
[00:08:28] S1: Well, let me give the backdrop. No regular iPhone 18. The iPhone 18 Pro is the most minor year-over-year upgrade we've seen in a long time. Nobody can find an iPhone Duo. No iPhone Air 2. All the major fall products, the MacBook Pro with Touch, the Home View, the HomePod Mini, the Apple TV, the OLED iPad, none of them launched until the holiday quarter. Yet they still beat And they beat because of the iPhone 18 Pro. Likely also from continued demand for the iPhone 17 Pro Max and all the carrier deals you saw earlier in the quarter. So this is a phenomenal report for Apple. The big news, which I think will be less phenomenal, is the guidance for the December quarter. Given the backdrop of everything I explained, it all comes down to how the iPhone Duo is going to perform. And so far, the iPhone Duo supply is very difficult to understand. New pre-orders didn't come, aren't launching until the end of January for many buyers. You can't get them at retail stores right now unless you're an AI bot. So I'll be interested to see the commentary there and what the numbers actually turn out to be. The other piece here is Greater China and services, both either a big fall or a strong deceleration. [00:09:40] S2: Okay, so yeah, a big miss when it comes to China. We'll get to that in just a minute. First, though, I want you to help us with the math. When we do get that guidance about halfway through the call, as you remind everybody on the live blog, Mark, that we're going to get, how do we know the share of Duo in there based on the number that we get?