MacDailyNews presents live notes from Apple’s Q217 Conference Call with analysts starting at 5pm EDT/2pm PDT today.

Apple will provide live audio streaming of its Q217 Results Conference Call using Apple’s industry-leading QuickTime multimedia software.

The live webcast will begin at 2pm PDT/ 5pm EDT today here.

Apple today announced financial results for its fiscal 2017 second quarter ended April 1, 2017. The company posted quarterly revenue of $52.9 billion and quarterly earnings per diluted share of $2.10. According to a Thomson Reuters analysts’ consensus estimates called for revenue of $53.02 billion and EPS of $2.02.

For their fiscal 2017 third quarter, Apple guided for revenue between $43.5 billion and $45.5 billion. Analysts’ consensus was for guidance of $45.6 billion.

Live notes from Apple’s Q117 Conference Call in reverse chronological order:

• AAPL after hours: $144.21 -$3.30 (-2.24%) @ 5:59PM EDT

• End of call

• Cook: India is moving impressively into 4G at a speed I have not seen anywhere else
• Cook: We think Apple is a great opportunity; we are bringing all of the things that we brought to bear (channel, stores, ecosystem, developer center) in other markets previously. Apple is currently under-penetrated in India, so we are putting a lot of energy into the country
• Cook: With 4G infrastructure expansion in India, that is good for Apple and iPhone
• Cook: We have been investing quite a bit in India; it is the 3rd largest smartphone market in the world today

• Maestri: We have fairly consistently reduced iPhone channel inventory in the June quarter

• Cook: Demand for iPhone 7 Plus is growing incredibly fast around the world
• Cook: We saw the largest number of upgraders ever in the first half of Apple’s fiscal year
• Cook: YOY performance was similar for iPhone
• Cook: iPhone channel inventory reduced by 1.2 million units in Q2; sell-through grew YOY

• Cook on Apple v. Qualcomm: “That’s what courts are for.”
• Cook: Qualcomm is trying to charge Apple on a percentage of non-Qualcomm components
• Cook: We are withholding royalties to Qualcomm, because we do not know how much to pay as there is a dispute on the terms; Apple needs the courts to decide that unless they can settle on a agreed upon amount
• Cook on Qualcomm: Anyone who has a standards essential patent is obligated to offer it to everyone on a FRAND basis. Qualcomm has not made such an offer to Apple

• Cook believes there might be signs of an iPhone pause ahead of a highly anticipated tenth anniversary iPhone
• Apple is excited about the future of Apple Watch
• Smartwatches are difficult, so Cook is not very surprised that other companies are falling out of it
• Cook: We are not close to supply/demand balance on AirPods
• Cook: When you combine Watch revenue with AirPod/Beats revenue that business was well into the Fortune 500
• Cook: We see Apple Watch as a very important product for Apple; units more than doubled in 6 of Apple’s top 10 markets in Q2

• People worldwide start at a certain level of spending on Apple’s Stores (iTunes Store, App Store) and then spend more over time
• Very large number of people coming into Apple’s ecosystem and then start buying on Apple Stores (iTunes Store, App Store)
• Sequential increase of 15 million subscribers to Apple services from 150 million to 165 million at end of quarter

• With taxes, and repatriation, theres’ a lot that has to happen there; Apple will reassess with any U.S. corporate tax changes
• Maestri: For the last 5 years, we’ve run the company to return about 100% of free cash flow to the shareholders

• Performance continues to be weak in Hong Kong as tourism market continues to slump
• Currency devalued by 5%; not an insignificant headwind
• Seven of Apple’s Top 10 retail stores are in China
• Apple Retail Store traffic was up 27% YOY in China
• Mac sales up 20% in China
• Cook: We sold the highest number of Plus models with iPhone 7 Plus in China

• iPhone 7/Plus supply now in balance
• Cook: We did not get the mix between iPhone 7 and 7 Plus right; demand for iPhone 7 Plus was stronger than Apple expected

• Apple received no benefit from Qualcomm withholding as they are accruing those payments
• Some level of gross margin compression in June quarter expected
• Maestri: Apple up 40 basis points sequentially; that’s with 100 basis points of currency headwinds

• Questions from analysts begin

• Apple is providing the following guidance for its fiscal 2017 third quarter:
– revenue between $43.5 billion and $45.5 billion
– gross margin between 37.5 percent and 38.5 percent
– operating expenses between $6.6 billion and $6.7 billion
– other income/(expense) of $450 million
– tax rate of 25.5 percent

• Apple will continue to issue debt to fund the capital return program
• Apple continues to plan annual dividend increases in the future
• Apple BoD approved a 10.5% increase to the Company’s quarterly dividend, and has declared a dividend of $0.63 per share of the company’s common stock, payable on May 18, 2017 to shareholders of record as of the close of business on May 15, 2017
• Apple has returned over $211 billion to shareholders, including $151 billion in share repurchases
• 66.3 million AAPL shares retired during the quarter
• Apple now has $256.8 billion in cash on-hand
• 16% increase in visitors to retail stores over the quarter

• AAPL after hours: $143.87 -$3.64 (-2.47%) @ 5:21PM EDT

• Apple set new enterprise revenue record for the quarter and company expects that momentum to continue throughout the year

• iPad remains very successful in the segment where Apple competes; 81% market share of tablets costing above $200
• iPad revenue grew in the U.S.
• 8.9 million iPad units was ahead of Apple’s expectations
• MacBook Pro demand was very strong

• App Store generated twice the revenue of Google Play Store in the quarter
• Last year’s Q2 contained the busy week between Christmas and New Year’s. This year’s Q2 did not.
• iPhone customer sat very high
• iPhone ASP in Q117 was $665 vs. $642 in Q216
• Apple CFO Luca Maestri: iPhone performance slightly better than last year on a sell-though basis

• Cook: Apple is a company that could have only been started in America
• Apple excited to move into Apple Park

• Cook touts Apple’s environmental programs

• Apple’s BoD has increased its share repurchase authorization to $210 billion from the $175 billion level announced a year ago
• Apple’s Board of Directors has authorized an increase of $50 billion to the company’s program to return capital to shareholders and is extending the program timeframe by four quarters. Under the expanded program, Apple plans to spend a cumulative total of $300 billion by the end of March 2019

• 495 Apple Retail Stores worldwide
• We are excited about India
• We continue to be very enthusiastic about our business in China

• Revenue from wearables alone (Apple Watch, AirPods, Beats headphones) = size of a Fortune 500 company
• AirPods: 98% customer satisfaction according to Creative Strategies
• Apple Watch sales nearly doubled year over year

• We are investing in Mac and every excited about the future of the platform
• String demand for new MacBook Pro

• Clips, a free, new Apple app, lest you make expressive videos to share via Messages/social media
• We are seeing great momentum in Messages

• Apple Pay seeing strong, growing usage, transactions up 450% over last 12 months
• Seeing strong growth in paid subscriptions – now exceed 165 million apid subscriptions (iCloud storage, Apple Music, etc.)
• Our Services business is well on its way to becoming the size of a Fortune 100 company
• We’ve seen great customer response to both models of the new iPhone 7 (PRODUCT)RED Special Edition
• We gained market share with iPhone in nearly every country that we track
• We are very proud of the quarter
• Apple CEO Tim Cook: Today we are reporting a strong March quarter, with accelerating revenue growth

• Start of call.

• Other Products revenue was $2.873 billion (includes sales of Apple TV, Apple Watch, Beats products, iPod and Apple-branded and third-party accessories) vs. $2.189 billion YOY, or +31%.
• Services revenue was $7.041 billion (includes revenue from Digital Content and Services, AppleCare, Apple Pay, licensing and other services) vs. $5.991 billion YOY, or +18%

• Unit sales:
– iPhone: 50.763 million (vs. 51.193 million YOY, -1%)
– iPad: 8.922 million (vs. 10.251 million YOY, -13%)
– Mac: 4.199 million (vs. 4.034 million YOY, +4%)

• AAPL after hours: $145.26 -$2.25 (-1.53%) @ 4:52PM EDT
• Awaiting start of call

Apple Q217 data