MacDailyNews presents live notes from Apple’s Q219 conference call

MacDailyNews presents live notes from Apple’s Q219 Conference Call with analysts starting at 5pm EDT/2pm PDT today.

Apple will provide live audio streaming of its Q219 Results Conference Call using Apple’s industry-leading QuickTime multimedia software.

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

The company posted quarterly revenue of $58 billion, a decline of 5 percent from the year-ago quarter, and quarterly earnings per diluted share of $2.46, down 10 percent. International sales accounted for 61 percent of the quarter’s revenue.

For Q219, Apple guided for revenue between $52.5 billion and $54.5 billion.

Live notes from Apple’s Q219 Conference Call in reverse chronological order:

• AAPL After hours: $210.90, +$10.23 (+5.10%) @ 5:58PM EDT

• End of conference call.

• India is primarily an Android market currently which means these is a lot of opportunity for Apple iPhone there, long term
• Apple is increasing local production in India
• Apple would like to place Apple Retail Stores in India; working with gov’t to get approval to do so
• Cook: India is a very important market in the long term; it is very challenging in the short term

• Cook on the the new services: “These aren’t hobbies.”
• Apple News+ supports magazine publishers
• Apple TV+ addresses the general move of consumers from cable/satellite to over-the-top TV
• Gaming is the top category on the App Store, hence Apple Arcade
• Apple Card has a significant level of interest

• AAPL After hours: $210.87, +$10.20 (+5.08%) @ 5:53PM EDT

• We are focused on getting Apple Arcade (autumn), Apple Card (summer), and Apple TV+ (autumn) out to market this year
• Cook: We are always working on new things
• Apple will not share the financial terms of the Qualcomm settlement as confidentiality is part of the agreement

• It’s good for the environment and good for users to trade in old devices and upgrade; old iPhones are refurbed or recycled
• Installment payments on iPhone are different in different geographies; China is doing the best in iPhone installment plans
• Cook: iPhone product being traded in is “all over the place.” iPhone 6, 6s, 7, 7s – all different replacement cycles

• Cook: Improved trade dialog between U.S.-China increased consumer confidence in China
• Trade-in programs and installment payments appeal to many customers
• Cook: Many people want to trade up to new iPhones; the trade-in to customers looks like a subsidy
• Cook: Declines to discuss 5G in any detail or even say “5G”

• AAPL After hours: $210.20, +$9.53 (+4.75%) @ 5:42PM EDT
• Guidance includes a 300 basis point hit from currency headwinds

• Luca: OpEx increase in part due to new services coming online

• Apple has made some adjustments in India that look positive initially
• Cook: We are glad to put Qualcomm litigation behind us; happy to have a multi-year supply agreement and a direct license; “we feel good about the resolution”
• Improved trade dialog between U.S. and China; this has affected consumer confidence in China positively
• China economic stimulus helping
• Trade-in and financing programs has been very well received in China
• Apple made some price reductions, essentially backing out the weaker currency effect and then some
• Cook: In iPhone we are seeing a better YOY performance in the last weeks of the quarter

    • Analysts’ questions begin —

• Apple is providing the following guidance for its fiscal 2019 third quarter:
– revenue between $52.5 billion and $54.5 billion
– gross margin between 37 percent and 38 percent
– operating expenses between $8.7 billion and $8.8 billion
– other income/(expense) of $250 million
– tax rate of approximately 16.5 percent

• The dividend is payable on May 16, 2019 to shareholders of record as of the close of business on May 13, 2019
• Apple raised quarterly cash dividend to $0.77 per share; Apple plans annual dividend increases
• Apple BoD has authorized an additional $75 billion for share repurchases
• Apple plans to reach a net cash neutral position over time.
• 55.1 million AAPL shares retired
• $27 billion returned to investors during the quarter
• $115 billion net cash position
• $225 billion in cash
• Native iOS apps continue to grow in the enterprise
• Apple sees great momentum in iOS traction in the enterprise
• Adoption of iPad has cut maintenance delays in half at “one of the world’s largest airlines”
• Across 450 airlines, Apple iPad is overwhelmingly the chose for electronic flight bags

• Apple Watch is the best-selling smartwatch in the world; 3/4th of buyers bought their first Apple Watch during the quarter
• Wearables, Home and Accessories: $5.129 billion (vs. $3.944 billion YOY)
• Luca: iPad Pro the “perfect PC laptop replacement for both consumers and professionals.”
• iPad: $4.872 billion (vs. $4.008 billion YOY)
• More than half of Mac buyers were “new to Mac.” (Read: Upgrading from crappy Windows PCs – MDN Ed.)
• New all-time Mac revenue records in Japan and South Korea
• Mac: $5.513 billion (vs. $5.776 billion YOY)

• All subscription categories are growing in double digits
• Services accounted for about 20% of revenue and about 33% of profit

• XR, XS, XS Max customer satisfaction: 99% (can’t please everyone – MDN Ed.)
• Active installed base of iPhone reached a new all-time high at the ned of March
• iPhone: $31.051 billion (vs. $37.559 billion YOY)
• Headwinds from foreign exchange
• Best iPad growth rate in six (6) years
• Luca: Quarterly revenue of $58 billion

• Everyone at Apple is hard at work on WWDC2019; Cook: “You are not going to want to miss this one.”
• Cook: Apple is as excited as ever in their great pipeline

• AAPL After hours: $211.00, +$10.33 (+5.15%) @ 5:19PM EDT

• Apple’s environmental initiatives continue to expand worldwide (recycling, solar, forestry, and much more)
• In Q219, Apple Health Records came to U.S. Veterans Administration
• Apple Watch ECG launched in 19 more countires during the quarter; it is changing lives
• iPhone trade-ins in Apple Stores initiatives; all-time record response, more than 4X iPhone trade-ins YOY

• Demand for AirPods (2nd gen.) is phenomenal; a cultural phenomenon
• Strong iPad sales quarter
• New iPad Air and iPad mini were launched
• iPad Pro had strong customer response
• Apple faced some Mac processor constraints; Apple believes Mac sales would have been higher without these constraints
• Apple launched a new, more powerful iMac
• In the quarter, Apple announced Apple News+, Apple Card, Apple Arcade, Apple TV+
• Apple News is already the No.1 news app in the U.S. and U.K.
• Over 390 million paid subscriptions, a increase of over 30 million in the quarter alone

• AAPL After hours: $211.50, +10.83 (+5.40%) @ 5:10PM EDT
• Apple Pay transactions more than doubled YOY
• Apple had best quarter ever for App Store and Apple Music
• Apple’s installed base continues to grow, setting new records

• iPhone declines were significantly smaller in the final weeks of the quarter
• Apple believes strongly in long term opportunity in China
• Record Q2 results in U.S., U.K., and Japan
• Headwinds faced from weaker foreign currency; in constant currency, report would have been 200 basis points higher
• Cook: “This has been an exciting and productive quarter for Apple.”

• AAPL After hours: $211.21, +$10.54 (+5.25%) @ 5:04PM EDT

• Start of conference call

• Apple Q219 R&D expenses: $3.948 billion (vs. $3.378 billion YOY)

• Apple Q219 total net sales: $58.015 billion (vs. $61.137 billion YOY)
• Apple Q219 net income: $11.561 billion (vs. $13.822 billion YOY)

• Net sales by reportable segment:
– Americas: $25.596 billion
– Europe: $13.054 billion
– Greater China: $10.218 billion
– Japan: $5.532 billion
– Rest of Asia Pacific: $3.615 billion

• AAPL After hours: $211.00, +$10.33 (+5.15%) @ 4:58PM EDT

• iPad: $4.872 billion (vs. $4.008 billion YOY)
• Wearables, Home and Accessories: $5.129 billion (vs. $3.944 billion YOY)
• Mac: $5.513 billion (vs. $5.776 billion YOY)
• iPhone: $31.051 billion (vs. $37.559 billion YOY)
• The company set an all-time quarterly record for Services: $11.450 billion
• Apple posted quarterly earnings per diluted share of $2.46, down 10% YOY
• Apple posted quarterly revenue of $58 billion, a decline of 5% YOY
• Apple’s fiscal 2019 second quarter ended March 30, 2019

• AAPL After hours: $211.73, +$11.06 (+5.51%) @ 4:53PM EDT
• AAPL After hours: $210.88, +$10.21 (+5.09%) @ 4:50PM EDT
• AAPL After hours: $210.67, +$10.00 (+4.98%) @ 4:48PM EDT

4 Comments

    1. What’s your point?
      Bankruptcy?
      Headline trolling?

      Did you know that the smartphone market is saturating? Go look at numbers elsewhere then come back and figure out the Apple numbers…

      Maybe your head is saturated…

  1. I can never understand why MDN solely provides Apple’s replies to analyst’s questions without any mention of the question being asked or who asked it.

  2. Just like I said before the earnings. Weak hands will drop the golden pot and just watch it being picked up by the smart 😀
    Now go go to court complaing and demanding compensation for you loss (bad investment decision really) because Tim Cook did not warn YOU that the stock will rise after earnings.

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