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MacDailyNews presents live notes from Apple’s Q419 conference call

Wednesday, October 30, 2019 4:49 pm News

MacDailyNews presents live notes from Apple’s Q419 Conference Call with analysts starting at 5pm EDT/2pm PDT today, October 30, 2019.

The company posted quarterly revenue of $64 billion, the biggest fiscal fourth quarter ever, an increase of 2 percent from the year-ago quarter, and quarterly earnings per diluted share of $3.03, up 4 percent. International sales accounted for 60 percent of the quarter’s revenue.

For Q120, Apple guided for revenue between $85.5 billion and $89.5 billion.

Live notes from Apple’s Q419 Conference Call in reverse chronological order:

• AAPL after hours: 248.10 +4.84 (1.99%) @ 6:01PM EDT

• Congrats, Nancy, and good luck in the future!
• End of conference call
• Cook: We are really please with the number of people who entered the Apple Arcade trial period. It’s too early to tell what the conversion rate will be, “but I feel like we’re off to a really good start.”
• Cook: It’s important to solve some things and “get to a better place” in U.S.-China trade deal
• Cook on U.S. import tariffs: We are paying some tariffs today, but in general “my view is positive on the way things are going” in U.S.-China trade negotiations
• We decided to be more aggressive on iPhone pricing and it’s paying off
• Cook: Apple has the best iPhone lineup we’ve ever had.
• Apple is cognizant that a lot of users want a recurring payment and the receipt of new products on a regular basis and Apple is committed to making that easier
• Cook: Not ruling out that we might see another bundling opportunity for some other service over time
• Cook: We look at each service and look at what’s best for it. So, that’s why Apple TV+ is a gift to new buyers
• Apple TV+ accounting: Apple contemplates a number of factors: multiple device purchases, geographical availability, family sharing, etc.
• Apple TV+ to new buyers of Apple devices is unique
• Luca again laments negative impact of foreign exchange headwinds
• The guidance Apple is providing at the midpoint shows an acceleration of growth
• Apple is launching new services; the engineering and advertising require cost money
• We continue to run selling, general and administrative tightly
• Luca on operating expenses: We want to invest in the business; primarily in R&D
• Wearables are doing very well in China
• It’s not all about iPhone in China; Services grew double digits
• Pricing and monthly payments have also moved the dial
• Product are well-received
• Trade tension is less and that’s a positive
• We feel good about how we’re doing [in China]
• Cook: We had a very good September in China; good reception for iPhone 11, 11 Pro, and 11 Pro Max
• 3/4 of Apple Watch buyers are new to Apple Watch (not a mature market, plenty of headroom there)
• Cook: We are not releasing the precise numbers of wearables
• Cook: We have opportunities in growth of installed base; the iPhone trade-in program and secondary markets have been helpful
• Cook: Free Apple TV+ for a year is a “bold move”; pricing is aggressive, too
• We’d like for as many people as possible to see Apple TV+ content
• In the future we’ll look back an see Apple’s greatest contribution was to people’s health
• Cook will not talk about things Apple is working on
• Cook: I think the Always On display for Apple Watch Series 5 is a game-changer for users
• Wearables have done extremely well: “We are thriled with the results” – Cook
• Better commodity pricing vs. last year, but foreign exchange is negative 120 basis points YOY
• Luca: Foreign Exchange is Apple’s biggest headwind, negative 70 basis points on a sequential basis
• Congrats, Nancy, and good luck in the future!
• Nancy Paxton, Senior Director Investor Relations, will retire in December after 93 earnings calls and 33 years at Apple
• The dividend is payable on November 14, 2019 to shareholders of record as of the close of business on November 11, 2019
• Apple’s BoD has declared a cash dividend of $0.77 per share of the Company’s common stock
• $3.5 billion in dividends
• $18 billion in buybacks
• Over $21 billion returned to shareholders in quarter
• Apple continues on path to reaching cash neutral position over time
• $108 billion total debt
• Apple has $260 billion in cash and marketable securities
• Apple is helping government agencies to increase efficiency and reduce costs (U.S. Census given as example; Apple products will play an important role in the U.S. Census)
• 80 of the 100 largest retailers of the world are choosing to deploy Apple products
• Apple is seeing strong demand in the enterprise market
• Apple is seeing more than 5X iPhone trade-in volume YOY
• Tremendous growth for Apple Watch revenue
• More than 80% of tablet purchasers plan to buy Apple iPads
• Active install base of iPad reached a new all-time high (number not disclosed)
• Active install base of Mac reached a new all-time high (number not disclosed)
• Over 5,000 Apple Authorized Service Providers worldwide
• Best quarter ever for AppleCare
• Apple will have over 500 million paid subs in fiscal 2020
• Over 450 million paid subscriptions (vs. 330 million YOY)
• U.S. has 99% iPhone customer satisfaction (451 Research)
• iPhone: $33.362 billion
• Services: $12.511 billion
• Mac: $6.991 billion
• Wearables, Home and Accessories: $6.520 billion
• iPad: $4.656 billion
• Diluted EPS was a Q4 record at $3.03 per share
• New Q4 revenue records in Americas and Rest of Asia Pacific segments
• Luca: Foreign exchange headwinds were close to a billion dollars
• BTW: Cook sounds like he has a cold
• At Apple, user privacy is at the center of everything the company does
• Apple runs on 100% renewable energy; committed to clean power generation
• New yearly Services record set in all geos; Apple Services is the size of a Fortune 70 company
• Mac Pro to be manufactured in Austin, Texas
• For fiscal 2019 Mac generated highest revenue ever
• Mac: $7 billion revenue
• 7th gen. iPad – most affordable iPad
• iPad: 17% growth driven by iPad Pro
• New Research app launched with major medical studies
• New Apple Watch Series 5 launched
• Wearables set revenue records everywhere
• Cook: I have binge-watched everything on Apple TV+ and there is much to look forward to
• Apple TV+ launches in over 100 countries and regions in two days
• Apple News expanded to Australia and UK during the quarter
• Apple happy to be working with Oprah on Book Club
• Customer feedback on Apple Arcade has been overwhelmingly positive
• Apple Arcade launched this quarter
• Later this year, customers will be able to purchase iPhones via Apple Card, pay over 24 months, with no interest rate
• Apple Pay offers the safest, most secure solution on the planet
• All-time record revenue for Apple Pay – more than doubled YOY
• Service are on a tear
• iPhone 11/Pro produce the highest quality video in a smartphone
• iPhone 11 has quickly become Apple’s best-selling iPhone
• iPhone 11/Pro has produced a wave of the best photos you’ve ever seen from a smartphone
• Apple set Q4 wearable records in every geo
• iPhone YOY performance continues to improve
• Cook: We saw further improvement in revenue trends in China
• Cook: This was Apple’s highest fiscal fourth quarter ever
• Start of call

• AAPL after hours: $245.98 +2.72 (1.12%) @ 4:51PM EDT

• Maestri continued: “We also returned over $21 billion to shareholders, including almost $18 billion in share repurchases and $3.5 billion in dividends and equivalents, as we continue on our path to reaching a net cash neutral position over time.”
• Apple CFO Luca Maestri in statement: “Our strong business performance drove record Q4 EPS of $3.03 and record Q4 operating cash flow of $19.9 billion.”
• Cook continued: “With customers and reviewers raving about the new generation of iPhones, today’s debut of new, noise-cancelling AirPods Pro, the hotly-anticipated arrival of Apple TV+ just two days away, and our best lineup of products and services ever, we’re very optimistic about what the holiday quarter has in store.”
• Apple CEO Tim Cook in statement: “We concluded a groundbreaking fiscal 2019 with our highest Q4 revenue ever, fueled by accelerating growth from Services, Wearables and iPad.”

• AAPL after hours: $247.60 +$4.34 (+1.78%) @ 4:47PM EDT
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