At noon on May 2nd, Beijing time, CNBC's Josh Lipton and Jim Cramer mentioned Apple’s chief financial officer's financial report in March to Cook, and Cook tried to interpret this to eliminate the public’s negative views on iPhone sales. .
It is worth mentioning that he denied the kind of 'longer upgrade cycle will hurt Apple' view:
From my point of view, it is important that the number of active installations of the iPhone is still growing at a double-digit rate, and this growth is still continuing. What does this mean? This means, from a conceptual point of view, There are more new iPhones that are being activated for use by users, and this amount has exceeded the number of old iPhone models that are constantly being eliminated. And this is really good for us, which is our service business last quarter. One of the reasons for being able to grow 31%.' Cook said.
Cook also pointed out that for the first time ever iPhone X achieved Apple's flagship iPhone to achieve the highest sales.
The following is a rough record of this interview:
Cook: We have the best second-quarter performance in history. Income increased by 16% year-on-year, and earnings per share increased by 30% year-on-year. iPhone's revenue increased by 14%, service sector revenue increased by 31%, and 'other products 'The Apple Watch under the table, AirPods and home pods and other products increased by 38% year-on-year, which all contributed to the increase in revenue. So, this is an amazing quarter.
The iPhone has been a strong driver for the iPhone X. The iPhone X is the most popular iPhone every week of the quarter, and of course, in the last quarter it was also the most popular iPhone ever since its launch. So, iPhone X It has achieved great success. This is the first time that the top model iPhone has been able to top the sales championship since we separated the iPhone 6 and iPhone 6 Plus. This is unprecedented in history.
Service revenue not only set a record for the second quarter of the calendar year, but also set a record for any quarter in our history. Its business foundation is very substantial and extensive. Each of our major regions (service revenue) has grown by 25 More than %, and we have many, many services. These services have performed very well, whether it is the App Store that created history, iCloud, Apple Pay or Apple Music, etc. All of these services have been created. Historical records. The number of paid subscription subscribers this quarter has exceeded 270 million at the end of the quarter. This figure exceeds 100 million - more than 100 million compared to the same period. Therefore, we have witnessed a huge shift in the service business, both of which Including our own services as well as third party services we sell on iOS App Store and App Store TV-O apps.
If you look at the iPad, iPad’s sales and revenues have increased for the fourth quarter in a row. The new iPad and educational activities we announced at the end of March have been very popular so far. We expect that a large number of iPads will be sold to the education market. Give more consumers.
In terms of geography, revenue in Greater China has grown by 21%. This is the best growth rate we have experienced in Greater China in two and a half years. Therefore, we are very proud.
From a cash return perspective, we repurchased US$23.5 billion in stocks during the quarter. This is the largest transaction we have ever made in any quarter of the history. Today we announced that the Board of Directors has approved US$100 billion. Repurchase, dividends increased by 16%, which is the largest dividend increase since our launch in 2012. This is an incredible quarter. From a forecasting perspective, we estimate that in the third quarter, revenue is about 51.5 billion. The United States dollar to 53.5 billion US dollars.
Any questions?
Josh Lipton: Last time we talked to Tim after seeing the results of the first quarter, you said that iPhone X is the best-selling iPhone. Is this still true today?
Cook: Yes.
Josh Lipton: How this will be reorganized - how will you influence your perception of future high-end and low-cost models?
Cook: I think there is a customer... The demand for smart phones in the market is very large. It is basically the needs of most people in the world, so you need to meet the needs of various individuals. So we will continue this practice today. There are a range of Apple products from entry to the top.
Josh Lipton: The iPhone's ASP (Average Selling Price) has risen to $796 during the holiday season. I know that for this quarter, Wall Street forecast price is $742. It seems that the iPhone's average selling price should be locked at 728. Dollar?
Cook: If you remember, during the conference call last quarter, (Apple Chief Financial Officer Luca Mesdeli) mentioned this during the question and answer session, when we enter the second quarter, we will reduce The iPhone's channel inventory. We have lowered 1.8 million units in particular. I think this is much more than Wall Street expects. If you look at where we are down, we actually lowered it to a high point, and we expect this to happen. And we told everyone in January that this obviously means that the wholesale price you mentioned for '$729' is actually less than the average selling price.
Josh Lipton: Let me back one quarter from this quarter, Tim. This is something we often discuss at CNBC – Consumers use a single iPhone longer. According to Consumer Intelligence Research Partners ( According to Consumer Intelligence Research Partners, a recent survey showed that 60% of users hold the iPhone for two years or more, compared to 51% 12 months ago. The effect of this cycle extension on Apple's business is what?
Cook: I think the upgrade cycle has different stories in each country, so most people in a country will talk about the country's upgrade cycle. If you think of the United States, then for a while in the United States, we have gone from the traditional mode of subsidy - - That is, people only need to pay 199 US dollars instead of 599 US dollars or 699 US dollars to get a mobile phone. When they turn to installment payment, this actually prolongs the update cycle of Apple products in the United States. This does not exist in some countries. Moreover, there are also countries where they have never had traditional subsidies. They always buy mobile phones directly at the selling price. Therefore, you will see different stories in different countries, so it is difficult to talk about it in general.
But from my point of view, it is important that the number of active installations of the iPhone has been growing at a double-digit rate. This has always been the case. What does this mean? This means that from a conceptual point of view, there are more new models The iPhone is being activated for the user, and the speed of replacement has exceeded the speed of the old model. This is very good for us, which is one of the reasons that our service business revenue increased by 31% in the last quarter. We have been discussing this issue for several quarters, many quarters, and this will cause people's concern because it is very important. Last quarter, our single-quarter service revenue exceeded $9 billion.
Josh Lipton: At least in countries like the United States, although the upgrade cycle has been extended, but the same consumers are buying more Apple products and services than before? Is this a way of looking at it?
Cook: This means that more people will buy it....Yes, this is true, but the bigger point it means is that more people own the iPhone and are using it, which also means There are a lot of iPhones we sell - and this is something that many people will forget - many of these iPhones are sold to those who have just gotten the first smartphone in life, or who have switched from other brands of smartphones to iPhones. There are still quite a number of people around the world who are buying smart phones for the first time. This seems strange to us because we have used it for ten years, but this is not surprising for many people.
Josh Lipton: When you talk about Greater China, can you take us to understand the demand trends in mainland China?
Cook: Yes, iPhone X was the most popular smartphone in China last quarter. So this is a strong affirmation - I think that when we have a top model, it is also the most popular intelligence. Mobile phone models. The demand trend in the Chinese market is: 21% of revenue is driven by three major regions - of course, iPhone sales are increasing. In order to increase 21% of revenue in Greater China, you must It's going to be very good in this direction of the iPhone. And the Mac is also growing, and the service business is growing. The service revenue last quarter was very encouraging.
Josh Lipton: Do you see any impact of the escalating trade tension between the United States and China?
Cook: No, I don't think so. I'm very optimistic.
Josh Lipton: Optimistic? Why, Tim?
Cook: Why? Because I think that China and the United States have this kind of unavoidable interconnectedness. The United States can obtain benefits only if China gains benefits. If the United States gains benefits, China can gain benefits. Only the two sides can obtain benefits. Gaining benefits. My meaning is very simple. So, if you look at history, it tells us that the most open and most diverse countries are doing the best. And for those closed and least multinational countries, they are doing the worst. History tells us this again and again. I think both countries know this. So, I'm optimistic.
Josh Lipton: Do you think that Apple is insulated from these tensions because of its investment in China?
Cook: You have to know, never say we are insulated from anything. We have done a lot of things in China. We have a lot of business there. We are operating our company with 100% renewable energy. It is a big event for China, and even we are very independent in this regard. We also really encourage more than 1.5 million app developers to write applications for iOS and App Store. Therefore, we have manufacturing in China. From hardware to software development, I think we have become a key part of the entire society.
Josh Lipton: Service, Tim. You plan to provide a $1 billion budget for original programming in 2018. RBC estimates that Netflix will reach $2 billion and Amazon will reach $3 billion.
Cook: We have never announced $1 billion. This is a rumor. So I'm not going to comment on the size of our budget.
Josh Lipton: So let me ask you, how do you evaluate the success of the original program? If Apple didn’t mention it during the season, won’t you feel bad?
Cook: We haven't even announced what it is. After we announced it, you asked me again.
Jim Cramer: You approved another $100 billion (repo). How much money are you left, so what do you buy in total?
Cook: We still have $10 billion left. Today we also announced that the 100 billion will be settled this quarter, and then we will start with that $100 billion.
Jim Cramer: Your service business subscription has increased by 100 million. This is quite remarkable. How do you see this now?
Cook: The number of active installations has exceeded 1.3 billion. We mentioned in the last quarter that although we didn’t provide figures for the quarter, it’s actually higher than the previous quarter, so it’s continuing to rise, up by two compared to the same period last year. Number. So what you get is: You have more services available to customers to choose from, and there are more devices to be purchased by more customers. This is basically the meaning behind service revenue.
Jim Cramer: Do you want to talk to me about Fortune Magazine's list company?
Cook: We have already exceeded Fortune 100. What we are talking about is that compared to our situation in 2016, we will double by 2020, which means that we will have at least 48 billion U.S. dollars in service every year. business.
Jim Cramer: You guys really introduced wearable devices. So, is the wearable really an epoch-making promoter, or just something you're proud of?
Cook: Our revenue has increased by nearly 50%. This is inseparable from the powerful drives of Apple Watch and AirPods. So, this is yet another record quarter of Apple Watch. We have already passed Apple Watch 3 equipped with a mobile cellular network. The Apple Watch Series 3 was a success and caused more telco operators to start accepting it this quarter, including China. So it did a great job. We did say - if you go back - we Already a Fortune 300 company in the wearable sector.
Jim Cramer: What do you want to say about customer satisfaction?
Cook: The customer satisfaction of iPhone X has reached 99%. This is incredible. We are very proud of it. In fact, for the entire iPhone X, iPhone 8 and iPhone 8 Plus combination, it is 99%.
Our trade-in and trade-offs are very good.
Jim Cramer: If you look at the distribution of your staff in the United States and China, you will find yourself employing so many people in the United States.
Cook: Yes, we hire a lot of people. The protagonist of the 'Apple Story' in China is a lot of developers. Although they do not work directly for Apple, they directly constitute the engine of the App Store. Apple's hardware manufacturer partners also have many Chinese employees. We have a considerable number of employees in China, but it is less than the United States.
Josh Lipton: We recently invited Qualcomm's CEO to CNBC. He believes that in the current situation, if you are dismissed by the company, you may be more inclined to reconcile. How do you intend?
Cook: Unfortunately, when you are the CEO of a big company, you will be removed for many reasons, so this will not induce me to do anything. We never want to participate in this lawsuit. We are reluctant to get involved because we have no choice. So, if they start to admit their own problems, we are also happy to find other solutions. Even so, I will not find any joy in it, it just allows I'm not so uncomfortable.
Note: Kramer's charitable trust owns Apple's shares.