Liveblog: Apple reveals its (relatively) meager Q4 2016 earnings

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Will Apple reach its own targets for Q2?
Revenues are expected to be down year-over-year.
Photo: Ste Smith

Apple is set to report its Q4 2016 earnings today, only instead of it being a time for celebration, the company is expected to announce its first annual revenue decline in 15 years.

Apple CEO Tim Cook and CFO Luca Maestri warned Wall Street that this quarter wouldn’t smash any records, but with the iPhone 7 doing better than expected, could relief be on the way?

Investors and analysts will grill Apple about how well the company expects to perform next quarter during today’s earnings call. And Cult of Mac will be right here, liveblogging the whole shebang when it starts at 2 p.m. Pacific.

Come join the fun — it’s livestreaming on Apple’s investor site.

October 25, 2016 3:01 pm PDT Buster Hein

The torture is finally over. If you want to listen to the replay, it will be available on Apple’s investor site by 5PM today.

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October 25, 2016 3:00 pm PDT Lewis Wallace

The strong dollar has been a problem for Apple because two-thirds of the company’s revenue comes from outside the United States. The 15 percent appreciation in the dollar relative to other markets made things tougher for Apple, but it’s becoming the “new normal,” Luca says, and the company is adjusting.

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October 25, 2016 2:54 pm PDT Lewis Wallace

India’s massive young population makes it a great market for selling smartphones. Infrastructure expansion and upgrades are also a good omen. It’s not where China is, but it’s looking good — and Apple is definitely focused on hitting that market.

“I see a lot of the factors moving in the right direction there,” Tim says. The Indian government is upgrading the infrastructure, which is creating jobs. (That also means more people with more disposable income.) “There’s a lot of headroom there … and we’re working very hard to realize that opportunity,” he says.

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October 25, 2016 2:51 pm PDT Lewis Wallace

Carrier incentives made a comeback this year, says a caller. Can we expect more?

Tim isn’t sure, but the two-year-old iPhone “sweet spot” meant lots of people were looking to upgrade this year and carriers wanted to capitalize on the situation. So who knows.

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October 25, 2016 2:47 pm PDT Lewis Wallace

That got Tim a little bit riled up! I like it!

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October 25, 2016 2:47 pm PDT Buster Hein

The analyst that just asked Apple “do you know what you want to do in the next 3 to 5 years” should be banned from all future earnings calls.

“We have a strong sense of where things are going to go and we’re agile enough to shift if we need to,” Tim Cook sternly told the analyst.

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October 25, 2016 2:44 pm PDT Lewis Wallace

“Most people would like an assistant with them all the time,” Tim says. In our mobile society, that’s why Siri is important — usage of an AI assistant on smartphones will “likely be much greater,” Tim says.

He also says Siri gets 2 billion requests a week. Wonder how many of those end with Siri saying “I’m not sure I understand.” Personally, I use Alexa more than I use Siri. And that’s simply because a large percentage of the time when I use Siri, it’s a frustrating failure.

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October 25, 2016 2:43 pm PDT Buster Hein

“Most people would like an assistant with them all the time,” says Tim Cook when asked if Apple is making an Echo competitor. “The advantage of having an assistant on your iPhone is it’s with you all the time. That doesn’t say there is not a nice market for a home one… I think the usage of the [assistant] on the phone will be much greater.”

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October 25, 2016 2:42 pm PDT Lewis Wallace

Who wouldn’t say that? Cult of Mac would have made Game of Thrones if we had the opportunity!

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October 25, 2016 2:41 pm PDT Buster Hein

Eddy Cue recently said Apple would have made Game of Thrones if it had the opportunity, so you can bet Apple is looking at more original content.

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October 25, 2016 2:40 pm PDT Lewis Wallace

Is content creation and ownership important to Apple? Or is Apple more about ecosystem and distribution?

“Television is an intense interest with me and many other people here,” Tim says. So Apple is focusing on some original content, and he “thinks it is a great opportunity.”

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October 25, 2016 2:38 pm PDT Lewis Wallace

A tough question: What does “sort of flattish” iPhone growth, despite several lucky breaks (Samsung’s flameout, timing, etc.), say about the device’s future sales?

Luca says the most important element is that iPhone 7/7 Plus is “supply-constrained.”

“We are selling everything that we can produce,” Luca says. Which is sort of a non-answer.

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October 25, 2016 2:36 pm PDT Lewis Wallace

“We are very bullish on China,” Tim says. “We continue to see a middle class that is booming there.” So basically … no change. China sales dropped 30 percent, but Apple is counting on strong demand for iPhone 7.

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October 25, 2016 2:35 pm PDT Buster Hein

“We are open to acquisitions of any size that are of strategic value,” says Cook, commenting on the AT&T and Time Warner merger. “We’re definitely open and we definitely look.”

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October 25, 2016 2:31 pm PDT Lewis Wallace

“We’re confidently investing in the future,” Tim says. I think he might have that tattooed on his palm.

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October 25, 2016 2:30 pm PDT Buster Hein

Tim was asked why R&D has more than doubled over the last three years but profits haven’t been up by the same margin.

“There’s clearly some amount of R&D that are on products that are in the development phase that have not reached the market,” said Cook. “We feel really great about the things that we got.”

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October 25, 2016 2:26 pm PDT Lewis Wallace

Lots of hemming and hawing from Tim on the Apple Car question. He sounded a little surprised — not as seamless as his usual non-answer answers about this subject.

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October 25, 2016 2:25 pm PDT Buster Hein

First up is Gene Munster asking about the car rumors. Tim Cook gave no clues though.
“I can’t speak about rumors, but as you know we look for ways that we can improve the customer’s experience on different sets of products. We’re always looking at new things… For the car space in general it’s clear that technologies will revolutionize the experience…But nothing to announce today.”

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October 25, 2016 2:25 pm PDT Lewis Wallace

Carriers report that the iPhone Upgrade Program is a hit, Tim says. The fact that demand is outstripping supply makes it kind of hard to tell, but “on an anecdotal basis, it’s clear the upgrade programs are a win,” he says.

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October 25, 2016 2:24 pm PDT Buster Hein

Finally, onto the questions from investors…

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October 25, 2016 2:18 pm PDT Lewis Wallace

Mac install base is at an all-time high — and there’s some exciting Mac news coming soon. (Maybe you’ve heard about that …)

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October 25, 2016 2:17 pm PDT Buster Hein

App Store growth has accelerated the last five quarters and generates more revenue than Google Play.

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October 25, 2016 2:16 pm PDT Lewis Wallace

45.5 million iPhones sold last quarter, and they can’t make the 7 Plus fast enough. I guess we knew that. Just check http://www.istocknow.com/live/ for proof.

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October 25, 2016 2:13 pm PDT Ami Icanberry

Cook hands the mic to Luca …

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October 25, 2016 2:12 pm PDT Ami Icanberry

iPhone sales up 50% in India.

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October 25, 2016 2:11 pm PDT Lewis Wallace

Machine learning is making Siri smarter and improving other Apple products. Please, dear god, make Siri smarter.

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October 25, 2016 2:10 pm PDT Lewis Wallace

Tim just keeps talking up the Home app. I still haven’t run into anybody in the wild who has ever used it.

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October 25, 2016 2:09 pm PDT Buster Hein

100 HomeKit compatible products will be on the market by the end of the year. That’s still not enough to get me to use the Home app though.

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October 25, 2016 2:09 pm PDT Lewis Wallace

I suppose getting insurance companies to subsidize purchases of Apple Watch is the next best thing to getting a government contract. Hey, works for me.

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October 25, 2016 2:08 pm PDT Ami Icanberry

Off to great start with Apple Watch Series 2. Individuals and businesses alike recognizing its potential to keep people happy, healthy and motivated.

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October 25, 2016 2:08 pm PDT Lewis Wallace

Tim is “thrilled” with response to iPhone 7 and 7 Plus and demand “continues to outstrip supply.” This all sounds familiar.

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October 25, 2016 2:07 pm PDT Ami Icanberry

iPhone 7 and iPhone 7 Plus are the best iPhone’s we’ve ever made.

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October 25, 2016 2:06 pm PDT Ami Icanberry

Tim Cook visited Japan earlier this month where Apple Pay went live yesterday. Apple pay transactions up 500 percent.

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October 25, 2016 2:06 pm PDT Buster Hein

Apple Music helped bring Services revenue up 22% in Q4. By 2017, the Services business will be big enough to be its own Fortune 100 company.

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October 25, 2016 2:05 pm PDT Buster Hein

“Last quarter saw more customers switch from Android to iPhone than ever before,” says Tim. (THANKS SAMSUNG!)

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October 25, 2016 2:04 pm PDT Ami Icanberry

iPhone sales up year after year in 33 of markets.

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October 25, 2016 2:04 pm PDT Lewis Wallace

MacBook, MacBook, MacBook — right out of the gate! In other words, don’t worry about this past quarter, get psyched for the new MacBooks coming Thursday.

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October 25, 2016 2:02 pm PDT Buster Hein

Tim Cook and Luca are in and we’re ready to go!

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October 25, 2016 2:00 pm PDT Buster Hein

Some bad news in Apple’s earnings: China is down 30%. The Other Products category — which the Apple Watch and Apple TV are under — is down 22%.

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October 25, 2016 1:45 pm PDT Buster Hein

The earnings are out and Apple did about as well as expected. The company made $9 billion in profit off of 46.9 billion in revenue. iPhone sales are down compared to the same quarter last year. iPad sales are doing ok. But Services are really booming for Apple. The company saw a 24% increase of revenue in the Services category during Q4 2016.

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October 25, 2016 1:45 pm PDT Lewis Wallace

The numbers are in. The Macsplaining starts in 15 minutes.

Apple made $9 billion in profit during Q4 2016

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October 25, 2016 1:42 pm PDT Lewis Wallace

If I were a cynic, I would say that Apple really, really wants the world to be talking about the new MacBook Pros today rather than concentrating on falling sales.

Apple leaks images of new MacBook Pro with ‘Magic Toolbar’

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October 25, 2016 12:32 pm PDT Lewis Wallace

Apple’s earnings call starts in an hour and a half. That should give you plenty of time to read Buster’s insight-riddled preview:

What to expect from Apple earnings call Q4 2016

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