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Will Apple reach its own targets for Q2?
Apple's Q3 2018 earnings are expected to be the weakest of the year.
Photo: Ste Smith/Cult of Mac
July 31, 2018 3:06 pm PDT Lewis Wallace

I’m glad Tim took the time to dig a little deeper for the follow-up. At first I thought he was just going to blow it off.

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July 31, 2018 3:05 pm PDT Ed Hardy

That question was the most interesting of the day. Possibly the most interesting I’ve ever heard on a quarterly investor call.

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July 31, 2018 3:02 pm PDT Lewis Wallace

Interesting follow-up – is the iPhone the only real on-ramp to the Apple ecosystem? Tim kind of dodges, but then gives a pretty thoughtful answer.

People love AirPods and Apple Watch, he says, and sometimes those devices draw people to Apple’s ecosystem. Other times, it’s what you’d expect – the massive-selling iPhone is the big hook that pulls people in. It’s different for everyone, he says.

Bottom line: If you’re in the Apple ecosystem, you’re in. Either way, Apple wins.

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July 31, 2018 3:00 pm PDT Buster Hein

BOOM! and we’re done. Kinda cool. Kinda boring…

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July 31, 2018 2:58 pm PDT Lewis Wallace

Now a question about HomeKit and home automation. Can Apple compete? HomeKit gadgets have been relatively slow to market, and HomePod was notably delayed.

“The home business is bigger than the HomePod and Apple TV,” Tim says. But he rightly points out that the iPhone, Mac and iPad are all equally viable “Siri access points.”

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July 31, 2018 2:57 pm PDT Buster Hein

Asked how the battery swap program has impacted business, Tim Cook responds, “We have never done any analysis internally about how the iPhone battery swap program has impacted iPhone sales. We don’t care.”

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July 31, 2018 2:57 pm PDT Ed Hardy

TIm Cook says that all Apple needs to overcome slowing global smartphone sales is great products, like the iPhone X.

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July 31, 2018 2:54 pm PDT Lewis Wallace

LOL … Just drool over all the promising original Apple TV shows currently in development then. By the time those come to fruition, you will just hit Play on whatever device is nearest you at the time.

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July 31, 2018 2:52 pm PDT Buster Hein

That’s too confusing for simpletons like me

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July 31, 2018 2:52 pm PDT Ed Hardy

Wow. I wrote almost exactly the same thing, Lewis. I’ll post it to show how much we agree: I think it could be “Apple TV”. An Apple TV is needed to access Apple TV.

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July 31, 2018 2:51 pm PDT Lewis Wallace

I’d bet anything they will just call it Apple TV. You will watch Apple TV on your Apple TV. (And on your iPhone, Mac and iPad.)

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July 31, 2018 2:50 pm PDT Buster Hein

My question is what are they going to call their TV streaming service? Apple TV is the most obvious but that’s taken. iTV?

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July 31, 2018 2:50 pm PDT Ed Hardy

Apple’s TV content feels like the rhinoceros in the corner. Not talking about it is getting really awkward.

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July 31, 2018 2:49 pm PDT Lewis Wallace

Apple Music sits at well over 50 million users, Tim says. (That’s paid subscribers as well as people in the introductory trial period.) The service has a “leadership position” in Japan … as well as the top spot in paid U.S. subs.

“The real challenge is to grow the market” for streaming music, he points out, calling it an “extraordinary opportunity.”

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July 31, 2018 2:48 pm PDT Buster Hein

Well, obviously Tim’s not going to talk about anything that hasn’t launched yet. Whether it’s TV shows or new iPhones.

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July 31, 2018 2:48 pm PDT Lewis Wallace

Cord-cutting is going to take off faster than anybody thought, Tim says. Everything points to “dramatic changes speeding up in the content industry, so we’re really happy to be working on something. We’re just not ready to talk about it in-depth today.”

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July 31, 2018 2:48 pm PDT Ed Hardy

But once again, Tim Cook dodged a question about what Apple’s going to do with all the TV content its paying to create. He’s excited about it. Great. But what is the plan?

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July 31, 2018 2:46 pm PDT Buster Hein

Apple is working on a TV project that Tim says they’re not ready to share yet, but they have great talent in the area that they’ve sourced from different places. The project will accelerator faster than people expect.

Dramatic changes are going to speed up in the content industry. Tim says he’s just not ready yet to talk about what he’s working on.

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July 31, 2018 2:46 pm PDT Lewis Wallace

I like it — a question about Oprah Winfrey’s multiyear deal with Apple. Not surprisingly, Tim is “excited” and “could not be happier” that she’s on board for Apple’s original content push.

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July 31, 2018 2:44 pm PDT Buster Hein

“There’s an inescapable mutuality that serves the bring the US and China together,” says Tim Cook. Both countries need each other in order for the world to do well. He says he’s hoping that calm heads prevail.

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July 31, 2018 2:42 pm PDT Buster Hein

As far the tariffs that have been imposed (the steel and aluminum tarrifs and two others that total $50 billion of goods), none of Apple’s products are directly affected. There is a fourth tariff that is out for public comment. Apple is evaluating it and will share it’s views on it before the comment period is over.

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July 31, 2018 2:42 pm PDT Lewis Wallace

Apple enjoyed its fourth consecutive quarter of double-digit growth in greater China. Other products, including Apple Watch, did well in the country too.

But will tariffs and a possible trade war with China hurt Apple? “Our view on tariffs is that they show up as a tax on the consumer and wind up resulting in lower economic growth,” Tim says. And sometimes they can bring about nasty “unintended consequences.”

Changes might be needed, but tariffs typically aren’t the best way to go about it, Tim says.

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July 31, 2018 2:38 pm PDT Lewis Wallace

Ooh, here comes the tough questions about iPhone sales. Average selling price is up higher than expected due to iPhone X, but … what about the actual units? They were good but not great.

Tim calls iPhone X “the most innovative smartphone on the market,” and says Apple “priced it at a level that represented the value of it. And we could not be happier that it has been the top-selling iPhone since the launch.”

“Customers want innovative products,” Tim says. Take that, iPhone X haters!

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July 31, 2018 2:34 pm PDT Ed Hardy

To throw in some numbers, Apple services took in $9.5B in Q2, up from $9.1B in Q1, and $7.2B in 2017Q2.

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July 31, 2018 2:34 pm PDT Lewis Wallace

I LOVE it when Tim talks about Apple’s magic pipeline.

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July 31, 2018 2:33 pm PDT Buster Hein

When asked how Apple plans to grow its services business over the next few years, Cook says that Apple is thrilled with results of double-digits services growth in all of its geographic segments.

“Given the momentum that we’re seeing, we feel great about our current services, but we’re also thrilled about our pipeline that has some new services in it as well.”

The combination makes Tim Cook think he can hit their objective even better.

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July 31, 2018 2:32 pm PDT Ed Hardy

Few mentions of Mac sales in the presentation, which are down. Q2 was 3.7 million vs. 4.2 million year-over-year.

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July 31, 2018 2:31 pm PDT Lewis Wallace

And now for the questions from analysts …

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July 31, 2018 2:29 pm PDT Lewis Wallace

Apple’s even winning in enterprise. It’s easy to forget about the business uptake of iPads and Macs, because it’s just not that exciting. But ease of use, security and overall quality are driving businesses to buy Apple hardware. (Oh, and Apple Business Chat will let you buy a beer at the ballpark by text.)

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July 31, 2018 2:29 pm PDT Ed Hardy

Apple sold 11.5 million iPads in Q2, up from 9.1 million in Q1, and compared to 11.4 in the same quarter of last year.

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July 31, 2018 2:25 pm PDT Ed Hardy

NPD says iPad had 60 percent of the U.S. market in Q2, up from 51 percent year-over-year.

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July 31, 2018 2:25 pm PDT Buster Hein

Oh hey! CVS is finally giving up on it’s war against Apple Pay! CVS will start accepting Apple Pay this fall.

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July 31, 2018 2:24 pm PDT Lewis Wallace

AirPods are still a “runaway success,” Luca says, and Apple still sells as many as it can make. (They’re just one of the “other” category successes that are so promising for Apple as the smartphone market reaches maturity.)

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July 31, 2018 2:23 pm PDT Buster Hein

Mac install base had double-digit year-over-year growth. Even though sales were down. Luca says that was impacted by the MacBook Pro launch, which didn’t happen until the beginning of Q4.

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July 31, 2018 2:22 pm PDT Lewis Wallace

iPhone customer satisfaction peaks at 98 percent on the latest models, Luca says. And businesses are planning to buy iPhones for their employees, too. Will Apple ever get tired of winning?

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July 31, 2018 2:20 pm PDT Lewis Wallace

You’ve been saving that one, haven’t you?

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July 31, 2018 2:20 pm PDT Lewis Wallace

I guess talking up Apple’s $300 million green initiative in China probably plays well on a number of levels. Corporate action on climate change, feel-good stuff for people who like some social activism with their luxury electronics, plus real engagement in Apple’s second-biggest market.

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July 31, 2018 2:20 pm PDT Buster Hein

Finally! It’s time to be serenaded by Luca Maestri’s magical Italian accent.

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July 31, 2018 2:17 pm PDT Ed Hardy

Want to know everything Tim just talked about? Read this article from June:

All the important new stuff Apple revealed at WWDC 2018

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July 31, 2018 2:17 pm PDT Buster Hein

Checking the transcript now…. yep, it was even more boring than I remember.

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July 31, 2018 2:15 pm PDT Lewis Wallace

Yeah, Ed, it’s WWDC dumbed down for Wall Street analysts. (And tech bloggers.)

And no, I don’t … I might possibly have fallen asleep then, Buster.

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July 31, 2018 2:15 pm PDT Buster Hein

Have you forgotten the great investor call of August 1 2017 lewis? Apple always uses new software as a filler during this conference call. There’s not much else to talk about.

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July 31, 2018 2:14 pm PDT Ed Hardy

Wow, 4 million people are beta testing iOS 12. Here’s hoping that means it will be (relatively) bug-free when the final version launches.

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July 31, 2018 2:14 pm PDT Ed Hardy

I feel like this is WWDC Lite.

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July 31, 2018 2:14 pm PDT Lewis Wallace

I don’t remember Apple giving such an in-depth description of an upcoming iOS release during an earnings call. But I guess if Tim spends more time talking about how great iOS 12 and ARKit will be, he can spend a little less time talking about flagging Mac sales (and slightly less than expected iPhone sales).

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July 31, 2018 2:13 pm PDT Ed Hardy

Like Tim, I see AirPods everywhere.

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July 31, 2018 2:12 pm PDT Ed Hardy

Apple Watch has been a slow grower, but it’s coming into its own.

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July 31, 2018 2:11 pm PDT Lewis Wallace

Wearables – Apple Watch, AirPods and Beats – are up more than 60 percent year over year. They’ve generated more than $10 billion in revenue in just the last year. (Tim stays on script and says AirPods remind him of the early days of iPod — remember those white wires?)

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July 31, 2018 2:09 pm PDT Lewis Wallace

Cloud services revenue jumped more than 50 percent. Tim’s going deep on all the successful products in the services category – stuff like Apple Music and Apple Pay. Even Siri and Apple News are getting the big C-suite salute!

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July 31, 2018 2:08 pm PDT Ed Hardy

App Store vs. Google Play:

Apple App Store revenue almost double that of Google Play

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July 31, 2018 2:07 pm PDT Ed Hardy

Subscriptions are great for Apple and developers. I’m not sure they are as good for iPhone and iPad users.

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July 31, 2018 2:07 pm PDT Lewis Wallace

Nice Google Play diss, Tim. Not surprising at all that the App Store is slaying the Android alternative in revenue.

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July 31, 2018 2:06 pm PDT Buster Hein

Revenue subscriptions are driving a huge portion of Apple’s services business. Apps that offer subscriptions is also continuing to grow. That’s great for Apple and developers.

Paid subscriptions surpassed 300 million, up 60% year-over-year.

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July 31, 2018 2:05 pm PDT Lewis Wallace

Switchers, first-time buyers and Apple loyalists snapped up all those iPhones last quarter, Tim says. (Who else is there, really? People who live in caves?)

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July 31, 2018 2:04 pm PDT Buster Hein

Tim Cook coming out with the highlights: iPhone revenue up 20% YOY. Install base was driven by switchers and first time iPhone buyers.

iPhone X was the most popular iPhone in the quarter.

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July 31, 2018 2:02 pm PDT Buster Hein

“Good day and let’s begin….”

Hoping for some clues about the next iPhone launch. Apple expects to make between $60 billion – $62 billion next quarter. That suggests a big iPhone launch should happen around September.

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July 31, 2018 1:54 pm PDT Buster Hein

Actual image of Tim Cook right now

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July 31, 2018 1:50 pm PDT Lewis Wallace

And here’s the obligatory GIF.

Note: Not an actual image from within Apple HQ.

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July 31, 2018 1:47 pm PDT Lewis Wallace

Here’s the full rundown on Apple’s latest Street-beating performance: Apple surprises Wall Street with record-breaking Q3 profits.

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July 31, 2018 1:44 pm PDT Lewis Wallace

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July 31, 2018 1:42 pm PDT Buster Hein

AAPL shares have already shot up to $195 in after-market trading. The company needs to hit $204 per share to become the first trillion dollar company.

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July 31, 2018 1:42 pm PDT Lewis Wallace

Apple also is predicting Q4 2018 revenue “between $60 billion and $62 billion.” That’s a key number, and it’s higher than most analysts expected.

Make way for the iPhone X Plus (and a super-sized Apple windfall)!

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July 31, 2018 1:41 pm PDT Lewis Wallace

Apple just dropped its results for Q3 2018, including “quarterly revenue of $53.3 billion, an increase of 17 percent from the year-ago quarter, and quarterly earnings per diluted share of $2.34, up 40 percent. International sales accounted for 60 percent of the quarter’s revenue.”

“We’re thrilled to report Apple’s best June quarter ever, and our fourth consecutive quarter of double-digit revenue growth,” said Tim Cook. “Our Q3 results were driven by continued strong sales of iPhone, Services and Wearables, and we are very excited about the products and services in our pipeline.”

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July 31, 2018 1:40 pm PDT Lewis Wallace

Nice time for the live blog to be acting up.

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July 31, 2018 1:37 pm PDT Lewis Wallace

Apple just posted its results, including “quarterly revenue of $53.3 billion, an increase of 17 percent from the year-ago quarter, and quarterly earnings per diluted share of $2.34, up 40 percent.”

“We’re thrilled to report Apple’s best June quarter ever, and our fourth consecutive quarter of double-digit revenue growth,” said Tim Cook. “Our Q3 results were driven by continued strong sales of iPhone, Services and Wearables, and we are very excited about the products and services in our pipeline.”

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July 31, 2018 1:22 pm PDT Lewis Wallace

Hahaha …

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July 31, 2018 1:19 pm PDT Lewis Wallace

“Bubble”? Who said “bubble”?

If Apple blows it today, things are not going to look pretty for the tech sector.

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July 31, 2018 1:15 pm PDT Lewis Wallace

Yes, everybody will be waiting to hear the iPhone ASP (aka average selling price). Will the iPhone X’s $1,000-plus price tag still be a killer feature?

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July 31, 2018 1:08 pm PDT Lewis Wallace

Note: Not an actual Wall Street image.

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July 31, 2018 1:04 pm PDT Lewis Wallace

Apple anticipation lifted both the Nasdaq and the Dow Jones Industrial Average today. AAPL climbed 0.2 percent to close at $190.29. On Wall Street, all eyes (or maybe ears) are on Apple’s earnings call.

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July 31, 2018 12:53 pm PDT Lewis Wallace

It’s been a rough couple of weeks for tech stocks. Facebook shed $120 billion of its value last week in the biggest tech single-day selloff in history. Twitter has been getting hammered due to slowing growth. And just yesterday, Samsung took a hit due to weak Galaxy smartphone sales.

Can Apple pull off the impossible and deliver results strong enough to keep Wall Street happy (or at least pacified)? We’ll know soon.

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July 31, 2018 12:45 pm PDT Lewis Wallace

While we’re waiting for today’s call to start, here’s your playbook about what to expect: 5 key details to watch for in Apple’s Q3 2018 earnings report.

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