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Reports of a better Siri abound yet again; this time it might actually be true
Apple’s published AI research paints a picture of how Apple’s approach to AI might come to life and, believe it or not, after years of similar promises that never really came to fruition, Siri might actually significantly improve.
Now, obviously, making product assumptions based on research papers is a deeply inexact science — the line from research to store shelves is windy and full of potholes. But you can at least get a sense of what the company is thinking about — and how its AI features might work when Apple starts to talk about them at its annual developer conference, WWDC, in June.
I suspect you and I are hoping for the same thing here: Better Siri. And it looks very much like Better Siri is coming! There’s an assumption in a lot of Apple’s research (and in a lot of the tech industry, the world, and everywhere) that large language models will immediately make virtual assistants better and smarter. For Apple, getting to Better Siri means making those models as fast as possible — and making sure they’re everywhere…
A lot of what we talk about when we talk about AI products is virtual assistants — assistants that know things, that can remind us of things, that can answer questions, and get stuff done on our behalf. So it’s not exactly shocking that a lot of Apple’s AI research boils down to a single question: what if Siri was really, really, really good?
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MacDailyNews Take: Yes, we’ve all heard this before – many times – but this time it might actually come true! Of course, we’ll believe it when we use Siri and it doesn’t suck. A Siri that’s really, really, really good will really positively impact products like HomePod, AirPods, Apple Watch, and Vision Pro, to name just four.
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Apple unveils 2024 Pride Collection: Watch band, iPhone and iPad wallpapers
Apple Inc.:
To champion global movements to protect and advance equality for LGBTQ+ communities, Apple is introducing a new Apple Watch Pride Edition Braided Solo Loop, available to order starting May 22, along with a matching watch face and dynamic iOS and iPadOS wallpapers, available in an upcoming software update. For the first time, the Pride watch face and wallpapers can be customized to showcase a spectrum of colors representing the vibrancy and diversity of LGBTQ+ communities.
Through this Pride Collection, Apple is proud to continue its support of LGBTQ+ advocacy organizations whose efforts are bringing about positive change, including ILGA World, a global federation committed to advancing the rights of LGBTQ+ people worldwide; and the Human Rights Campaign, a global advocacy group working to ensure all LGBTQ+ people are treated as full and equal citizens. Additional advocacy organizations Apple supports include Encircle, Equality North Carolina, Equality Texas, GLSEN, Equality Federation, the National Center for Transgender Equality, PFLAG, SMYAL, and The Trevor Project.
The new Pride Edition Braided Solo Loop evokes the strength and beauty of LGBTQ+ communities with a vibrant, fluorescent design inspired by multiple pride flags, and features a laser-etched lug that reads “PRIDE 2024.” The colors black and brown symbolize Black, Hispanic, and Latin communities, as well as those impacted by HIV/AIDS, while the pink, light blue, and white hues represent transgender and nonbinary individuals.
Apple’s new Pride Edition Braided Solo Loop is a vibrant, fluorescent design inspired by multiple “pride flags,” while the “Pride Radiance” watch face can be personalized with a spectrum of colors.
Apple Inc.:
The new Pride Radiance watch face and iOS and iPadOS wallpapers bring bold, symbolic color to Apple Watch, iPhone, and iPad. Signaling hope, strength, and fellowship to LGBTQ+ communities, the beams of light glow against a dark background, and stack on top of each other to represent the everlasting impact of LGBTQ+ activism and its role in illuminating the path to greater equality for future generations.
Users can choose from a spectrum of colors to personalize their watch face and wallpapers. On Apple Watch, the colors trace each numeral of the watch face and react in real time as the user moves their wrist based on input from the gyroscope. On iPhone and iPad, beams of color spell out “Pride” and dynamically move when the user unlocks their device. The new Pride Radiance watch face and iPhone and iPad wallpaper will be available soon with watchOS 10.5, iOS 17.5, and iPadOS 17.5.
Pricing and Availability
• The Pride Edition Braided Solo Loop will be available to order on apple.com and in the Apple Store app beginning May 22, and will be available at Apple Store locations beginning May 22 in the U.S. and Canada and May 23 in other regions, for $99 (U.S.).
• The Pride Edition Braided Solo Loop is available in 41mm and 45mm sizes, and is compatible with Apple Watch SE and Apple Watch Series 4 or later.
• The new Pride Radiance watch face and iPhone and iPad wallpapers will be available soon with watchOS 10.5, iOS 17.5, and iPadOS 17.5.
• Customers can download the matching Pride Radiance watch face through the Apple Watch app, on the Apple Store app, or at apple.com.
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Adam Scott: ‘Severance’ season 2 will ‘finally be coming out in the somewhat near future’
One of the stars of Apple TV+ award-winning hit series Severance, Adam Scott, says that season 2 will “finally be coming out in the somewhat near future.”
The first season of Severance premiered on February 18, 2022 and the season finale on April 8, 2022, so – due to the writers’ and actors’ strikes – it’s been an unusually long wait between seasons; almost Stranger Things-esque.
Danielle Directo-Meston for The Hollywood Reporter:
THR: I read that filming just wrapped on Severance‘s highly anticipated second season. What can you share about it, or how do you think people will react?
Scott: I wish I could tell you and everybody about what’s coming up because it’s going to be so much fun. I can’t wait for people to see it, but I can’t say a word, but it’ll finally be coming out in the somewhat near future and I can’t wait for everyone to see it. That’s basically it. It was so much fun to make.
THR: I and many other Severance2 fans will be patiently waiting.
Scott: Well, your patience doesn’t have to hold on too much longer.
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MacDailyNews Take: If you’ve yet to see Severance, we can’t recommend it highly enough. The series starts at a low simmer, then just keeps building into a boiling season finale that’s among television’s all-time best.
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Artificial intelligence could rev up Apple’s iPhone sales
Apple — and investors — are looking to artificial intelligence to increase consumer and business interest in its offerings, particularly in iPhone, but also in Mac, iPad, Apple Watch, HomePod, Apple TV, and Vision Pro.
Ben Glickman for The Wall Street Journal:
Analysts are increasingly optimistic that Apple’s nascent AI offerings, which would finally bring the tech giant into the competition with major rivals, will provide a much-needed boost to iPhone sales, which fell 10.5% from the prior year to $46 billion in the first quarter.
New AI offerings are expected to be unveiled at the company’s annual developers conference in June, and analysts see the offerings as a way to entice consumers to upgrade or buy new products.
“This is the drumroll moment as Apple is set to unveil its long-awaited AI strategy,” said Wedbush analysts in a research note. They expect AI to drive the next “supercycle” for iPhone sales this fall.
Ben Reitzes and Jack Adair, analysts with Melius Research, say the company’s situation is similar to where it was a decade ago, when it had lost some market share to Samsung and was releasing larger-screened iPhones. The company’s refresh cycle shortly thereafter powered huge gains for the stock and showed the power of Apple’s brand and customer loyalty, they said in a research note.
“The AI initiative that will be unveiled should bring new services and likely compel you to upgrade all your gear in order to use it over the next three years,” Reitzes and Adair said.
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MacDailyNews Take: Supercycle!
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Morgan Stanley ups Apple price target to $216
Following Apple’s Q2 2024 earnings report, Morgan Stanley has increased its price target to $216 from $210.
William Gallagher for AppleInsider:
“Apple guided to an above-Street June Q, alleviated concerns about China iPhone [sales], reached an all-time Services rev & GM record, authorized its largest incremental buyback in history, & hinted at Gen AI announcements to come in weeks,” said the company in a note to investors seen by AppleInsider. “It’s hard not to be more bullish after that.”
Morgan Stanley dismissed the falling iPhone sales figures, saying that the decline was much less than expected. It also noted that year over year, the iPhone actually grew in mainland China.
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MacDailyNews Take: Apple’s Services growth is finally starting to assuage the iPhone-fixated.
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Apple CFO: ‘We are making significant investments’ in AI and ‘believe we are well-positioned’
Apple is planning a long-awaited push into generative artificial intelligence (GenIA), the fruits of which are expected to be revealed at its annual Worldwide Developers Conference in June.
“We are making significant investments in the space,” Chief Financial Officer Luca Maestri told Bloomberg Television’s Emily Chang. “We believe we are well-positioned.”
In Apple’s conference call with analysts on Thursday, CEO Tim Cook similarly stated, “I think AI, Generative AI and AI, both are big opportunities for us across our products. And we’ll talk more about it in the coming weeks. I think there are numerous ways there that are great for us. And we think that we’re well-positioned.”
Mark Gurman for Bloomberg News:
A lack of innovative new devices has contributed to slow sales at Apple, but the company looks to begin rectifying that on May 7. That’s when it plans to unveil new iPads — the first updates to its tablet line in 1 1/2 years.
The Cupertino, California-based company also is planning a long-awaited push into generative artificial intelligence. In June, Chief Executive Officer Tim Cook is expected to lay out Apple’s AI strategy at its annual Worldwide Developers Conference.
Cook said Thursday that Apple will stand out from its AI rivals by tightly integrating hardware and software, using in-house chips, and making privacy and security a priority…
Apple is planning to release its first Macs with M4 processors later this year, adding a fresh focus on AI capabilities, Bloomberg News has reported.
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MacDailyNews Take: In his opening remarks during Thursday’s conference call, Cook said, “We continue to feel very bullish about our opportunity in Generative AI. We are making significant investments, and we’re looking forward to sharing some very exciting things with our customers soon. We believe in the transformative power and promise of AI, and we believe we have advantages that will differentiate us in this new era, including Apple’s unique combination of seamless hardware, software and services integration, groundbreaking Apple’s silicon, with our industry-leading neural engines and our unwavering focus on privacy, which underpins everything we create.”
Cook, when answering an analyst’s question, followed up, “I don’t want to get in front of our announcements, obviously. I would just say that we see Generative AI as a very key opportunity across our products. And we believe that we have advantages that set us apart there.”
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Apple’s Ajax LLM to power significant AI upgrade for Siri, Safari, Messages, Mail, and more
Several of Apple’s standard system components are poised to get significant AI-related enhancements, powered by Apple’s forthcoming Ajax LLM with Siri, Safari, Messages, Mail, and Spotlight being first in line for the treatment, AppleInsider reports.
Marko Zivkovic for AppleInsider:
Over the past several months, there’s been various chatter regarding AI-related features bound for iOS 18, and AppleInsider has since learned some specifics on the functionality of Apple’s Ajax large language model (LLM), as well as information on features the company has been testing alongside it.
Apple’s approach to generative AI will focus on practical benefits for the end-user while simultaneously attempting to preserve user privacy by using on-device LLM… Features like text summarization, document analysis, and AI-enhanced search options would all directly benefit end-users in meaningful ways.
Apple intends to introduce AI-related improvements to several of its built-in system apps beginning next month, including Siri, Spotlight Search, Messages, Mail, and Safari…
Perhaps the most valuable feature Apple has developed is the software’s capability to generate sentence-long responses and function unabated without cloud-based processing… While Ajax can generate rudimentary text-based responses on-device, more advanced replies or text summaries appear to necessitate server-side processing. This aligns with other reports claiming that Apple is in talks with OpenAI and Google about licensing their cloud-based AI technology.
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MacDailyNews Take: WWDC 2024 – and Apple’s AI marketing extravaganza – starts on Monday, June 10th.
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Apple buys itself some time as it scrambles to catch up in AI
Apple’s board of directors on Thursday announced the authorization of an additional program to buyback up to $110 billion of the company’s common stock. The stock price surged in pre-market trading.
Dan Gallagher for The Wall Street Journal:
It is the largest boost ever since the world’s second-most-valuable public company first began repurchasing its stock a little over a decade ago. That, along with a 4% lift to its dividend, accompanied a less-than-impressive report for the company’s fiscal second quarter, during which Apple saw its biggest year-over-year decline in iPhone revenue in nearly four years…
[A] lot is riding on the next iPhone cycle. And that device also could mark Apple’s entry into the race over generative artificial intelligence that has consumed its big tech peers. Microsoft, Amazon, Meta Platforms and Google-parent Alphabet have been launching gen AI-based services and pouring billions more into capital expenditures to build up the networks to support them. The revenue generated by those services is still relatively small, but the payoff from investors has been significant. Those four stocks have averaged a gain of 63% over the past 12 months. Apple’s shares have risen less than 3% in that time.
A product event next week is expected to feature new iPads, and the company already seems to have high hopes for that line. Apple Chief Financial Officer Luca Maestri said Thursday that iPad revenue is expected to grow by double digits in the current quarter following five straight periods of declines. And AI-focused announcements at next month’s conference could still cheer investors, especially given the stock’s recently weakened valuation.
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MacDailyNews Note: Apple has announced it will be holding a special event on Tuesday, May 7th at 7am PDT / 10am EDT where the company is widely expected to announce new iPad Air and iPad Pro models, both in two display sizes, a first for the iPad Air, alongside updated Apple Pencil and Magic Keyboard accessories.
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Apple stock surges after earnings report
Dow Jones futures and other major stock indexes extended their rallies in Friday premarket trading after the U.S. Labor Department’s weaker-than-expected April jobs report. Among the risers was Apple stock, which enjoyed a surge fueled by a record $110 billion share repurchase plan.
Scott Lehtonen for Investor’s Business Daily:
The Labor Department’s April jobs report said the U.S. economy added 175,000 jobs for the month, much less than the expected 243,000 number, according to Econoday estimates. That was also down from March’s 303,000 addition. The unemployment rate ticked higher to 3.9%; It was expected to hold steady at 3.8%.
Late Thursday, Apple narrowly beat Wall Street’s estimates for its fiscal second quarter. The iPhone maker also raised its quarterly dividend and stock buyback plan. Apple stock rallied more than 6% in premarket trading.
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MacDailyNews Take: Apple’s share price is now roughly $15 below its all-time high.
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MacDailyNews presents live notes from Apple’s Q224 conference call
MacDailyNews presents live notes from Apple’s Q224 Conference Call with analysts starting at 2pm PT / 5pm ET today, May 2, 2024.
This stream is best experienced on an iPhone 7 or later, iPad (5th generation or later), or iPod touch (7th generation) using Safari on iOS 12 or later; or a Mac using Safari on macOS Mojave 10.14 or later. Streaming to your TV requires an AirPlay 2–capable device, or via AirPlay to an Apple TV (2nd generation or later) with the latest Apple TV software or tvOS. Other platforms may also be able to access the stream using recent versions of Chrome, Firefox, or Microsoft Edge (MSE, H.264, and AAC required).
Apple’s live conference call webcast will begin at 2pm PT / 5pm ET here.
Apple today posted quarterly revenue of $90.753 billion (vs. $94.836 billion YoY), down 4 percent year over year, and quarterly earnings per diluted share of $1.53 (vs. $1.53 YoY).
For the quarter, analysts’ consensus estimates (per LSEG) called for Apple to report EPS of $1.50 EPS on revenue of $$90.01 billion, both of which Apple beat.
Live notes:
• AAPL After hours: $184.25 +$11.22 (+6.48%) @ 5:57PM EDT
• Luca: 45.5% – 46.5% gross margins for June; memory and foreign exchange will be slight headwinds
• Q: Commodity pricing for June quarter
• Cook: I am hearing about so many use cases; similar to how the Mac is used – you use it for everything, so, too, with the Vision Pro. It’s an enormous number of different verticals; we’re off to a good start with Vision Pro in the enterprise
• Q: Top 2-3 Vision Pro uses cases?
• Luca: We you look aver the long arc of time, we’ve gone thru a long period of a very strong dollar; so that’s something to keep in mind when you look at results
• Cook: We price our product for the value we are delivering
• Cook: Innovation spurs the upgrade cycle; economic factors play in there; carrier promotions, etc.
• Q: Do you see ways to deploy capital more to spur demand Promotions? Price decreases?
• Luca: China is by far the largest emerging market, but when you look at all of the others, the numbers are getting large; the populations are large and growing and our products are makign a lot of progress in those markets. It is very good for us, So the gap vs. China is reducing
• Q: Emerging markets growth? Can they, added up, surpass China?
• Cook: We decreased during the quarter as normal and are very comfortable with the channel inventory
• Q: iPhone channel inventory
• Cook: I can’t address the data points; I can only address our results. We did accelerate last quarter and iPhone grew in mainland China; I can’t speak to numbers coming from outside Apple
• Q: What are we missing in China, at a high level?
• Cook: We are producing there. You need to produce in China to be competitive. We continue to expand channels and are optimistic in China
• Q: China supply chain?
• Luca: Growth rates improved during 2023, so the comps are difficult, but Apple expects Services to grow double digits in Q3 Services, similar to Q2
• Luca: Overall very strong. All-time records in both developed and emerging markets
• Q: Drivers of Services growth?
• Luca: we expect to grow low single digits in Q324
• Cook: If you make the YoY adjustment on iPhone, it would be flattish YoY, not down
• Cook: GenAI is an opportunity for many of Apple’s devices; I am extremely optimistic
• Q: June quarter iPhone business to be down again? Is AI (lack thereof so far) an issue?
• Cook: Long term in China, Apple sees a lot of customers moving into the middle class; continues to be optimistic
• Cook: Acceleration from Q1, driven by iPhone, especially in mainland China, but Apple has work to do in other product categories
• Q: Economy in China?
• Luca: One step at a time. We are working very hard to get there; free cash flow has been very strong for the last several years, so that’s one reason why Apple is increasing buybacks
• Q: $58 billion net cash currently; how to get to net cash neutral?
• Luca: In general, we continue to see a lot of interest at the top of the range of our products in each category
• Q: iPhone mix tilted towards Pro models?
• Cook: Enterprise is focused on selling iPhone, iPad, Mac, and Vision Pro units
• Q: AI for the enterprise
• Cook: I think AI and GenAI both are big opportunities across our products; I think there are numerous ways that are great for Apple and the company is well-positioned; we’ll talk more about AI soon
• Q: Is AI an opportunity to monetize your mobile real estate?
• Trip to China was fantastic; I maintain a great view of China long term
• Cook: iPhone in mainland China, we grew before normalization (before supply destruction we mentioned earlier)
• Cook: In Q2, for greater China, we were down 8% due to iPhone sales
• Q: China confidence?
• Luca: Generally favorable during the quarter
• Q: Rising costs for commodity and components?
• Cook: I don’t want to get in front of our announcements; we see GenAI as a big opportunity across our products
• Generative AI monetization?
• We haven’t seen anything different within the product categories
• Luca: Down sequentially primarily due to different mix YoY, leverage plays a big role
• Q: Product gross margins? Are customers mixing down within or across product lines?
• Cook: It’s really too early to answer the question
• Q: Effect of 3rd party app stores on iPhone and iPad in the EU?
• On the CapEx front, Apple has its own data center capacity and also with 3rd parties and plans to continue along the same lines going forward
• Luca: We are obviously very excited about GenAI
• Q: Artificial Intelligence to affect historical CapEX cadence?
• Services: We’ve seen very strong, brod-based performance across the board
• Luca: We expect total revenue to grow low single digitis YoY
• Q: Outlook for products?
• Expect 45.5% – 46.5% gross margin
• Expect iPad revenue to grow double digits
• Expect Services to grow double digits
• Color: June quarter total revenue to grow low single digitis YoY
• Apple continues to plan for annual dividend increases going forward
• Apple’s board of directors has declared a cash dividend of $0.25 per share of the Company’s common stock, an increase of 4 percent
• Board of directors has authorized an additional program to repurchase up to $110 billion of the Company’s common stock
• $105 billion total debt
• Apple $162 cash and marketable securities
• Apple particularly pleased with strong performance in emerging markets
• Maestri touts Mac and Vision Pro in the enterprise
• Apple has well over 1 billion paid subscriptions across Services
• Both transacting and paid accounts reached new all-time highs
• Services revenue: $23.867 billion
• Almost 2/3rd of Apple Watch customers were new to the product in the quarter
• Wearables, home and accessories revenue: $7.913 billion
• iPad U.S. customer sat = 96%
• iPad install base hit new all-time high
• iPad revenue: $5.559 billion
• Mac sales driven by M3 MacBook Air
• Mac revenue: $7.451 billion
• iPhone customer sat in U.S = 99%
• iPhone active installed base grew to an all-time high
• iPhone revenue: $45.963 billion
• OpEx $14.4 billion, up 5% YoY
• Installed base of active devices reached an all-time high
• iPhone had a challenging compare YoY
• Luca Maestri: Revenue: $90.753 billion
• AAPL After hours: $185.21 +$12.18 (+7.04%) @ 05:12PM EDT
• Cook talks “carbon removal” projects
• Cook touts emission reductions, recycling, solar and wind power
• Apple want to become “carbon neutral” by 2030
• Cook touts privacy and protections against quantum computing
• Retail: Shanghai store opening was very exciting
• Apple Sports app released during quarter
• Promos Apple TV+ productions which win major awards
• Services revenue: $23.867 billion; all-time revenue record
• Wearables, home and accessories revenue: $7.913 billion
• Cook talks up Apple Watch; mentions AI and ML again
• iPad revenue: $5.559 billion; down 17% YoY due to difficult compare
• Cook touts M3 MacBook Air; mentions AI again
• Mac revenue: $7.451 billion, up 4% YoY
• Cook visited Southeast Asia; excited for the future
• iPhone revenue: $45.963 billion
• iPhone faced a difficult compare YoY
• Apple believes it has AI advantage that will distinguish itself; mentions neural engines and privacy focus
• Apple bullish on generative AI
• Next month WWDC – exciting!
• Exciting event coming next week
• Cook talks up Vision Pro
• Services set all-time revenue record
• Cook: Set revenue records in Latin America and Middle East, Canada, India, Span, Turkey, Indonesia
• Conference call begins
• AAPL After hours: $185.51 +$12.48 (+7.21%) @ 04:56PM EDT
• AAPL After hours: $183.99 +$10.96 (+6.33%) @ 04:46PM EDT
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Apple beats the street, announces largest-ever $110 billion share buyback
Apple today announced financial results for its fiscal 2024 second quarter ended March 30, 2024. The Company posted quarterly revenue of $90.8 billion, down 4 percent year over year, and quarterly earnings per diluted share of $1.53.
“Today Apple is reporting revenue of $90.8 billion for the March quarter, including an all-time revenue record in Services,” said Tim Cook, Apple’s CEO, in a statement. “During the quarter, we were thrilled to launch Apple Vision Pro and to show the world the potential that spatial computing unlocks. We’re also looking forward to an exciting product announcement next week and an incredible Worldwide Developers Conference next month. As always, we are focused on providing the very best products and services for our customers, and doing so while living up to the core values that drive us.”
“Thanks to very high levels of customer satisfaction and loyalty, our active installed base of devices has reached a new all-time high across all products and all geographic segments, and our business performance drove a new EPS record for the March quarter,” said Luca Maestri, Apple’s CFO, in a statement. “Given our confidence in Apple’s future and the value we see in our stock, our Board has authorized an additional $110 billion for share repurchases. We are also raising our quarterly dividend for the twelfth year in a row.”
Apple’s board of directors has declared a cash dividend of $0.25 per share of the Company’s common stock, an increase of 4 percent. The dividend is payable on May 16, 2024 to shareholders of record as of the close of business on May 13, 2024. The board of directors has also authorized an additional program to repurchase up to $110 billion of the Company’s common stock.
Apple will provide live streaming of its Q2 2024 financial results conference call beginning at 2:00 p.m. PT on May 2, 2024 at apple.com/investor/earnings-call. The webcast will be available for replay for approximately two weeks thereafter.
Apple’s Q224 results:
• EPS: $1.53
• Revenue: $90.753 billion
• iPhone revenue: $45.963 billion
• Services revenue: $23.867 billion
• Wearables, home and accessories revenue: $7.913 billion
• Mac revenue: $7.451 billion
• iPad revenue: $5.559 billion
Prior to Apple’s earnings report, analysts according to LSEG consensus estimates expected:
• EPS: $1.50
• Revenue: $90.01 billion
• iPhone revenue: $46.00 billion
• Services revenue: $23.27 billion
• Wearables, home and accessories revenue: $8.08 billion
• Mac revenue: $6.86 billion
• iPad revenue: $5.91 billion
MacDailyNews Take: Should bode nicely in after hours pending what’s said on the conference call at 2pm PDT /5pm EDT.
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Apple poised to throw billions more at investors amid stock slump
Apple stock has been in decline for most of the year, but AAPL investors are likely to get at least one bit of good news when the company reports earnings Thursday afternoon. More cash in form of buybacks, fist and foremost, and a bump in dividends.
[Apple] typically makes updates to its capital-return policies when it posts March-quarter results, and that means it could soon rain more money on investors in the form of dividends and buybacks.
CFRA analyst Angelo Zino said Apple AAPL will up its buyback program by $90 billion, in line with what it did in each of the past two years. But the company’s dividend increase could be smaller: Zino projects a 3% dividend hike, compared with a 4% increase last year and a 5% bump the year before that.
Morgan Stanley analyst Erik Woodring also said not to expect a “meaningful deviation” from past patterns, suggesting the possibility of a $90 billion buyback increase as well, along with a mid-single-digit increase to the company’s dividend.
The capital-return announcement will come as Apple’s stock has gotten off to a sour start to the year, falling 12% over the course of 2024 to date, as the S&P 500 SPX has advanced 5%.
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MacDailyNews Note: Wall Street’s consensus expects EPS of $1.51 and $90.4 billion in revenue for Q224 versus $1.52 in EPS and $94.84 billion in revenue in Q223.
We’ll have Apple’s results as soon as they are available right around 1:30pm PDT / 4:30pm EDT – just check our home page: https://macdailynews.com.
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Apple extends new core technology fee to iPadOS apps in the EU
Apple will extend its newly introduced core technology fee to iPadOS apps downloaded on its App Store in the EU after the iPad operating system was added to a list of key services subject to EU tech rules, the company said on Thursday.
Apple in March announced a core technology fee (CTF) of 50 euro cents per user account per year for major app developers even if they do not use any of its payment services or its App Store, with the first 1 million user accounts exempted from the fee.
“This week, the European Commission designated iPadOS a gatekeeper platform under the Digital Markets Act. Apple will bring our recent iOS changes for apps in the European Union to iPadOS later this fall, as required,” the company said in a blogpost.
“The CTF will also apply to iPadOS apps downloaded through the App Store, Web Distribution, and/or alternative marketplaces,” it said.
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MacDailyNews Take: As it should.
See also: European Commission says Apple’s iPadOS also subject to Digital Markets Act – April 29, 2024
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Can Apple begin to turn around this so far no good year?
With Apple stock down about 11 percent, this has so far been a year of bad news after bad news for Apple investors. Now, the company is set to report fiscal second-quarter earnings after Thursday’s market close.
Eric J. Savitz for Barron’s:
For the March quarter, analysts tracked by FactSet expect Apple to post revenue of $90.5 billion, down 4.5% from the year-ago quarter. That’s a reversal from 2.1% year-over-year growth in the December 2023 quarter, and would mark the fifth down quarter out of the last six, and the biggest decline since the 5.5% slide in the December 2022 quarter. Analysts expect $1.51 in earnings per share, down a penny from a year earlier.
Wall Street consensus estimates as tracked by FactSet call for iPhone revenue to fall 9.8% from a year ago to $46.3 billion, pressured in part by weak demand in China, where the company is losing market share to Huawei and other local competitors.
The Street is expecting $6.9 billion in iPad revenue for the quarter, down 11%… Mac sales are projected to fall 4.5%, to $6.8 billion. The consensus view on the wearables, home, and accessories segment calls for revenue of $7.9 billion, down 11%. Services should be the only growth area this quarter, with projected revenue of $23.1 billion, up 10.6%.
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MacDailyNews Note: Apple’s Q2 report is traditionally when Cupertino provides its annual update to its capital allocation policy. Expect Apple to announce boosts to both its dividend and its stock repurchase (buybacks) program after market close today.
We’ll have Apple’s results as soon as they are available right around 1:30pm PDT / 4:30pm EDT – just check our home page: https://macdailynews.com.
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Google paid $20 billion to Apple in 2022 to be Safari’s default search engine
Google paid $20 billion to Apple in 2022 to be Safari’s default search engine, Bloomberg News reports, citing newly unsealed court documents in the Justice Department’s antitrust suit against Google.
Leah Nylen for Bloomberg News:
The deal between the two tech giants is at the heart of the landmark case, in which antitrust enforcers allege Google has illegally monopolized the market for online search and related advertising. The Justice Department and Google will offer closing arguments in the case Thursday and Friday, with a decision expected later this year.
Google and Apple had hoped to shield the payment amount from public disclosure. At the trial last fall, Apple executives testified that Google paid “billions,” without specifying a number. A Google witness later accidentally disclosed that Google pays 36% of the revenue it earns from search ads to Apple.
Court documents filed late Tuesday ahead of the closing arguments mark the first public confirmation of the figures by Apple’s senior vice president of services, Eddy Cue. Such numbers aren’t disclosed by either company in their securities filings. The documents also revealed the importance of the payments to Apple’s bottom line. For instance, in 2020, Google’s payments to Apple constituted 17.5% of the iPhone maker’s operating income.
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MacDailyNews Take: Google pays Apple tens of billions of dollars annually to be Safari’s default search engine because Mac, iPhone, and iPad users are extremely demographically desirable (to any company that like to make profits) versus those who settle for iPhone knockoffs.
In September 2023, Asymco‘s Horace Dediu did the math and arrived at the conclusion that Apple iPhone owners are 7.4 times more valuable than those who settle for Android phones.
Real iPhones vs. Poor Man’s iPhones. Same as it ever was. — MacDailyNews, April 22, 2022
The bottom line: Those who settle for Android devices are not equal to iOS users. The fact is that iOS users are worth significantly more than Android settlers to developers, advertisers, third-party accessory makers (speakers, cases, chargers, cables, etc.), vehicle makers, musicians, TV show producers, movie producers, book authors, carriers, retailers, podcasters… The list goes on and on.
The quality of the customer matters. A lot.
Facile “analyses” that look only at market (unit) share, equating one Android settler to one iOS user, make a fatal error by incorrectly equating users of each platform one-to-one.
When it comes to mobile operating systems, all users are simply not equal. – SteveJack, MacDailyNews, November 15, 2014
Android is pushed to users who are, in general:
a) confused about why they should be choosing an iPhone over an inferior knockoff and therefore might be less prone to understand/explore their devices’ capabilities or trust their devices with credit card info for shopping; and/or
b) enticed with “Buy One Get One Free,” “Buy One, Get Two or More Free,” or similar ($100 Gift Cards with Purchase) offers.
Neither type of customer is the cream of the crop when it comes to successful engagement or coveted demographics; closer to the bottom of the barrel than the top, in fact. Android can be widespread and still demographically inferior precisely because of the way in which and to whom Android devices are marketed. Unending BOGO promos attract a seemingly unending stream of cheapskate freetards just as inane, pointless TV commercials about robots or blasting holes in concrete walls attract meatheads and dullards, not exactly the best demographics unless you’re peddling muscle building powders or grease monkey overalls.
Google made a crucial mistake: They gave away Android to “partners” who pushed and continue to push the product into the hands of the exact opposite type of user that Google needs for Android to truly thrive. Hence, Android is a backwater of second-rate, or worse, app versions that are only downloaded when free or ad-supported – but the Android user is notoriously cheap, so the ads don’t sell for much because they don’t work very well. You’d have guessed that Google would have understood this, but you’d have guessed wrong.
Google built a platform that depends heavily on advertising support, but sold it to the very type of customer who’s the least likely to patronize ads.
iOS users are the ones who buy apps, so developers focus on iOS users. iOS users buy products, so accessory makers focus on iOS users. iOS users have money and the proven will to spend it, so vehicle makers focus on iOS users. Etcetera. Android can have the Hee Haw demographic. Apple doesn’t want it or need it; it’s far more trouble than it’s worth. – MacDailyNews, November 26, 2012
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Apple has a low earnings bar to clear with big buyback hopes
Apple has low expectations from Wall Street analysts and investors for its second-quarter results due right after the close on Thursday, but also faces hopes for continued big buybacks.
Its reputation as a haven that can outperform in all market conditions has been refuted this year, as it sharply lags peers with better growth, a clearer AI narrative, a cheaper price tag — or all of the above. The upshot is, there may be less room for disappointment with a lowered bar, especially with a massive buyback announcement likely.
“Expectations aren’t very high this quarter, but if we get a better outlook, coupled with some reasons for excitement over AI, we could see the valuation start to expand quite a bit,” said Matt Stucky, chief portfolio manager at Northwestern Mutual Wealth Management. “It might be tough to count on that, but Apple is a high-quality defensive stock, with a lot of shareholder returns and cash flow. The shareholder returns are the dominant reason to have a position.”
Analysts expect Apple to add another $90 billion to its repurchase program… Apple has already spent more than $650 billion buying back its own stock since 2012, according to data compiled by Bloomberg.
The buybacks have been a way for Apple to support earnings. Revenue is expected to fall almost 5% this quarter, which would represent its weakest rate in more than a year, as well as Apple’s fifth quarter of the past six with negative growth… The stock is down 12% this year, compared with a gain of 2.9% for the Nasdaq 100 Index. Relative to the tech-heavy benchmark, Apple’s underperformance in the first quarter of 2024 was its sharpest in more than a decade.
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MacDailyNews Note: Wall Street’s consensus expects EPS of $1.51 and $90.4 billion in revenue for Q224 versus $1.52 in EPS and $94.84 billion in revenue in Q223.
See also: Apple’s mammoth stock buybacks boost returns for investors – April 29, 2024
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Stock market calmed by Fed’s interest rate signals ahead of Apple earnings
Global stock markets showed cam on Thursday after the U.S. Federal Reserve squelched talk of more interest rate hikes as Apple earnings loom large for Wall Street.
The U.S. central bank’s rate setters unanimously decided to leave rates in the 5.25% to 5.5% range they have been in since July, but it was the post-meeting press conference that proved most interesting.
While Fed chair Jerome Powell indicated that stubbornly high inflation would see a long-expected U.S. rate cut pushed back, he refused to entertain talk that rates might actually need to go up again.
Wall Street’s S&P 500 futures were up 0.7%, pointing to it recouping the ground it lost late on Wednesday.
Most of the focus there will be on Apple’s results after the close, with analysts bracing for a big drop in sales and waiting to hear how the company plans to embed AI into its iPhones.
Long considered a must-own stock on Wall Street, Apple shares have underperformed other Big Tech companies in recent months, falling more than 10% this year as fears mount about its slow roll-out of artificial intelligence services and as a resurgent Huawei [RIC:RIC:HWT.UL] takes market share in China.
Analysts on average see iPhone sales, which account for about half of Apple’s revenue, falling 10.4% in the first three months of 2024, according to LSEG. That drop would be the steepest in more than three years.
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MacDailyNews Take: As always, we’ll have Apple’s results for you as soon as they are available right around 1:30pm PDT / 4:30pm EDT – just check our home page: https://macdailynews.com
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Qualcomm better-than-expected revenue forecast; sees strong demand for premium smartphones
Qualcomm gives better-than-expected revenue forecast onThursday as the company highlighted strong demand for “premium tier” or “AI-powered” smartphones that require the most advanced chips.
Here’s how it did versus LSEG consensus estimates for the quarter ended March 24:
• Earnings per share: $2.44 adjusted vs. $2.32 expected
• Revenue: $9.39 billion adjusted vs. $9.34 billion expected
Net income during the quarter was $2.33 billion, or $2.06 per share, versus $1.7 billion, or $1.52 per share, in the year-earlier period.
Qualcomm said it expected between $8.8 billion and $9.6 billion in sales in the current quarter, higher than Wall Street expectations of $9.05 billion.
Qualcomm said on the earnings call that it expected overall handset revenues to decline during the current quarter by “mid-single digit percent” because of a lack of summer smartphone launches, which is a typical seasonal pattern.
Qualcomm’s most important business is its handsets business. It sells processors, modems and other parts for smartphones — primarily Android devices, but also some modem parts in iPhones.
Handset sales rose 1% year-over-year to $6.18 billion, signaling that the smartphone market may be recovering after a few years of post-covid slumping. Qualcomm called out strong demand for “premium tier” smartphones that require the most advanced chips, especially in China.
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MacDailyNews Take: Bodes well for Apple, provided they do enough in terms of AI to spur next-gen iPhone demand.
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Here’s what analysts expect from Apple’s earnings report on Thursday
Wall Street’s consensus expects EPS of $1.51 and $90.4 billion in revenue for Q224 versus $1.52 in EPS and $94.84 billion in revenue in Q223.
Daniel Howley for Yahoo Finance:
The anticipated pullback in iPhone shipments follows back-to-back quarters of revenue declines out of Greater China, one of Apple’s most important sales regions. For Q2, revenue is set to drop 28% year-over-year.
Shares of Apple are off some 5% year to date and roughly flat over the last 12 months. Shares of Big Tech rivals like Microsoft and Google, meanwhile, are up 25% and 37% over the last year, respectively.
Apple’s iPhone revenue is anticipated to drop some 10.8% to $45.75 billion in the quarter, while iPad revenue is set to fall 11%. Analysts also anticipate both Mac and Wearables to decline 5% year-over-year.
“At this point, expectations are pretty darn low,” Dan Niles, founder of Niles Investment Management told Yahoo Finance Live.
“Competition from China isn’t going away, they’re late to AI, and unfortunately, you’re paying a pretty high PE multiple at 25 times for a company whose March quarter revenues they guided to is exactly the same as three years ago,” he added.
The company is late to the generative AI party, with rivals across Big Tech already rolling out their own product offerings to consumers and enterprise customers.
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MacDailyNews Note: Apple will report its second quarter earnings right after the bell on Thursday, May 2nd. As usual we’ll have them for you as soon as they are available – just check our home page on Thursday right around 4:30pm EDT / 1:30pm PDT.
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Apple’s iPhone 16 said to come in new color-infused green
“Fixed Focus Digital” has claimed on the Chinese social media site Weibo that Apple will offer the iPhone 16 and possibly the iPhone 16 Pro in a color-infused green option.
Previous leaks have revealed several possible color options for the iPhone 16 Pro, which, if true, will see the device available only in variations of Space Black, White, Gray, and Rose. However, the leaker also said that Apple was planning to use the same color-infusing technique it used on the iPhone 15 for the upcoming iPhone 16 Pro models.
The leaker claims to have seen a sample of the color. Rather than just a Pantone-style book sample, it appears that the leaker has possibly seen the result of a color-infusing test or a prototype iPhone 16 Pro.
“Fixed Focus Digital” describes the resulting color as “good looking” and “beautiful.”
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MacDailyNews Take: As Kermit the Frog said so eloquently, “It ain’t easy being green.”
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