Report of 4q20 financial report conference call Cook said China’s performance was poor because there was no new iPhone launched in September From Apple

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The following is the Report of 4q20 financial report conference call Cook said China’s performance was poor because there was no new iPhone launched in September From Apple recommended by recordtrend.com. And this article belongs to the classification: 5g industry, iOS, iPad, iPhone.

On October 30, 2020, Apple Inc（ NASDAQ:AAPL ）The fourth quarter of fiscal year 2020 (the third natural quarter of 2020) was released after the U.S. stock market closed on Thursday (Beijing time early Friday). According to the report, Apple’s net revenue in the fourth quarter was 64.698 billion US dollars, which exceeded the previous expectations of Wall Street analysts, compared with 64.40 billion US dollars in the same period of last year; the net profit was 12.673 billion US dollars, down from 13.686 billion US dollars in the same period of last year; the diluted earnings per share was 73 US dollars, exceeding the analysts’ expectations, compared with 76 US dollars in the same period of last year.

After the release of the earnings report, apple management held a conference call with CEO Tim Cook, CFO Luca Maestri and Investor Relations (Senior) director Nancy Paxton to attend and answer analyst questions.

[Apple’s fourth quarter results exceeded expectations, but its share price still fell more than 5% after hours]

The following is the transcript of the financial report teleconference:

Cross research analyst: can you talk about Apple’s current situation in China and its future trend?

Cook: I’ll mainly talk about the last quarter and then this quarter. In the last quarter, we saw double-digit growth in our non Apple product line. Apple mobile phone is divided into two parts. One part is before early September, because this is the time when we usually launch new iPhone products. During this period, the demand for iPhone will increase. There were no new iPhones on sale for two weeks in September, making the numbers less than ideal.

China’s business performance in the past two quarters has been more robust than the figures you see in the statements, and there are also some differences. This quarter compared to the previous quarter, and some of the momentum we’ve accumulated in the last quarter, and the initial sales data we’ve seen on the iPhone 12 and the iPhone 12 pro. We’re not going to give some revenue guidelines. But I can make it very clear that China’s sales data will be very good this quarter. We are very confident about the situation in China.

Last quarter, we had less inventory here than in other regions. This is one of the reasons why this place is different from other places. In the same period last year, new iPhones accounted for a higher proportion of overall iPhone sales than in other regions. This can explain why the situation in China is different. The construction of 5g in China is very developed, and it is expected to build 600000 base stations by the end of the year. So the time for us to enter the Chinese market is very good. According to the feedback we have received in the Chinese market, we are very confident about the performance of this market.

Cross research analyst: in the United States, the construction and use of 5g are also constantly advancing. What are the main reasons for the promotion by the management?

Cook: we are working very hard to provide the best experience for iPhone users. For this purpose, we are constantly working with various 5g companies to ensure that the new iPhone has the best battery and signal experience. We have now tested more than 100 5g communication companies in 30 regions. Of course, this process will continue to move forward in more regions, because different communication companies will also expand their own territory, which happens every week.

Analyst: what range is the next revenue forecast?

Maastri: we don’t provide any revenue guidance, so let me talk about the main differences between this quarter and last quarter. The release time of the new iPhone in this quarter is different from that in the past. First, we will release iphone12 and iphone12pro in the fourth week of the quarter, and we will release the iPhone mini and iPhone Pro Max in the seventh week of the quarter. Therefore, when we consider the growth rate, we must bear this in mind. For all Apple products and services, we hope to achieve double-digit growth.

We are very satisfied with the progress of the current situation. We started to accept the reservation five weeks ago. Although it is still very early for the mobile phone, I think there are many favorable factors at present, both for the iPhone and for the whole mobile phone series. Cook has also stated in his comments that our new iPhone series is Unprecedented, the number of users has been increasing, reaching the highest level in history. 5g is also a once-in-a-century opportunity. In the market of China or the United States, 5g’s supply competition is very fierce. In fact, this is very beneficial for consumers. Therefore, I think I am very confident in these factors.

Analyst: if the service can be implemented in the form of “family bucket”, why can’t the hardware? Is it because the advantages of serving the whole family can not be reflected in the hardware?

Cook: people are willing to pay for the hardware. So you can also see some dealers showing hardware products in their stores. All this began to take the form of a registered member. Because for some users, they will have a mobile phone iPhone product for a long time. They will take advantage of the residual value of the phone, which can be converted into some actual discounts when changing the phone. There are some in the market that show the same pattern. There are also some consumers who come to us and say they want to buy all the services and we want to try our best to meet the demand. We are also looking forward to launching apple one tomorrow.

Morgan Stanley analyst: new technologies like 5g chips will put pressure on the cost of mobile phones, but Apple still keeps the ASP (sales price in the United States) very stable. So I would like to ask, how is the profit model of Apple’s new mobile phone series different from the previous product series?

Maastri: we don’t give any guidance on the gross profit. We hope that the gross profit can maintain the level of last quarter, because the current situation is still relatively good. We have released a new series of iPhones, and our prices remain stable. We also use a lot of new technologies in mobile phones. The overall commodity market is very good. The pressure of foreign exchange rate exists in this quarter, but this will not be the influencing factor. We feel very good about the sales expectation. There are many favorable factors for the growth of gross profit. We are also very happy to provide a lot of new technologies. At the same time, we can protect the gross profit level that many investors attach importance to.

Morgan Stanley analyst: I’d like to talk about the services business. It doesn’t depend on any single service. However, licensing and some businesses are indeed the main reasons for promoting the growth of gross profit and driving the growth of advertising revenue in history. Therefore, when the management is under the pressure of Google’s antitrust, will they think that they are issuing licenses and other businesses Will the revenue of the company be adversely affected? Is there any other business unit that can make up for these losses?

Cook: in the past few years, we have launched many new services, such as Apple TV, apple news, apples card and other related services, and apple fitness plus will soon be available. We have a lot of services. Although they have been released a long time ago, they are very good in the app store and icloud. There is a lot of space and growth potential in this area.

Analyst: the number of iPhone users has reached the highest level in the market. The cycle of the new aircraft has also been extended. If these factors are positive and positive, will the management foresee a longer period of continuous growth?

Cook: we are very confident about this product line. If we look back now, we have released four new iPhones for the first time in history, which are suitable for very different target user groups, and are the four most powerful mobile phones in history. We do have a very large and loyal user group, and we are constantly exploring some phone changes Group, so we are very confident in all this. 5g is also a rare opportunity in a hundred years. There are many positive emotions about this. In the market, we have received a lot of attractive quotations. Considering these factors, if we look at the current initial sales data of iPhone 12 and iPhone 12 pro, we really have a good start.

Analyst: my second question is about the growth rate of service business. Is this growth sustainable? Are there any other drivers behind this?

Maastri: we are very satisfied with the growth of our business. As you said, we have been maintaining year-on-year growth. The first reason is that our business is expanding. We have many different profit models, so the overall retail improvement is actually a mixture of different profit models. We are also constantly launching new services and investing. This year, we launched a lot of new service businesses and made a lot of investment, but at the same time, we can still achieve profit growth, so we are very confident in the strategy of service business growth. We are also very satisfied with the feedback from consumers. We saw record revenue in all of the key business segments, and in different markets, we saw record revenue in September. In different business sectors, all the drivers work together, and all this will translate into profit growth.

JP Morgan analyst: do the management see that because of the big environment, consumers’ spending is affected, thus affecting the sales of new iPhones?

Cook: by mid September, we saw double-digit growth in consumer demand for iPhones. So there is a lot of growth momentum in this area, and now this momentum will become more, because we have released the new iPhone and iPhone 12pro. If your question is whether there will be more growth momentum due to the change of the general environment, I personally think there will be more growth momentum. But I can’t do any experiments, so I’m not sure.

J.P. Morgan: now we may be facing the second wave of severe epidemic situation. So now that all companies are on the line, Apple has made some comments on this in its opening statement. Would the management please talk about what preparations have been made in terms of inventory or supplier channels to face the epidemic situation like that in the first half of this year?

Cook: we will do everything we can, but we will give priority to safety. Just like in Apple’s stores, we put forward the idea of turning the store into a fast store, which we have implemented in many places, because we feel that it is safe for employees and customers. However, we are still allowed to communicate. We have also contacted a lot of customers by phone. The online stores are still running. I think everyone has done their best to find a suitable temporary solution to adapt to the changing environment, but there are also many uncertain factors.

Analyst: the management mentioned in the opening statement that the gross profit rate in December is roughly the same as that in September. For iPhone, there are unfavorable factors, such as subsidies from communication companies. Will this affect the expected gross profit?

Maastri: Generally speaking, in the December quarter, we will have some positive factors, because we will have some seasonal fluctuations from September to the holidays. In addition, there have been further improvements in different products. We’ve launched a new line of iPhones. But it is also very important that we have actually released a lot of new products in the past few weeks. In addition to the new iPhone line, we have also released a new Apple watch, a new iPad, and every time we launch a new product, the cost increases accordingly, so this is the other side of the coin. I think there should be a balance between these two aspects. In addition, we have provided customers with a lot of new technologies and features. This time foreign exchange rate is not a factor. This is different from before.

Analyst: the management mentioned in the opening statement that the gross profit rate in December is roughly the same as that in September. For the iPhone, there are unfavorable factors, such as the favorable factors such as the subsidies of communication companies. Will the gross profit expectations be affected?

Maastri: Generally speaking, in the 12th quarter, in this December quarter, we will have some positive factors, because we will have some seasonal fluctuations from September to the holidays. In addition, there have been further improvements in different products. We’ve launched a new line of iPhones. But it is also very important that we have actually released a lot of new products in the past few weeks. In addition to the new iPhone line, we have also released a new Apple watch, a new iPad, and every time we launch a new product, the cost increases accordingly, so this is the other side of the coin. I think there should be a balance between these two aspects. In addition, we have provided customers with a lot of new technologies and features. This time foreign exchange rate is not a factor. This is different from before.

Analyst: the management didn’t mention too much about Apple’s payment ecology in its own presentation. So what are the advantages of Apple’s payment ecology, including apple card and apple cash?

Cook: Thank you for your question, but actually there is not much I can talk about in this area. We still have great passion for the whole payment service field. Apple card has performed very well, and apple pay has performed better. You can imagine that in today’s environment, people don’t want to pay with physical cards. Therefore, the acceptance of Apple cards is much higher, and I don’t think this high acceptance will decline. The United States is relatively backward in contactless Trading, and this epidemic may change the United States. We are very confident in this aspect. Apple can do a lot of other things in this area, and we will be very interested in this aspect.

Jeffrey investment bank analyst: my question is about the supply chain. Can the capacity of the current supply chain meet the demand by the end of this year? So what are some ways to guarantee the supply?

Cook: I don’t know if your question is only about the iPhone. First of all, in terms of iPhone, we are indeed facing a very tight situation in terms of supply, so it is difficult to predict how long this will last. We have not started to accept orders for iphone12 mini and iphone12 Pro max, we also have iPads and apple in MAC Watch is facing supply pressure. We have a lot of focus now. Let’s try our best to solve this problem. At the moment, I can’t predict when the pressure will go away.

Jeffery investment bank analyst: my next question is about the sales momentum of MAC and iPad in these two aspects. When does the management think it will last? Will it continue to increase after the back to school season and holidays? Due to the tight supply side, will the performance in December and next March be stronger than or worse than the seasonal fluctuation?

Cook: the product line of non Apple mobile products has achieved double-digit growth. We are still confident in the sales expectations of MAC and iPad. The progress made in distance learning and distance work will not disappear, but will form a new normal. Because people are constantly learning and doing well in this area, I don’t think we will return to the previous state. So I think that in this case, the iPad and MAC are more important. In the past quarter, the growth of both products was very significant. In September, the sales of MAC set a record for apple. We did carry out more aggressive promotion activities for college students. This is one of the factors. Another important factor is that I don’t think distance learning will recover soon Return to the state before the epidemic.

Analyst: my question is about the pricing of the iPhone. There are some changes in the pricing strategy of the iPhone 12 this year. Has the price of the iPhone 12 gone up? Compared with 12pro, the price difference between 12 and 12pro has decreased in the past. Please talk about the reasons behind the change and the impact it will have?

Cook: the price of the whole series of iphone12 starts at $699. Because the buyers are located in different countries and regions, the actual payment amount is different. Therefore, the amount of consumer payment is the most important. The iPhone 12 is 799 dollars, which is about 200 dollars. But people may pay more attention to the iPhone 12 mini and the iPhone There is a difference of $300 between 12pro. Now we only have the data of iphone12 and iPhone 12pro, then mini and pro Max have not accepted orders. Our pricing strategy has always been to provide customers with the best value. I think we have really achieved this year, including all the technology we have invested in mobile phones, including 5g.

Analyst: we see that some 5g service providers in the United States have provided some incentive policies. When we enter the 5g era and are ready to enter the 5g era, have the incentive strategies of these service providers changed? 5g has been promoted all over the world. Will this incentive strategy increase?

Cook: I can’t express my opinion on behalf of our service providers, because this should be the question they answer. I think it is in the interests of the vast majority of global service providers to transfer their users to 5g, which is also in the interests of the users themselves. So we support this very much, so the current situation It is that all the people are working in the same direction, which is a little different from the situation we have faced before, which is also one of the reasons why I have great confidence in the future. Another focus is on our user base and our product line, which are very strategic.

Apple: 2q20 net profit $11.249 billion, down 3% year on year Apple: 3q20 net revenue increased by 11% to $59.685 billion more than expected Apple: revenue of app store will reach 519 billion US dollars in 2019, China will reach 246 billion US dollars. Apple: net profit in the first quarter of fiscal year 2020 will be 22.2 billion US dollars, both revenue and profit will set a record. Apple: excellent performance in the Chinese market in the first quarter of 2020, iPhone sales will achieve double-digit growth Apple: service revenue during the epidemic period Total revenue increased 1% to 58.3 billion US dollars Piper Jaffray: American local tycoons own and yearn for Apple’s future growth source Xiaomi group: 1q20 revenue is 49.702 billion yuan, higher than market expectation Xiaomi: 2q20 revenue is 53.538 billion yuan With a year-on-year growth of 3.1%, domestic mobile phones hit the iPhone, apple ushered in 12 years to dark time, apple 2020 latest financial report released, how to refine “the highest quarterly revenue in history”

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