now we've been talking about apples. So it's time
to take a closer look at Apple's earnings. The
tech giant delivering record revenue for its fourth quarter.
Iphone sales grew by about 10% falling just a little
short of investor expectations, total sales and Apple's fiscal
2022 were up 8% to 394.3,$3 billion right
now. Pre market shares of the company are trading
just slightly lower about eight hundreds of a percent there
. Now joining us to discuss is Angelo Zino,
senior equity analyst at C. F. R.
A. Angelo, thank you so much. Welcome
to the show. What do you make of Apple's
earnings and why are you maintaining a buy on the
stock for now? Yeah, no thanks for having
me. So, you know, I think overall
the results were probably as good as you could have
expected amid kind of the current landscape and given what
we've seen across some of the other social media stocks
or, you know, tech oriented stocks, specifically
social media. But if you kind of look at
, you know what Apple is doing really well here
, it's more executing on the numbers and uh,
you know, not being very prudent with expenses.
Um, but you know, at the end of
the day, I mean, this is um,
this is a company where you can give them all
the time in the world for and the management ta
team is kind of really running on full cylinders here
, as far as kind of the, the forecast
was concerned. I mean clearly, um, probably
very cautious, especially kind of ahead This holiday selling
season, but again, probably warranted um, in
our view, we do keep our buy recommendation on
this year's because this is listed at the end of
the day, a company generating$100 billion dollars plus
in free cash flow annually. And again, it's
a name where we think it's going to be a
stable free cash flow generator, which you're not getting
with a lot of other companies out there Now,
Angela, you mentioned the holiday season, which is
of course a vital time for apple. Meanwhile,
Apple saying it's cutting back production of its iPhone 14
due to weak demand. Should investors be watching to
see if that changes into the holiday season? Could
things possibly turn around here for those phones? Yeah
, I mean, listen, I think as far
as kind of our expectation, as far as the
iphone 14 lineup is concerned. Um, you know
, clearly what they've done here is very strategic in
nature and that is kind of putting all kind of
the great content on the higher price pro devices and
um, that's selling, I think better than most
people expected and in fact demand continues to outstrip supply
and when you kind of look at the two standard
devices and specifically on the plus side side of things
, um, you know, the company is really
kind of held back in terms of um, the
upgrades there and, and as far as the plus
is concerned. Listen, there's really no need to
buy the device because by paying just an incremental$100
more, um you're getting all that additional content.
So I think this is one of those situations where
the company has been very strategic focusing on cost containment
on the standard devices and um that's really helping them
here kind of navigate some of the turmoil within the
consumer landscape. Let's talk about services to Angelo,
Apple recently increasing prices for apple music and apple tv
plus also increasing prices for apple music from 99 9
99 a month to 10 99 a month, you
know with weakening iphone sales. How important are these
services right now to Apple's business model? Yeah,
I mean listen as far as the quarter was concerned
, I'd say there was one real big disappointment to
us and that was the services number grew about 5%
review was you know about 10, growth. So
definitely a disappointment on that side of things. A
lot of it kind of going um you know the
company alluded to softness and gaming specifically on the app
store side of things as well as um you know
soft, the well well known softness on the the
ad market but that said um you know our long
term view on the services side of things is a
company that can see that business grow at least high
single digit and um some of the price hikes here
will kind of help with that and you know at
the end of the day this is a company and
at least on the services side of things that will
live and die based on the growth of their installed
base. And we think that remains uninterrupted and will
continue to be an interrupt over the next decade.
So being able to kind of throw more services out
there and actually being able to kind of increase prices
the way they've done on the hardware side of things
I think is a great thing out there for investors
. Now, let's talk about earning season overall.
We've had quite a bit of disappointment when it comes
to technology and sort of a mixed bag for earnings
overall. But what specifically does Apple's earnings tell us
about the health of the economy globally at this point
? Yeah. I think listen when I look at
Apple's numbers, I'd say at least looking at the
consumer side of things, I'd say the consumer is
a lot more resilient than maybe a lot of people
out there anticipated and especially within the U. S
. Market which is holding up much better. Um
And when you kind of look deeper into the numbers
there, I'd say europe is definitely more challenge than
other other areas of the world. But as far
as kind of Apple in their numbers here, I
think the consumer is willing to kind of pay for
what they want right in Apple's iphones and macs and
ipads continue to kind of be, um, you
know, a Brandon offerings that consumers out there are
willing to pay for. But you know, at
the end of the day here, I mean,
clearly, um, you know, the macro landscape
is definitely softening given what we've seen from other tech
oriented companies out there again, specifically on the ad
side of things. And you know, investors are
really gonna kind of applaud, um, those that
are kind of more vigilant on the tech side of
things. And Apple is definitely kind of keeping a
close eye on that. Angela. Thank you so
much for your time this morning. That's Angelo Zino
, senior equity analyst at C. F. R
. A Research.