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Apple down in after hours trading despite posting big beats on revenue, EPS

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Apple reported earnings that outperformed expectations, with the tech company posting $1.68 EPS and $111.4B in revenue, compared to consensus estimates of $1.42 EPS and $103.1B in revenue.

Video Transcript

ADAM SHAPIRO: I've got to get to Jared Blikre because we had record revenue reported from Apple and much more. Jared.

JARED BLIKRE: That's right, and we're seeing the stock down just slightly in after hours trading here, but let's get right into the numbers because on all the key metrics, it looks like really big beats here. So first quarter EPS came in at $1.68 per share. Estimate was for $1.42. Revenue-- big beat here. $111.4 billion. Estimate was for over $10 billion lower at $103.1 billion. And then iPhone revenue-- big beat, $65.6 billion. Estimate was for over $5 billion lower. Products revenue-- $95.68 billion. Estimate was for about $7 billion lower.

So all the numbers lining up here, seeing the stock briefly turn into the green. But I just want to go down some of the other segments here. Looks like the only place I'm seeing a slight miss is on the Mac revenue. Not a big part of their business, but still coming in at $8.68 billion. Estimate was for a bit higher-- $8.86 billion. And they also declared a cash dividend of 20 and 1/2 cents per share. So we're going to be going through this and coming up with some other numbers, but these are the headline numbers-- big beats on all the key metrics here, guys.

SEANA SMITH: Hey, Jared, lots of focus on their services revenue, too. That was $15.8 billion during the quarter. The estimate from the Street was from $14.9 billion. This, of course, has been a focus for analysts, for shareholders, for investors at large over the last couple of years, just in terms of how much Apple is able to grow its services division. When you see numbers like that, does that kind of reaffirm the thesis that Apple is diversified enough and is not only relying or is not relying too much on its products at this point?

JARED BLIKRE: Well, I mean, it's an ecosystem that we talk about, right? So they have to have everything kind of firing on all cylinders. And that seems to be the case here. You know, we just had a big down day in the market. We had a Fed decision. We've got retail stocks going crazy. So amid all of the fuss here, to see the stock down only about %-- I'm not going to get overly concerned.

But your point is well taken. This is-- they're morphing into more of a subscription and services company. They need that hardware to be there, but well, it's $15 billion today. They need to grow that into $30 billion in the years to come. So that's where the focus is on-- yes.

ADAM SHAPIRO: But we've seen from analysts-- I think it was Dan Ives that pointed out that, like, iPhone replacement-- it's going to be more than 400 million iPhones in the next couple of quarters have to be replaced. So this figure we're seeing right now-- I mean, I'm an investor. It's still going to be iPhone juggernaut or at least a year, isn't it?

JARED BLIKRE: Yeah, I think so. And we've got a couple of key quotes here from the earnings release that I just want to read. This comes from Luca Maestri, the Apple CFO-- our December quarter business performance was fueled by double-digit growth in each product category-- so pretty broad-sweeping there-- which drove all-time revenue records in each of our geographic segments and an all-time high for our installed base of active devices. These results helped us generate record operating cash flow of $38.8 billion. We also returned over $30 billion to shareholders during the quarter as we maintain our target of reaching a net cash neutral position over time.

So the firm is doing very, very well. You talk about the product replacement cycle. That's a definitely a thing this year. Most people don't have 5G, and those that do, it's going to be rolled out in a much more-- in a much broader way in the coming years. You've got to think, who's going to step in and kind of crush the competition here? You've got the Android devices, and you've got Alphabet kind of running the show there. But Pixel sales haven't been that great.

Samsung, the other competitor-- I happen to be a Samsung Galaxy aficionado myself as well as the Google Pixel. You know, you throw it up. Everybody's going to have to be buying new phones over the next year or two. And as long as Apple continues to improve their services, I haven't found a subscription that I might buy just yet, although admittedly I'm not an Apple user, and I don't need their data services. If they got Apple Plus, you've got to-- functioning here, really kicking it up the subscribers into high gear. If they got Apple Plus going, that would just be another source of revenue for them.

SEANA SMITH: Big takeaway-- Apple needs to do a little bit more to get Jared Blikre on board. Jared Blikre, thanks so much for breaking down those results for us.