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Apple earnings: Twitter reacts to Q1 results, significant headwinds for tech industry

In the latest “After the Call,” Yahoo Finance’s Brian Sozzi, Brad Smith, and Dan Howley discuss the reaction to Apple earnings on Twitter as investors parse Apple's sprawling businesses, slowing smartphone sales, macroeconomic challenges for tech, and the AI craze.

Video transcript

BRAD SMITH: We got to bring in our own, of course, technology designated hitter, the DH, Dan Howley, to get some of his thoughts on the earnings call as well here. Howley, what did you take away?

DAN HOWLEY: Yeah, look, you know, I got to say, I thought that the call was much better than I was expecting. And sure, part of that is because Apple wants to, obviously, put on a smile and make this into a bright spot. But they really did do a good job kind of telegraphing the fact that when we look at this quarter, Apple knew that they were going to have problems with production. They gave that to us early. And Tim Cook was sure to point out the fact that iPhone sales would have grown if not for those problems with COVID and the lockdowns in China.

So when we're looking at this overall, it does seem as though it would have been a much better quarter had that not happened, meaning essentially that the business is still doing well. I just-- I want to point out something real quick that just has to do with the iPad and the services sales. Essentially, we're seeing this improvement when we saw iPhone sales fall apart.

So it's-- I wasn't expecting to see iPad revenue. I just-- also, I want to point out, if you look at the kind of timeline of how people are reacting on Twitter, I have this tweet here that's basically talking about how essentially that the tech golden age is over. You listen to the call, and it doesn't appear to be the case. It seems it's completely flip side, where we're still going strong with big tech.

I don't necessarily think that Apple and Google or Alphabet and Microsoft, it's not apples to apples. Apple is selling hardware, remember. Google is selling ads. I think that that's probably the main difference here. They don't have to worry about what's going on with the ad market. They don't have to worry about what's going on with the business market necessarily. It's all to consumers, and it seems as though things are going kind of, you know, [INAUDIBLE].

BRAD SMITH: And Dan, I mean, doesn't this come back to the cycles for some of these mega-cap tech companies and how much they're able to throw around some of their cash to continue to invest in that next leg of growth?

DAN HOWLEY: Yeah, I think, look you know, first of all, AI, we--

BRIAN SOZZI: He didn't mention AI! Tim refused to even mention AI! He didn't want to be stuck with l.

BRAD SMITH: He refused to say it.

BRIAN SOZZI: Maybe he should have. Maybe the stock would be up 10% tonight, guys. He refused to mention it. Come on, Tim Cook. AI talk-- I want to hear it.

DAN HOWLEY: I'm tired of AI. I'm glad that it didn't come up. Someone tried to put a question in there. I just-- sure. AI is there. I mean, Siri has been around forever. It's not as-- also, look, don't even get me started on AI. ChatGPT is very impressive. It is not where the world is going as far as AI. It's a program. It's not the end all, be all of what AI will be. But it's not-- I don't think Apple has anything to do with it. Just because Microsoft's doing it doesn't mean Apple should.

BRIAN SOZZI: I can't help myself. I know we got to get to a tweet, but real quick, Google reported after Alphabet. They are so jazzed up on AI, they are creating a new reporting structure for their AI business. We're going to talk more about that tomorrow morning. Dan, back to you. I had to mention it.

DAN HOWLEY: Yeah, I just want to point out the second tweet that we have here is, again, just kind of the downside that I think people were looking at. And, you know, I mean, for me, when I heard the report, you know, I was expecting, obviously, as I think everybody else was, was the first revenue decline since 2019. That's what we saw. And it's not-- it wasn't-- I got to say, Tim Cook masterclass in kind of spinning this in the positive, basically saying this wasn't going to be the bigger downside that we were expecting going forward. Apple continues to sell.

So, I mean, like I said, this is very different than what's going on with Meta. Everybody was, like, jumping all over the place for Meta today. The ad market's not doing well. I don't know-- stock buybacks, and oh, we're cutting costs. The core business is still having problems. We see that from Snap. We see that from Google. So I just want to point that out.

And then, just finally, we talk about services doing well. We talk about iPad revenue doing well. I just want to point out this one tweet that we have about services here. They constantly say services, new record-- cool. What is the revenue for Apple Music+, Apple TV+, Apple Arcade, you know, iTunes? Can you give us the revenue there? No, no, no, no. We'll just say, services blanket.

By the way, services is inclusive of things like AppleCare and things like that. So we don't know what any of that means. We just know that you might be selling a lot more AppleCare, and maybe people signed up for Apple TV+. We got to find out what's going on with Apple TV+. You might--

BRIAN SOZZI: Nobody cares! Nobody cares about it.


BRIAN SOZZI: [INAUDIBLE] the Homepod. They talk about the Homepod. Who cares about it? Nobody cares.

DAN HOWLEY: I love Severance. I could see people wanting to say, you know, I signed up for Severance. I'm going to quit. Because [INAUDIBLE] a lot of stuff there still. The Homepod, look, they did a better job with it. They did a better job with it. I think for them, next quarter, the big thing is going to be how these new Macs sold, right? So they just introduced these new Macs with the M2 Pro, the M2 Macs chip. They have the new iMac, right?

We saw the difficult comparisons. They brought that up in the call itself. They said, look, there's going to be difficult comparisons from last year. And sure, we saw that in this quarter as well. But there were no new Macs really. They were out on the market.

Now there were brand new Macs that came out. We have to see what that means now for the Mac sales in the next quarter. Sure it might be down because of those comparisons. But what does that mean as far as people's interest in the next generation of Apple chips? The first generation was a big deal. I don't know what that means as far as the next generation.

BRIAN SOZZI: Where are my AR glasses?

BRAD SMITH: Aw, don't get started on the AR glasses.

BRIAN SOZZI: [INAUDIBLE] I want all these things. I notice this on the call. [INAUDIBLE] guys.


DAN HOWLEY: I don't want to talk about glasses because my opinion, VR is like 3D TVs. I don't know where those are.


BRIAN SOZZI: In the trash.

BRAD SMITH: All right. [INAUDIBLE] Dan, thanks for hopping on, hanging around after the call with Sozzi and I. Appreciate the take.