Is Apple Doing Aggressive Financial Engineering?

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April 23 (Bloomberg) –- Piper Jaffray's Gene Munster, Inmobi's Crid Yu and Bloomberg's Cory Johnson discuss Apple's second-quarter earnings, the future of Apple TV and iPhone sales in China. They speak with Emily Chang on Bloomberg Television’s “Bloomberg West.” (Source: Bloomberg)

What was the biggest thing that stood out to you today when you heard what was said?

The iphone number was the most impressive.

They use that as the tip of the spear to get their ecosystem out there.

That number was substantially better than what was thought.

Emerging markets, that is what really stood out.

There was a lot in that report.

This was not your average quarterly earnings.

There's a lot on the allocation side and it is dense -- dividends.

The number was a disappointment.

Cori, when you take a look at the numbers, paul kedrosky called a financial engineering that has nothing to do with apple's core business.

How do you respond to that?

He is completely wrong.

I like to say that about paul because it is completely fun.

It is not the crooked financial engineering that i used to look for when i was a short seller looking for companies that were cooking the books.

That is not what they are doing there.

Every apply capital in a lot of ways that make the stocks look more attractive.

The stock is something that is completely different from the business.

You saw an acceleration of iphone sales.

The analyst did not expect to see that era that was pretty strong from these guys.

They're great successes that are happening in the iphone, as well as in the iphone department.

It is a gross margins were taking a hit because it has been such a widespread product update.

These devices were being billed when the component costs were at their all-time highs.

We saw those gross margins come down.

We saw the iphone units rise pretty dramatically.

There is strength in that is nice.

At the same time, we haven't seen new product categories.

We have been waiting for innovation to come from apple.

People hiring people away from apple.

They said their focus is on product.

You asked about apple tv and why he said it is no longer a hobby.

What was his answer?

We satisfied with it?

Is answer was it is more than a billion dollar revenue business and it shouldn't be a hobby.

My take is when you're approaching a $2 billion revenue business, a billion dollar hurdle is still hobby level.

He did make a couple of references to future updates to apple tv and future products in that category.

We have been talking about an apple tv.

To answer your question, i think if you look hard at what he was saying between the lines, he was still saying that there is an opportunity for them to change the living room.

They have fallen behind in that when you think about amazon and some of the updates to roku box.

It all plays into this thing that it is important in terms of products for apple.

We think that tv whether it is a set top box or new apple tv is one of those areas.

I want to talk about how apple is doing in china.

Iphone sales did hit a record.

How is apple doing in china?

Better than we thought.

We talked about this last time.

They can stimulate iphone sales in china.

A lot of it is still to come.

What else is still to come?

The one thing that people are expecting is a larger screen.

That is something that gene talked about.

Everyone is waiting for that to come out.

A lot of people are holding out on buying the new phone until that comes out.

How much does it matter having new products?

They seem to be doing just fine.

The company is doing great.

They're making boatloads of money.

There has never been anything like this arguably in american business, certainly technology.

The products are beloved.

Sales have never been so big.

If you want this to be a growth company and take things to yet another level, investors want to see a higher multiple in the stock.

Look at innovations that had with the iphone and ipad that was simply amazing.

In other areas, they have to come up with new products.

We consider gross prospects -- we can see the growth's prospects.

We will continue this

This text has been automatically generated. It may not be 100% accurate.

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