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00:00[CC may contain inaccuracies] Apple pretty much a beat across the board that earnings per share. Just to pick out one number to 10. This is an expectation of a dollar eighty nine. Can you see anything in there at all that gave you pause for concern. No real pauses for concern and it's an interesting reflection that having just heard all these other CEOs talking about the challenges they've had with supply chain you know clearly Apple said yes we had some but very not a whole lot. Now it's important. Remember that a lot of Apple's suppliers. Apple is the largest customer. And so they're going to do whatever they can to make sure that Apple is happy because they are indeed the biggest customer in most cases. So Apple I think you know was able to leverage its power its strength its size to get the parts that it needed. It also I think it has incredibly deep fingers into the supply chain way deep down. They've reflected that in a number of ways over the years. So I think they had particularly good insight into their supply chain probably better than a lot of companies have. And that's clearly reflected in the results that we saw. Apple definitely coming from a position of strength when it comes to the supply chain. But what about a factor it can't control. How about inflation. How is that going to impact things going forward. And is it going to have to raise the price of some of its some of its products. It's entirely possible that we will in fact see Apple raise those prices. I mean they've had they've got very healthy margins. So you can argue well they've got a little room to maneuver to be able to take in some of those cost hits. But if we continue to see these inflationary pressures I think inevitably we're going to see that. You know what's interesting about the numbers by the way you know typically with all their hardware categories are very cyclical. You can follow this sort of sort to shape between first quarter to fourth quarter. It ramps up then it drops. And we saw the same thing this year. But the services revenue if you look at what Apple's been doing with service is nearing 20 billion this quarter. It's a straight up linear path. And so those kind of have huge margins there and unlikely to see a whole lot of inflationary pressure on that side. So I think a lot of the growth story for Apple moving forward even if we have some inflationary issues on perhaps the hardware side is they've got these strong services business that they can leverage and they're attaching to more and more content more and more things to it. And of course getting more and more their customers with the larger installed base to sign up for these services. And I think that's the long term strength story for Apple. Let me delve into the hardware story though because we did see Tesla for example given the supply chain challenges coming out and saying that they will not be releasing a new model this year because there was no point. They have issues with power shortages. Could this also be an issue for Apple at some point. Because we don't see any of these supply chain issues being resolved anytime soon. I know that they're actually more resilient than other companies but I wonder if there will be a model impact on their product lineup at some point. Look there certainly could be sure. And you know obviously down the road another big point of speculation for Apple's future is around other types of devices you know whether it be a car in VR glasses or frankly automotive. Right. And it is a completely different set of supply chain issues certainly for automotive. And we've seen that across every single automaker Tesla included in Apple's case of course. They haven't really had to worry about that just yet. And so within the world that it's currently in. I'd say I think they're in reasonable shape. But is there a risk of it. Absolutely. There's all kinds of risks. You know we know that the semiconductor business is still consolidated very strongly. If God forbid anything ever happens to happen in Taiwan you know TSMC is a huge supplier to all the tech and three Apple included. So obviously any impact there would have a huge impact on Apple in the entire industry. So yes there is certainly that possibility. But I think you know we're going to see we're seeing this drive to diversify supply chains semiconductor increases around the world. Intel of course made big news this past week building announcing a plant in Ohio here in the U.S. So I think we're going to continue to see that diversification and a lot of tech industry players would like to see that. I'm sure Apple included despite its strength we have seen of course have stock pressure. And given the broad tech sell off that we've seen so many people now saying earnings will be even more important going forward. And in terms of what you've seen so far whether it's Microsoft Intel and others. Does this give you some pause. Where are you at when it comes to their guidance. Yeah. You know it's interesting. It's really it's guidance. Right at the end of the day it's almost like oh yeah. What you did last quarter actually don't care any more. Now it's all just like you know give me your guidance like that. We've all there's always been a strong focus on guidance clearly. But I think we're seeing it even more so because I think part of the thing that's also going on in addition to the economy and these supply chain issues is I think there is a sense out there that we are going to start to enter somewhat a of a post Covid whatever we want to call it world. And that's going to have different implications. And I think some of the issues we've seen on the tech stocks is they obviously got a huge run up during the pandemic. And I think some people are taking a step back and saying OK as we start to think about a world that is sort of post pan. Mark what does that mean and have we overinflated where we need to be on tech stocks. That's why I think you've seen a number of these tech stocks. Obviously they had huge run during the pandemic getting some pretty severe hits that arguably don't really match with the earnings or even with some of the guidance. But you know like in the case of Microsoft classic example before they put out the guidance on expecting Azure to grow their cloud based computing business you know the stock went down even though they had record earnings you know saw things with Tesla. And you know and with Intel they took a big hit too because it was more on the future earnings than in their case the investments they're making to build more manufacturing which is impacting the gross margins. But I guess I think it's kind of these macro issues that go beyond just the economy to sort of this. How does the world look over it and how do we react based on that.

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Apple Has Good Insight Into Supply Chain, TECHnalysis Says

Bob O'Donnell, president and chief analyst at TECHnalysis Research, discusses Apple Inc.'s financial results and outlook. Apple posted record quarterly sales that sailed past Wall Street estimates. The Cupertino, California-based company didn’t provide guidance for the current period, its fiscal second quarter, an approach that it’s used during the unpredictable Covid-19 era. O'Donnell speaks with Paul Allen and Shery Ahn on "Bloomberg Daybreak: Australia." (Source: Bloomberg)

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