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Conference Call Notes from MacDailyNews. Read from Bottom to Top:

MacDailyNews presents live notes from Apple’s Q120 conference call
Tuesday, January 28, 2020 4:49 pm
MacDailyNews presents live notes from Apple’s Q120 Conference Call with analysts starting at 5pm ET/2pm PT today, January 28, 2020.
Apple will provide live audio streaming of its Q120 Results Conference Call using Apple’s industry-leading QuickTime multimedia software. This stream is best experienced on an iPhone, iPad, or iPod touch using Safari on iOS 10 or later; a Mac using Safari on macOS Sierra 10.12 or later; or a PC using Windows 10 and Microsoft Edge. Streaming to Apple TV via AirPlay requires an Apple TV (2nd generation or later) with the latest Apple TV software or tvOS. Other platforms may also be able to access the stream using recent versions of Chrome or Firefox (MSE, H.264, and AAC required).
The live webcast will begin at 5pm ET/2pm PT today here.
The company posted quarterly revenue of $91.8 billion, an increase of 9 percent from the year-ago quarter and an all-time record, and quarterly earnings per diluted share of $4.99, up 19 percent, also an all-time record. International sales accounted for 61 percent of the quarter’s revenue.
For Q220, Apple guided for revenue between $63.0 billion and $67.0 billion.
Live notes from Apple’s Q419 Conference Call in reverse chronological order:

End of conference call.
Japan was strong for Apple Services and Wearables; cistomers in Japan are very loyal
6 of the too 7 smartphones in Japan were Apple iPhones (strong performance in a difficult environment)
Luca: Japan was down 10% YOY, due to iPhone performance because of regulatory changes (iPhone pricing uncoupled from 2-year contracts)
Cook: We have provided our guidance for the next quarter and don’t discuss anything beyond that
Analyst: iPhone revenue growth sustainability?
This quarter’s results and next quarter’s guidance show that Apple is balancing investment and profitability
New services require R&D and marketing
Luca: We have a lot of great opportunities in front of us
OpEx had been growing at a large rate over the past few years. When is return on investments expected?
iPhone 11 was top-selling iPhone every week of the quarter
Luca: Mix helped in Q1 and in guidance in Q2. iPhone 11, 11 Pro and Pro Max response has been exceptional
Analysts: Gross margins and iPhone mix?
Cook: When you look at AR today, its going to go across you business and home life and that will happen in parallel
Analyst: Where will AR inflection point come from?
Cook: Each of our products can drive purchases of other products
Cook: With each Apple product that a customer buys, they get tighter into the ecosystem thanks to users satisfaction
Analyst: Are wearables driving people into the Apple ecosystem?
Revenue was very strong, some credit card fees are higher with more transactions
Luca: We purchased Intels modem business during the quarter and that is an important core technology for the company
Luca: We felt good about our OpEx results, but we want to make all of the necessary investments in the business
Analyst: OpEx thoughts?
Cook: I won’t comment on future products, but generally, but when you think of 5G, look around the world at the different deployment schedules; won’t comment on handset prices
Analyst: iPhone pricing?
Apple TV+ content costs are incurred and then amortized over a certian period of time depending on the type of content
Luca: Apple TV+ was very small contributor to revenue in the quarter (just launched recently). There are paid subscribers, bundle subscribers (buy product, get free year) – this revenue is deferred in multiple ways
Analyst: Did Services revenue have any deferral for revenue?
Cook: for Apple TV+ we feel strongly that the customer wants an ad-free product
Analyst: Apple’s potential in advertising business via Services?
Cook: hopeful for supply/demand balance for Apple Watch Series 3 to happen this quarter; likely not for AirPods Pro
AirPods Pro and Apple Watch Series 3 supply come into balance?
Cook: I’m optimistic that will continue
Cook: We have many carrier partners around the world who were very helpful this quarter for iPhone
Analyst: Are carriers working to leverage 5G?
Cook: Nope
Analyst: Tries to get Cook to talk future products
Apple is very happy with the 17% quarterly growth of Services
Apple feels the Services business is going incredibly well; new services just launched very recently
Apple will pass 500 million paid subscriptions during the March quarter; setting new target of 600 million before end of 2020
Apple grew double-digits in Services in all five geos
Luca: 17% for the quarter beats YOY 16% growth
Analyst: The modest slowdown in Services 17% vs 18% sequentially?
Luca: We look at the way prices move and at times, we buy certain commodities in advance
Analyst: Commodity market?
Sales within the Wuhan area are small, but retail traffic has been reduces in recent days in China, even outside the Wuhan area
Apple has closed on retail store in China and Apple resellers have as well
Apple does have suppliers in the Wuhan area, but all of those suppliers have backups outside the Wuhan area
Apple has limited travel to China to business-critical situations
Cook: Our thought are with those affect by coronavirus outbreak
75% of customers buying a Mac in China are new to the Mac
iPhone 11 is doing very well in China; trade-in and financing programs are very well-received
Cook: The results from last quarter double -digit growth for iPhone in mainland China, an important change and double-digit growth in wearables
Analysts: What were you seeing in China prior to health crisis?
Cook: Monthly payments on Apple Card is U.S.-only, but it was an important part of increased iPhone sales
Analyst: Customers using Apple Card to buy iPhones, help sales?
The product is about storytelling; some of which, if done well, will be critically acclaimed
Cook: We are measuring success of number of subscribers
Analyst: How are you measuring Apple TV+ success?
Luca: Loss of leverage due to seasonality, but offset by better mic and cost savings
Analyst: Why are gross margins greater than usual?
Cook: 75% of Apple Watch customers are new to Apple Watch
Cook: Wearables grew 44% YOY
Analyst: Can you explain the Wearables growth, where is it coming from?
Apple’s board of directors has declared a cash dividend of $0.77 per share of the Company’s common stock
The dividend is payable on February 13, 2020 to shareholders of record as of the close of business on February 10, 2020.
Apple is providing the following guidance for its fiscal 2020 second quarter:

revenue between $63.0 billion and $67.0 billion (wide range reflects uncertainty over effects of Wuhan coronavirus)
gross margin between 38.0 percent and 39.0 percent
operating expenses between $9.6 billion and $9.7 billion
other income/(expense) of $250 million
tax rate of approximately 16.5 percent

30.4 million shares retired
Apple maintains goal of reaching net-cash neutral position over time
$108 billion in total debt
Apple ended the quarter with $207 billion in cash
100% of Fortune 500 healthcare enterprises use Apple products
Strong enterprise demand for Apple products
All-time record for Wearables, Home and Accessories: $9.52 billion
Half of the customers purchasing Macs and iPads were new to each platform
AppleCare all-time revenue record
iCloud all-time revenue record
Apple Music all-time revenue record
Apple shooting for 600 million paid subscribers by year end
Apple expects to hit over 500 million paid subscribers this quarter
480 million paid subscriptions, up 120 million YOY
Customer engagement continues to grow paid accounts grew double-digits
Services all-time revenue record of $13.07 billion
iPhone 11, 11 Pro, and 11 Pro Max satisfaction of 98%
Active installed base of iPhone has reached an all-time high
All-time record for quarterly earnings per diluted share of $4.99
All-time net income record of $22.2 billion
Tax rate: 14.2%
Luca Maestri: All-time revenue records in, among others, U.S., Canada, Mexico, Brazil, UK, Germany, France, Italy, Spain, Poland, Thailand, and Viet Nam
Apple closely following the coronavirus situation
Apple health studies are focused on use privacy as is everything Apple does
Everyone Can Code curriculum released during the quarter; million of students in over 5,000 schools
Apple sees a bright future for Apple Retail and iPhone trade-in program
Doubling in iPhone trade-ins vs last year
Most powerful Macs ever shipped during the quarter – 16-inch MacBook Pro and Mac Pro
Mac: $7.160 billion
iPad: $5.977 billion
Supply constraints for Apple Watch Series 3 and AirPods Pro
Over 75% of Apple Watch buyers were new to Apple Watch
Apple Watch set a new all-time quarterly revenue record
AirPods Pro had big growth
Wearables, Home and Accessories: $10.010 billion (the size of a Fortune 150 company)
The company is thrilled with Apple Card
Apple Pay revenue and transactions more than doubled YOY
Apple News now has over 100 million users around the world
Apple TV+ is off to a rousing start
Apple Arcade has “been fast off the blocks”
Services: $12.715 billion with double-digit growth in all 5 geographic categories (Americas, Europe, Japan, Rest of Asia Pacific, and Greater China)
iPhone net sales: $55.957 billion
Cook: Exceptional demand for iPhone 11, iPhone 11 Pro, and iPhone 11 Pro Max (Apple’s three most-popular iPhone models)
Cook: All-time records for geographic segments: Americas, Europe, and Rest of Asia Pacific. Greater China returned to growth
Cook: We are thrilled to report Apple’s highest quarterly revenue ever
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AAPL After hours: $322.14 +$4.45 (1.40%) @4:56PM EST
FYI: Tim Cook says Apple has shut one store in China and is restricting employee travel because of coronavirus
Apple beats the Street with record first quarter results
BTW: CNBC’s ability to corral Apple know-nothings who’ll nonetheless spout interminable nonsense about Apple is unparalleled
Awaiting start of conference call.