At 1,700 but coming up short, down 3 points at 1,692. 49. Just moments away now from earnings out of at t and apple, and we will get those numbers to you as soon as they come out. But first, lets get straight to todays Market Action with oliver percent from Gary Goldberg financial services, mike san tolly from Yahoo Finance and cnbc. Coms very own jeff cox. Mike, let me begin with you, and just get you to react to what the prior guest said. He said he sees a market thats feeling tired to him. Is that what you see . Yeah, i mean, if you look at how overbought the market is, it obviously looks like its teed up for a stall or correction activity. Honestly, its hard to be too bearish at a market when you see this onemonthout performance by the transports, small caps, financials, all the things youd like to see lead. I do think we have to be prepared to watch how the market absorbs the next pullback. Obviously, there will be one. Historically, at least this year, as soon as we got one of the 2 dips, you had a lot of bearishness, a lot of hedging. And i think you want to see that. You dont want to see people take the next dip with complacency and with the sense that this, too, shall pass. You want to see people get nervous, because thats the wall of worry thats had the rally been climbing all this year. Oliver, weve been waiting for the pullback that never comes for so long. Youve been hearing people say a long time the market is tired. What do you think . We saw a little one in june and then you saw people get over the anxiety. Whats happening in markets right now is hold on. We have to cut you off. One second. Im sorry. We have to go to josh, because at ts results are out. Reporter yeah, michelle, at t just reporting let me give you the rules. At t reports eps of 67 cents. The street was looking for 68 cents. On the top line, revenue comes in at 32. 08 billion. Analysts had been looking for 31. 8 billion. Right now, the after hours, tlt unchanged. Guys, back to you. All right. Lets get straight to our analysis for the analysts standing by for at t with the instant reaction. With us is david and jennifer. Jennifer, your initial thoughts here, the top line i mean, the bottom line coming in slower but the top line coming in slightly better. Thats right. The top line being better, michelle, is big. You know, they have a very good glimpse into enterprise, probably better than anyone else. And for that to beat when verizon missed on enterprise is key. David, your reaction to the numbers . Encouraged to see that the revenues exceeded expectations. Earnings just slightly below expectations. The biggest thing well be looking at in todays call is whether management reaffirming the guidance for the rest of the year. Jennifer, also, well be looking for the number of net new subscribers and the iphone activati activations . Yes, preannouncement, in early june, 500,000 net adds. The iphone is becoming less of a relevant stat because everyone has it. David, what do you think about revenue for the rest of the year in light of what you saw we saw here, and that is a slight beat on the revenue line . Well, tyler, we did see a little bit of an acceleration in revenues in the Second Quarter visavis the First Quarter. So thats encouraging. It will be also interesting to see how they come out in terms of their ebitda margins and whether their Wireless Service margins held up. The expectation they would be around 43 . Jennifer, has this fundamentally changed, this sector of the market, in terms of were at maximum saturation in a lot of countries for these companies. Arent we has it changed the way you invest in the companies, because they grew so fast for so long, and now it seems to be slowing down . I think its less of a net add game at this point, michelle. Its more of what they can extract from the wallet share of the customers. If customers are using more data, thats good for the revenue per average user. David, a 39 price target on the stock. Its now about 36. Make the case for why this stock can go up another roughly 10 from here. Sure, tyler. First of all, it appears to be reasonably valued in a market in alltime highs. Stock trades around 14. 5 times this years estimated earnings, a significant discount to the market. It has a 5 yield, dividends have been raised 29 consecutive years. Strong balance sheet. Solid cash flows. Profitable. Theyre buying back stock. Solid defensive holding. Were not saying its a growth idea, but more of an income idea for defensive investors. Jennifer, what do you think of the stock, and do you prefer it or do you prefer verizon . We like both, michelle. I would say verizon in terms of Earnings Growth, we like better. Theyre growing double digit earnings, where versus at t with high single digits. I would agree with david. People think at t has been dead and they continue to prove people wrong. Okay. Jennifer, david, thank you so much for joining us on the at t instant analysis. Thank you. Their numbers are out. Remember, we are waiting for apple. While we do that, lets get back to the market discussion with oliver and mike and cnbc. Coms jeff cox. Oliver, you were rudely interrupted before. The market, is it tired or not . Its a little tired. You can see new highs from here. The tapering idea has been priced into the market at this point, so were getting and we survived. We survived, right. No apocalypse there. Revenues and Earnings Growth have been solid. Now, i think whats going to happen over the next six months for the rest of the year is the market will benefit from low expectations. And i think thats key for investors to understand. Youre going to see volatility. Yes, you may see a 3 , 4 , 5 pullback at some point or another, but like june, it will be shortlived and you will push up against new highs because theres money on the sidelines. You know, jeff cox, you have some things that really argue for a higher market. You have low relatively low interest rates. You have what oliver just said, low expectations. You have low inflation. And youve got low but steady profit growth. Thats usually a pretty good recipe for stocks. Yeah, i mean, you also have very low economic growth. So thats thats not such a good recipe. No, thats a very bad recipe. The market just kind of seems to take all of the stuff in stride, not really Pay Attention as far as the economic stuff goes. I think what youre really going to see as we go through earnings season, youre going to see what the guests said a little while ago about this being a stockspecific market. Sure, i mean, you know, weve been talking about how tired the market has been for quite a while now. It seems to come continue to keep pushing higher. But i do think as far as the averages go, weve gotten a little ahead of ourselves. It will be very stockspecific. Be very interested to see how apples numbers come out. Because tech numbers have been horrible so far for earnings. We knew they would be. Maybe apple can turn things around a little bit and give some hope for us going forward. Mike, i was struck by what you said earlier about how people its hard to get bearish when you see the transports rallying like they are, and juxtapose that against apple that we used to wait for so breathlessly. And we still are. Any minute now. But theyre down 20 so far this year. Yeah. Right . Its been a huge divergence between the old world and the new world. You know, honestly, i dont think apples been a bellwether on the way up or the way down. Last year was popular to say apple was the hallmark because it was obviously a huge component of the indexes. In fact, it was running ahead from 400 to 700 when, in fact, the overall market was flattish. So to me, its kind of its own animal. Its just another stock right now. I think its much more interesting how the overall markets been absorbing the prominent earnings misses. Youre punishing the stocks that are missing, going down on average 2. 5 . Yet its kind of rotating. Its very similar to last quarter in that sense. That being said, transports, by the way, down almost 1 today, and youre starting to see the laggards rally today. To me, thats kind of late rally action basically kind of looking for the junk thats been left behind and selling some of the winners. I do still think we have to expect some kind of stall or pullback activity relatively soon. Oliver, there are a lot of stock buybacks and jeff cox and i were just talking about the fact that ceos really love that. They love that, because their shareholders like it. It puts a floor under the stock price. But the other reason they like it is it means there are fewer shares over which to spread all of those lovely es in the p e ratio, and that helps the earnings per share. Isnt that a little bit of funny business . Well, to a certain extent, it is. You have to be careful. Not all share buybacks are the same. You want to see what theyre used for. If theyre really being retired and treated as treasury stock, thats a positive. We like dividend increases. We pay careful attention to that. If shares are being bought back to be reissued in just addition to management and ceos, thats just a wash. Like you guys have been talking about on cnbc, its really a stockpickers market, and you have to look at each company differently and specifically as opposed to generalizing. By the way, tyler [ overlapping speakers ] the point about the economy. This is really important about the stock buyback. Weve seen over 1 trillion worth of stock buybacks since the bull market started. And that money is being taken away from cap ex, being taken away from hiring, and investors like it that way. Theyre fine with that. When you talk about actual economic growth, where thats going to come from is companies deploying that cash and theyre refusing to do it now. Its just all about propping up the stock market prices and the averages. Mike santelli, you wanted to jump in. I wanted to tie it back to at t. Through the having a look at todays numbers, i havent looked, but they bought 7 of the shares year over year, turned 3 net Income Growth into 12 Earnings Growth in the First Quarter. Thats the game they played. If that made sense, 20 ago in the stock price, does it still make sense with the stock that much higher . I do think the pricing sensitivity of share buybacks is what you learn back in terms of destroying corporate capital. All right, gentlemen, thank you very much. Oliver, mike, jeff. Lets get to josh lipton who has the numbers from vm ware. Reporter a few names reporting. Lets get you up to speed. Vm ware, surging after hours, came in with 79 cents. The seat was looking for 77. A beat there. On the top line, 1. 24 billion, analysts were looking for 1. 23 billion. On panera, a different story. That stock selling off into the close. Then we got the numbers. 174. The street was looking for 177. On the top line. 589 million versus 596. The street wanted to say, importantly looking ahead, at guidance, they take the first fiscal year 2013 now saying 675 to 685, the street wanted to see 704. So some disappointment there. Finally, broadcom reports 70 cents ex items, the street wanted to see 68. Beats by two pennies on the top line, 2. 09 billion versus 2. 01 billion. The street wanted to see. Basically in line there. Guys, back to you. All right. Thanks for the breakdown, josh. After the break, well get you caught up on all of todays big Earnings Releases, because there are even more than what josh told you about. You bet. And then, were less than 20 minutes away from the one weve all been waiting for, and that would be apple. That stock lower again today. The numbers are going to be very closely watched, and we will have them for you first. [ male announcer ] come to the golden opportunity sales event and experience the connectivity of the available lexus enform, including the es and rx. This is the pursuit of perfection. People find out state farm does car loans as well as they do insurance, our bank is through. Good point. Grab an edge. Look theres two guys on the state farm borrow Better Banking sign. Nope for real theres two dudes on the state farm borrow Better Banking sign. [ reporter ] breaking news from the state farm borrow Better Banking sign. Were seeing two men that have climbed the borrow Better Banking sign gentlemen please get down from the state farm borrow Better Banking sign. Phil get the hose. Okay hes getting the hose. Alright, lets go. [ male announcer ] talk to a state farm agent about car loans that can save you hundreds. Thats borrowing better. Golden opportunity sales event and choose from one of five lexus hybrids thats right for you, including the lexus es and ct hybrids. This is the pursuit of perfection. Earnings season is in high gear. Bob pisani runs through todays big movers. Seema previews the other big reports later this week. Bob, youre up first. Reporter new highs on the s p and dow, but the aerospace was the big winner. Lockheed martin helping. Looking at aerospace. Lockheed martin terrific here. Blew the door off of earnings. Be aerospace, another one. Terrific numbers. Look at the industrials. United technologies really helped the Dow Jones Industrials average today. Strong in aerospace. Illinois tool works was a bit of a disappointment. Two cents lighter. They said things would be better in the second half of the year. Material stocks. Dupont fair, not great. Light on the revenues. Ended on the downsideme mentdow. Tough time for copper, but a nice beat overall. They came off the lows of a couple of weeks ago. Why are we at new highs . People keep bucking me about this. Theres a bunch of reasons, but its obvious. Record earnings. Mr. Bernanke has been dovish. The secondhalf improvement is expected right now. And china talking this morning or this evening about 7 growth being the bottom line there. Finally, look at coleman over at dupont. Look what she had to say. This is the reason the markets are holding up here. We anticipate sec half earnings will be significantly better than last years second half. Guys, thats whats motivating stocks, the second half. Back to you. All right, thank you. Music for the earnings parade has begun. Seema, wall street is looking for even more blockbuster earnings for the rest of the week. Were going to get apple in a few minutes. What else have you got your eyes on . Tomorrow, wall street will hear from facebook. Analysts will be once again focused on the social media firms Revenue Growth as more consumers use their phone to log into the website. Other bigtech names are qualcomm and western digital. Biotech earnings kick off on thursday where. Three stocks are up more than 50 this year. And, of course, all eyes are now on apple. The street forecasting a 21 drop in earnings per share, which would be a thirdstraight quarterly decline, and thats primarily due to heightened competition in the smartphone market. Analysts want to know how many iphones it sold in q3, how successful its been in china, the Worlds Largest smartphone market, and how ipad sales are faring. Thats one of the catalysts behind the slump in the pc market. Michelle . Yeah, absolutely. Were going to be watching for it, you heard it from seema, all eyes are on Apple Earnings due out any minute news. Keep it here for the fullteam coverage and instant analysis of the tech giants results. And another media hot company here. Its been a couple of rough days for netflix stock, though. Off the street, they are flying high with subscriptions and 14 emmy nominations for original programming. So is netflix the new hbo . Something more, something less . Well discuss that one next. Dont touch that remote. [ kitt ] you know whats impressive . A talking car. But ill tell you what impresses me. A talking train. This ge locomotive can tell you exactly where it is, what its carrying, while using less fuel. Delivering whatever the world needs, when it needs it. After all, whats the point of talking if you dont have something important to say . So you can capture your receipts, ink for someall business purchases. And manage them online with jot, the latest app from ink. So you can spend less time doing paperwork. And more time doing paperwork. Ink from chase. So you can. A barrage of earnings hitting wall street after the bell. Josh lipton has the highlights. Reporter a wave of Companies Reporting here. Lets get you caught up. Electronic arts, ea, a loss of 40 cents. Remember, the street was looking for a loss of 60 cents on the top line ea reports 495 million, analysts were looking for 454 million. Looking ahead, guidance for the year, ea saying theyre looking for a buck 20 on 4 billion. That is in line with what the street was looking for. Also, juniper. They report 29 cents. Thats a beat. The street was looking for 25. On the top line, 1. 15 billion. Street was looking for 1. 09 billion. Also some news here, the ceo of juniper will retire once a successor is named. Also, the Company Announcing a 1 billion buyback. Guidance for next quarter also above estimates on this name. Guys, back to you. Got it, josh, thank you. Speaking of earnings. Netflix reported yesterday, the company beating expectations but falling short on subscribers. Still the stock go ahead, michelle. Sorry. Still, the stock is 170 this year, tyler, and it received 14 emmy nominations. We can usually read each others minds, but sometimes we trip up. After comoderating the netflix Earnings Call, our own Julia Boorstin sat down with reed hastings. Heres what he had to say about the streaming services original content. We should probably be more adventurous, so we should have some failures, but were not being adventurous enough. Well continue to build on that. As long as most of them are great successes. Interesting company, interesting guy. So where does netflix go from here . Can it be the new hbo, and with us now is mitch lowe, netflix cofounder and the current ceo of quarterly, a subscription service. Mitch, welcome. Good to have you with us. Thank you. This stock has been hot, c d cold, hot again, cold the last couple of days. Whats next for netflix, the company . Well, i think its you know, its fascinating how theyre beginning to get deeper and deeper into exclusive content. And it really i think it really means that theyre looking for a way to differentiate themselves from upcoming stronger competitors like amazon, which are, you know, amazon is really going to be kind of more like netflix used to be, where they carried everything on every format. So i think its exciting to see. Is that a good idea . I mean, essentially, theyve gone from one Business Model now to a different one. Essentially its gone from distribution, if you want to focus on content, its completely different. Now youre competing against an hbo. Can they do it . Oh, yeah. You know, they can do it you know, many people have talked about how much they know about their customers tastes and what kind of films and tv shows they like. And all thats true. They have enormous amounts of data. But even more importantly, they know who to merchandise specific pieces of content to. So were you were you disappointed when you saw the net subscribers here . House of cards, all the rage. Everybody is talking about it. Emmy nominations, and then, eh, they didnt have the numbers. Well, i think you need more patience. Remember how long it took hbo to get to this point. You need to have i mean, hbo has over 100 original shows with multiple episodes. It takes at least for the consumer, it takes consistent flow of shows over and over again to get them converted. So i think it takes time. I think it will take a couple quarters of good shows like house of cards, arrested development, but every quarter you need a strong show like that. I guess the subscriber growth number michelle was talking about is sort of a case of arrested development. What about the companys ability to have the very best filmed Entertainment Options on its service . My 20yearold son watches netflix more than any network of course, aside from cnbc. But his criticism is that the movies arent arent quite as good as you get on video on demand and elsewhere. Or itunes. Yeah. Oh, yeah, you know, thats true. Thats what all the the Services Face is how quickly can they get the big films that people have just seen all the media and exposure. Right. To. So its a challenge they all face. It was great to have you on, mitch. Appreciate it. Thank you. A company we love to talk about, isnt it, tyler, netflix . I was talking this morning, i think it is the most we love to talk about media as a business. And right now, its probably as interesting a company as there is in the Media Business for my money. Absolutely. Not that i have much money. Had a fight over it, split up over it. Apple earnings out any minute. Also a super interesting company, tyler. Absolutely. Well bring you the numbers from apple, break them down, a full team of analysis, and team members with skin in the game. Stick around for apple. Well have it shortly. With fidelitys options platform, weve completely integrated every step of the process, making it easier to try filters and strategies. To get a list of equity options. Evaluate them with our p l calculator. And execute faster with our more intuitive trade ticket. Im greg stevens, and i helped create fidelitys options platform. Its one more innovative reason serious investors are choosing fidelity. Now get 200 free trades when you open an account. And then another. And another. And if you do it. And your friends do it. And their friends do it. Soon well be walking our way to awareness, support and an end to alzheimers disease. And that . That would be big. Grab your friends and family and start a team today. Register at alz. Org we are Just Moments Away from apples Third Quarter results, fiscal Third Quarter. As we count down to the much anticipated numbers, lets go to our panel of experts. Joining us is gene, andy and najal of Technology Insights research. Gene, ill start with you. You are pointing out to us that something potentially a potential watershed moment could be happening for apple. It could be a negative one when it comes to the revenues. Explain. Well, you know, this quarter we essentially think it will be in line. We think the issue will be with the guidance. We expect that to be below the streets 37 billion. And the 8 that the street is looking for in september, because of particularly because of the ipad. So these are transitional quarters were in. The most important part is whats coming after these quarters. So if they can hold it together, that will be enough. Didnt i read in the notes you were talking about the revenue and how year ago the First Quarter was up 60 , just First Quarter this year is up 11 , and now were talking about flat to potentially negative . Yeah, we are. I mean, this is the reality of where the street numbers are right now. So thats just this kind of transitional quarter i guess its a moment, though, isnt it . Weve been talking about raging Revenue Growth at apple and now were talking about flat. Is that permanent, or is that something youre hinting that you think it changes at some point in the future . Yeah, we think it changes. We think it will be earnings will be flat in december, so down in september, flat in december. And up 15 in march. And so, yes, its downward, the trajectory is down right now. Its not exciting. They dont have exciting products out. But ultimately, we think that turns. Lets turn to you, andy, and get your reaction to what gene just said. And particularly, put it in the context of the mobile market for those smartphones, which lots of people say is approaching the saturation point. Where does that leave apple . In a tough spot. I mean, its hard to fight saturation, right . The only things you can do is either try to move downmarket, which is usually a disaster in technology hardware, or try to maximize your profit, which is what i think they should do. But when your market is saturated and trying to maximize profit, theres nowhere to go. Youre expecting revenue declines hold on. Have we got it . Its moving higher that stock is moving. The stock is moving by 12 now. Okay. So were going to have ayman on this tomorrow, just to see if anybody has gotten information early. Yeah, looking ahead of the numbers. Certainly in the after hour, people are playing the stock very heavily. Theres a lot less liquidity, we should point out, in the after hours, so any movements you get there, you can easily push a stock around, or more easily than you can during the regular session when we began this interview, i believe we were quoting it up 1 on the day. Oh, here i dont know whether it was an issue with our feed or what. But now you see it moving up 17 in are we seeing numbers on the screen is that okay. 7. 47 a share versus 7. 32 a share was the estimate. So thats better than expected. And it looks like lets get to julia. Those revenues are slightly better than expected, right, julia . She has the numbers. Julia . Thats right. Earnings coming in better than expected at 7. 47. Thats compared to expectations of 7. 32. But it is still down from the yearago quarter of 9. 32. Now, revenue came in at 35. 3 billion. Thats a hair better than expected. Wall street was looking for 35 billion. Which is basically flat from the year ago. So this is up a hair from the yearago period. So those numbers are better than expected. Looking at the individual Sales Numbers iphone shipments came in at 31. 2 million. Thats compared to expectations of 26. 4 million. So better than expected. But ipad shipments look like theyre coming in light. 14. 6 million compared to expectations of nearly 18 million, and max, they sold pretty much right in line with expectations, 3. 8 million, total shipments of max compared to expectations of 3. 9 million. Ill continue to dig into this and well be back to you with more. All right, gene, what do you think of the numbers . The iphone is the most important number, and that obviously was a big surprise. Looking for 26. 5 million. The whispers were 27. Now were up just north of 31. So thats really good. And thats really the core thats going to explain why the stock is moving so sharply in after hours . Yeah. Exactly. And i think ultimately, the numbers are essentially in line, slightly better. Thats not the exciting part. The exciting part is people are feeling better about the iphone, because theres been a lot of speculation with samsung and htc that this was going to be really rough. And i think they did a little bit better than hold it together. The ipads a different story there. But i think the iphone is definitely thats why the stock is up. Najal your reaction here. You were looking for revenue declines for apple. I dont know if you were speaking specifically about this quarter. Here is a revenue slight beat. And powered clearly by better than expected iphone sales. So actually, i was expecting 35. 7 million, 28 million iphones. They did bet my iphone estimate. At 38. 6 gm with significant iphone beat with the iphone typically coming in around 45 gm, that indicates that the iphone beat largely came from low end iphones. And youre seeing probably still further gm pressure onto iphone franchise, which is, i believe, the significant bear concern out there on apple, whether or not the carriers will start to pressure apple on the current subsidies they require. And i think that when we dig through those numbers, that concern is only going to get magny tmag magny magnified. Julia, you have more. The margins and guidance. They reported 36. 9 gross margin and the company had projected range between 36, 37. So its the high end of the range. Looking forward to its fiscal Fourth Quarter, the companys guiding to, again, a range of between 36 and 37 in terms of that gross margin. Now, looking at the other projections, the company says revenue in the fiscal Fourth Quarter will be between 34 and 37 billion. It seems like that is lighter than expected and it projects operating expenses between 3. 9 and 3. 95 billion. So it looks like the projections for the Fourth Quarter, the fiscal Fourth Quarter may be light. Back over to you. Thank you, julia. Tyler, i should point out the managing editor sent an email, the stock started to move after the numbers came out. It was just apparently i didnt know them being, just a dumb tv anchor and didnt no, we were watching the numbers moving, being directed to it, and didnt know that the number was out. Yes. To clear that up, obviously the number had come out. We were getting it on the air there. We always want to scrub the number, make sure we understand it before we put it out there, and the stock obviously investors who did have the accurate numbers were reacting. And they reacted very positiv y positively, up now at 431. 06, 12 gain, almost 3 . In the after hours. Weve got much more ahead on apples earnings. Keep it right here. Dont move. At farmers we make you smarter about insurance, because what you dont know can hurt you. What if you didnt know that its smart to replace washingmachine hoses every five years . What if you didnt know that you might need extra coverage for more expensive items . And what if you didnt know that teen drivers are four times more likely to get into an accident . sup the more you know, the better you can plan for whats ahead. Talk to farmers and get smarter about your insurance. We are farmers bum pa dum, bum bum bum bum lets keep the focus on apple and ask the question thats on a lot of peoples minds. Are the best days behind them . A pretty good quarter just now that were hearing about, or is shareholder of granite investment, are rumors of the demise greatly exaggerated . Michelle in. Thats what he says. Hes joining us right now, along with our panel, gene of piper jaffray, andy, and nehal of Technology Insights research. Sir, thank you for joining us on this part of the panel. Are you a shareholder. I assume youre happy with the results at this point, because you got a big boost in the after hours. Well, certainly were happy with the results today. Were longterm shareholders, so we try to ignore some of the call it the quarterly ups and downs of apple stock. But what were seeing is a company that continues to execute, continues to have a Strong Management Team and great products. So whether or not the mix of iphones is correct, over the long run, were pretty happy. Gene, let me turn back the clock to a year ago when a lot of people maybe not you were saying that this companys shares could be 1,000 apiece at some point in the not too distant future. What do you see for this stock over the next 12 months . Well, we think it could be in the 650 range. We still think theres meaningful upside there, and part of the reason, it comes down to products. And at the end of the day, you have to make a bet. Theyre going to come out with new product, are they successful, and able to grow the revenue and get earnings to turn positive . We think that can happen. We think if you can take it, ignore what happened in the past, look forward, we think theres a lot of upside to this. I dont think its the best days of apple. I think the reality is when this company was reinventing itself, that was exciting. But theres still huge opportunities ahead of the company. And i think that largely gets ignored on days like today, that theres some good things still to come. Bottom line, andy, this comes down to product cycle, right . And were waiting for a cool new one from apple and were still waiting. Weve been waiting a while, right . Yeah, we might be waiting a while. Its somewhere in between, though, and thats the nuance that shareholders can maybe even benefit from here, is that it does come down to product cycles. But apple also has, you know, the highest retention rates in the industry by a mile. And it turns the model into a little bit more of a microsoft type of model where can you mine that and generate a lot of cash oh, oh, but microsoft has been dead money for 20 years. Touche. Microsoft didnt trade [ overlapping speakers ] ten years ago, though. Yeah. All right. Lets take a break here. I want to go back out to Julia Boorstin who has more detail and color on the Apple Earnings report. Julia . Reporter thats right, tyler. Just to weigh in on what youre talking about, which is the product cycle. I do think the reason the stock is trading higher is the surprise of the strength of the iphone. And the expectation that was going to be a product that was stagnating. It is really surprised it is showing such significant growth. The quote that the company chooses to put from ceo tim cook in the Earnings Release is focused on the iphone saying that that the strong growth in revenue from itunes, software, services in addition to the iphone is what theyre really proud of here. He goes on to give us a little hint that they will have more to come in that product cycle, saying, quote, we are really excited about the upcoming releases of ios 7 and osx mavericks and here comes something very interesting. Were laser focused and working hard on amazing new products we will introduce in the fall and across 2014. So, of course be thats what investors really want to hear about, what those amazing new products might be, whether its a lowercost iphone or perhaps an iwatch. I do expect a lot of questions on that topic about the product cycle in the Earnings Call coming out. Nehal, i want to turn back to you. Youre out your revenue estimates, if im understanding, and correct me if im incorrect here, are lower than the street consensus. Are you still sticking with that in light of what youve just seen here . Yeah. So the primary thing thats actually below consensus is my gross margin. And thats because i believe that we will see carrierinduced gm pressure pricing pressure. And it comes back to whether or not, as weve been talking about, can apple continue to have a iphone product . I think the key to having a differentiated product in the smart space is having differentiated cloudbased service. So that includes mapping services, that includes a browser, that includes superior Artificial Intelligence agent, and when you look at the superior streaming service, when you look at the key cloudbased services, who has those . Those are google. And thats going to be a better experience on an android platform. And when you look at that the differentiation is now actually more moving towards androidbased phones and weve done survey work around to show the highend Android Users are very voracious consumers of the google service, but also interestingly, iphone users are voracious consumers of Google Services as well. Can i boil down everything you just said . People like apps on the android better is what youre saying . The core apps. The core the core apps. Which is what everybody typically, you know, really cares about. And right now, you can obviously get that on the apple iphone. And youll continue to be able to get that on the apple iphone. The question that comes across users mind, wow, im using all of the core google map, maybe ill have a better experience on a googlebased phone. Nehal made an interesting point there, andy, and if i were to boil it down, it would be this. There was a time when apple had the hammer. They had all of the leverage. They had the phone that all of the carriers wanted. Now, there are other phones out there that are highly competitive with apples phones, so they dont have the hammer that they used to have. That means their Gross Margins are going to have more pressure, because theyre not going to be able to charge as much. Theyre going to have to do some deals with some of the carriers, at t, verizon, and others. Have i got that right, andy . Well, i think you summarized his thought right. I wouldnt agree with that. Now, apple still sells i mean, we saw verizons results, right . They sold over half the phones over half of the smartphones they soilld were iphones. If you are a carrier, you do it at the risk of apple saying no and you losing a good portion of the highend customer base, which is where a lot of the profit is. So i wouldnt agree with that. I think apple still has tremendous Pricing Power and quite frankly, i think we see in the gross margin guidance that the pricing on the new phones is going to be pretty darn similar did i miss misinterpret what you said or no, you you got it correctly. I would question the gm guidance, still, at 34, 37 billion, that implies the new iphone is not coming out in the september quarter. And, therefore, its holding up well within the existing iphone franchise. However, we go back to the june q results and you see that massive mix shift, yet no gm upside. That indicates, a, that the iphones that were sold, that drove the upside, were the iphone 4 and iphone 4s. And perhaps there were some additional discounting on top of there. All right. We should point out youre referring to Gross Margins when you say gm. Yes. All right, guys, well take a quick break. Stay where you are. Well come back and talk more apple. You cant ever get enough of that. The stock continues to move after its Earnings Report released just a you few minutes ago. And there you see a 4 gain in apple. Yeah. Dont move. More after this. If youre serious about taking your trading to a higher level, tdd 18003452550 then schwab is the place to trade. Tdd 18003452550 call 18882849410 or visit schwab. Com trading to tdd 18003452550 learn how you can earn up to 300 commissionfree online trades tdd 18003452550 for six months with qualifying net deposits. Tdd 18003452550 see how easy and intuitive it is to use tdd 18003452550 our most powerful platform, streetsmart edge. Tdd 18003452550 we put it in the cloud so you can use it on the web. Tdd 18003452550 and trade with our most advanced tools tdd 18003452550 on whatever computer youre on. Tdd 18003452550 also, get a dedicated team of schwab trading specialists tdd 18003452550 who will help you customize your platform tdd 18003452550 even from the comfort of your home. 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Well, aside from, of course, liking his first name, we can truly say that we were routing for tim cook to get the job, as steve jobs was ill and it was pretty clear. He is pretty well responsible for, call it the structure that apple is, with the way that they manufacture, the way that they design, and their ability essentially to control a pretty large Global Supply chain of both suppliers and shippers and distribution points. So were very happy with tim cook. Of course, hes not the iconic figure that steve jobs was, so people are always looking for him to slip up or some sort of problem. And so far, they why hes executed verywell. Were very pleased. Gene, let me turn back to one area that seemed like it was a shortfall. If i got the number correctly, it was that the ipad sales were 14. 6 million, and the expectation was something in the neighborhood of about 18 million. Why do you think that is . And how serious an indication is it . Is it merely they just havent come out with a new generation ipad and people are waiting, or what . I think thats probably half of it. I think the other half comes down to android tablets have been more competitive. And i would im in the camp that apple and the iphone andro been more competitive. Apple and then the iphone side is doing exceptionally well against the android will continue to do exceptionally well. I think the tablet space is a little bit more of the wild west right now. So i think were still trying to figure out exactly how all this fits together. I think that even know the ipad number was below expectations, the mix of ipad minis versus the typical ipad is going to impact gross margin, too. Several factors are hinging on that ipad number. You look like youre framed in that ipad. At t reporting and slipping here in the after hours. Eps clocks in x items at 67 cents. That misses what the street had been looking for by a penny. Revenue of 32. 08 billion. That was better than expected. The company added 551,000 wireless subscribers. At t down about one percent here in the after hours. Guys, back to you. Thank you very much, josh. Juliette, why dont you give us from your perch out there in california a find of view from where you sit of how apple is doing and how important it is from where you sit for them to come out with new products of the sort we were just talking about in the ipad stream or the iphone stream. A lot of talk about a bigger screen on the iphone. I think the product cycle is very important. I think thats the thing that all the investors are talking about. What they care about more than earnings is to know what the next big product will be and they want the reassurance that apple will be able to maintain momentum and perhaps reverse the downward cycle that weve seen. I want to point out the massive cash that apple is sitting on, up one percent from last quarter and 21 percent from a year ago quarter. Its 146 billion. Thats a massive pile of cash and its going to raise a lot of questions about what apple should do with that cash. There is a comment here in the release, cfo oppenheimer saying they generated 7 billion and are pleased to return 8. 8 billion in cash through dividends and share repurchases. In this release the board of directors announces the regular Cash Dividend of 3. 05 per share. But i bet people are wondering what else apple should do with that cash. They should buy detroit. Twice. Tim, what do you think they should do with the money . We would be happy to take it as shareholders. Okay, so you would like a bigger dividend . We really dont care which way they pay it back, a bigger dividend, stock buy backs, any anyway that they can p continue to be shareholder friendly. As to whether we like tim cook, we haves seen more return to shareholders under his regime at apple. Anyway hanehal, what do you buy backs are good if you have good reason to believe that your stock is undervalued and that is going to be a massive boone to investors. With 146 billion should they be doing that right now . Would you like an announcement of increase in the dividend or increase in the buy backs . Absolutely. They certainly have the fire power to do that . Gene . I would love for them to finally break this content war around the tv and get better service, help around there. Im not suggesting they spend 50 billion on it but take 10 billion and start moving that log jam forward. Youre not suggesting they compete with a cable company, are you . Well, just somehow make it work so you can unbundle channels. Use some of that cash. On the Technology Side theyve been struggling with maps but they can buy some Smaller Companies and improve web services. When are we getting the tv . Now we hear there is going to be a watch before a tv. We dont know that. We know what tim cook said at the conference. Its clear the tv is on that road map. We think its been six quarters. Folks, thank you. Julia, we thank you for your insights. We have a baked apple. We have talked it down to the core. Thank you very much. Apple could push the markets to record highs tomorrow. Wall streets top pros are going to weigh in on your money next. At a dry cleaner, we replaced people with a machine. What . Customers didnt like it. So why do banks do it . Hello . Hello . if your bank doesnt let you talk to a real person 24 7, you need an ally. Hello . Ally bank. Your money needs an ally. The healthcare law gives us powerful tools to fight it. To investigate it. Prosecute it. And stop criminals. Our senior medicare patrol volunteers. Are teaching seniors across the country. To stop, spot, and report fraud. You can help. Guard your medicare card. Dont give out your card number over the phone. Call to report any suspected fraud. Were cracking down on medicare fraud. Lets make medicare stronger for all of us. Lets make medicare stronger always go the extra mile. To treat my low testosterone, i did my research. My doctor and i went with axiron, the only underarm low t treatment. Axiron can restore t levels to normal in about 2 weeks in most men. Axiron is not for use in women or anyone younger than 18 or men with prostate or breast cancer. Women, especially those who are or who may become pregnant and children should avoid contact where axiron is applied as unexpected signs of puberty in children or changes in body hair or increased acne in women may occur. Report these symptoms to your doctor. Tell your doctor about all medical conditions and medications. Serious side effects could include increased risk of prostate cancer; worsening prostate symptoms; decreased sperm count; ankle, feet or body swelling; enlarged or painful breasts; problems breathing while sleeping; and blood clots in the legs. Common side effects include skin redness or irritation where applied, increased red blood cell count, headache, diarrhea, vomiting, and increase in psa. Ask your doctor about the only underarm low t treatment, axiron. You want to see a lively chart, check this one out. That is apple, the shares gaining ground after hours, after the tech giant posted per than expected earnings and revenue for the Third Quarter helped by a jump in iphone sales, a big jump, 31. 2 million iphones sold in the quarter. Gross margins fell. Michelle . The Apple Earnings could it boost the stock tomorrow morning or the whole market . We have 30 seconds on the clock. Our guests are here to tell you what else you should be watching here. Were joined by Michael Underhill and back with us is oliver hersh. Michael . When i look at it its all about the consumer. Were not getting distracted by the ipad sales. Its all about the iphone. We are in a high volatility, low gdp. When we look at apple the stock is going to continue to grind higher. When i look at the stock itself its about increasing the dividend, a share buy back, technology invest and content investment. Oliver . Thats a good point in terms of consumer spending. Thats certainly whats going to drive gdp growth. You have pepsi coming out. Thats going to be important. With regards to apple whats impressing me is the fact that people have started to digest the Earnings Report. Thats a positive sign. Thank you, thats a positive sign. Very interesting. Last two hours have been fun. Lets look at the day on wall street and recap it for you as we see the industrials record once again, the 20some odd record of the year if memory serves. 15567 and three quarters. Nasdaq down but thats the 4 00 p. M. Close. If you figure in that apple gain youre going to see a different kind of open i would suspect tomorrow. The s p 500 tried as it might to get over 1700, didnt, down three points today. That does it for the closing bell. Dont forget to tune in tomorrow when facebook Earnings Reports after the bell. Fast money starts right now. Live from the Nasdaq Market site in new york citys times square im melissa lee. Traders guy adami, tim seymour, karen finerman, Anthony Scaramucci and mike khouw. Apple, broad bond, akamai. Were taking position ahead of googles secret product event tomorrow. Our tech story is apple on the