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3 Must-See Quotes From Apple's Earnings Call

By Daniel Sparks - Updated Apr 24, 2019 at 11:22PM

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Management talks iPhone, services, and iPad.

Headed into Apple's (AAPL 1.98%) fiscal first-quarter results, investors knew the company would show weakness in its important iPhone segment. Sure enough, iPhone revenue for the period fell 15% year over year. Declining revenue in the segment came primarily from lower-than-expected sales in Greater China and other emerging markets, the company said. 

The challenged iPhone business unsurprisingly has some investors wondering how the company can reinvigorate the business. During Apple's earnings call for the quarter, management gave investors insight into some plans to aid the segment. In addition, management discussed important topics beyond the iPhone, including services and iPad.

Here are three key quotes from the earnings call to take note of as investors look over the quarter's results.

A hand holding an iPad Pro

Apple's latest iPad Pro. Image source: Apple.

How Apple wants to improve iPhone sales

Apple doesn't want to sit around and wait out a disappointing iPhone cycle. Instead, management is looking for ways to address the situation immediately.

"We are undertaking and accelerating a number of initiatives to improve our results. It's not in our DNA to just stand around and wait for macroeconomic conditions to improve," said Apple CEO Tim Cook during the earnings call.

He continued:

One such initiative is making it simple to trade in an iPhone in our stores and raising awareness of this opportunity. Because of the quality and durability of iPhones, they maintain significant residual value, making trade-ins a great opportunity.

Other initiatives to help boost iPhone sales include making it easier for customers to pay in installments and expanding its installment payment plans to more geographies.

An impressive services segment

In its quarterly update, Apple revealed an impressive 63% gross margin on its services segment. As Apple's second-largest segment, investors are looking to services to help fuel the company's next phase of growth. But is the segment cut out for such an important responsibility?

Cook seems to think so.

"[W]e are very happy not only with the growth but also the breadth of our services portfolio," the CEO noted. "Our revenue from services has grown from less than $8 billion in calendar 2010 to over $41 billion in calendar 2018. The largest category represents less than 30% of total services revenue."

Services revenue rose 19% year over year in the company's fiscal first quarter to $10.9 billion. Apple also noted that the App Store, Apple Pay, cloud services, and its App Store search ad business -- all categories that fall into the company's services segment -- achieved record-high revenue during the quarter.

Don't overlook iPad

Another important area of Apple's business worth highlighting is the company's iPad business. On the heels of the company's recently refreshed iPad Pro, the segment saw its highest year-over-year growth rate in nearly six years.

Apple CFO Luca Maestri highlighted the segment's strong momentum, which is notably attracting a large number of customers who have never owned an iPad before.

And among customers purchasing iPads during the quarter, half were new to iPad. The most recent consumer survey from 451 Research measured a 94% customer satisfaction rating for iPad overall with iPad Pro models scoring as high as 100%. Among business customers who plan to purchase tablets in the March quarter, 68% plan to purchase iPads.

iPad revenue in Apple's fiscal first quarter rose 17% year over year to $6.7 billion. It accounted for 8% of the tech giant's total revenue.

Check out the latest Apple earnings call transcript.

Daniel Sparks owns shares of Apple. The Motley Fool owns shares of and recommends Apple. The Motley Fool has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. The Motley Fool has a disclosure policy.

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