Apple FY 2Q17 Earnings Call Notes

Timothy Donald Cook – Apple, Inc.

Misjudged the demand for the 7 plus

“Katy, one of the things that we did not get right was the mix between the iPhone 7 and the iPhone 7 Plus. It wound up that demand was much stronger to the iPhone 7 Plus than we had predicted. And so it took us a little while to adjust all the way back through the supply chain and to bring iPhone 7 Plus into balance, which occurred early this past quarter. What have we learned from it? Every time we go through a launch, we learn something. And you can bet that we’re brushing up our models and we’ll apply everything we learn to the next time.”

Watch units have doubled in 6/10 top markets

“We have seen the watch as a really key product category for us since before we launched it. We took our time to get it right, and we’ve made it even better with the Series 2 offering. And we’re really proud of the growth of the business. The watch units more than doubled in six of our top ten markets, which is phenomenal growth, particularly in a non-holiday quarter. And so we couldn’t be more satisfied with it.”

Not surprised that competitors are falling out of watch

“Where does it go? I wouldn’t want to comment on that, but we do have a really great pipeline here. And I think in terms of competition falling out and so forth, the watch area is really hard. It in essence from an engineering point of view is similar to a phone in terms of the intricacies and so forth. And so I’m not very surprised that some people are falling out of it. But we’re very committed to it and believe that – it’s already a big business and believe over time it will be even larger. Thanks for the question.”

Apple FY 1Q17 Earnings Call Notes

Tim Cook

Especially strong demand for iPhone 7 plusWe might do acquisitions with repatriated moneyIndian demonetization was the right move

“That’s a really good question. Despite the demonetization move in India that created lots of economic pressure there last quarter, despite that, we had all-time record revenue results, and so we were very happy about that. The demonetization impact has not worked its way through yet. It’s still definitely having some overhang. But I think in the longer term, it’s a great move, and I feel really good about how we’re doing there”

Litigation vs. Qualcomm was a last resort

“I feel the same way I did in April of 2012. I don’t like litigation and view it as a last resort. And so you should take from our filing that we viewed it as we didn’t see another way forward. They were insisting on charging royalties for technologies that they had nothing to do with. And so we were in a situation where the more we innovated with unique features like Touch ID or advanced displays or cameras, just to name a few, the more money Qualcomm would collect for no reason and the more expensive it would be therefore for us to innovate. And so it’s somewhat like buying a sofa, and you charge somebody a different price depending upon the price of the house that it goes into. Just from our point of view, this doesn’t make sense, and we don’t believe it will pass muster in the courts. In addition to that, as a part of their increasingly radical steps they were taking to try to hold up that model, they withheld $1 billion in payments that they owed us. And so we felt like we had no choice was the net of it.”

See a lot of opportunity for the iPad

“If I zoom out of the 90-day clock and look at it, we’ve got some exciting things coming on iPad. I still feel very optimistic about where we can take the product. When we look at the number of people buying iPads for the first time, which is a good thing to look at from a point of view of whether things are reaching a penetration point or not, the numbers indicate that it’s not close to that kind of thing. The customer sat numbers are through the roof. Literally, the customer sat for the iPad Pro is 99%. It’s stunning.”

Luca Maestri

Iphone grew double digits in many markets including the US

“When we look at it geographically, I think we see different developments. For example, we felt very, very good about the unit growth that we had in many markets around the world. You’ve been quoting an overall total company growth rate. But when we look at a country-specific level, there were a lot of countries, I would say the majority of the countries, where iPhone units grew strong double digits, starting here in the United States, where for example, the fact that annual upgrade programs are becoming more and more popular is proving to be a positive for us. Same happened in a number of countries around the world, starting with Canada and Australia but also many places in Western Europe as well. Japan grew double digits in terms of units. So I think geographically we are seeing very, very good performance.”

Samsung Electronics’ (SSNLF) Q3 2016 Earnings Call

Robert Yi – Senior VP, Investor Relations

It´s a tough operating environment in mature markets

“third quarter, the total revenue was KRW 47.8 trillion, a 7.5% year-on-year decline. This decrease was mainly due to the Note 7 issue, despite the increase of sales in the memory and OLED businesses.”

Currencies are having a effect

“In this quarter’s strengthening of the Korean won against the major currencies such as U.S. dollar and euro had a negative impact on the operating profit quarter on quarter. We figured it’s approximately KRW 700 billion effect, mostly on the component business.”

Kyeong Tae Lee – VP, Mobile Communications business

Mobile communication slightly down

“Our earnings for the mobile communication business declined significantly Q-on-Q due to the Galaxy Note 7 issues. However, with the strong sales of our existing models including the Galaxy S7 and S7 Edge, our smartphone shipments have only slightly decreased Q-on-Q.”

Mobile phone demand expected to to increase

“Market demand for both smartphone and tablet is expected to increase Q-on-Q as we enter the year-end peak season. For the mobile communication business, we will push forward to achieve the business earnings at a similar level to the same period in the previous year by focusing on the sales of the Galaxy S7 and S7 Edge, which have shown continuous demand and stable profitability.”

The S7 might be their best yet in sales in launch year

“in the third quarter, yes, actually, we’ve seen our S7 sales to maintain a strong sales and we think that the S7 will be able to greatly surpass the previous Galaxy S series in terms of full-year sales. Actually, in all of our Galaxy S series, the S7 probably will be recording the highest sales in the launch year.”

Apple FY 4Q16 Earnings Call Notes

Apple (AAPL) Q4 2016 Results

Timothy Donald Cook

iPhone demand is outstripping supply

“In terms of iPhone 7, Gene, the carriers that had upgrade plans, the information that we have from them is that demand is very robust. But from a worldwide point of view, the truth is that demand is outstripping supply in the vast majority of places, particularly on the iPhone 7 Plus”

Weakness in China due to anniversary of surge in upgrade rate

“why was it down? There’s lots of reasons, but the largest one in our view is that when you look at what happened in 2015 in China, we had a surge of upgraders that came into the market for the iPhone 6 or iPhone 6 Plus, and the upgrade rate increased relatively more in Greater China than elsewhere around the world. And so when that upgrade rate in fiscal year 2016 returned to a more normal upgrade rate, which would be akin to what we saw with the iPhone 5S as a point, it had further to fall. And so that’s the main reason in our view that you see a difference.”

We’re open to acquisitions of strategic value

We are open to acquisitions of any size that are of strategic value where we can deliver better products to our customers and innovate more. And so we look at a whole variety of companies, and based on that, we choose whether to move forward or not. But we’re definitely open and we definitely look.

We have the strongest pipeline that we’ve ever had

“We have the strongest pipeline that we’ve ever had and we’re really confident about the things in it. But as usual, we’re not going to talk about what’s ahead…We have a strong sense of where things go and we’re very agile to shift as we need to.”

Smartphone has not done as well in India because infrastructure hasn’t been there, but that’s changing

“The smartphone has not done as well in India in general. However, one of the key reasons for that is the infrastructure hasn’t been there. But this year or this year and next year, there are enormous investments going in on 4G and we couldn’t be more excited about that because it really takes a great network working with iPhone to produce that great experience for people. And so I see a lot of the factors moving in the right direction there. I also think the government is much more focused on the infrastructure and on creating jobs, which is fantastic, because you really need the kind of infrastructure and the technology to do that.”

Luca Maestri – Apple, Inc.

65% of smartphone buyers in the US plan to purchase and iPhone

“Customer interest and satisfaction with iPhone remains extremely strong. In the U.S. for instance, the latest survey fielded by 451 Research found that among consumers planning to purchase a smartphone within 90 days, 65% plan to purchase iPhone, with the current iPhone owners reporting a 97% customer satisfaction rating. Among corporate smartphone buyers, the latest survey measured a 95% iPhone customer satisfaction rating and found that of those planning to purchase smartphones in the December quarter, 79% planned to purchase iPhone.”

iPad has 82% of high end tablet market

“We continue to be highly successful both in terms of market share and customer metrics in the segments of the tablet market where we compete. Recent data from NPD indicates that iPad gained share in the U.S. tablet market in the September quarter and had 82% share of tablets priced above $200. And in August, 451 Research measured a 96% consumer satisfaction rate for iPad mini, 95% rate for iPad Air, and a 93% rate for iPad Pro”

At some point the strong dollar becomes the new normal and we need to work with that

“It is very, very important I think for investors to understand that what’s happened during the last two years. During the last two years, the U.S. dollar has appreciated by 15% over the basket of currencies where we do business. And we’re a company that generates two thirds of our revenues outside the United States, 15% appreciation of the U.S. dollar. So on a year-over-year basis, just 2016 over 2015 was 340 bps impact from foreign exchange. This is something that we have offset almost entirely through a number of initiatives going from pricing actions to cost initiatives to our hedging program, but at some point, the strong dollar becomes the new normal and we need to work with that”

Best Buy FY 2Q17 Earnings Call Notes

Best Buy’s (BBY) CEO Hubert Joly on Q2 2017 Results

Maybe our expectations were too low

“As it relates to compared to our expectations, maybe our expectations were too low. But the other thing is that frankly our team is executing extremely well. And what the brand’s consolidation has done is it has unlocked the ability of our teams to invest in the customer experience and great work for customers”

Back to school at expectations. VR not material this year.

“Back-to-school, back-to-college is performing according to our expectations and of course is reflected in our outlook. As it relates to virtual reality, I mean candidly, this is an exciting new technology. The impact this year is going to be not material on our performance. We through the assortment and the demo stations that I talked about, we certainly do expect to be a destination for this and to have excitement with our customers. From a financial standpoint, limited impact early in the cycle, limited product availability and so forth, but excitement from a customer and store standpoint because this is yet another example of a product that if you want to learn about it, experience it, even though it says virtual reality, the reality is that you need to experience it physically to be able to see that virtual reality, but this is true. ”

Online performance continues to be strong

“So thank you for your kind words. The performance of online continues to be strong. We think about online in two ways; one is the channel itself and then the other digital experience and how it helps customers because most of the visits on that site actually result in sales in the stores or visits to the stores and then completing the transaction online. So it’s quite intertwined. Projecting the percentage is going to be down the road of our business. It’s not something we have done. The – there is a way to think about it, which is there is growth online, which is clearly fast, but I think our stores have a very strong role to play. So this is – we don’t see it as a zero sum game. ”

Corie Barry

Revenue increased by 0.1%

“In our domestic segment, revenue increased a greater than expected 0.1% to $7.9 billion. This increase was primarily driven by comparable sales of 0.8%, which were partially offset by the loss of revenue from 12 large formats and 22 Best Buy mobile store closures since last year. ”

Price compression in 4K is not new

“Yes, the only thing that I would add is Dan as you well know price compression in 4K TV is not a new phenomenon. That is a phenomenon that’s been happening pretty strongly for the last eight quarters. And so to Hubert’s point, we continue to factor that in, but the excitement and the accessibility that that drives for our customers is very exciting to us.”

Apple FY 3Q16 Earnings Call Notes

Apple (AAPL) Timothy Donald Cook on Q3 2016 Results

Sell through greater than sell in

“Revenue of $42.4 billion was near the high end of our guidance range and gross margin of 38% was at the top of our guidance range. We achieved these results while reducing channel inventory by about $3.6 billion, significantly more than the $2 billion inventory reduction we had expected. So our sell-through was markedly greater than our sell-in.”

iPad grew 7%

“We had our best iPad compare in 10 quarters, with revenue growing 7% thanks to the rollout of the 9.7-inch iPad Pro. We’re proud to have the most exciting lineup of tablets and accessories in the world and exceptionally high customer satisfaction and engagement. Our surveys also show that about half of iPad Pro purchases are buying them for work.”

New watchOS coming in the fall

“Apple Watch continues to be the best-selling smartwatch in the world. And just this month, J.D. Power ranked it highest in customer satisfaction among all smartwatches. With watchOS 3 coming this fall, customers will be able to update their Apple Watches with an enhanced user interface, significantly improved performance and all-new fitness and health capabilities, including activity sharing.”

China’s economic environment has slowed since the beginning of the year

“We face some challenges in Greater China, as the economic environment has slowed down since the beginning of the year. This is reflected in consumer confidence and retail spending, and the Chinese yuan has depreciated by 7% relative to the U.S. dollar since August of last year. Hong Kong’s tourism and retail businesses also continue to be significantly impacted by the stronger Hong Kong dollar relative to other Asian currencies.”

Using machine learning

“We’re also using machine learning in many other ways across our products and services, including recommending songs, apps, and news. Machine learning is improving facial and image recognition in photos, predicting word choice while typing in messages and mail, and providing context awareness in maps for better directions. Deep learning within our products even enables them to recognize usage patterns and improve their own battery life.

Developing ways to deliver AI processing on cloud without compromising privacy

And most importantly, we deliver these intelligent services while protecting users’ privacy. Most of the AI processing takes place on the device rather than being sent to the cloud. And starting this fall, we’ll be using sophisticated technology called differential privacy, enhancing our ability to deliver the kinds of services we dream of and customers love without compromising on the individual privacy our customers have come to expect from us.”

Rationale for Didi investment

“From a Didi point of view, we see that as, one, a great financial investment. Two, we think that there are some strategic things that the companies can do together over time. And three, we think that we’ll learn a lot about the business and the Chinese market even beyond what we currently know, and Didi has an incredible team there”

Very optimistic about the future since smartphone becoming even more instrumental to people’s lives

“I’m very optimistic about the future because I see so many signs that are positive. I see an installed base that has gotten incredibly large. I see a switcher rate that is the highest ever. I see the smartphone itself, led by iPhone, becoming even more instrumental and important to people’s lives. It’s becoming essential”

Smartphone penetration is still only 42%

“The iPhone demand is made up, as you know, of upgraders, switchers and new to smartphone. And so if you take it in reverse order for a minute and look at a new smartphone, smartphone penetration right now around the world at the end of December was 42%. And so there’s quite a bit of room there. It is true that a lot of those are in emerging markets, but we have done – we’ve had reasonable business success in several emerging markets. And so we don’t enter into those with no experience, although we will enter into them humbly.”

Luca Maestri – Chief Financial Officer & Senior Vice President

We do know that the macro environment is slowing down in a number of places

” As you know, we do not provide guidance for channel inventory. But I would say, in general, I think it’s important to keep in mind that if we look around the world, we do see a lot of positive signs, but we also know that the macroeconomic environment is slowing down in a number of places around the world. And that needs to be taken into account in our guidance.”

Apple FY 2Q16 Earnings Call Notes

Timothy Donald Cook – Chief Executive Officer & Director

Smartphone market slow growth due to macro environment

” In terms of do I think the smartphone market is mature, I think that the market, as you know, is currently not growing. However, my view of that is that’s an overhang of the macroeconomic environment in many different places in the world. And we’re very optimistic that this too shall pass and that the market and particularly us will grow again.”

More people than we expected want the latest tech in a more compact package

“I think the iPhone SE is attracting two types of customers. One is customers that wanted the latest technology but wanted it in a more compact package, and we clearly see even more people than we thought in that category. And then secondly, it’s attracting people who aspire to own an iPhone but couldn’t quite stretch to the entry price of the iPhone, and we’ve established a new entry. ”

The upgrade rate is slightly higher to 6s than 5s but lower than 6

“The iPhone 6s upgrade cycle that we’ve measured for the first half of this year, so the first six months of our fiscal year to be precise, is slightly better than the rate that we saw with the iPhone 5s two years ago, but it’s lower than the iPhone 6. I don’t mean just a hair lower. It’s a lot lower. And so without giving you exact numbers, if we would have the same rate on iPhone 6s that we did iPhone 6, it would be time for a huge party. It would be a huge difference.”

Upgrade cycle is much longer in the tablet market than cell phone

“one of the challenges with the tablet market is that the replacement cycle is materially different than in the smartphone market. And so as you probably know, we haven’t had an issue in customer satisfaction on the iPad. It’s incredibly high. And we haven’t had an issue with usage of the iPad. The usage is incredibly high. But the consumer behavior there is you tend to hold on for a very long period of time before an upgrade.”

China is not as weak as has been talked about

“And so as I back up from this and look at the larger picture, I think China is not weak as has been talked about. I see China as may not have the wind at our backs that we once did, but it’s a lot more stable than what I think is the common view of it. And so we remain really optimistic on China. ”

Growing number of people in both parties that want tax reform so it will probably get done

“I think there are a growing number of people in both parties that would like to see comprehensive reform, and so I’m optimistic that it will occur. It’s just a matter of when. And that’s difficult to say, but I think most people do recognize that it’s in the U.S.’s interest to do this.”

Luca Maestri – Chief Financial Officer & Senior Vice President

Advocates for corporate tax reform

“On tax reform, maybe I can continue, and I’ll let Tim provide more color, but we’ve been strong advocates for comprehensive corporate tax reform in this country. We continue to do that. We think a reform of the tax code would have significant benefits for the entire U.S. economy, and we remain optimistic that we’re going to get to a point where we can see that tax reform enacted. At that point in time, of course, we would have much more flexibility around optimizing our capital structure and around providing more return of capital to our investors.”

Apple 1Q16 Earnings Call Notes

Tim Cook

Seeing extreme conditions unlike anything we’ve experienced before

“Our results are particularly impressive, given the challenging global macroeconomic environment. We’re seeing extreme conditions unlike anything we’ve experienced before just about everywhere we look. Major markets, including Brazil, Russia, Japan, Canada, Southeast Asia, Australia, Turkey and the eurozone, have been impacted by slowing economic growth, falling commodity prices and weakening currencies.”

Foreign currency fluctuations have a meaningful impact

“66% of Apple’s revenue is now generated outside the United States, so foreign currency fluctuations have a very meaningful impact on our results. ”

Began to see economic softness in China

“Notwithstanding these record results, we began to see some signs of economic softness in Greater China earlier this month, most notably in Hong Kong. ”

The mother of all balance sheets

“We had the mother of all balance sheets, with almost $216 billion in cash, which translates to nearly $39 per diluted share of Apple stock.”

Customer loyalty still high

“recent consumer surveys by 451 Research, formerly known as ChangeWave, measured an incredible 99% customer satisfaction rate for iPhone 6S and 6S Plus and an equally impressive 97% rate for the iPad Air 2. They also indicate that our iPhone loyalty rate is almost twice as strong as the next highest brand.”

Install base has crossed 1B devices

“our install base has been growing very fast and has recently reached a major milestone, crossing 1 billion active devices for the first time. ‘

The level of Android switchers we had was the highest ever by far

“I would say we were blown away by the level of Android switchers that we had last quarter. It was the highest ever by far. And so we see that as a huge opportunity.”

I don’t think VR is a niche

“Yeah. In terms of virtual reality, no, I don’t think it’s a niche. I think it can be — it’s really cool and has some interesting applications.”

Next quarter should be our toughest compare

“we do think that iPhone units will decline in the quarter. We don’t think that they will decline to the levels that you’re talking about. We aren’t projecting beyond the quarter, as Luca mentioned earlier. But at this point in time, we see that Q2 is the toughest compare.”

I don’t think smartphone penetration is saturated yet

“as I look at sort of your — maybe your broader umbrella point about a question on saturation, the metrics I see would strongly suggest otherwise. For example, almost half of the iPhones that we sold in China last quarter were to people who were buying their first iPhone. And certainly if you go outside of China into the other emerging markets, our share is much lower and the LTE penetration is so low, I mean in some cases, it’s zero, that it indicates to me that there’s still a lot of people, a tremendous number of people in the world, that will buy smartphones and we ought to be able to win over our fair share of those.”

Our expansion plans have not changed even in markets where it looks fairly bleak

“our expansion plans in China have not changed. We are maintaining our investment profile and plans there. We are also continuing to invest in markets where we believe they are great places for Apple for the long-term, like India, as an example of that one. And finally, even in the markets where today, grandly, it looks fairly bleak, from Russia and Brazil and some of the other economies that are very much tied to our oil-based economies. We do believe that this, too, shall pass and that these countries will be great places and we want to serve customers in there and so we’re not retrenching. ”

Luca Maestri

79% of corporate buyers planning to purchase smartphones plan to purchase iPhones

“Among corporate buyers planning to purchase smartphones in the March quarter, 451 Research found that 79% planned to purchase iPhones. That is the highest iPhone purchase intent in the eight-year history of the survey.”

The macroeconomic environment is weakening

“The macroeconomic environment is weakening. When you think about all the — particularly all the commodity-driven economies, Brazil and Russia and emerging markets, but also Canada, Australia in developed markets, clearly the economy is significantly weaker than a year ago. We talked about the unfavorable FX, which again is 400 basis points.”

Data centers are a growing expense as installed base keeps growing

“data centers is a growing expenditure for us, because, as we mentioned in our prepared remarks, our installed base of customers and devices is growing, and is growing very significantly. And the data center capacity that we put in place is to provide the services that are tied to the installed base.”

Apple 4Q15 Earnings Call Notes

Revenue grew by $51B y/y

“we are proud to report revenue of $234 billion, an increase of 28% and $51 billion over 2014. This is our largest absolute revenue growth ever. To put that into some context, our growth in one year was greater than the full year revenue of almost 90% of the companies in the Fortune 500.”

Sold 231m iPhones in LTM

“In the past 12 months around the world we’ve sold over 300 million devices including 231 million iPhones, 55 million iPads and 21 million Macs setting new unit records and increasing our global market share for both iPhone and Mac.”

Apps represent the future of TV

“Yesterday, we started taking orders for the all new Apple TV and it was a huge first day for this exciting new product. We want to provide the same innovation in the living room that we delivered in our iOS devices. People are already watching more TV through apps today and we think apps represent the future of TV.”

Issued 5.8B of debt denominated in other currencies

“In the September quarter, we issued a total of $5.8 billion of term debt, consisting of 1.25 billion British pound denominated notes, 2.25 billion Australian dollar denominated notes and 2 billion euro denominated notes.’

Expecting 700bps headwind from FX in Q1

“You have to consider the constant currency growth rates. And so if you do that, our guidance is actually 8% to 11% because we have about a 700 basis point FX headwind in Q1′

We’re seeing a lot of switchers from android

“We believe that iPhone will grow in Q1 and we base that on what we are seeing from a switcher point of view, we recorded the highest rate on record for Android switches last quarter at 30%.’

There are also still a lot of upgrades ahead

“We also look at the number of people that have upgraded, that were in the installed base prior to iPhone 6 and 6 Plus. And that number is in the low 30 percentages. ”

A huge growth in middle class in China

“The latest study I have seen from Mackenzie indicates if you look back five years China’s middle class had about 50 million people in it. If you look ahead five years, it will have ten times that number in it.”

These drivers are long term drivers

“the macro things that I spoke about earlier, the upgrade programs, the Android Switcher rate, the iPhone momentum in the emerging markets and the LTE penetration in these markets these trends are not one quarter things. These are longer term things.”

Are continuing to hedge as hedges roll off

“We continue to hedge, so our program continues on an ongoing basis and we will continue to provide some level of protection to foreign exchange movement. ”

I don’t envision having a large enterprise sales force

“I do not envision Apple’s having a large enterprise sales force will certainly make – we continue adding some people more on the engineering side, but I don’t envision having a large direct sales force.”

iPhone number one selling phone in ChinaIf I just look at how many people are coming into our stores, I wouldn’t know there’s any problem in China

” if I were to shut off my web and shut off the TV and just look how many customers are coming in our stores regardless to whether they’re buying, how many people are coming online, and in addition looking at our sales trend, I wouldn’t know if there was any economic issue at all in China. And so I don’t know how unusual we are with that…I just think that the area that it’s currently operating within, it’s hard to tell the difference of the consumer level for us. I mean, you really can’t tell the difference, if you look at sort of our daily and weekly numbers.”

I don’t think China is growing as fast as it was but our results are not dependent on changes in the growth

“I think that there’s a misunderstanding probably particularly in the Western world about China’s economy, which contributes to the confusion. That said, I don’t think it’s growing as fast as it was, but I also don’t think that Apple’s results are largely dependent on minor changes than growth. I think it’s much more of contributing – I think other things contribute to that much more.”

There are a lot of people who haven’t upgraded yet

‘When I look at the upgrade rate, Steve, what I see is I feel good that it’s a low number because that’s low number means that there is 69% of the people that are out there prior to the iPhone 6 and 6 plus that haven’t bother to upgrade this year. That’s a large number.”

50% of people buying the iPhone 6 in China are buying their first iPhone

“if you look at China as an example, it’s over 50% of people that bought 6 and 6 Plus were buying their first iPhone’

Blackberry 2Q15 Earnings Call Notes

CEO John Chen

We continue to lead in mobile security

“The key takeaway here is really that we continue to lead in mobile security and now we are bringing the BlackBerry security know-how into the Android ecosystems. As a result, we believe we can address a larger and growing segment of the enterprise space and we believe we could be a leader in this space.”

Directly addressing analyst research

“I need to clarify two misperceptions from reading the research notes from our Good announcement.”

Discussion of contract manufacturers taking on “unique parts exposure”

” we have both arrangements. We have ones that we will take inventory, or at least parts — I call it the unique parts exposure. Then we have one that we don’t, as you well know. So this, of course, will continue, whether it’s an Android device or a BlackBerry 10 device. So there’s no difference here.”

We’ve stabilized cash flow, now we have to stabilize revenue

“Remember, we all said about a year ago, we were talking about stabilizing the company, the business, and focusing on cash flow from operation. I think we have accomplished that. This year, as we said, we’re going to stabilize the revenue, and unfortunately, we have a really low point here. But we do expect Q3 to level up and maybe even up a little bit, and then Q4 to go up from that level, and as I pointed out, I think we are all very focused on one key psychological win which is our software revenue eventually will cover these — the growth will cover the decline of the SAF and those two equations will converge, maybe that’s a way to put it. And that we expect in Q4.”

We’re still on plan

“We have some very exciting products that we are developing in house here. We haven’t seen the full impact of our IoT investment and that will come. So yes, I’m still on my plan.”


Changing some financial reporting

“Before I dive into our details, as you probably noticed, we are changing our non-GAAP income statement presentation to exclude purchase accounting deferred revenue write-down, stock based compensation expense, and amortization of purchased or acquired intangibles as part of the M&A transactions.”