Cisco Systems’ (CSCO) Q4 2017 Earnings

Charles Robbins – CEO

Cyber attacks have increased

“the 90% increase in cyber-attacks against IoT devices over the last year”

Currency headwinds in the UK

“On the UK, if you go back to Q3, we talked about it being significantly down and one of the primary drivers was the headwind created by currency. In Q4, what I’ll tell you is that headwind from currency remained, it did not ease up….I’ll say one final thing on the UK: while enterprise and commercial we saw a good uptick, service provider remained about the same.”

Orders improving

“In general, I think if you just look at our order rates that we released today, we went from Q3 negative four to flat in Q4. So clear that we saw improvement there.”

Kelly Kramer – EVP & CFO

Inventory is up

“A large majority of the inventory increase is driven by memory advanced purchases. So that protects us in for a large portion but we also have been as I mentioned in the lack — we’ve also been securing and committing to our purchase commitments for even more access to supply that also will ensure that we have the supply albeit perhaps at higher prices if they continue to rise.”



Tencent Holdings’ (TCEHY) Q2 2017

Martin Lau

It will take a while for online video to breakeven

“there is a lot of usage, more and more people are watching online video at longer and longer time, on a daily basis. But at the same time — and at the same time, advertising revenue has been increasing, and there is also an increasing willingness from consumers to pay. So, the subscription number as well as revenue has been increasing quite rapidly. On the other hand, the flip side of this is the cost of content has been increasing, even faster. So, what we see is that over time, we believe the content will continue to increase, but the rates would probably be lower. And the subscription, as we continue to increase, would deliver higher revenue per active user. So, we will get closer to a more equilibrium between cost and revenue at some point in time. But I think unfortunately at this point in time, the net loss of the business is still increasing.”

James Mitchell

High demand for AI-as-a-service 

“In terms of providing AI-as-a-service, I think this is definitely a one direction that we are going into in our cloud business already and we are seeing a lot of demand on that. And we have been able to sign up a lot of customers because of our ability to offer them AI capability. And that’s just the beginning. Over time, I think we will do much more on that.”

People are discoevring games on more communal venues

“In terms of games and targeting, if you look at games playing globally, particularly on the personal computer, it’s moved from being media driven to being increasingly community driven. 20 years ago, people discovered new games on the PC in the U.S. and Europe through computer magazines; now, they’re discovering them through reddit, through Twitch, through those kinds of more communal venues. And some of the same trends are underway in China. And what we’re trying to do is working with the game developers to make sure that we target their games to the users who are likely to be most receptive.”

Societe Generale’s (SCGLF) Q2 2017 Earnings Call Notes

Frederic Oudea – CEO and Director

Positive outlook on Europe

“our economists are reasonably positive on the next 12 to 18 months’ economic outlook. And may I say in particular, in Europe, you have seen the Q2 figures and provided that there is not any extraordinary event, I would say, the economy should carry on doing pretty well on the back of a high level of confidence with more clarity on the political side, et cetera.”

Philippe Heim – Group CFO

General outlook for Europe and Africa

“I have to mention that the economic environment remains broadly the same all across the board in the various places where we operate. We’re still benefiting from a strong momentum across the board in Central and Eastern Europe, with – let’s say, a solid GDP growth supported by strong domestic demand….And in Africa, we’re still – we still see a strong growth in the places where we operate in – and specifically in Sub-Saharan Africa with Congo and Ivory Coast and, again, in Cameron, while the situation is more mixed in North Africa.”

In sum

“So in a nutshell, the quarter was marked by lower activity, a wait and see attitude coming from investors and hence, we’re seeing our revenues down by 4.3%.”

Equity revenues up, Fixed income down

“So in equity, revenues, they’re up slightly by 3.3%, a strong performance of structured products, with highest revenue since first half of 2015, while, of course, with lower activity all the flow products businesses’ were affected. In fixed income, pretty much the same pattern. Revenues were down by 6.8%.”

Tesla (TSLA) Q2 2017 Earnings Call

Elon Reeve Musk – Tesla, Inc.

Model 3 is here with high production targets and zero promotion

 “…having with us steady production of Model 3s was an incredible milestone in the company’s history. We wanted to make a great, affordable electric car which is a fundamental thing that is missing. We wanted to make that from day one, and if we could only have done it sooner, we would have….I’m very confident that we will be able to reach a production rate of 10,000 vehicles per week towards the end of next year. And we remain – we believe on track to achieve a 5,000 unit week by the end of this year….what people should absolutely have zero concern about is that Tesla will achieve a 10,000 unit production week by the end of next year….We’re not promoting the car. If you go to our stores, we don’t even want to talk about it, really, because we want to talk about the thing that we can supply. If somebody orders a Model 3 now, it’s probably late next-year before they get it.”

The demand for Model 3 is pretty high

“there have been 518,000 gross reservations for 3, and we have 455,000 net reservations. But those cancellations occurred over the course of more than a year. The net gain since Friday, net of cancellations, has been over 1,800 per day.”

Demand for Model S and Model X unaffected by Model 3 release

“It should also be noted that one of our big concerns was that Model S, particularly, and Model X demand would suffer with the introduction of the Model 3. In fact, this has turned out to be the opposite situation. Model S and Model X demand increased with the release of Model 3.”

Learning to be less dumb

“When we make mistakes is because we’re stupid, not because we’re trying to mislead anyone. I just want to emphasize – I – we aspire to be less dumb over time. “

There may be more gigafactories coming

“we’re also thinking hard about, where do we put Gigafactorys three, four, five and six? We expect to keep the majority of our production in the U.S., but it’s, obviously, going to make sense to establish a Gigafactory in China and Europe to serve the markets there, because it’s not to build cars (29:23) in California and truck them halfway around the world, particularly when you’re trying to make things as affordable as possible – that really hurts.”

Rolls-Royce Holdings’ (RYCEF) Q2 2017 Earnings Call

Warren East – CEO

They are ramping up engine production

“Clearly we’re in the midst of, and we’ve been talking about for some time, a period when we are ramping our volumes of large engines that we deliver. And clearly this has been a question mark: Are we going to be able to ramp up sufficiently, or not? Last year, we grew volumes year-on-year from the previous year. This year, we have a big step-up to do. We’re halfway through the year. We are achieving a step-up, volume production’s up, volumes produced up 37%, deliveries up 27%, so I think we’re addressing that question.”

Stephen Daintith – CFO

Accounting changes coming up

“Accounting changes, a couple of items that are on the horizon. As you know, with effect from the 1st of January 2018, we move to IFRS 15….We welcome IFRS 15. I think it will allow for a purer and clearer view of the business….And indeed, we are hoping that for the March results next year we can show you the ’17 results on a current basis but also the full results on an IFRS 15 basis as well so you can see that fair comparison, probably spend quite a lot of time on that. And that will then allow you to think about how you want to think about 2018 on an IFRS 15 basis….IFRS 16 comes into play on the 1st of January 2019, and we’ll be taking operating losses onto the balance sheet. Again, no impacts on cash.”

Apple (AAPL) Q3 2017 Earnings Call

Timothy Donald Cook – Apple, Inc.

The iphone is 10 and still popular

“The combined iPhone 7 and iPhone 7 Plus family was up strong double digits year over year. One decade after the initial iPhone launch, we have now surpassed 1.2 billion cumulative iPhones sold.”

They are keen on autonomous systems

“We are very focused on autonomous systems from a core technology point of view. We do have a large project going and are making a big investment in this. From our point of view, autonomy is the mother of all AI projects. And the autonomous systems can be used in a variety of ways and a vehicle is only one.”

The drivers of Apple growth going forward include emerging markets

“I do think that we can grow both in units and market share….And so what are the drivers? The installed base is growing. It’s still growing very strongly. That will generate more upgrades over time. I feel good about our ability to convince people to switch. And where the developed markets the first-time buyer rates are down other than places like Japan perhaps, the emerging markets, we haven’t even gotten started yet, really. From a revenue point of view, we had very strong growth there. Emerging markets ex-China were up 18% year on year. It was a record for us, so we see a lot of opportunity in these markets.”

Created 2m jobs in the US

“We’ve created 2 million jobs in the U.S., and we’re incredibly proud of that. We do view that we have a responsibility in the U.S. to increase economic activity, including increasing jobs, because Apple could have only been created here. And so as we look at that 2 million, there are three main categories of that, and we have actions going on in each of them to further build on that momentum. The first category is app development. About three-quarters of the 2 million are app developers. And we’re doing an enormous amount of things to deliver curriculum to both K-12 with Swift Playgrounds in the K-to-6 area, other curriculum as you proceed beyond grade 6 under the Everyone Can Code area.”

Luca Maestri – Apple, Inc.

High interest and satisfaction with Iphone

“Customer interest and satisfaction with iPhone are very strong with both consumers and business uses. In the U.S., the latest data from 451 Research on consumers indicates a 95% customer satisfaction rating for iPhone 7 and 99% for iPhone 7 Plus. Among consumers planning to buy a smartphone, purchase intention for iPhone was nearly three times the rate of our closest competitor. Among corporate smartphone buyers, iOS customer satisfaction was 94%. And of those planning to purchase smartphones in the September quarter, 78% plan to purchase an iPhone.”

Service is growing driven by the App store

“Turning to Services, we set an all-time quarterly record of $7.3 billion, up 22% year over year. The App Store was a major driver of this performance…the App Store, which is the largest of our Services categories, is seeing an increasingly larger amount of paying accounts. On a year-over-year basis, the number of accounts that are actually transacting and paying on the App Store is growing very, very well.”

On App store spending trends

“What we’re seeing and we’ve seen over a long period of time as we keep track of these cohorts of customers, we see that as customers get on the App Store and start spending on it, we see the spending profile is very similar across generations of customers. People tend to spend more over time. Obviously, you have different spending profiles in different geographies around the world, but in general you see that trend across the board.”

Comcast (CMCSA) Q2 2017 Earnings Call Notes

David N. Watson – Comcast Corp.

Internet is a key driver of growth

“High-speed Internet continues to be the largest contributor to overall cable revenue growth…there is significant runway ahead of broadband. And the key to me when you look at this is the upside of the opportunity. We’re sitting at 45% penetration right now. So there’s growth just there. The overall market is growing with only 75% of households subscribing to Internet access…We deliver very fast, reliable service. And the focus – the shift that we’ve had around innovation is around WiFi in the home.”

Michael J. Cavanagh – Comcast Corp.

On costs

“Programming costs, we came in in the first half of the year at around 12% and I wouldn’t expect it to be much different in the second half. In terms of non-programming costs, you saw the great results in the first half of the year and we think those trends are steady…We do expect programming costs as we’ve said to come down into the high single-digits in years after 2017.”

Ford Motor (F) Q2 2017 Earnings Call Notes

James P. Hackett – Ford Motor Co.

They are reassessing regions they operate in and their capital allocation to these areas

“the new reality that I can kind of confirm to you is that we really have to ask ourselves what do we have to believe to get to the kind of returns that we expect and you expect. And if we can’t answer that, then we can’t be there. That’s making the choice when you hear us talk about playing to win and where to play, that is what that code means, is that you are clarifying where you’re going to put capital.”

Robert L. Shanks – Ford Motor Co.

Bad times in Europe with Brexit playing a mjaor role

“in Europe, all the key metrics are lower…The revenue is down largely because of the volume…we were down about $380 million. Almost literally half of that is related across a number of these factors due to Brexit. The biggest impact is exchange, so a much bigger effect than actually what’s shown in the singular bar there, directly related to Brexit. We also saw the industry decline, which is buried within the – in fact the industry – as I mentioned to you, the industry was up, but you can see the industry dollars is down. That’s the effect of the UK, because it’s a high margin market.”

Expecting imporvements in Middle East and Africa

“we still continue to expect the Middle East and Africa to improve this year compared to 2016 due to lower cost, favorable exchange and lower volume. And a lot of that – in fact, all of that improvement is going to take place in the second half of the year. So, I expect to see better results on a year-over-year basis in the second half of the year than what we’ve seen in the first half.”

They expect a soft gradual decline in auto sales

“Our view is that what, however, you wanted to describe it, an eroding plateau, I’ve seen that, or however you want to characterize it, very strong sales, we don’t see anything in terms of the economy, the health of the consumer, housing, oil, the oil production is back up and that’s had an impact on trucks for example, that would suggest that over the next two – let’s say two years, that there’s any kind of significant collapse or dramatic change. We do think it’s going to decline. We think it will be a soft gradual decline.”

General Motors (GM) Q2 2017 Earnings Call Notes

Mary Teresa Barra – General Motors Co.

On autonomous cars

“From an autonomous vehicle perspective, miles driven is certainly a factor, but it’s not the only factor, because what is the quality of the miles driven? Right now, to our knowledge, we’re the only one testing our autonomous vehicles in Downtown San Francisco, which is a pretty dense urban environment with a lot more, I’ll say, opportunities to learn from different situations. So it’s not just the miles traveled. It’s the quality of those miles in the number of incidents that you’re exposed to that the vehicle learns. And so although we don’t have a very specific mile, there’s quite a bit of work we’re doing, even with agencies or groups outside of the company to put that together.”

Charles K. Stevens – General Motors Co.

Passenger cars to perform marginally better in H2

“…we expect to see is better sales in the second half versus the first half, which is kind of the way the industry runs. Within that perhaps marginally better passenger car, but we’re certainly not counting on a recovery.”

Trucks to have a downtime

“we built inventory in the first half in preparation for our previously announced downtime in trucks and crossovers in the second half of the year. ….all else being equal, we would expect to see more truck downtime next year versus this year. But by the same token, we will have incremental opportunities for compact and mid-crossovers next year because we’ve got significant downtime. But if I was providing an outlook right now, I would say probably production volume is going to be down in 2018 versus 2017 given the downtime.”

Miscellaneous Quotes for Week to 28th July 2017

Bill Gross – Janus Capital on Bloomberg and CNBC

A recession would be good.

“Recession would do the economy some good like a forest with dead wood. You clear out some of the dead wood and you prevent a forest fire…A slow down is finw with me as it produces ultimately in the long term a healthier economy.”

on the Fed

“They’re on to now reducing the balance sheet, because they want a positive yield curve”


FOMC Statement

Rising economic activity

“the labor market has continued to strengthen and that economic activity has been rising moderately so far this year. Job gains have been solid, on average, since the beginning of the year, and the unemployment rate has declined. Household spending and business fixed investment have continued to expand. On a 12-month basis, overall inflation and the measure excluding food and energy prices have declined and are running below 2 percent. Market-based measures of inflation compensation remain low”

Coming soon: Normalization 

“The Committee expects to begin implementing its balance sheet normalization program relatively soon, provided that the economy evolves broadly as anticipated;”