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tv   Tech Check  CNBC  September 28, 2022 11:00am-12:00pm EDT

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everything coming together at the end of the quarter >> that's right. we will see, mike. thank you. just going to give a shoutout that delivering alpha continues today and david faber is out there doing a panel later. "techcheck" starts right now good wednesday morning i'm carl quinnty nia with deidre bosa here with me and jon fortt. what the bank of england is doing to calm the market more tech companies slamming the breaks lyft and docusign and upgrade for netflix and in-depth look at the cord cutting what that means for how you play the streamers but we begin with comments made by stanley druckenmiller delivering alpha take a listen to this. >> our central case is a hard
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landing by the end of '23 but i don't know i've been wrong on a lot of things i could be wrong on this but that's our forecast which is recession in '23 >> joining us here at the nyse. managing partner, cnbc lowe tony here and druckenmiller has been negative for a long time but sticking with his guns this terms of a hard landing in '23 and chastising the fed and boe or what he believes is a mistake now. >> what we saw was that the inability for the fed and chairman powell to acknowledge the fact that inflation was a concern and many had been beating the horn and further fueled by a lot of macro events, supply chain issues. now, now that chairman powell has addressed it, he is going all out volker so we know one
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thing volker had to do was beat inflation back what he was handed when he took over, everyone thought that the job had been done and reared its head again and volker made sure and powell doing the same thing. all that thought there would be a pivot, there's not going to be a pivot. they'll continue to raise rates and make sure they tame inflation even at the cost of jobs and what it will do to the economy. >> we could get negative month-on-month cpis and have home prices go negative and job losses start to move in scale and you think the fed will be resolute. >> i think they will >> really? that is big implications for how you trade in the tech space. >> yeah. i think it's going to be continue to punish them in terms. the multiples because we know what rising interest rates do. we've already seen that but i
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think we've seen that if q1 and q2 the numbers had been very resilient. and in many cases some firms had actually increased their expectations i think we're going to see folks start to pull back i think we'll start to see rising rates now actually hurt earnings as we go into the next earnings season. >> that line right there takes us straight to apple, dee. >> that's the exact question everyone is trying to figure out have earnings estimates come down lo, do you agree the base case is this hard landing and what does that do to earnings which are still up year-on-year in terms of estimate. >> they are and i do think that the soft landing was always going to be challenging. you know, i would ask anyone to point us to a framework or a model as a reference in history to show us when we've successfully had a soft landing and i think it's very hard to do, especially today in this environment when we have so many pieces that are moving and so
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many signals that are contrary in what they typically would mean like the inverted yield curve and contrast with what we see with the strong job market and so i don't really think there is a framework that one can look at. so i actually do agree and think a soft landing will be very difficult. i don't think there is a neutral landing. i think it's either a soft landing or hard landing. >> right markets certainly turned around on news from the boe, apple down 3.5% weighing on the broader market all morning let's get to steve kovach after bloomberg told suppliers to slow it by 6 million units. steve, break it down because, yes, this is kind of a trimming of a more production, keeps it in line but the story here is apple is very, very good, very efficient at figuring out what -- how many units to make and if it's out of line that
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could mean a lot more pain in other parts of the company, other parts of corporate america. >> yeah, exactly, dee. there's a lot of nuance to the bloomberg report it's saying apple is dropping plans to increase iphone 14 production on top of those original expectations it had before the launch so it's sounding like apple saw signs demand would be better than originally expected but extra demand faltered during the first couple of weeks after the 14 line launched but this report also backs up what we've heard over the last few weeks, that those iphone pro models are selling better than expected which will help boost iphone revenues those start at 1 is,000 bucks apiece and the 14 plus goes on sale so won't get a full picture until another couple weeks after that morgan stanley analysts calling this report, quote, more bark than bite and noting that apple's original expectations are holding firm they're expecting unit sales of
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iphones to be about flat year over year and citi saying the strength in the pro line can help offset weakening demand and say a whopping 76% of new iphone 14s sold so far are from the pro line still, something has changed in the last couple of weeks that made apple think there won't be a bonus surge on demand and jefferies analysts saying iphone sales are down 11% in china in the first three days of sales. apple did not comment but we're seeing how the market is reacting, guys. >> steve, it's easy to misconstrue these apple reports as we know from watching them over the years and seems to me like if apple is, indeed, tracking for flat units year over year, that would be a huge victory. i think what we saw at the beginning with the launch is this strong skew in preference toward the pro and pro max in terms of demand and what apple
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has done is in essence boost the price in some markets overseas and also skew the line so that you're going to be paying more if you're buying an iphone overall and their margins are probably going to be better. so i don't know what people were expecting if, you know, they thought that apple was going to do a lot more units but that certainly would be unusual in a year like this and not what it seems like apple was depending on. >> yeah, that's exactly right and kind of why we're seeing, jon, the street push back on the bloomberg report a little bit saying it's nothing to really worry about and to your point, yes, if those iphone pros are, in fact, selling as well as we're getting the early data on, then that boost, the average selling price for every iphone sold, and that increases the revenue. remember, apple no longer reports iphone unit sales. they go by total iphone revenue and that's what investors are going to look for so even if unit sales are flat, then that
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could be okay because it's going to be offset by those more expensive phones and next week the more expensive iphone 14 plus which starts at 899 will go on sale too and a lot are looking to that to test further how the complete line of iphone 14 demand is. >> absolutely and, lo, want to bring you back in here on apple. apple has been the aaron judge of this tech economy, right? like they've pulled away from others, both in terms of stock performance, maybe even to an extreme degree and also their ability to differentiate enough to continue to command a premium. people aren't trading down in iphones. they seem to be trading up even if that affects units. how important is apple then as a gauge of how good it can get in tech >> right, i think this is one company that we can always look to to give us an understanding of the consumer demand, especially for these types of
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goods. and in particular, i do want to point out that shift because that's accurate. when we think about this bonus demand, what apple is saying, hey, our base case was correct not seeing the bonus demand. i suspect that part of one of the strategies that apple had in place was to try and pull over some users from the android base and, you know, i think given this mix shift seeing demand actually hold steady on the more premium phones, that's spot-on in terms of the analysis those are better margins anyway and what we have seen is that the higher end consumer is showing the resiliency so we should expect that the lower end consumer is not going to see that and i think that is where apple thought some of that bonus demand was going to come from, pulling over some android users to these lower price phones. it's okay to sell more phones that are more expensive. >> although does that mean we need to think about the size of the ecosystem, differently now
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if there's going to be less transfer over from android over time >> yeah, i do. i do think one of the strategies that apple had tried with these lower price phones was to try to pull over folks to increase the ecosystem. once you have that base of users in the ecosystem on the hardware there's the opportunity to sell all of the additional services which have higher margins as well. >> i wonder, though, if we're all looking at this bloomberg report when we should be looking at china, that jefferies estimate that china -- new iphone sales down 11%, you're not seeing much scalper activity this is the biggest smartphone market in the world and accounts for a fifth of apple revenue >> that's right and that is one market to continue to look at because, you know, kind of we're getting to the point as china goes on the consumer demand side especially for electronics so does the rest of the world and when you look at the usage in
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china of smartphones in general and that preference towards the more higher end iphone models, that without a doubt is something to watch for and 11% drop is pretty significant >> 11% is significant, lo, but when -- if that's a unit drop, we also got to consider the revenue and profit mix that we were just talking about, right, and where the growth would be coming from for apple. china has been troubled for awhile with covid lockdowns and whatnot and part of the question does north america make up for it >> right, and i think this kind of goes back to carl's point about the ecosystem as a whole what they've been trying to do is lock people in on the hardware side then have the ability to sell themselveses, so, yes, in the near term that's correct. if we see the 11% drop but we're going to pick that up by selling higher end units, that increases margins and that will have a near term benefit. however, i think long term the
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plan for apple has always been to get as many people into the ecosystem as possible, lock them into the hardware, so that they can vertically integrate and have all those additional services layered in on top that have even higher margins. >> it's going to be a bit of a wait to see how they respond to the reporting on the call, because they're unlikely to say anything between now and then but it's certainly raising a lot of eyebrows, lo, thanks so much. lo toney d dom dominic chiu has a look. >> we've highlighted the technology sector and communications services sectors, two places where we were trying to find relative values at least on a price to earnings forward basis so every dollar and stock price for anticipated earnings over the next 12 months, today looking at consumer discretionary and megacaps,
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amazon and tesla and put that next to the invesco qqq trust and it's better than the nasdaq 100 but still in terms of just worse versus the s&p 500 on a year to date basis now, within that consumer discretionary sector from a forward price to earnings basis, evaluations no doubt have come down quite a bit during that span if you look at the forward p/e there's no doubt it's driven by two stocks, we'll get to that but 25 times forward earnings we've seen it tail off quite a bit from the highs we saw post pandemic so with that in mind at a 25 times forward p./e. basis, how many stocks in that sector are actually below or trading at a discount to that industry multiple so to speak it is the vast majority of them, believe it or not and highlighted by names like nike, trades at about 25 times forward earnings, home depot roughly 15 to 16 times, expedia group, 10
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time, general motors, 5 times forward earnings and about 3 1/2 to 4 times forward earnings for pultegroup there are stocks trading at discounts, but, of course, the two stocks that matter the most to the consumer discretionary sector are no doubt amazon and tesla. and let me just put that up there. with amazon we're talking about a company that trades at roughly, call it 62 times forward earnings versus 52 for tesla those these two stocks are important because they make up 45% of the index weight so as go these stocks, so goes the rest it's hard to look at the industry multiples without looking at those two and as we have the last couple of days, i will post the other stocks with discount multiples on a forward basis on my sdwit feed @thedomino so you can see. >> those previous names, tech,
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welcome back more tech companies slowing hiring lyft freezing it for the rest of the year after laying off 60 employees in july. lyft said its costs jumped 36% in the most recent quarter and shares down 66% year to date docusign reducing their workforce by 9% as part of a new plan the company trying to help growth and profitability objectives and the move comes after the company named former google executive alan sigason. we'll mon terror them regarding reduction in workforces. >> key word, incremental have to wonder if a lyft hiring freeze is the pain powell had in mind versus the layoffs from docusign but for lyft which has
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been facing higher costs and has really just been slammed, you're looking at a chart down 66% year to date. if that's going to help out even with profitability, stock base comp, jon, makes up 18% of lyft's first quarter sales so that is a huge portion cutting or at least freezing hires may help with that >> yeah, when it comes to docusign, with a company like this, i think you want to check and see if they get it right the first time i mean, it's rough on workers, certainly when you end up having to do a cut but you really only want to do one cut ideally you want to cut once, build from there, hire the people who need to be hired and then have an upward trajectory and don't want the malaise where you cut and cut again or you can't get people in the door so, you know, investors tend to like cuts, right, because they flow to the bottom line but really what you're in it for is growth and you want to see if they have to cut again so the watch is on >> that's a good point
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i remember at the beginning of the pandemic, jon, you would see some companies cut once and cut again. hard for workforce morale. let's turn to alphabet raising estimates saying the platform is five years behind aws behind a revenue perspective. joining us is john blackledge. behind former revenue perspective but also very behind from a profitability perspective. google cloud is the distant number three in terms of the hyper scalers. it is still losing money what turns it around especially when azure and aws are growing at pretty similar rates from a much larger base. >> great question. thanks for having me on. one of the things that we did with this work was we actually introduced a google cloud model. remember, alphabet provides revenue and income for google cloud but do not break out gcp and workspace so we were able to do that and we found a couple interesting things, number one, we think gcp is 75% of total
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google cloud revenue and then we're also able to compare it with to your point aws actually going back and going forward and the three interesting things we found which you said, yeah, gcp is five years behind aws from a revenue scale perspective so the revenue this year for gcp looks like aws revenue in 2017 secondly, and i think importantly, and i'll tie in the operating income a second but the gcp from 2019 to this year, their revenue is tracking on -- tracking brett well with aws from 2014 to 2017 so the question is going to be, you know, can the next four or five year, can it track with aws? if it does our numbers are going to be low even though we raise today and you -- a great point, google cloud has a negative operating income gcp, we found there's a huge gap
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between gcp and aws at same revenue scale and the gap is seemingly wider in the last couple of years, even though per our estimates gcp revenue has quadrupled since 2019, the op income gap at a similar revenue scale widened, and i think there's a couple of reasons, i mean, they are like you said, number three they're the competitor maybe the way they're architecting their data centers is similar to aws and amazon but i think being number three player has an impact on profitability, all that said, but there's the opportunity, right, for the alphabet shareholder. there have been rumblings that alphabet within google cloud will focus on profitability and so there is an opportunity >> yeah, to what extent should we be looking at this from more of a gross margin perspective, large customer perspective and the benefit across google to what extent does it make sense
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to look at that versus revenue to revenue based on what amazon was building five years ago? is the structure and value in the cloud changing such that investors need to think about that differently >> yeah, it's a good question, jon. i feel like when we modeled it out, we think aws and, again, they don't break out like they don't go to the gross margin level but we think gcp mid-60s and think a lot of the losses come from the other op ex. when tom came on board at google cloud, they have done a lot of hiring so i think there's a lot of head count and a lot of costs within below the gross margin, gross profit line leading to that. >> cfo says they will continue to get investment from the overall company.
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thanks for your insights john blackledge. thank you. from the cloud to the edge ahead of amazon's big product announcements that kick off today at noon eastern, that's in devices and services in time for the holidays i got a chance to talk their svp of devices and services i asked him how amazon is thinking about product development for the consumer in a time where inflationary pressures are affecting everything >> it's sort of the essence of how we're inventing around the idea of am by cent intel jennings the idea that technology, affordable technology by the way which i think ours has always been, echo dot is 50 dail st. claire but-- it can be incredibly useful when you need it but fade into the background when you don't that is the essence of what we're trying to do and i would say in environment, all environments but especially ones that are challenging in many
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ways coming out of a pandemic, maybe the economy, you know, i would argue that maybe picking your head up out of the phone a little bit more. maybe spending a little bit less time in the metaverse is good for all of us and spend more time with your family. >> going to have more on the specific announcements which are coming this afternoon. i also talked to dave limp about logistic supply challenges with q4 days away catch the full conversation after the news breaks, it's going to be on the show twitter and linkedin page right around 2:00-ish probably. once the news is out, you can talk about the details of everything they're announcing? we'll watch that event, jon. what he said at the end caught my attention he said sometimes you need to pick your head out of the phone for awhile speaks to them not having their own operating mobile system and alexa fades into the background of your house but the key question for this unit, this
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business for years has been, will we ever get an alexa in the wild, right, and they've moved into the car, carl, but you still don't have an alexa at your fingertips when you exit your home. >> pretty interesting and certainly staying out of the metaverse would be music to jon's ears, we know that we look forward to hearing a lot more, dee. session high, dow up almost 400. >> yeah, and the ten-year yield at 3.755 so a little bit of easing there too after the break an upgrade of netflix. another one i should say, there's been a few lately. is now the time to buy with the stock down 60% "techcheck" returns in just a moment
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welcome back with "techcheck" with julia boorstin, jon fortt and deidrdre bosa. doing yeoman's work even with apple as a drag. one firm saying now is the time to go long, netflix. julia has more on that first european markets are closing in unbelievably volatile sessions after the bank of england steps in to stabilize the bond market. seema mody has been watching it all morning. >> the purchases will be carried out on whatever scale is necessary. that was what the bank of england said earlier this morning. that did provide some temporary support off the lows of the session. jpmorgan telling clients while today's move may sound like qe, quantity tative easing, they caution it is not, it is a tool to address the recent deterioration in the long end of
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the curve and concerns over margin calls speaking of that yields on the 30-year in the uk dropping, a reversal what what we've seen over the past six days from 3.8 to 5.1% currently yielding about 3.9 for the 30-year in the uk. currency traders at stonex writing while the bond market may calm down due to actions taken by the boe, let's not forget it's possibly not the best news for the currency, the pound which did initially trade higher, it's trading higher right now, 1.07 against the dollar the record low is 1.05 bank space in london, barclay's, lloyd's on the decline, eurasia saying the government's plan unlikely to convince markets that the crisis will get worse before it gets better. one bright spot similar to what we're seeing, the oil and energy and mining names, you'll see shell, glencore, bp up 1% to 2%.
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carl, back to you. > seema, thanks for that. our next guest worries a tightening fed coupled with shaky earnings might mean that markets have further to fall and investors agree with the put options hitting record highs, of course, the volume last week on friday pretty unbelievable joining us is from fidelity investments, yuri. talk to me about how the q3 season will shape up especially given people are pinning their hopes on better seasonality. >> so, by the way, greetings from milan where i'm on a road show here. so there's the valuation side and know about that story as rates rise, the present value of future cash flows goes down and so the p/e side of the market derates and, of course, that is well under way we were at 23 times expected earnings in january. we're down to about 16 my guess is we're heading to 15 or 14 based on where the fed is telling us it's going. but that p/e is only as good as
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the "e," right so this is on a forward basis and earnings have held up so far, right so second quarter, 75% of companies beat estimates by about 400 basis points q3 earnings season is coming up in a couple of weeks, expectations are for about 3% to 4% growth and we'll see if companies hold up but, you know, a 14 times $235 per share earnings number is not the say as 14 times 220 which is the current number so with the economy slowing and earnings growth slowing, it is 50% last year, down to 10% on its way probably to 5% or so, how strong that "e" stays will be important underpinning or lack of it for the market going forward. >> are you going so far as to expect flat or negative earnings growth >> so far earnings are holding
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and, you know, when inflation is high as it is today, generally speaking during derating cycles earnings actually do hold up okay because evening if it's a money illusion, earnings are a nominal concept because companies sell into the nominal economy. but, of course, investors see through that so they will be less willing to pay for those earnings so i'm not convinced at all that earnings growth will go negative we do see though that energy is lifting earnings, right, x energy, the estimate for earnings growth for this year is only 3% instead of 10% so we do need to look past the big movers that are keeping earnings up, but i think earnings growth slowing is certainly in the works and it's well under way and whether the 2023 numbers hold up, you know, which call for another 6% or 7% growth from 2022, i think that's the bigger risk than rather 2022 ends up coming through because when you look at the yield curve and how
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far the fed is taking this, right, to about 2.5% above the neutral rate, there is recession while i'm not willing to commit to that outlook, i think that risk looms larger for 2023 than 2022 >> what about dollar strength, jurrien? that affects the "e" as well companies and will deal with it again. have estimates fully baked that in and especially you talk about some of the big tech names vulnerable to dollar strength, how does that trickle into the u.s. economy your forecast, is that assuming a softer recession or hard one like druckenmiller said. >> the dollar is certainly a problem for a lot of people and a lot of central banks we see the weakness in the chinese yuan and yen and in sterling so i'm sure the fed chair is getting a number of calls from all over the world about the dollar strength and it
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reminds me actually of the 2015 to early 2016 cycle where we had this policy divergence between the u.s. lifting rates and the rest of the world easing at that point, driven by the chinese yuan and ended up with a so-called shanghai accord. i don't know if we'll get one this time around but certainly a strong dollar is a problem for earnings it is a head wind especially for the big global companies and you can make the distinction, for instance, between utilities which are more domestic and consumer staples which are more global and so i don't know to what degree the estimates reflect that but i can tell you that the estimate for the third quarter, you know, the bottom up aggregated estimate really hasn't moved very much in a number of months so my guess is that the strong dollar is not really reflected in that. >> jurrien, i wonder because i hear a lot of people saying, oh, well this be over in '23 or '24?
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this period we're going through in the markets, is this a weather pattern, you think, or is it climate change, right? is this something that we go through for a year or is it something that's going to be multiple years like the period that we just went through of low rates and easy money that, you know, that was more climate change than a weather pattern. >> yeah, i think in many ways we're actually kind of back to the old normal, right? so we had the great moderation of the last several decade, low interest rates, low inflation, a lot of mini cycles, right, so elongated expansions and very small corrections. before that time, though, we were kind of always in a boom/bust mode the economy would overheat inflation would become a problem and the fed would respond by hiking rates then we'd have a recession and that was sort of the boom/bust of the four to five-year cycle. i wonder if we're going back to that now and whether the last couple of years as unusual as they've been with covid and a
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lockdown and re-opening or war in russia, et cetera, i wonder if the last couple of years is more representative of what the cycle has always looked like in the past until we got to that great moderation, so i think that is a risk that the cycles get trudge indicated and more severe as we go forward. >> certainly waning globally says, demographics would lend itself to that argument. it's going to take years to know for sure safe travels look forward to seeing you again soon jurrien timmer. >> thank you. do not miss jamie chanos live from delivering alpha coming up at the top of the our and orlando bravo is at 2:15 ayh ewmiss those intervis. st witus
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- yieldstreet presents: alternative investing with kal penn and older kal penn. - oh, the stock market is doing that fun thing again. - hey news from the future, you're going to live through that about 10 more times. (laughs) - oh, it's no stress. i just discovered yieldstreet. they vet investments that don't ride the stock market rollercoaster. - ooh. i think some of my gray hairs just reversed. - yeah. you're welcome. - [narrator] become an investor today. yieldstreet: private market investing.
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atlantic equities upgrading netflix this morning julia boorstin has more on that call julia. >> well, jon, netflix shares are up 6.5% this morning though still down 16% year to date. atlantic upgrading the stock ahead of its expected launch of an ad supported service that's expected to come in early november write, quote, we have determined that this could be extremely material and do not believe the benefit is currently reflected in the consensus
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we estimate advertising revenues could reach $8 billion in 2025 accounting for 15% to 20% of total revenues at that point now, wolf research out with a bullish note today reiterating its outperform rating on the stock saying, quote, we anticipate that advertising video on demand will drive stronger long-term revenue and free cash flow growth but in the near-term fx may be the biggest factor in earnings revisions going on to say that they are cautiously optimistic heading into the third quarter despite significantly worse fx trend, meanwhile, moffett nathanson out with its quarterly cord cutting report warning about a turn for the worse after the cable company lost more than 1 million subscribers in the second quarter. topping 1 million for the first time ever, moffett nathanson writing problems abound. the virtual mvpd story is losing
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luster the traditional distributor story is even worse. total industry kleins have accelerated and going on to note that seasonality is worsening and even the sports safety net is fraying now, great moffet knows only one in four have moved they maintained an outperform rating on comcast as well as on fox. market perform on disney and warner brothers discovery and an underperform rating on paramount. the big question is as we head into third quarter earnings how much consumers will be pulling back or shifting from ad free to lower cost ad supported streaming subscription services and, of course, watching for the details on that netflix ad supported launch, guys >> so much in there, streaming, the dollar, cable and the rest, julia, thanks so much. our julia boorstin. the chinese tech stock
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outperforming the broader market this year. more on how you might want to play that name when we're back in two
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a gut check. brutal for china tech. alibaba, one clear outperformer has been -- shares more than 5% per date
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that comes despite their covid restrictions and the less desirable performance of their peers. now, the company did have a good quarter last quarter and that boosted shares which are up nearly 2% today. it's an e-commerce company now trying that model in the u.s., should be interesting. >> it is going to be interesting. meantime, coming up next bernstein's tony saginaki will weigh in on extra iphone production more to do with what to do with that stock as it tries to bounce off 145. stay with us on almost anything, anywhere, automatically. avalarahhhhh. what if tax rates change? ahhhhhh. filing sales tax returns? ahhhhhh. managing exemption certificates? ahhhhhh. business license guidance? ahhhhhh. does it connect with accounting? ahhhhhh. item classification? ahhhhhh. cross-border sales? ahhhhhh. what about? ahhhhhh. ahhhhhh.
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do you have those budget markups? thank you. mmhm. [bubbles]
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let's get back into apple. our next guest says today's news still keeps targets in line with expectations on the iphone but predicting the current cycle could end up weaker than predicted. tony, good to see you. my outlook for this cycle was lower units, higher margins and really the questions of, "a," does apple have the components to fulfill demand on the premium end? if so that'd be great. and are they going to get the comp on apples and watches given
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stores have opened this year >> i think that frames it pretty well more broadly i think the question is will a consumer that is increasingly pressured by high interest rates and perhaps some difficult comparisons from a year and two years ago when they were home and spending on consumer electronics, will apple be able to continue to engage and command dollars from this consumer that's the real question and extends not just to iphone but also more broadly to macs and ipads, which have had a really good year during the pandemic and over the last year and it's one to watch. it all goes back to how healthy is the consumer? and ultimately is apple's positioning, product positioning target a somewhat more affluent consumer, able to continue to
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persist healthily going forward? >> the risk is seems apple stock is actually up more than 3% over the last 12 months which is pretty unusual what will it take for apple to go more in line with very strong companies like meek soft have done and is that in the cards even if the season is okay >> i think apple, you know, has commanded a view in investors minds that it's a durable consumer franchise and that earnings will not be impacted as much as other companies. so if we do see increments of weakness in iphones or more broadly across its consumer offerings i do think we'll sea pull back in the stock, because right now investors are given apple the benefit of the doubt and saying this a great franchise, consumers like their products and we think they can hold up through a more difficult economic period. if apple is not able to deliver on that -- and that's why you're
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seeing some uneasiness in the stocks today you know, we have a downward revision albeit from just a week or two ago in terms of production expectation so if the fear is uh-oh, this might be catching up with apple and therefore maybe earnings and revenues are not as secure as we thought, sure, we're going to have the stock give back some unquestionably >> tony, i wonder how you're thinking about production costs. there's some reporting this morning that tsm had asked for a price increase and the giant said no. we know about some of the migration to india is that going to be material long-term? >> over time the migration to india is really diversification play away from china, and, you know, that's a multi-year process. i think in terms of input costs what we found historically until very recently is typically iphone margins had gone down despite the fact prices had gone
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up and part of that is inflation, part of that is that apple is putting more technology into each iphone, and so i think the historical pattern could ultimately persist which is that iphone margins and more broadly hardware margins will go down. now, i think the one thing that is certainly in apple's favor is that the pro continues to have very strong take out and pro margins are generally higher than base iphone margins in part because pro buyers tend to buy more storage so i see potential input cost increases given inflation, but i also see a pro mixed to the pro which should help offset that. >> did you answer your question then, how is that to the consumer if they are buying the
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pro, and how much credence do we put into that bloomberg report that talked about a softening of expectations we've had reports in the past that made investors jittery. apple goes onto blow everyone out the water. certainly a different macrobackdrop. >> i think investors have to be really careful about early data around the cecal i think the best test to that was four years ago in 2018 when apple itself provided guidance on number one for iphone, and then on january 1, just two months later had a significant negative preannouncement so even later in the cycle apple itself with all the information in the world and trends that they see in their products was not able to gauge iphone demand properly and so i -- you know, i think both on the upside when people got excited about a pro makeshift and production going
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up and today on the down side, oh, production isn't going up, i think investors need to bide their time a little bit. it's very early in the cycle that being said, if the bloomberg report is correct and that apple is now starting to see perhaps a downward trajectory in their expectations, that does worry me because often when a product of any kind goes on a certain trajectory and that trajectory is starting to deviate away from your forecast, that's generally not a good sign. >> we've got to leave it there tony, thank you. >> and if you missed part of the show do not forget to follow and subscribe to our podcast you can listen anytime, anywhere wherever you download podcasts tech check is back in a moment
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one more thing before we go. cnbc is out with a list of names screened that investors are betting heavily against. they have short interest that's at least a quarter or more of the flow that's the number of shares available for general investors to buy or sell two tech names in the top ten are asana and michael strategy both have just a third of their
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short floated as of august carl, that could mean some volatility if they move higher they might end up moving a lot higher or mean the accident. >> meantime, guys close to session highs. bulls are going to try to make another run here at 3700 busy day on the half with chan chanos and delivering alpha let's get to the judge carl, thanks very much and walecome everybody to the half time report we're live from cnbc's delivering alpha conference here in new york city we have a big line-up today. famed short seller jim chanos is going to join us in a few moments. front and center the apple fallout on iphone production cuts the stock is as you know getting hit hard as a result we're going to debate the ramifications for the market overall if the las


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