MacRumors

During today's earnings call covering the second fiscal quarter of 2019 (first calendar quarter), Apple CEO Tim Cook was asked about Apple's settlement with Qualcomm.

While Cook declined to provide color on how this will affect Apple's development plans in the future, he did say that Apple is satisfied with the resolution.

We're glad to put the litigation behind us and all the litigation around the world has been dismissed and settled. We're very happy to have a multi-year supply agreement and we're happy that we have a direct license arrangement with Qualcomm that was important for both companies. We feel good about the resolution.

Apple and Qualcomm reached a settlement in mid-April and agreed to drop all litigation in multiple countries around the world. Apple made a one-time payment to Qualcomm and inked a six-year licensing agreement to use Qualcomm's patented technologies.

The settlement also included a chipset supply agreement, and Qualcomm is expected to provide the 5G chips that Apple will need to introduce 5G connectivity in its 2020 iPhones.

While rumors have suggested Apple is going to add 5G in 2020, Apple itself has not confirmed those plans and Cook did not provide details on Apple's 5G timeline when asked. He did, however, say that Apple aims to get new technologies into products as soon as it can.

We look at a lot of things on the different technologies and try to look at and select the right time that things come together and get those into products as soon as we can.

After Apple and Qualcomm announced their settlement agreement, Intel said that it was dropping out of the smartphone modem chip market entirely, with no plans to manufacture 5G chips.

Apple today announced financial results for the second fiscal quarter of 2019, which corresponds to the first calendar quarter of the year.

For the quarter, Apple posted revenue of $58.0 billion and net quarterly profit of $11.6 billion, or $2.46 per diluted share, compared to revenue of $61.1 billion and net quarterly profit of $13.8 billion, or $2.73 per diluted share, in the year-ago quarter.

Gross margin for the quarter was 37.6 percent, compared to 38.3 percent in the year-ago quarter, with international sales accounting for 61 percent of revenue. Apple also declared an increased quarterly dividend payment of $0.77 per share, up from $0.73. The dividend is payable on May 16 to shareholders of record as of May 13.

In addition to the increase in the dividend payment, Apple says it has authorized another $75 billion for share repurchases.

This is the second quarter since Apple changed the way it reports its results, with the company no longer providing unit sales data for iPhone, iPad, and Mac. As a result, Apple is only providing revenue figures for its various segments, leaving analysts to estimate unit sales based on their own calculations.

“Our March quarter results show the continued strength of our installed base of over 1.4 billion active devices, as we set an all-time record for Services, and the strong momentum of our Wearables, Home and Accessories category, which set a new March quarter record,” said Tim Cook, Apple’s CEO. “We delivered our strongest iPad growth in six years, and we are as excited as ever about our pipeline of innovative hardware, software and services. We’re looking forward to sharing more with developers and customers at Apple’s 30th annual Worldwide Developers Conference in June.”

Apple's guidance for the third quarter of fiscal 2019 includes expected revenue of $52.5-54.5 billion and gross margin between 37 and 38 percent.

Apple will provide live streaming of its fiscal Q2 2019 financial results conference call at 2:00 PM Pacific, and MacRumors will update this story with coverage of the conference call highlights.

Apple earnings call recap ahead…

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Apple is set to report its earnings results for the second quarter of its 2019 fiscal year at 1:30 p.m. Pacific Time today.

The quarter began December 30, 2018 and ran through March 30, 2019, according to Apple's fiscal year accounting calendar.

Apple's guidance for the quarter from January 29:

• revenue between $55 billion and $59 billion
  

• gross margin between 37 percent and 38 percent
  

• op. ex. between $8.5 billion and $8.6 billion
  

• other income/expense of $300 million
  

• tax rate of approximately 17 percent before discrete items

Apple's guidance suggests that it will report at least its third-best second quarter ever based on revenue:

• 2015: $58 billion
  

• 2016: $50.6 billion
  

• 2017: $52.9 billion
  

• 2018: $61.1 billion
  

• 2019: $55+ billion

Wall Street analysts forecast that Apple will report $57.4 billion revenue, above the midpoint of its guidance, and earnings per share of $2.36, according to 28 estimates averaged by Yahoo Finance.

What to Look For

• Investors will be looking for iPhone revenue and Greater China revenue to rebound after Apple issued its first revenue warning in 16 years last quarter due to fewer-than-anticipated iPhone sales, primarily in the Greater China region. Wall Street expects iPhone revenue to be around $30.5 billion, according to six estimates compiled by Bloomberg News.
  

• Any potential commentary surrounding Apple's settlement and chipset agreement with Qualcomm. Apple is expected to release its first 5G-enabled iPhones in 2020 with Qualcomm and Samsung modems.
  

• Apple's growing services category remains key. Apple's services revenue reached an all-time high of $10.9 billion last quarter, up 19 percent year-over-year. This category includes the App Store, Apple Music, iCloud, iTunes, Apple Pay, and AppleCare. Later this year it will expand to include the Apple Card, Apple Arcade, Apple TV+, and Apple News+.
  

• Apple's stock price has increased by approximately 30 percent since its last earnings report on January 29 and positive results could further support the rally. Many analysts are bullish on Apple, as they believe that Chinese consumer demand rebounded during the quarter.
  

• Apple plans to provide an update on its capital return program on its earnings call today. Many analysts expect a significant increase of between $50 billion and $100 billion and an increased dividend.
  

• Apple's guidance for the third quarter of its fiscal year, which is typically its slowest in terms of revenue.

Apple's CEO Tim Cook and CFO Luca Maestri will discuss the company's earnings results on a conference call at 2:00 p.m. Pacific Time today. MacRumors will loosely transcribe the one-hour call as it occurs live.

Apple's iPhone sales in China were down 30 percent during the first quarter of 2019, according to new shipment estimates shared today by Canalys.

Apple shipped an estimated 6.5 million iPhones during the quarter, marking its worst decline in two years. It shipped fewer smartphones in the country than Chinese vendors Xiaomi, Vivo, Oppo, and Huawei, coming in as the number five brand in China.

Huawei, the top vendor in China during Q1 2019, shipped 29.9 million smartphones for 34 percent market share. Huawei saw impressive growth during the quarter, with smartphone sales up 41 percent. Other smartphone vendors in China also saw drops in smartphone sales, though not as dramatic as Apple's decline.

Apple held just 7.4 percent market share in China during Q1 2019, down from 10.2 percent in the year-ago quarter. According to Canalys analyst Mo Jia, introducing features like 5G is "vital" to prevent ‌iPhone‌ demand in China from shrinking even further.

Apple's performance in China is concerning, given that the worst quarter for iPhone shipments is usually Q2 or Q3, not Q1 when new devices are still fresh. Apple has acted to cut iPhone retail prices, which has largely relieved the pressure from its channel partners. Despite the iPhone's installed base in China being well over 300 million, it is vital that Apple prevents users deserting it for Android vendors. Apple faces a challenge in China to localize its software and services offerings as quickly as in Western markets. Its hardware is therefore more exposed to competition in China than elsewhere. Bringing up-to-date features, such as 5G, next year, as well as localized software is vital to prevent demand shrinking further.

Overall smartphone shipments in China fell to 88 million units, the market's worst performance since 2013 and a three percent drop from the year-ago quarter. Huawei managed significant growth in China through increased investments in brick and mortar stores, a wider offering of consumer IoT devices, and penetration of rural markets with low cost smartphones.

Apple is set to announce its earnings results for the second fiscal quarter of 2019 (first calendar quarter) this afternoon. Apple is expecting revenue between $55 billion and $59 billion, a decline from the $61.1 billion reported in 2018.

Apple is no longer disclosing ‌iPhone‌, iPad, and Mac sales, which means there is no longer access to specific sales data to confirm analyst estimates.

Facebook will launch a new desktop app for Messenger on both macOS and Windows later this year, according to a since-deleted blog post spotted by French blog iGeneration ahead of Facebook's annual F8 developer conference.

A screenshot of the Windows version of the app reveals that it will look rather similar to both Skype and Apple's own Messages app on Mac. Facebook said Messenger Desktop will have many of the same features as the mobile version of the app, including support for group video calls and collaboration.

Facebook is expected to unveil the desktop app alongside several other new Messenger features at its F8 keynote today at 10:00 a.m. Pacific Time.

Update: Facebook's blog post has been republished after Messenger Desktop was unveiled at F8 as expected.

CNET has a video of the announcement:

In a new support document, Apple has indicated that its legacy photo editing suite Aperture will not run in future versions of macOS after macOS Mojave. The support document provides users with steps to migrate Aperture libraries to Apple's newer Photos app for Mac or Adobe Lightroom Classic.

Apple ceased development of Aperture in June 2014 and removed the software from the Mac App Store in April 2015 after the launch of the Photos app for Mac. However, the application continues to function on macOS Mojave for users who still have it installed, albeit with some performance limitations.

As part of the transition from 32-bit to 64-bit, certain media files created using older formats or codecs will also be incompatible with future versions of macOS after macOS Mojave. Apple has shared instructions on how to convert incompatible media in iMovie libraries and Final Cut Pro X and Motion projects.

Foxconn is broadening investment in MicroLED display technology in a bid to win orders from Apple for future iPhones, according to a report from the Chinese-language Economic Daily News (via DigiTimes).

MicroLED is widely considered to be Apple's next step after OLED, which it currently uses for the Apple Watch and iPhone XS. MicroLED displays have many of the same advantages that OLED displays have over LCDs, including improved color accuracy, improved contrast ratio, faster response times, and true blacks – given both have self-lit pixels.

However MicroLED displays are thinner, brighter, and more energy efficient than OLED panels. MicroLED displays also have inorganic gallium nitride-based LEDs, which have a longer lifespan than the organic compound used in OLED displays and should make them more resistant to burn-in issues.

Apple's interest in MicroLED was first reported in 2014, when it acquired MicroLED display maker LuxVue. The following year it was discovered that the ‌iPhone‌ maker had also opened a secretive laboratory in Taoyuan, Taiwan to research display technologies like OLED and MicroLED for future devices.

In 2017, the company reportedly scaled back its efforts at that center, possibly switching to a facility closer to home: Apple is believed to have a secretive manufacturing plant in Santa Clara, California, where it is designing and producing display test samples using MicroLED technology.

It will likely be a few years before MicroLED displays appear in Apple products – perhaps one year for the Apple Watch and two to four years for the ‌iPhone‌ – once MicroLED displays can be mass produced both reliably and affordably.

When that time comes, Apple will likely outsource full-scale production of the displays, and Foxconn is clearly planning to pick up at least some of the business, if today's report is anything to go on.

Sprint and T-Mobile have announced an agreement to extend the deadline for their proposed $26 billion merger deal to July 29 (via Reuters).

The extension was revealed in a filing with the Securities and Exchange Commission, and means that the two carriers now have more time to get the proposed merger approved by both the Federal Communications Commission and the U.S. Department of Justice.

The Justice Department's antitrust division has been exploring whether the deal would result in a major threat to competition. Earlier this month, Justice Department staff members reportedly told Sprint and T-Mobile that their planned merger is unlikely to be approved as it is currently structured.

However, in an interview on CNBC, Justice Department Antitrust Division chief Makan Delrahim said he had not made a decision regarding the T-Mobile and Sprint merger and is waiting for more information from the two companies.

"I have not made up my mind," he told CNBC. "The investigation continues. We've requested some data from the companies that will be forthcoming. We don't have a set number of meetings or a time line."

"If the case is there for us to challenge a transaction or suggest changes, we will do that," he said. The division is reviewing the argument that the deal would allow the combined company to produce a better, faster 5G, the next generation of wireless, he added.

T-Mobile and Sprint first announced plans for a merger in April 2018. If approved, the merger will combine two of the four major wireless carriers in the United States, giving the new company nearly 100 million customers.

With discussions ongoing, Sprint and T-Mobile may be willing to offer concessions that include assets sales to get the government to approve the merger plans.

However, other challenges await the two carriers, with multiple state attorneys prepared to launch lawsuits if the Justice Department doesn't end up challenging the merger, according to sources that spoke to The Wall Street Journal.