emily: welcome to a special edition of bloomberg west and we have breaking news, apple earnings just out, and we're taking a look at those numbers are 47.5 million iphones sold in the third quarter. that is slightly lower than as -- then estimates. what is your take on these iphone numbers? >> the number estimates, $1.84

versus $1.80. the average is about $1.16. on the top or bottom line it was a mess. obviously the iphone sales were a little bit lower than expected. emily: earnings per share did beat this is not atypical of apple. >> and other really interesting number is the china sales of 13.23 billion dollars. there has been so much concern about the china economy at the big stock market plunge that we saw over the last quarter. emily: what is standing out to you? julie: we have the ensemble of everything, and we can pick out what is most interesting.

first of all, the company's earnings per share coming in for sense of estimates. apple tends to be estimates. it is that i vote number. 47.5 billion iphones in the third quarter, the estimate was for 48 port a million phones. apple depends so heavily on the iphone, so if it has lower sales than estimated, that is a bubbly -- probably a problem. on the other hand, the average selling price with weeks -- $699.91. the ipad average selling price was below the estimate. the estimate about $426. 4.8 million macs sold over the third quarter, that matched estimates. we are also getting at least one number that is a forecast for

the recorder. it is one that is pretty much in line. gross margin forecast for 30.5% to 39.5%. right at the midpoint. the number that really stands out to me has to be the iphone number. 47.5 million. emily: this is typically a slower number for iphone sales. we're expecting them to unveil new iphones in september. i want to throw it to bob in san francisco. i am also looking at the china number, $13.23 billion in china sales and they have become a greater and greater portion of the overall revenue. does this numbers jive with you were expecting given the volatility you were seeing of late? >> the china economic impact did in fact apple.

that had an impact on those iphone numbers. what we saw from the isp is the fact that the iphone 6+, the really big screen, the most expensive price is really driving the sales. what i am seeing from this, and i agree that the iphone number is the big question. this is the beginning of some challenges for the smartphone market in general. not for apple, but for a lot of people. that is the concern we have to watch for. emily: one of the things that has been happening in china, as although the smartphone market is saturated, the space is actually accelerating. apple says they have sold more watches the first nine of the ipad's first nine. i want to bring in our analyst we just put out a report on the watch today. does this number me but to you? you said that 90% of the watch owners are satisfied with it.

>> it speaks to the high levels of customer satisfaction of apple's products. we were estimating that they wouldn't sell more than the ipad at launch the current generation is now the largest seller for a first generation product for apple. our goal, since we are not going to get hard numbers around sales, is to look at our current owners satisfied and the resounding answer was yes they were. emily: bill down in aftermarket trading. what is your take away? >> a little million here and there and a product that is selling 200 million dollars a year is not a major shift either way. we have the most dominant tech product in the world do generally well. that is why the watch to me is probably still a relatively minor product in the industry.

it is not something we are going to see as a major driver of apple earnings in the near future. emily: i like my watch, but i love my iphone 6. i want to bring julie back into this. julie: in terms of the watch, i wanted to mention a couple of other comments. they are coming from an interview we are doing with the cfo of the company. he says that they want exceeded sales expectations in the past quarter and more than 100% of the other revenue categories the rise there was because of the watch. he is speaking about this other category because we do that apple was going to love in the watch revenue with this other categories. it was not going to break it out. but i'm looking at this for the third quarter and what i and the here is $2.6 billion of revenue. he is saying more than 100% of that increase is coming around

the watch. i also want to point out, as we look at the action in the shares in the after hours, the company for the fourth quarter is coming out with a revenue forecast. it is not unusual for apple to be cautious with this forecast. but it is saying that fourth-quarter revenue will be at most $51 billion. the estimate from analysts were the $21.1 billion. slightly below, but partially responsible for the decline we are seeing in the shares. emily: they will start selling the watch in more locations. >> i wonder about the overall impact on the market. $750 billion market cap, i'm looking at the nasdaq 100 etf, which in after-hours trading is down 0.9%. those reactions are not necessarily accurate and it is clearly a straight line down in that. cap all caps for 4% of the in the spider etf is down 0.3% in

after-hours trading. if these numbers keep going, it could be a weak market tomorrow. emily: some of these reports up and coming up about the apple car. apple is now hired an executive from chrysler, they are working on some sort of electric car project. how optimistic are you about what they are working on now and does it matter? >> the car is the very interesting development, but this is five years away, it takes that long to start developing a product like a car. they are putting the pieces in place to explore this very seriously. and they are going to do a lot of iterations on it. there will be a lot of talk about this as they hire people and do prototypes or component elements. they could partner with another car vendor, perhaps for the engines, and another piece themselves. there is al qaeda possibility.

-- there are all kinds of possibility. i think it is much longer term. in the near term it will feel the iphone. the watch is psychologically important, but financially it is nothing. emily: apple shares down more than 7%. the iphone still the most important driver of revenue for apple. his he watched still a niche product, and is apple over dependent on the iphone? >> they have a wide product category, but it is all about the iphone. the growth that we see in china and for all categories, the goal overtime will be diversity across the categories. the point is, this is the first quarter where we have stories for the watch. we can do reverse engineering. but this is a quarter over quarter story for the other categories for us to have another number of quarters for

growing, shrinking, but revenue wise it is not the biggest driver out there. it will be a small chunk of that going forward. it is still largely about the iphone. that is where the growth story comes from. >> this is a company that is under a microscope all the time because it is the biggest company. every investor is the product. so they said under 40 million of the sales could suggest slowing momentum. i still think you have to look at the big picture. this company is beautifully positioned for the long-term. there may be a short-term blip in terms of expectations and reality. but in reality, there is nothing worrying about apple based on what we learned now. emily: iphone numbers will be what everybody looks at, slightly below, although they did give a clue about the apple

watch selling more watches in the first nine weeks than a soul of the ipad -- then they sold of the ipad. thank you for joining me. up next, microsoft earnings are out as well. we break down how the nokia write-down impacted revenue. plus in earnings dropped the most in almost nine years. ♪

emily: welcome back. we have been covering earnings out of apple. selling 47.5 million iphones in the last quarter, slightly less than the 48.8 million estimated. apple forecasting 49 to $50 billion in the coming year. we are continuing to monitor apple and we will be listening into the call momentarily. i want to turn out to microsoft and the company reported disappointing earnings for the fourth quarter of its 2015 fiscal year. the $7.6 billion right down for a nokia purchase preventing a profit. the write down pushing them into $2.1 billion in losses.

joining me now from san francisco, the meaning to director at ubs and arc into reading editor -- our contributing editor. these microsoft earnings numbers do not let particularly great. we did not expect a lot, with the restructuring of the business. >> the commercial cloud business has been the key measure we have been following for quite some time. i was not seeing anything as good as wallstreet wanted. we will have to wait or back to. act i was a delight coming in and cleaning. we do believe, as it relates to overall large-cap value stocks

that they are making the right moves. they are working in luck more productively than oracle and any other large-cap names we cover. there is exciting growth in stocks we are covering like salesforce or adobe. emily: how confident are you that they can get to this and a good amount of time? >> there is a debate today about private company versus public valuation. this may be a mild disappointment in terms of growth rate, but this is an $8 billion business growing and 88%. it would have a $55 billion market cap, standing alone. $8 billion business is growing 88%, that is a really good thing. it is a business that microsoft has to grow.

in the context of microsoft, which is humongous colossus, it is not big enough. that is a key area for him to be growing as fast as a yes regardless of the short-term disappointment. i am not a wall street person, i'm an industry watcher. on the macro basis, microsoft is moving in a very good direction. emily: what would you say about the windows 10 rollout happening next week. it is supposed to be a very big deal, offering to most people for free. but microsoft is changing. what you expecting with the windows 10 rollout? >> we think is a swing factor. the operating system, you do not pick up your iphone and say i love iowa, you say you love the apps and that it is reliable. but the os is becoming less relevant and it has shrunk from 30% of revenue to 15% of revenue. it will continue to shrink.

what matters is the application, the effort structure that microsoft is delivering, and we think they are spot on with what they're doing in office 365. as your is now a billion dollar business. when you look at the cloud assets that they have, they are way ahead of anybody else in their large-cap. emily: does it matter that from a big picture industry that microsoft is basically nowhere on phones? this technology giant does not have a major phone hardware mobility? >> they bought a company that led them to write down billions of dollars. it is a serious problem. they wish they had it. you have global and cloud is the macro industry directions right now. they are doing pretty well in the latter. they are essentially nowhere, on the other, that is a serious

problem. emily: is there a time where at some point we are going to say now we need to see some progress? >> i think you are progress. i think he is caught between the honeymoon, and as the company is evolving, he is making those transitions rate but he has made some great decisions when you look at -- he came out of the server business, and that is doing phenomenal. they are doing the right thing. but it will take time. you cannot move this overnight. emily: we will be waiting and watching for act two as it evolves and today, the largest ever net loss reported by microsoft. thank you for joining us. coming up, revenue growth in yahoo! is up, but the stock is falling in after-hours trading. we will talk to the numbers causing the drop, next. ♪

emily: it is now time for the daily byte, one number that tells a whole lot. today is -12.3%. that is how much silliness been wiped off of all comes stock this year. rethinking strategy, raising the possibility of a company split. a breakup has been talked about before, one scenario would keep the chipmaking business separated in the patent licensing arm. we will be watching tomorrow's

quarterly earnings report for clues about what is next. and yahoo! shares are falling at the company's or casted sales come in below analyst estimates. but the revenue beat estimates jumping to $1.4 billion versus expectations of $1.03 billion. that is 15 percent year-over-year. marissa meyer also waiting to -- pointing to growth in the maven businesses. they grew to over $400 million. the company's founder is still with me. we have to talk about the spinoff first because there are some indications that the spinoff may not go as planned if the irs does not say we are going to not tax you. what is it? >> in all likelihood, you will see it happen. whether the negotiation or

discussions going back and forth but investors have been counting on this for a long time. i do not see a scenario where they are not able to get this deal done, based on the work they have done this far. emily: what is your take on marissa mayer and the job she has done? >> let's put it this way. yahoo! is worth more than zero or negative rate if you add up the cash they had in this valuation, basically the valuations are nothing. that is crazy. emily: what is it without alibaba? >> a really good advertising company. maybe not the leading one, the most impressively growing one, but it is an impressive advertising company with a lot of unique users a day. i would go back to the point about private versus public companies.

any private company right now at 600 million users uniquely every day, even if they had not figured out how to make money, would be cherished by investors. this one is being treated like a nobody because everybody is focusing on alibaba, and maybe there is the sexism about laura said. i think she has a higher bar that she has to meet and other ceos. emily: you think because she is a woman she has to get a higher bar? >> shocking. >> i do not agree. i think marissa has done a great job at this company by any measure. however, what you are starting to see in this company is the battle they are going to have to fight to be relevant. they have to do to things. they have to spend an enormous amount of money to grow their revenue, as she said in the press release and she will say on the call. they have to new services, faster than anybody else with

them to maintain that growth rate and attract new users. they are one of the only companies left, them and ebay, and obviously google, who went from web 2.0 to web 3.0 at scale. they have to spend like crazy to make themselves relevant in this new world. but it's tough to do. you're seeing it in the numbers. >> what about the fact that they have a negative evaluation for their core operations? if they have done such a good job? >> the path of gold associated with alibaba has clouded the entire judgment on what's there core business is. emily: we will have to leave it there. we could debate this for hours. i will be jumping on the apple earnings call in just a few minutes. tomorrow it is all about qualcomm. ♪

announcer: from our studios in new york city, this is charlie rose. charlie: we begin this evening with our continuing coverage of the iran nuclear deal. the united nations security council unanimously endorsed the agreement and authorize the lifting of economic sanctions. the u.s. secretary of defense, ash carter, arrived in israel to meet with the country's leadership. prime minister benjamin netanyahu is one of the most critical of the deal. it has been received negatively from a broad spectrum of israelis of various political backgrounds. ari shavit is a popular columnis