compete with that. in some cases i would say like in africa, we are setting up a can -- a platform against convenience, working with technology companies and others to create a platform of our own, but for the most part we will be playing on the platform of someone else. ♪ caroline: and they are out already, guys. we welcome you to "what'd you miss?" with apple earnings crossing the bloomberg. iphone revenue, it's a mis-compared to where the market had expected it. this is a fiscal fourth-quarter with ipad revenue coming in ahead of expectations. mac revenue coming in just shy of expectations. earnings-per-share, bang in line, overall that

fourth-quarter revenue is a miss versus the 84 $.7 billion with wearables and accessories coming in shy as well. service revenue, this is where the future growth remains, yesterday it had been 17.57. they've already returned during the quarter. coming in with plenty of money to get back to the investor base, seeing services at an all-time high with revenue up 30%. it's a miss and the mark -- market therefore sent it lower after hours. taylor should mark taylor: it's really interesting. you can't discount an iphone cycle, as dan talked about, with some of the bullishness and despite the supply chain issues, that religionists is a fourth or big upgrade that's still underway. let's wood all with our

bloomberg senior analyst, as well as jeremy ryan at gradient, which has $4.2 billion in assets under management. bringing us in here, what stands out to you? >> it's supply chain related. we have to figure out how many iphones they can ship in the next six months. everything else takes a backseat. we all know that the demand is there. the economic cycle is good. 5g upgrade. carrier incentives are there. from all those things, we don't see this as demand issues, but a supply problem. >> it has been short of expectations. does that concern you without the forecast ahead? anurag: one of the ways to think about the iphone apple

ecosystem, it gets delayed. the question is, can they ship it fast enough for people to have it in their hands during the holidays and? caroline: it's notable that they called it strength of ecosystem driving the act of system, they need to depend on customer loyalty for people to wait for products. jeremy: yeah, customer loyalty is essential to them. what you are seeing with amazon and apple, the people who rely on supply are a bit challenged. with that ship shortage on the apple side, as your analysts said, it's probably the way of what happened here. that's the shortfall. the demand for the ecosystem services is better than expected and the people using them are using them more frequently and that's great but now we have to get them in hand.

whether that is this quarter or months from now, that's what we need to figure out. when we will start getting shipments on a more regular basis. services continue to be a bright spot for the company. how are you thinking about that as they come in below expectations? the thought on wearables is much more, does it keep people stickier? do you use them more to access more services should mark that's what the higher multiple is for. when it was just a device company worried about shipments, it was a lower multiple but now it's a higher multiple as they recognize the recurring revenue on the services side. if it gets you to do more in their ecosystem, that's a good

thing. we have to monitor to make sure that people are actually attaching themselves to these. this quarter is a little light but i think that's much more of a supply problem than a demand problem and i think that will get alleviated and if it causes them to use the services more, it's great for apple in the long term. on wearables, facebook talking about how their wearables will bring them into the meta-verse. looking at the apple strategy, are you happy with their competitive strategy? -- standing? if you look at these -- jeremy: if you look at these independently and were to take them out to be independent companies, the fact that it is under apple, selling so many iphones, that makes it look more challenged, if you will, but independently these would be ravaging successes. i look at it and am happy

because if at the end of the day it gets the people who are iphone users to become watch users and airpods users and all the other subscription services coming out, that's just better and better for the stock and it is what we would want to own it for. caroline: they are not giving guidance for the current period. anurag: it's the whole thing, we don't know where the parts are going to show up and the biggest thing to think about is when can we expect it to be resolved? three months to six months? the year will be ok. otherwise it will be a peak year and everything gets pushed on to next year, the iphone 14. the next two quarters are critical for them, if they can get the parts and ship the iphones. taylor: when we think of pricing power, it's unparalleled for this company, but anecdotally i ordered the m1 laptop and they

threw in free ipods, which is interesting, they are a company that doesn't have to do that. is it to get you in the ecosystem because they have the pricing power? anurag: i think it's customer satisfaction. apple and amazon think of customers before anything else. there's a reason iphone users don't go anywhere else. they will wait a long time to get their next equipment. once you go to an, you just don't go back. that's a reality. sonali: we all know what that feels like. apple and amazon selling off on the news. what do you do? time to buy or is there more to go to meet a more realistic value? jeremy: yeah, it can happen any point and we will see what happens tomorrow, but nothing that came through here, it's not selling the stock, typically the honest with you.

looking at the main thesis and the drivers of what we are looking to invest in, it's still there. the ecosystem was better than expected and we think the supply concerns will alleviate themselves at some point and i don't think that the demand is going away anytime soon. amazon, now we are into two quarters of this a bit here, again coming off a year where everyone was stuck at home. when you are stuck at home and can't do anything, you will buy more things on amazon. looking at sporting events and things like that, they are full and when you do that, you don't spend as much on amazon and i think there's a component to getting through that a bit here, but still none of the stuff that came out here now is thesis changing, in our opinion. if the stock looks as such, we would be a buyer on those opportunities. caroline: what do you want to hear from the call in particular? home, accessible, wearables, is it what you want

to hear about? anurag: i want to hear the timeline. i know there's a shortage. how can they resolve it? get better than everyone else and how soon can they do it? in my mind if this goes into summer, the year is gone and we have a bigger problem in terms of total revenue and shipments. it's a matter of how soon they can resolve this. caroline: quickly, route -- taylor: quickly, returning funds, dividends, is that the right use of cash for a company that wants to be cash neutral? >> cash is something i don't worry about with either of these companies. they can spend like crazy and generate a ton of cash. it's the question of what is their best use of that cash? there is a component of buyback that they can do in there. neither of these companies are insane with acquisition. amazon recently did a decently large one for them but compared to the market cap it's

relatively small. how they use the cash, if they choose to add to the dividend or give buyback, they have plenty of leeway and will generate plenty of cash in the future and will be able to invest a business. amazon nearly doubled their fulfillment centers from any other company and they still have that cash position. so i'm not worried about cash for either of these firms. caroline: so great to have you on these days, jeremy, anurag, going to let you go and get onto the calls to dig a little bit. coming up, we are going to talk about the tax implication coming towards these companies. biden is releasing a new plan outline. 15% minimum tax on corporations and we will break down the impact on large companies like amazon and apple. this is bloomberg. ♪

caroline:caroline: we have course just got numbers out of apple. increasing revenue by 30% year on year, not enough to meet the market expectations, so they missed on total revenue and iphone revenue an revenue as well, many feeling it is a supply chain issue and they are clearly looking to focus in on that, moving closer to their goal across the lifecycle. talking up the power of the iphone 13 line-up, really not talking about the supply chain woes everyone wants to hear about without giving guidance on the fiscal quarter that we are

currently in, returning $24 billion to shareholders. currently off after hours. taylor: taylor: within the big tech earnings we got some news out of d.c. and that is what i want to go to next, as we think about what the equity markets have been focusing on, the headwind of uncertainty around d.c. policy that may become a tailwind with stimulus in here we got a framework from biden today that includes a minimum tax on corporations with a 1% surtax on stock buyback over $10 million with parts of the millionaire's tax not the billionaires tax and of course we are hoping for the infrastructure bill that could come with the spending and revenue to offset it. let's deeper into the tax plan with lori davidson, our -- laura davidson. it's notable, what's important is what is included as well as what was not included in the bill.

laura: yeah, this was a step forward in terms of finding out what people think is important. the surtax on the high earners, not the billionaires tax, the tax on unrealized gains that would hit tech founders. one of the big things that was kind of unexpected until a couple of days ago was this corporate minimum tax. they will put a minimum 15% levy on corporations that have a lot of tax credits and deductions, hitting tech, pharma pretty hard. those industries are all able to use the r&d deduction to whittle their tax bill down to zero and it would make a big difference for these companies going forward. sonali: you are so clued in, minute by minute. how close is the framework to a deal? laura: not that close. it still just a draft. there are unanswered and

unfinished issues in the bill with paid family leave, some democrats still pushing for the billionaires tax. it was something biden wanted to have today as he started his overseas trip but it didn't represent democrats being ready to sign on to a deal. caroline: u.s. is one of a handful of countries that doesn't have paid federal leave. where is congress likely to vote in all of this? laura: that's really the big question, they said they wouldn't vote of that until the social spending bill is ready to go in we are looking at weeks possibly months until it's ready. caroline: we want to thank you, laura davidson, keeping yourself extremely busy. returning to the fact that apple and amazon, massive companies that have been singled out for maybe not paying put some would say is their fair share of tax.

here to discuss how that framework affected the compensate -- conversation around big tech, big companies, [indiscernible] who handles offshore tax abuse and corporate misconduct. we need your expertise here. we now have an administration and indeed, perhaps across the board, a congress that is keen to see big companies pay big tax bills in the united states. are we closer to getting there if there's a 15% global minimum tax rate? >> i do. both of those companies are known for not paying their fair share. in 2013 carl levin and john mccain a hearing with apple showing that they had set up three irish subsidiaries and made sure that they were not taxed in any country, sort of the holy grail of corporate tax avoidance, triggering a

worldwide conversation about how operations ought to be paying their fair share in the countries where they do business. taylor: is that tax enough to get us there? is it a good start? elise: it's a good start and it's based not just on the trips that you can take about reporting the income you have with the irs, but it's about how much you look at the money that you report to your shareholders, which is a big change. >> earlier an investor privately told me that taxes were already reduced, right? they can been -- they can be then increased again with little pain to investors because we would be back to where we were before. do you think that there is more room still to have corporations pay more in this country? >> clearly there is. under the trump administration,

all the corporate tax revenues went down. there's plenty of room, these companies are making huge profits, for them to contribute to the infrastructure that they all need in order to succeed. >> of course, most countries sign up for this within the oecd and you even managed to get the likes of ireland on board, agreeing to this. the 15%. the rules though are always the joy of accountancy to certain extents, finding legitimate legal ways in many ways, a fiduciary duty to your shareholders, some would say, applying the most limited way to pay or tax dues. where will they go? can you see loopholes where we would see companies managing to lower their effective tax rate? elise: we haven't seen the

language yet, so we don't know, but those countries are going to be doing the infrastructure, the court systems, the law enforcement they all need to. sonali: i wonder if any special considerations should be made. how are these tech companies doing it, moving the profits abroad? elise: there has been a lot of gameplaying. apple is the poster child for that, playing between the court and irish law and when it became public it really triggered a worldwide conversation about the tricks that were going on and how corporations were playing one country off another so that they didn't have to pay their fair share and i think that people around the world, countries around the world can't afford that and are sick and tired of it. that's why 130 countries signed on to this 15% minimum corporate tax. taylor: we are also in the

middle of her earnings, hearing from apple and amazon, increasing wages on employees as well to hike the minimum wages they are paying now. any sort of goodwill built-in for hiking wages and, then of course, you are paying maybe fewer taxes, lower taxes? or is there ample opportunity to do both? elise: when you look at the payments being made to the executives, the gap between what executives get and what workers get is so gargantuan, there's still a lot of ill will in that area. amazon alone in 2018 had $11 billion in profits. not only did they pay zero in taxes, they actually got a tax refund. there tax rate is minus 1.2% and the next year they had her team billion dollars in profits. the tax rate was 1%. last year they made $20 billion

in profits and for the first time they actually paid some tax , about 9%, but that's half of the corporate rate in this country and of course still way below the 15% minimum. there's a feeling that these corporations are still not paying their fair share and they have plenty of profits to do it. taylor: elise bean, really appreciate your time. you guys, of course we had into continuing to looking at shares of apple lower on the day. i think the key stand out here is the service revenue that has been one of the star out performers, the iphone and the supply chain crunch that has hurt some of these devices. we continue to see that within shares of apple. pivoted to that similar conversation with amazon about higher costs, higher wages, higher elation. how much is that continuing to

pressure the bottom line is we think about some by chain impact into the key holiday season? oath of the shares are lower of course in after hours trading and we will have a lot of final thoughts on these as well. caroline: we will. this is bloomberg. ♪

caroline: let's get back to it. we have digested amazon and apple that oath missed in terms of expectations in the market, but guys, it's easy to forget when these companies miss, they actually bring in stupid amounts of money. i'm looking at revenue climbing 30% for apple. revenue is up 15% for of amazon. $125 billion, 100 $10 billion for the fiscal third quarter.

taylor: we don't wake up and an analyst doesn't suddenly have a buy on the stocks. >> and they are ready to spend it, to. 250 thousand dollars into the holiday season. caroline: we look at the costs, though, too. this is bloomberg. ♪

>> from the heart of where innovation, money, and technology collide, this is "bloomberg technology" with emily chang. emily: welcome back to "bloomberg technology," coming up in the next hour, out with the old and in with the meta, mark zuckerberg goes all in,

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