caroline: apple earnings crossing now with services revenue at $19.52 billion ahead of expectations. first quarter revenue, all in. it's a big beat. especially on the first quarter earnings-per-share against the estimate. overall iphone revenue is coming and strong with product revenue coming in strong. mac revenue, 10.8 billion versus nine point 5 billion and wearables are at 14.7. i'm sure that everyone is going to -- romaine: i'm sure that

everyone is going to nitpick over this but that headline revenue, even with the breakdowns of the other revenue services here, these are phenomenal numbers by any stretch of the not -- the imagination. taylor: and tim cook continues to talk about the record results made possible by this most innovative lineup of services ever, grateful for the customers and that goal to become carbon neutral he says but it's unbelievable when you talk about these services driving double digit growth in revenue and earnings to an all-time high on an install base of active devices, this company continues to shine. romaine: why do people bet against apple? our guest joins us now to help walk us through the earnings. i feel like every quarter we go through this, people get down on apple, they say it's so big, no growth left in the company, tim

cook can't do more and they find a way to do more. looking at the numbers now, did they meet expectations? >> they meet and exceed, to be honest. i'm very happy. the iphone numbers did very well there. the supply chain, you can say the issues seem to be behind them and it should set them up for a very good next financial year. caroline: talk to us about the supply chain behind them. how are they may -- managing to -- to whether this against -- better than other countries -- companies? anurag: it's a big question in the truth is they do get preferential treatment amongst the manufacturers but the issue is still, can they still make up those iphone numbers? as i said, we are getting a

missed -- mixed signal on the supply chain side but these numbers give us the comfort that there is broad growth across all categories. look at the services revenue. this is spectacular and it should pacify investors for a couple of quarters. taylor: a company that targets net neutrality, with cash blooming to $202 billion total debt migrating downward, leaving a gap of about $100 billion or so. they are continuing to talk about their dividend of $.22 per share, maintaining that. what do they do to reach that sort of cash debt neutrality target? anurag: it's a mix of buybacks and dividends. i don't think any company out there is quite so big in terms

of the free cash flow numbers in the only thing they can do honestly, you can't buy anything in the market in terms of m&a, all you can do is buy back your shares and keep on putting out more dividends. romaine: is there an argument to be made that they should be putting the cash to work in a way that is maybe more longer-term productive than just giving it back to shareholders stock buybacks? anurag: services is where they should be thinking and they have. that's the right way to do it. i am actually against them getting into the car to business that has, like it or not, something like 20% to 30% gross margins where the services business is 70% gross margins. i like that kind of world.

caroline: talk to us about geographies, they were up everywhere except in japan. where is more important to them at the moment? we are always very focused on that china number of course. anurag: frankly speaking the last six months to nine months being about supply chain challenges, it won't be so much about the demand-side. if the global economy is robust, the demand-side is taking care of. it's the issue of fulfilling their orders and for me it's broad taste, less concerned about one geography over another. taylor: big picture, there were concerns that tim cook isn't an

of eight of enough. strong consumers response over recent products, has there been enough recent product innovation at this company to really ink about that big diversification? anurag: the one thing that we don't talk about is the macbook m1 ship. the freed book -- feedback i get from that ship compared to anything produced outside, it's phenomenal. they are gaining so much market share in the pc market, but we don't talk about it because it doesn't move the needle as much. but frankly speaking, that particular product itself, anyone getting pc or computing equipment will most likely go for a mac in the future. romaine: to put a point on your statement there, i have heard from a lot of people that cover the company, that chip really did sort of revitalized demand for some of those mac books in a way that we hadn't seen in quite

some time. i'm curious as to how much apple can sort of take that over into its other products, the physical hardware products, if at all. anurag: it's really one of the most important things and really, we don't care about this. every time it's on the services in china, what it can do in my view is substantially improve the margin profile of some of these products if they can somehow take care of a lot of these parts and design them better. why can't they outsource that design and let others make it? they are not in that business. they like to control the ecosystem themselves. they have done a much better job than intel when it comes to the chip business. romaine: thank you for joining us now to go over those earnings coming across on apple and of course there is a broader conversation to be had here about the supply chain issues,

issues that tim cook had warned about prior to this. they don't necessarily seem to be reflected in the numbers as we talk about the company working to bring that production in-house and increasing dependence on outside components in here to discuss the shift is the partner of the american practice head of technology and cloud services over at a company where she advises on semi conductor and supply chain strategies. all right, let's be bold. if tim cook called right now and said what can he do better to address the supply chain any advice that you would give to him? the supply chain shortage is still very much real and -- anne: the supply chain shortage is still very much real. across the industry we will be talking about this, even through this year when we start to see

relief and into 2025, where we could have a bumpy road on the supply chain for semi conductors. overall industrywide, demand for these semi conductors is up 15% in 2021 spread across industries . that doesn't meet the demand that's out there. we are seeing shortages across smartphones and automotive, an industry that we are watching closely. the semi conductor supply chain shortage is one that companies will have to stay on top of and really think about how they change their supply chain strategy in the long-term to address the problem that will be with us for quite a while. taylor: let's talk about that. if you are global in heaven economy of scale with reach, you can handle this better than anyone. are you seeing companies that are bigger, global in scale, able to weather the storm, diverging from the ones who just

aren't able to do it? anne: one thing that is unique about the semi conductor value chain is that it is very consolidated in terms of who offers what service. looking across each aspect there really are only a few suppliers there globally supplying these chips to all these different industries. scale definitely helps in these supply chain conversations if you are bigger as opposed to a smaller player but part of this is there are so many different types of chips produced on so many different types of technologies, what an automotive company needs might be very different from what a leading edge data center might need. there is a lot of shared capacity that is unique, which is what makes things pervasive right now. scale helps but i think your supply chain strategy helps as well. caroline: and clearly even though they were constrained in

their perspective, they managed to rake in a phenomenal amount of revenue and indeed, sales. not all companies are equally made to navigate supply chain woes. apple, bringing the chipmaking capability in-house, are you likely to see more and more companies start to do that or not? anne: this interesting trend is around how companies are thinking about the design of semi conductors. apple is looking at it, some of the cloud service providers are looking at it, but it really gets down to the design of the chip and how they are trying to target it for their specific products or workloads. they are still manufacturing it. some of those founder providers are still manufacturing the chip for everybody. it's a real trend that we want to watch. the budget manufacturing shortage involves eight of --

design element with chips that might be more targeted to their needs. romaine: broadening this out to the automotive sick -- sector, we know that vehicle demand is strong, but to get enough chips to sort of put into these things not only raises questions about short-term supply but really long-term supply. the amount of chips needed for cars or consumer electronics will be infinitely larger than what we needed even just two or three years ago here. what does it mean for the buildout of capacity? are we prepared to do that? are we already doing that? anne: that's a great question and if we look at the amount of capacity being announced, it's almost doubled. if you think about the amount of capacity capex that went in over the past five years, it was $230 billion globally.

looking at what's been announced for the next five years, it's 450 billion dollars, doubling almost a medic capacity people are willing to put in place. now an important part of that is there are many different types. a lot of that money goes to the leading edge. the type of silica that you need for your smartphone data centers . automotive uses more mature technologies for their needs and a lot of the money to his being targeted at the bleeding edge and there is a need to add more capacity to the more mature technologies that have been out there for a while and are really important for these things. i think that governments are going to be playing a pretty important role in this. we have seen announcements across the u.s. and europe as we try to not only expand capacity but diversify it to have a more resilient footprint. caroline: great to get your expertise. meanwhile, a ceo interview being done by tim cook with dow jones.

and they say that the problems will lessen in the current quarter. more, plenty more on apple, higher after hours. this is bloomberg. ♪

romaine:romaine: apple posting record quarterly sales in its fiscal first quarter, basically the holiday quarter at the end of december here, coming in well above expectations here. mac, ipad missing slightly, but

wearables revenue, services revenue, all the main metrics pretty much across the board. caroline: we also have to think about antitrust as well. you got waves of love is -- legislation and litigation coming their way. epic games, remember? all-important head to head there in the way that the overall app store is run. the senate judiciary panel opening it up last week? going and hard from a lobbying perspective but with so much cash to put to work, what can they do if they can't buy anything? taylor: analysts saying that this company is generating $90 billion to $100 billion in free cash flow globally and maintaining that cash neutral target for the long term, if you cannot buy, you

return to shareholders and you continue to buy some of the shares out in the open market. could there be m&a, caroline? i know we want to bring in the next guest but breaking news first? caroline: very quickly, home depot naming a new ceo, ted decker from march 1, 2020 two. new to the retail space, the company continues to do rather well for our wants and needs of improving our homes. the current chairman and ceo will continue to serve. taylor: let's get to our guest. bill teaches antitrust and contract law and was formerly a member of the ftc and chair the agency from 2008 to 2009. professor, is it clear that, you know, pretty obvious there isn't further emanating that these big tech companies could do?

they can -- bill: they can continue to buy companies but there are bigger cautions for them. it's a popular theory in the enforcement circles today that you want to keep larger established companies from purchasing smaller companies with innovative ideas that could ultimately threaten the status quo. one set of transactions destined to get a much closer look in the coming years are those that involve relatively small enterprises that have particularly innovative ideas that in some way could be seen as future threats to incumbents. another category of transaction that is probably out of the question is the acquisition of arrival that entrenches your position in a particular market segment. that could be throughout your existing range of products. it could be for new products that are coming out in which you could be deemed to have accomplished a reinforced

position of great significance. if you work jan that i suspect there is still a considerable area in which you can buy and sell but those are two areas of activity that are surely more closely under the regulatory spotlight today. romaine: there are also antitrust issues about how apple gates its own community here. there's a massive install base and we know about the lawsuits out there as to how it ran the i store -- itunes store and the roadblocks they put out there. is there a sort of feasible and viable legal argument to be made that what apple has done is wrong? bill: they tend to be much debated but i would not call them mainstream theories. they do exist.

for example, even in the case with epic, the basis on which the trial court found they had infringed of the law was the state of california unfair competition law. the court said that even though there wasn't a violation of federal antitrust laws, the state of california law prohibited apple from operating in the way that it had to. so, there are, i would say in the u.s. a series that would establish liability that tends to be difficult to prove and as well the company has to think about two other possible threats. one, foreign competition authorities will come at them with laws that are more generous in allowing prosecutors to establish infringements. and as you mentioned, there is the possibility that we get new legislation in the united states and we face that certainty of new legislation for so-called gatekeepers in europe, where the digital markets act is coming our way and will affect the

behavior of apple and other large forms. existing antitrust doctrine does not provide an easy way for plaintiffs to win, but i suspect the bigger concern around the corner is that we will have new regulatory regimes setting limits on what they can do. caroline: we've got less than a minute but generally do you think they will have to change their business model, in europe in particular? bill: absolutely and i suspect they are already doing that. the european model has the possibility for the competition law in the privacy regime with brussels setting the regulatory standards that will apply globally and i think apple and others are going to have to end to them. yes. taylor: bill, really appreciate your time and thoughts and perspective. we will be back next with your final take. this is bloomberg. ♪

romaine: the triple take today was on apple, they pretty much eat across, i don't know, pretty much beat across everything here in the reaction from the market, i thought it would be a little bit stronger. shares are up 3% but you kind of wonder what will happen when you get to that 5% conference call. caroline: why are the nasdaq futures not higher? why when this is the biggest market cap s&p, why are they not rallying on the back of this? taylor: i thought the professor said it well, they can make targeted m&a but nothing to further entrench a decision or show regulators that they are further solidifying the position in the market. romaine: tim cook really warned about those supply chain numbers, but it didn't show up,

so i'm wondering what the magic trick was where they were able to get this all out the door. caroline: it's been phenomenal. "bloomberg technology," up next with who would have thought, a little bit more apple for you. have a great day. this is bloomberg. ♪ every day in business brings something new.

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>> do you think that electric vehicles could reach 10% of the american market by the end of this year? >> that's, that's difficult to say, like you said. it will be both not only demand, but based on the demand we are seeing for our vehicles and the rest of the industry is seeing, it feels like the demand is certainly there. but the question will be how quickly can we, all of us, execute to build capacity to meet the demand? that is what we are very busy doing in the next 24 months. we expect to get to about

600,000 battery electric units globally and that's before the bigger investments we are making in kentucky and tennessee, both for batteries and assembly coming online. they don't come online until about 2025. ♪ >> from the heart of where innovation, money, and power collide. in silicon valley and beyond. this is "bloomberg technology," with emily chang. emily: i'm emily chang in san francisco and this is "bloomberg technology." another record for apple despite supply chain issues, we will break down their quarterly report. robinhood results are out one