Apple released its fourth quarter results in fiscal year 2020 today. According to the report, Apple’s total net revenue in the fourth quarter was $64.698 billion, up 1% from $64.40 billion in the same period last year; net profit was $12.673 billion, down 8% from $13.686 billion in the same period last year. Apple’s fourth quarter revenue in Greater China was $7.946 billion, down 28% from $11.134 billion in the same period last year. < p > < p > after the release of the results, apple management held a conference call with CEO Tim Cook, CFO Luca Maestri and Investor Relations (Senior) director Nancy Paxton to attend the conference and answer analyst questions. Thank you, Shannon. Can you tell me more about China? Luca maastri just mentioned services in various regions. But can you talk about the trend of apple in China? Tim Cook: Thank you, Shannon. If you look at China and the last quarter, I’ll explain the last quarter and this quarter together. Last quarter, we saw strong double-digit growth in our non iPhone business throughout the quarter. For the iPhone, you need to look at it in two parts. The first is before the middle of September, which is the time node for our iPhone release in previous years, and it is also a time when consumer demand drives iPhone data growth. < / P > < p > of course, there were no new iPhones shipped in the last two weeks of September, resulting in the overall unsatisfactory data. But the underlying business in China remained very strong in the last quarter. If you look at the data we publish, it may be quite different from what you think. In terms of this quarter, combined with the explanation of the last quarter and the momentum we have gained, and equally important, the initial data we saw on the iPhone 12 and the iPhone 12 pro, I can tell you that we are confident that we can achieve growth in China this quarter. Therefore, we are very optimistic about the current development. There are also some information that I can share with you. In the last quarter, our channel side inventory reduction was more significant in China than in other regions. This also makes the data in China different from other regions. In addition, new products in the same period last year accounted for a higher percentage of our iPhone sales than in other regions. I hope these can help you understand our situation in China. As for the Chinese market, 5g in China is developing very fast. It is expected that by the end of this year, China will complete the construction of 600000 5g base stations. Therefore, the time for us to enter the Chinese market is just right. Combined with our popularity in the Chinese market, we are very confident in China’s performance. < / P > < p > Cook: we are doing our best to provide the best experience for iPhone users. To this end, we have been working closely with operators around the world to ensure that iPhone coverage, battery and phone quality are excellent. So far, we have completed 5g test with more than 100 operators in more than 30 regions. As a result, 5g is already common all over the world. 5g will continue to cover more areas in the future. There will be new changes every week. So things just get better and better. Of course, there must be some places that develop faster than others. But we think it’s the right time for us to launch 5g devices. < p > < p > Deutsche Bank analyst jeriel ong: what I want to ask is about seasonality. Over the past five years, month on month growth has generally been around 50%. Do you think the growth will be more significant this year after the launch of new products? Luca maastri: there are some differences between this quarter and the past. First of all, as I mentioned before, the release time of iPhone is different from usual. We released two new iPhone models, the iPhone 12 and the iPhone 12 pro, in the fourth week of the quarter, and then two more models, the iPhone mini and the iPhone 12 Pro max, in the seventh week of the quarter. So, when looking at growth rates, you need to keep this difference in mind. As for other product categories, we expect double-digit growth. Therefore, we are very confident in the current development. We started taking reservations five days ago. Although there is not much data to share, we think there are many advantages for the iPhone and for the entire cycle this year. The best iPhone we have ever had. The iPhone installation base is huge and continues to grow. All of this is unprecedented. Obviously, 5g is also a once-in-a-decade opportunity. In some markets, especially in the United States, operators are very active. It’s good for consumers, and it’s good for us in the end. So, based on the current situation, we are very optimistic about the future. Thank you for sharing. I also have a question of strategic direction. The apple one service bundle is intended to bundle multiple services together. I want to know, and then some investors often ask me, can we bundle Apple’s hardware together? If service bundling is feasible, is hardware bundling also feasible? If not, is it because bundling hardware does not bring the same benefits as service bundling? < p > < p > Cook: for hardware bundling, there is no information available today. But we do think that people tend to pay a portion of their hardware each month. As a result, our stores and online sales offer installment options. Because of this, some channels also sell hardware based on monthly payment. For some buyers, this is a bit similar to the subscription model, because they are used to using a mobile phone for a period of time, and then use the residual value of the phone in exchange for the purchase subsidy of the new phone. Then in terms of services, consumers often ask us whether we can provide a more simple and convenient way to directly purchase all services? Of course, we want to serve users better. So we thought about apple one. Katy Huberty, Morgan Stanley analyst: new technologies, including chips that support 5g, have put some pressure on costs this year. But in this product cycle, the average selling price of the new iPhone is basically unchanged. What’s the difference between the margin of iPhone 12 and the past product cycles? < / P > < p > maastri: first of all, we do not provide a forecast of the gross margin level for the product category. But as I mentioned earlier, we expect the company’s gross profit to be in line with last quarter as a whole. Then, last quarter’s performance, as you can see, is relatively strong. Because we sell new phones at basically the same price. But at the same time, we have brought new technologies to new mobile phones. I want to say that the commodity environment is very good. It has been several quarters, and the commodity environment has not been so good. I don’t have to say that foreign exchange will be a negative factor for this quarter. As we have said, foreign exchange will not affect this quarter. Because we are confident in the sales performance expectations, strong performance can offset the foreign exchange factor. Moreover, I also think that the change of gross profit rate is also very good. While providing better technology, we can still achieve the same level of gross profit rate. I think this is what investors expect. < / P > < p > Katy Huberty: let’s talk about the service business again. Of course, it doesn’t rely on a single business, but historically, licensing and other services have been the driving force of growth and the source of advertising revenue. In view of Google’s antitrust pressure, what do you think is the potential risk of reduction in other segments of the licensing and services business? Do you think there are any opportunities for other services to make up for any potential weaknesses? < / P > < p > Cook: we have launched many services in the past few years, and we are also vigorously promoting Apple TV + and apple news + and apple arcade, and later Apple card. We just launched Apple fitness +. There are also many services that were launched earlier, from the app store to icloud, which performed very well. Therefore, there is a lot of room and potential for development here. I don’t know what the outcome of Google’s antitrust lawsuit will be. But I think it will take a long time to see the results. Amit daryanani, evercore analyst: just now you mentioned that the installation base of iPhone has reached the highest level in history, and the satisfaction is also very high. And our data shows that the iPhone replacement cycle is lengthening. Do all these factors make you more confident that we can usher in an extended period of iPhone revenue growth? < / P > < p > Cook: we are very, very optimistic about the current cycle. Because when you look back at what we’ve done, you can see that we’ve released four iPhones for the first time, and everyone can find the one that suits them. It’s also the most powerful iPhone family we have so far. Our user base is really huge, loyal and growing. We are also trying to get new users. I am very optimistic about this. In 5g, we are facing a once-in-a-decade opportunity. So when I think about all of these factors, when I look at the initial data for the iPhone 12 and the iPhone 12 pro, I know we’ve got a good start. < / P > < p > Amit daryanani: Luca, I have another question for Luca about the gross profit rate of the service. The gross profit margin of services has been maintained at a high level. I’d like to know if the 67% gross profit margin is sustainable? And what do you think are the two or three factors that maintain a high gross margin? < / P > < p > maastri: obviously, we are very satisfied with the level of gross profit rate of services, with a year-on-year growth of nearly 300 basis points. The reason, of course, is that we are increasing service revenue, so we are also accumulating advantages through these services. As I have explained before, our service portfolio has different profit margin characteristics. So, depending on the mix of products, we can see a corresponding increase in profits. But we are also constantly introducing new services, and we need to make a lot of investment in new services. But we have proved that, for example, this year, we have launched a lot of new services and made the necessary investment, but we still have the ability to expand the gross margin. Therefore, we are confident in the development track of services, and we are very happy to see that consumers have responded to all services. Because we see record breaking income levels in almost every category. So, all the dynamics and advantages we have in the service business are working and turning into profits. Samik Chatterjee, JP Morgan analyst: I want to start with the iPhone line. At the beginning of the year, you mentioned that sales of iPhones have all gone up because the US government has issued consumers with bail-out checks to stimulate consumption. So, do you see any change in consumer spending? Does the macro economy affect your view of iPhone sales, especially the new product line? < / P > < p > Cook: by mid September, consumer demand for iPhones had been growing at double-digit rates. Therefore, potential