Apple CEO Tim Cook attends the annual session of China Development Forum (CDF) 2018 at the Diaoyutai State Guesthouse in Beijing, China March 26, 2018.
Jason Lee | Reuters
Apple shares fell over 3% on Thursday, following a 4% decline on Wednesday, after several reports suggesting that Chinese government workers could be banned from using Apple iPhones.
The reported restrictions, which have not been publicly announced by the Chinese government, raise concerns that Apple’s products could get caught up in international tensions between the U.S. and China.
Greater China, including Hong Kong and Taiwan, is Apple’s third-largest market, accounting for 18% of Apple’s 2022 revenue of $394 billion. It’s also where the vast majority of Apple products are assembled. Apple declined to comment.
China has ordered officials at central government agencies not to bring iPhones into the office or use them for work, The Wall Street Journal reported on Wednesday, although it was unclear how widely the bans were issued. The ban could spread to other state companies and government-backed agencies, Bloomberg News reported on Thursday.
While a ban on all government employees could reduce iPhone unit sales in China by as much as 5%, Bernstein analyst Toni Sacconaghi wrote in a Thursday note, it would be a larger threat to Apple if the bans sent a signal that everyday Chinese citizens should instead use electronics from Chinese companies.
“Perhaps more importantly, restricted use of iPhones among government employees could negatively impact sales among consumers (related family members; general populace) and could be part of a broader move by the Chinese government to promote usage of domestic technology,” Sacconaghi wrote.
Dan Niles, portfolio manager at Satori Fund, said on Thursday he sold his stake in Apple and is now shorting the company, citing the possibility of a government iPhone ban and increased competition from Huawei.
New competition
Last week, several Chinese retailers started taking orders for a new Huawei phone, the Mate 60 Pro, which quickly became a hot topic on social media in the country.
The phone starts at 6900 RMB, or about US$954, and uses a Chinese-manufactured chip from Huawei’s chip subsidiary, HiSilicon. Early tests suggest that the phone can access 5G speeds, although Huawei’s specification pages don’t mention it.
Huawei was placed on the U.S. entity list in 2019 over fears that its technology could give the Chinese government backdoor access to communications. The move requires U.S. companies like Google and Qualcomm to get permission from the U.S. government before supplying Huawei. The sanctions significantly hampered Huawei’s phone business, which was rising before the sanctions, forcing it in recent years to spin off some of its phone brands and contributing to a $12 billion shortfall back in 2020.
Huawei’s new phone has a chip, manufactured on China’s mainland, that uses the 7-nanometer production process. Smaller production processes tend to translate to faster and more efficient chips. This year’s upcoming iPhone is expected to use a 3nm process, manufactured by Taiwan Semiconductor, and Apple first went with a 7nm process to make its A12 chips, which were used in new iPhones in 2018.
But Huawei’s chip raises questions about how well separate restrictions on chip manufacturing technology, which aim to prevent Chinese companies from making cutting-edge processors, are working.
“From my perspective, what it tells us is that the United States should continue on its course of a ‘small yard, high fence’ set of technology restrictions focused narrowly on national security concerns, not on the broader question of commercial decoupling,” Jake Sullivan, U.S. national security advisor, said Tuesday in a briefing.
In Apple’s most recent quarter, ending in June, Greater China sales grew 8% on an annual basis to $15.76 billion. It was Apple’s fastest-growing region. On the company’s earnings call, Cook said Apple was seeing users switch from Android phones to iPhones, mentioning that was “at the heart” of Apple’s results.
“We continue to try to convince more and more people to switch because of the experience and the ecosystem that we can offer them,” Cook said.
Google chief executive Sundar Pichai speaks during the tech titan’s annual I/O developers conference on May 14, 2024, in Mountain View, California.
Glenn Chapman | Afp | Getty Images
Google will start using artificial intelligence to determine whether users are age appropriate for its products, the company said Wednesday.
Google announced the new technique for determining users’ ages as part of a blog focused on “New digital protections for kids, teens and parents.” The automation will be used across Google products, including YouTube, a spokesperson confirmed. Google has billions of users across its properties and users designated as under the age of 18 have restrictions to some Google services.
“This year we’ll begin testing a machine learning-based age estimation model in the U.S.,” wrote Jenn Fitzpatrick, SVP of Google’s “Core” Technology team, in the blog post. The Core unit is responsible for building the technical foundation behind the company’s flagship products and for protecting users’ online safety.
“This model helps us estimate whether a user is over or under 18 so that we can apply protections to help provide more age-appropriate experiences,” Fitzpatrick wrote.
The latest AI move also comes as lawmakers pressure online platforms to create more provisions around child safety. The company said it will bring its AI-based age estimations to more countries over time. Meta rolled out similar features that uses AI to determine that someone may be lying about their age in September.
Google, and others within the tech industry, have been ramping their reliance on AI for various tasks and products. Using AI for age-related content represents the latest AI front for Google.
The new initiative by Google’s “Core” team comes despite the company reorganization that unit last year, laying off hundreds of employees and moving some roles to India and Mexico, CNBC reported at the time.
AppLovin shares soared almost 30% in extended trading on Wednesday after the company reported earnings and revenue that sailed past analysts’ estimates and issued better-than-expected guidance.
Here’s how the company performed compared with analysts’ expectations, according to LSEG:
Earnings per share: $1.73 vs. $1.24 expected
Revenue: $1.37 billion vs. $1.26 billion expected
Net income in the quarter more than tripled to $599.2 million, or $1.73 per share, from $172.3 million, or 51 cents per share, a year earlier, the company said in a statement.
Revenue jumped 43% from $953.3 million a year earlier.
AppLovin was the best-performing U.S. tech stock last year, soaring more than 700%, driven by the company’s artificial intelligence-powered advertising system. In 2023, AppLovin released the updated 2.0 version of its ad search engine called AXON, which helps put more targeted ads on the gaming apps the company owns and is also used by studios that license the technology.
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AppLovin’s business has been split between advertising and apps, which is primarily made up of game studios that the company has acquired over the years. With the historic growth in its advertising unit, the apps business has become much less important, and now the company says it is selling it off.
“Today we’re announcing we’ve signed an exclusive term sheet to sell all of our apps business,” CEO Adam Foroughi said on the earnings call.
Later in the call, the company said it has signed a term sheet for the sale for a “total estimated consideration” of $900 million. That includes $500 million in cash, “with the remainder representing a minority equity stake in the combined private company.”
Advertising revenue climbed 73% in the quarter to almost $1 billion. The ad business was previously categorized as Software Platform. The company said it made the change because advertising accounts for “substantially all of the revenue in this segment.”
AppLovin said it expects first-quarter revenue of between $1.36 billion and 1.39 billion, exceeding the $1.32 billion average analyst estimate, according to LSEG. More than $1 billion of that will come from its advertising segment, as the company said it is “still in the early stages” of bolstering its AI models.
“The roadmap ahead is filled with opportunities for iteration,” the company said in its shareholder letter. “As we execute, we believe we can continue to drive value creation for our shareholders.”
Cisco CEO Chuck Robbins speaking on CNBC’s “Squawk Box” outside the World Economic Forum in Davos, Switzerland, on Jan. 22, 2025.
Gerry Miller | CNBC
Cisco shares climbed about 6% in extended trading on Wednesday after the networking hardware maker reported fiscal second-quarter results and guidance that topped Wall Street’s expectations.
Here’s how the company did against LSEG consensus:
Earnings per share: 94 cents adjusted vs. 91 cents expected
Revenue: $13.99 billion vs. $13.87 billion expected
Revenue increased 9% in the quarter, which ended on Jan. 25, from $12.79 billion a year earlier, according to a statement. The growth follows four quarters of revenue declines. The company said it had orders for artificial intelligence infrastructure that exceeded $350 million in the quarter.
Cisco now sees adjusted earnings of $3.68 to $3.74 for the 2025 fiscal year, with $56 billion to $56.5 billion in revenue. Analysts polled by LSEG had been looking for $3.66 in adjusted earnings per share and $55.99 billion in revenue. In November, the forecast was $3.60 to $3.66 in earnings per share and $55.3 billion to $56.3 billion in revenue.
Net income in the latest period slid almost 8% to $2.43 billion, or 61 cents per share, from $2.63 billion, or 65 cents per share, a year ago.
Revenue from the networking division totaled $6.85 billion, down 3% but more than the $6.67 billion consensus among analysts surveyed by StreetAccount.
The security unit contributed $2.11 billion. That is a 117% increase from a year earlier, thanks to the addition of Splunk. Analysts expected $2.01 billion, according to StreetAccount.
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Splunk, which Cisco bought in March 2024 for $27 billion, was accretive to adjusted earnings per share sooner than planned, Scott Herren, Cisco’s finance chief, was quoted as saying in the statement. Cisco’s total revenue would have been down 1% year over year if not for Splunk’s contribution, according to the statement.
Many technology companies have been trying to predict the effects from President Donald Trump’s newly established Department of Government Efficiency. But three-quarters of Cisco’s U.S. federal business comes from the Defense Department, while most of the headcount cutting thus far has occurred in other agencies, Cisco CEO Chuck Robbins said on a conference call with analysts.
“Everything seems to be progressing as we expected,” he said.
Customers do not appear to be pulling up orders before tariffs go into effect, Herren said on the conference call.
As of Thursday’s close, Cisco shares were up 5% so far in 2025, while the S&P 500 index had gained about 3%.