Apple Inc. (NASDAQ:AAPL) is scheduled to release its next earnings report on July 26 after closing bell, and already data is pouring in from all sources on what to expect. All eyes are watching China and iPhone sales in addition to the regular metrics.

China a key market for Apple (AAPL)

Apteligent released its June report covering data for Apple Inc. (NASDAQ:AAPL) this week. Among the topics covered is China, which was a major negative point in the company’s last earnings report. Revenues there plunged 26% in the March quarter and the firm warns that the June quarter may not have been much better. The iPhone 6 remains the most popular device in China, according to the firm’s data, which looks at device usage.

This is particularly interesting as many bulls base their thesis for a strong iPhone 7 cycle despite a lack of huge new features on the fact that it will be the two-year mark since the iPhone 6. Of course on the flip side of this argument, we can see that still many Chinese consumers are using older iPhone models.

Apple AAPL
Courtesy: Apteligent. Used with permission

The firm also reports that while it looked like there was solid growth during the first quarter in terms of iPhone units, the growth was actually flat compared to previous quarters when comparing the two tables.

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Courtesy: Apteligent. Used with permission

Here’s how the usage by device has changed over time in China, according to Apteligent:

Courtesy: Apteligent. Used with permission
Courtesy: Apteligent. Used with permission

The firm also notes that the reason the growth in the iPhone SE was so large was because it’s coming off a base of zero. Also the iPhone SE only made up about 1% of total device usage in China during the June quarter, which means it has yet to really take off there despite early signs that it is doing well. Of course Apple Inc. (NASDAQ:AAPL) would certainly rather sell an iPhone 6s than an iPhone SE, as Apteligent estimates that the company must sell almost two SEs to match the revenue from every 6s it doesn’t sell. However, other firms have suggested that margins on the iPhone SE might not be as bad as some think.

iPhone SE versus iPhone 6s

Most Wall Street analysts agree that strength in the iPhone SE is offsetting weakness in the iPhone 6s lineup. Deutsche Bank analyst Kulbinder Garcha said in a research note dated July 15 that he estimates that Apple Inc. (NASDAQ:AAPL) sold about 10 million iPhone SE units during the June quarter. He projects 40.7 million total iPhone units, representing a 14.4% year over year decline and 20.5% sequential decline with impacts from an inventory drawdown.

He also expects a return to unit growth with the iPhone 7 starting in the fall with growth in the installed base driving the unit growth. He expects Apple to sell 207 million iPhones in the 2016 calendar year, representing a 10.8% decline, and then 215 million units in 2017 before accelerating to 250 million iPhones in the 2018 calendar year.

Other expectations for Apple’s (AAPL) earnings report

Garcha believes Apple Inc. (NASDAQ:AAPL) will post $41.2 billion in revenue and earnings of $1.39 per share for the June quarter when it reports on July 26. Those numbers compare with the consensus numbers of $42.3 billion and $1.38 per share. He has an Outperform rating and $150 per share price target on Apple stock.

Looking further out, the Deutsche Bank analyst believes Street expectations for iPhone units in the December quarter could be too high, however, as he expects the iPhone 7 cycle to be rather muted. The Street currently expects $73.2 billion in revenues and earnings of $3.15 per share for the December quarter, compared to Garcha’s estimates of $67.8 billion and $2.89 per share.

Shares of Apple Inc. (NASDAQ:AAPL) stock edged higher 0.12% to $98.91 during afternoon trading on Friday.