Slowing iPhone Sales Upset The Apple Cart Again In Q2 by John Butters, Senior Earnings Analyst – FactSet

Apple will be a focus company for the market during this week, as the company is scheduled to report earnings today. For the calendar second quarter (fiscal third quarter for Apple), the current mean EPS estimate is $1.40, compared to year-ago actual EPS of $1.85. If Apple reports a year-over-year decline in EPS for Q2 2016, it will mark the second straight quarter that the company has reported a year-over-year decline in EPS. The last time Apple reported two consecutive quarters of year-over-year earnings declines was Q2 2013 through Q3 2013 (fiscal Q3 2013 through Q4 2013 for Apple).

iPhone Sales, Apple, AAPL

As a result of this projected decline in EPS, Apple is expected to be the largest contributor to the expected earnings decline for the S&P 500 Information Technology sector for Q2 2016. The blended (combines actual results for companies that have reported and estimated results for companies yet to report) earnings decline for the Information Technology sector is -3.9%. Excluding Apple, the blended earnings growth rate for the sector would be 2.2%.

iPhone Sales and Apple’s Growth

As of today, if Apple reports actual EPS equal to or below the mean EPS estimate for the quarter, it will mark the first time that Apple has been the largest detractor to earnings growth for the Information Technology sector for two consecutive quarters since Q2 2013 through Q3 2013.

Related Story: Falling Apple Pulls Down Tech Sector

What is driving Apple’s substantial contribution to the earnings decline for the Information Technology sector for Q2 2016?

iPhone Sales, Apple, AAPL

Over the past three years on average, the iPhone product segment has accounted for about 60% of the total revenues generated by Apple. From Q1 2014 through Q4 2015, the iPhone product segment reported average year-over-year revenue growth of 31%. However, last quarter (Q1 2016), the segment reported a year-over-year decline in revenues of -18%. For Q2 2016, the iPhone product segment is projected to report a year-over-year decline in revenues of -22%.

Read more about earnings trends in this edition of FactSet Earnings Insight. Visit www.factset.com/earningsinsight to launch the latest report.

Receive stories like this to your inbox as they are published. Subscribe by e-mail and follow @FactSet on Twitter. If you are looking to source FactSet data or analytics in your publication, email [email protected]

© Copyright 2000 – 2016 FactSet Research Systems Inc.