Apple Inc. (NASDAQ:AAPL)’s expected 21 percent drop in earnings per share for the second quarter of the year is responsible for dragging down the entire information technology sector in the S&P 500. In fact, the sector is expected to have the worst earnings growth rate of all the sectors in the index during the second quarter, reports CNBC’s Alex Rosenberg.
Apple And Expectations For The Second Quarter
Poor expectations for Apple account for about half of the expectations for the sector’s negative growth during the quarter. According to FactSet, the IT sector as a whole is expected to decline by 6.3 percent in the second quarter, and Apple Inc. (NASDAQ:AAPL) along is expected to decline by 3.1 percent.
If Apple does as expected when it releases its next quarterly report next month, then it will post earnings of $7.36 per share, according to FactSet. In the same quarter a year ago, the company posted $9.32 in earnings per share. Of course it’s Apple’s massive size which makes it responsible for half of the negative growth that’s expected during the second quarter.
Apple’s History In The S&P 500
Of course it is important to note that although Apple Inc. (NASDAQ:AAPL) is likely to significantly drag the sector down in the second quarter of this year, it has had the opposite effect in the past. In fact, statistics from FactSet shows that Apple Inc. (NASDAQ:AAPL) was then the biggest contributor to the IT sector’s earnings growth starting in the third quarter of 2010 and going through the third quarter of 2012. In fact, Apple Inc. (NASDAQ:AAPL) made up the greatest majority of IT sector earnings growth in the last quarter of 2011 and the first quarter of 2012.
Analysts said it’s unusual for one company to so completely dominate an entire sector in terms of earnings contribution or detraction. They also say that if Apple can drag the sector down, then it has the potential to pull it right back up.
Analysts in general have a fairly positive view of Apple Inc. (NASDAQ:AAPL) going into next year. They believe the company will once again be an important contributor to the earnings growth of the IT sector. They expect new products in the second quarter of this year to spur growth once again at Apple Inc. (NASDAQ:AAPL) and carry it into next year.