Apple Inc. (NASDAQ:AAPL) will report its earnings for the three months ended June 30 this afternoon after the market closes on Wall Street. The company earnings report is generally one of the most highly anticipated earnings reports in each quarter, and today’s release is no different. Over at Forbes today Tero Kuittinen takes a look beyond the hype, and tries to figure out what the Apple Inc. (NASDAQ:AAPL) results tell us about Europe.
Europe has been a strong market for Apple Inc. (NASDAQ:AAPL) ever since it launched the first iPhone back in 2007. The company has managed decent revenue growth on the continent, 11 percent YoY in the most recent reported quarter, despite the economic hardship that prevails there. Results from other smart phone manufacturers already reported make today’s report less than predictable.
Rival Decline
As Kuttinen points out, Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) and Research In Motion Ltd (NASDAQ:BBRY) (TSE:BB) showed year on year revenue declines. Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) said that its device sales on the continent dropped by around 9 percent. Apple is not immune from the effects of the wider economy despite growing a luxury brand in the midst of a worldwide depression. Investors should pay close attention to European results in this afternoon’s report.
Europe does not seem to be on the verge of any sort of recovery. The continent is still struggling to solve the problems on its periphery, and problems in the core present themselves as a ticking time bomb from time to time. If Europe, Apple’s second biggest market, refuses to get better, Apple Inc. (NASDAQ:AAPL) sales will start to slow.
Apple and consumer spending
Europe is in a poor position to support Apple Inc. (NASDAQ:AAPL) sales, but the continent has still managed to demand a large amount of the company’s smart phones and tablets despite the economic problems there. In a deep recession, however, consumer spending is going to be hit. Just because it hasn’t managed to drag Apple Inc. (NASDAQ:AAPL) down yet doesn’t mean the company will not be hit in the near future.
With Asia and North America apparently doing quite well in terms of consumer spending during the June quarter, it may seem obvious that Apple Inc. (NASDAQ:AAPL) will beat its iPhone shipment numbers. Weaknesses in Europe should not be ignored, however, and investors should be wary of the damage lack of demand from Europe might cause.
