Apple Inc. (NASDAQ:AAPL) will post its March Quarter results after the market close on Wednesday April 23, where the company is expected to earn revenue slightly above the guidance and at high end of EPS.
Apple gross margin to compensate for decline in revenue
In January, Apple Inc. (NASDAQ:AAPL) posted lower number of iPhone shipments and March guidance was also below expectations. According to a report from Forbes by Chuck Jones, iPhones and iPads will decline sequentially “more than normal,” which will be partially counterbalanced by a higher gross margin. Gross margin is expected to be marginally above the mid-point of guidance.
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Revenue guidance from Apple Inc. (NASDAQ:AAPL) was between $42 and $44 billion compared to $43.6 billion in the previous year. Jones expects the company to generate $43.3 billion in revenue, a decline of more than 1% year over year, whereas the Street expects it to be $43.6 billion.
Gross margin guidance for Apple Inc. (NASDAQ:AAPL) was in the range of 36.5%-37.5% for the December quarter and increased to 37%-38% for the March quarter. Jones has assumed 53% of total revenue from the sales of iPhone, which is same as last year. Gross margin is expected to come down sequentially by 20 basis points from 37.9% to 37.7%. The report also stated that gross margin would have come down by 10 basis points last year, in March, if Apple did not have additional warranty accruals.
iPhone 5S, 5C China sales may disappoint
China is one of the most important catalysts for Apple Inc. (NASDAQ:AAPL) in deciding its performance. Back in December 2012, the Cupertino, California based company launched the iPhone 5 in China Telecom and Unicom in mid-December. The iPhone 5 sales are impressive, but for iPhone 5S and iPhone 5C, which were launched in September 2013 on the first day of availability, the same cannot be said when compared to the same quarter a year ago.
Japan’s NTTDoCoMo share of the iPhone 5s increased substantially from 35.5% in February while the share of 5C witnessed a marginal decline from 4%. Overall, carriers helped the company to boost iPhone sales from 39.5% to 46.6%, in one month while it was only 30.8% in December. This reflects that the partnership with NTT DoCoMo would improve the iPhone sales throughout the year.