What To Watch When Apple Inc. (AAPL) Reports Earnings

What To Watch When Apple Inc. (AAPL) Reports Earnings

Apple Inc. (AAPL) Information Technology – Computers & Peripherals | Reports April 26, After Market Closes

The Estimize consensus is calling for earnings per share of $2.01 on $52.06 billion, 4 cents higher than Wall Street on the bottom line and about $550 million on the top.

Value Partners Asia Bets On India In Hopes Of “Demographic Dividend”

Value Partners Asia ex-Japan Equity Fund has delivered a 60.7% return since its inception three years ago. In comparison, the MSCI All Counties Asia (ex-Japan) index has returned just 34% over the same period. The fund, which targets what it calls the best-in-class companies in "growth-like" areas of the market, such as information technology and Read More

AAPL iPhone Sales

The iPhone continues to be Apple’s Inc. (NASDAQ:AAPL) biggest growth catalyst, accounting for two thirds of its revenue in any given quarter. Concerns have been raised over the past few quarters that iPhone sales are beginning to deteriorate. After the runaway success of the iPhone 6, demand for the 6-month-old S version has fallen flat. Apple Inc. (NASDAQ:AAPL) responded by releasing the iPhone 5SE earlier this year, deviating from its typical phone release schedule. How this phone has performed over these last few months will be addressed in tomorrow’s report. Regardless, iPhone sales reached a record high of 74.8 million to kick off fiscal 2016. This however, was close to the sales peak Apple reached in the same period a year earlier. iPhone sales have typically been strongest during the holiday season. Apple’s Inc. (NASDAQ:AAPL) guidance for Q2 suggested this would be the hardest quarter for the handset, which could see double digit year-over-year declines in revenue.


More often than not, earnings from Apple’s Inc. (NASDAQ:AAPL) suppliers are a great indicator of iPhone sales. Last quarter, when iPhone sales began to slow, major suppliers didn’t immediately feel the effect. Semiconductors including Cirrus, Qorvo and Skywork Solutions, all of which produce chips or wireless solutions in the iPhone, posted earnings that were better than expected or right in line with estimates last quarter. That said, each of these companies missed their revenue numbers, many blaming waning iPhone demand. Going into Q1, each of these companies have seen both top and bottom-line expectations feverishly cut.

Other Products

Excluding iPhones, the rest of Apple’s Inc. (NASDAQ:AAPL) portfolio which consists of tablets, computers, watches and other electronic devices, constitutes one third of revenue in any given quarter. These products have struggled lately primarily driven by weakness in China, currency headwinds and low upgrade demand. Last quarter, Apple Inc. (NASDAQ:AAPL) sold 16.1 million iPads, compared to 21.4 million a year earlier. Upgrade demand for these tablets have been abysmal, so it makes sense that the iPad 2 is still the most widely owned iPad to date . Meanwhile, the Apple Watch has come with mixed reviews. Most tech savvy consumers know the second iteration is always better than the first, so the next version of the watch might be the spark that Apple Inc. (NASDAQ:AAPL) needs. Mac sales have also been disappointing, declining 2% in the first quarter. Unless Apple Inc. (NASDAQ:AAPL) makes a major acquisition or begins to pursue moonshot investments, like Google, then we might be in for more revenue weakness until new products are delivered.

Photo Credit: Tommy Klumker.

Updated on

No posts to display