4 Things To Watch When Apple Inc. (AAPL) Reports On Tuesday

With Apple set to report its Q3 earnings after the close today (Tuesday 26), Investing.com wanted to provide you with data, charts and analysis from Investing.com’s Senior Analyst, Clement Thibault:

Apple’s forecast for Q3 2016 EPS is $1.38, on $42.1B revenue….

“Even compared to last year’s Q3, when Apple reported $1.85 EPS on $49B in revenue, this year’s numbers are lower; EPS is down 25% while revenue is down 14%.”

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iPhone sales lagging….

“Now that competitors have caught up and are keeping pace with Apple, consumers are beginning to see the “S” model for what it actually is—a revenue generating gap filler.”

Last quarter, Apple posted its first ever decline in iPhone sales. Indeed, the iPhone 6s has been the first iPhone that did not surpass its predecessor in sales. Worse still, the Samsung (KS:005930) Galaxy S7, probably the strongest iPhone competitor (sometimes referred to as the ‘iPhone killer’), has been selling extremely well—as of May 2016, Samsung accounted for 37% of smartphone sales in the US vs Apple’s 29%, according to Kantar Worldpanel. And coming up from behind are Huawei, now in third place, followed by Xiaomi, each looking to increase their own market share in this space. The fact that Samsung’s device is newly introduced might explain the delta in sales, however all of this should still be worrying news for Apple.

Focus on service segment growth….

“According to Credit Suisse, services will be AAPL’s next growth engine and will more than double its relative share of revenue to 30% of the company’s total revenue.”

iPhone SE: cannibal or savior….

“Unfortunately, the iPhone SE has been too successful, to the point where the flagship 6’s sales have been cannibalized, hurting margins from the significantly more profitable iPhone 6s.”

We don’t believe Apple will be able to replicate its once-in-a-generation trick of creating an entirely new market out of thin air. At least not under Tim Cook’s (so far uninspiring) watch.

For more info and data on Apple’s financials see below: