Few things make the stock market’s ears prick up like an Apple Inc. (NASDAQ:AAPL) earnings report, which is precisely what will occur later today when Apple divulges how well its sales have performed over the last quarter. When these figures are released into the public domain, we will get some idea of how well the new iPhone 5 has been received by the public.
The general perception is that the iPhone 5 has been a huge hit. The queues around the block alone when it was released would seem to signify this, but early indications regarding sales figures have also pointed to it being a potentially record-breaking device. However, this good news for Apple Inc. (NASDAQ:AAPL) may be tempered somewhat by the fact that it is believed that the more affordable iPhone 5c model has not been as successful as Apple hoped.
Big Q1 for Apple (AAPL)
While earnings information is always taken very seriously by the city, and is also obviously a strong pointer to how well a company is doing, the latest release from Apple Inc. (NASDAQ:AAPL) will be viewed as particularly important. Apple was extremely busy between September and December, in what is often an extremely critical period for the consumer electronics giant. During this period in 2013 alone, Apple released two new iPhones, two iPads, new Retina MacBook Pros and the new Mac Pro. Thus, the sales results from all of these devices will give a very insightful indication to what we can expect for the company from the next 12 months, both in terms of sales and strategy.
Of course, in an era of immense financial sector speculation – in every sense of the word – the world’s markets don’t await news from Apple Inc. (NASDAQ:AAPL) meekly with no idea of what to expect. Every move of a huge corporation such as Apple is analysed, debated and then re-analysed in an attempt to extrapolate what is going on at its core. Additionally, leaks from the company – both intentional and otherwise – also give the market indications regarding what’s going on at Apple.
Thus, we already have a pretty good indication of what to expect from Apple Inc. (NASDAQ:AAPL) in terms of share price. The International Business Times reports that Wall Street expects Apple to post earnings per share of $14.09 (£8.50) on revenue of $57.5 billion. The figures were gathered by Reuters, who interviewed a collection of city analysts in order to collect them. This would be a pretty decent result for Apple given that it would represent an increase of 2 percent and 5 percent respectively from their 2012 figures for the quarter.
Apple’s iPhone 5c conundrum
Although the general news is cheery, the purported failure of their 5c device will naturally be a concern for the company. The iPhone 5c was intended to sell to a market which were looking for a more affordable iPhone, with the company recognizing that one potential criticism of its output was a lack of affordability for members of the public with less disposable income than average. Apple Inc. (NASDAQ:AAPL) doubtless observed that less dear offerings from the likes of Samsung has done particularly well in the smartphone market and were doubtless hoping to rake back a little of this market share.
However, it would appear that based on the financial results that are expected that Apple has not been as successful as it would have hoped at establishing the 5c as a ‘bargain basement’ iPhone. Herein lies one of the anomalies of brand recognition; Apple Inc. (NASDAQ:AAPL) is recognized as a quality brand, thus it attracts customers looking for a premium product. It would seem to be logical then that if the opportunity to purchase an Apple product at a lesser price comes up that there will be more sales.
Unfortunately, this doesn’t necessarily work out in reality, as those who really want an iPhone want the best model, and others wanting a more affordable option perhaps firstly consider Apple’s products to be over-priced in the first place, and secondly think that there are offerings which deliver more bang for buck elsewhere.
Thus, if the figures turn out as expected then Apple will have to give the 5c and the whole concept of releasing an affordable smartphone some serious consideration in the next twelve months. It seems entirely implausible that they will shelf the concept, but it may need to be re-jigged, or released at a new price point in the future if the concept is to be a success.
Record breaking sales
Although the 5c’s results may not be ideal, elsewhere all of the indications for Apple Inc. (NASDAQ:AAPL) are of a highly positive period for the tech manufacturer. When Fortune polled a collection of city analysts on Apple’s fortune for the quarter, the consensus of opinion was that Apple will have passed the critical 50 million iPhone shipments figure for the first time in Q1. In fact, the average estimate was over 55 million, which would be an extremely positive improvement of 16 percent from last year’s final figure of 47.79 million.
Thus, though we can expect the news from Apple Inc. (NASDAQ:AAPL) to be tinged with some negatives, there is pretty much always room for improvement for any company. The figures expected from Apple are actually pretty spectacular, and indicate that their flagship product, the iPhone, emphatically retains its enduring appeal.