Three Things To Watch When Apple Reports Quarterly Earnings

Apple Inc (AAPL) Information Technology – Computers & Peripherals | Reports January 31, After Market Closes

The Estimize consensus is calling for earnings per share of $3.24 on $76.96 billion, 2 cents higher than Wall Street on the bottom line and $30 million on the top.

iPhone Sales

The iPhone remains Apple’s biggest catalyst, accounting for two thirds of its revenue in any given quarter. The phone largely struggled for the past 2 years due to limited appeal of the iPhone 6s and increasing competition. However, investors believe the recent release of the iPhone 7 can put these ongoing concerns to rest. Because the phone became available in the final weeks of the fiscal fourth quarter, this marks the first full quarter of sales from the newest iPhone. It also coincides with the holiday season which is traditionally Apple’s strongest quarter. Factset estimates Apple sold 78 million phones during the quarter, up from 74.8 million in the same period last year. Phone sale will either need to meet or exceed expectations for Apple to return to growth in the upcoming report.

Other Products

Excluding iPhone sales, Apple’s other products are expecting to struggle. The rest of Apple’s 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 sold 9.27 million iPads, signifying a 6.2% drop from the same period last year. . 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.

Mac sales were just as disappointing, declining by nearly 17% in the fourth quarter. Apple’s new macbook released during the quarter hopes to buck the trend of weak sales. Give Apple’s price points, it’s hard to imagine a flood of new and preexisting customers rushing to buy a $1500 laptop.