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apple will report its second fiscal quarter earnings after the market closes on Thursday.
Investor expectations are low, and Apple could outperform even with slower sales growth. In February, Apple said it expected iPhone sales to be flat, with revenue about the same as the $94.84 billion in the same period last year.
Here’s what analysts expect from Apple, according to LSEG consensus estimates.
- Earnings per share: $1.50
- revenue:90.01 billion dollars
Here’s how Apple’s business units are expected to perform in the March quarter, according to LSEG estimates.
- iPhone revenue: 46 billion dollars
- mac’s revenue: $6.86 billion
- ipad revenue: 5.91 billion dollars
- Wearables, Home & Accessories Revenue: 8.08 billion dollars
- service revenue: 23.27 billion dollars
Analysts expect Apple to report revenue of about $83.23 billion for the current quarter, with an annual growth rate of 1.8%. Apple’s stock price has fallen about 10% this year, underperforming its peers and the broader market. Some people are worried that demand for the iPhone 15 in 2023 will be weak.
However, the biggest theme investors are paying attention to is the overall trend in China, Apple’s third largest market. In the December quarter, sales in Greater China, including Hong Kong and Taiwan, fell 13%. Analysts surveyed by FactSet expect sales in the China region to be $15.25 billion, down 14% from a year ago.
Worse, this downturn could signal a worsening of conditions in Apple’s key markets, where Apple makes the majority of its products. In the past year, Chinese government agencies have reportedly Apple has asked its employees to reduce their use of “foreign” devices (iPhones), suggesting that Apple may not have the backing of China’s state leadership.
Apple also faces increasing competition from domestic companies such as Huawei, which recently introduced 5G smartphones despite U.S. restrictions on exports of advanced chips.
“AAPL is significantly downgraded due to concerns that Apple’s China business may be structurally impaired due to the iPhone 15 economic downturn,” Bernstein analyst Toni Sacconaghi wrote in a note last week. I did,” he said. He has an Outperform rating on the stock.
But Sacconaghi doesn’t think Apple will be permanently hampered by Chinese Communist Party sentiment, calling the current downturn cycle “more cyclical than structural” and pointing to Apple’s historical volatility in the region. pointed out.
“In a strong iPhone cycle, Apple’s China revenue typically grows at a much faster pace than Apple overall, as Chinese consumers embrace new phones,” Sacconaghi wrote. “As we are currently seeing, strong support is typically followed by several quarters of weak growth (and often negative year-on-year growth).”
Third-party data on China is also not strong.
Huawei surged 70% on an annual basis in March, while Apple fell 19% to third place, according to data from Counterpoint Research. But an analysis of the data shows that “preliminary signs of improving iPhone demand…are more widespread than previously expected,” UBS’s David Vogt wrote this week.
On the other hand, according to state statistics, the number of iPhones sold is 33% drop in Februaryshipment volume decreased for the second consecutive month.
Wells Fargo analyst Aaron Lakers said in a March note that iPhone sales could fall 20% on an annual basis this quarter.
Expectations for the quarter have waned, and how Apple sees this quarter going may be more important than its March quarter results.
Eric Woodring, a Morgan Stanley analyst with an overweight rating on the company’s stock, wrote in an April note that he was “comforted by Apple’s ‘better than feared’ earnings report and guidance.” There is a possibility that prices will rise or rise sharply.” “This creates a difficult setup, but we don’t think investors necessarily need to come forward.”
Apple hasn’t provided guidance beyond 2020, but company executives have provided data points that analysts can use to predict sales. “The June quarter sales and gross margin outlook will be critical this quarter,” Woodring wrote.
Apple also typically updates investors during its second-quarter earnings report on how much it plans to spend on share buybacks this year.
“We expect Apple to update its capital return plan in its March quarter results, but we do not expect any material deviations from recent plans,” Woodring wrote. In May 2023, Apple announced that it had approved an additional $90 billion in stock buybacks.