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Apple has a chance to give investors another reason to maintain Apple's uptrend when it reports its results after the markets close on Tuesday. Apple stocks rose 15% in the last three months, driven by a major capital return program announced in April.
In its third quarter financial results, which cover the three months ending in June, Apple will reveal whether iPhones launched last September are benefiting from sustained demand, or whether the iPhone X more expensive to $ 1,000 lasted long last year. very important holiday area. Generally, the spring quarter of Apple is the slowest in terms of business turnover and iPhone sales.
"Our controls suggest that the demand for iPhone 8 and 8 Plus remains seasonal while the iPhone X inventory is normalized and that older models continue to do well in emerging markets," writes Jim Suva, Citi analyst.
Wall Street is seeking Apple to report a turnover of $ 52.3 billion, up 15% from one year to the next, and earnings per share of 2, $ 16.
But investors will also keep a close eye on comments and details buried in the report that might suggest where Apple is going, especially this fall, when it is planned to launch new iPhones.
Here's What Wall Street Looks For:
iPhone Sales
Since the iPhone constitutes the majority of Apple's revenue, it makes sense that investors want to know how much money they have. iPhones were shipped and the average price that they were sold for.
Even a small difference in this number can change Apple's earnings from a good day to a bad day for the stock.
Morgan Stanley's Katy Huberty, for example, expects Apple to have delivered 39.8 million iPhones during the June quarter, under the consensus estimate of about 41.8 million iPhones delivered.
Ng Han Guan / AP
Services
But more and more, investors are turning to Apple's services – the money it earns by selling subscriptions to the owners of iPhones – as the main driver of what could make Apple more valuable. business that is already.
"The iPhone results are less important at the end of the cycle … we expect investors to focus more and more on the results of services to see if basic monetization efforts are going on." Apple can boost the overall growth of the company ". Note of July 23rd.
Apple defines the services as the income that it pulls from iCloud, Apple Music, the App Store, iTunes and AppleCare, and sometimes Apple comments on its growth, especially during the slower quarters.
"Services are an increasingly important part of the history of the AAPL and a major factor in gross margins," writes Amit Daryanani, an RBC analyst, in a recent note. "The segment currently accounts for about 15% of revenue and is set to become a $ 50 billion business by 2020".
Huberty is looking for Services to grow 32% from one year to the next, which would be a big leap.
China
Reuters
The Chinese market remains the area where Apple could experience the strongest growth, given the growing middle class of the country.
But Apple is also facing intense competition from domestic manufacturers of Android phones, as well as regulatory issues in the middle realm. Until now, Cook and his general manager of China, Isabel Ge Mahe, have managed to navigate the delicate regulatory landscape.
"China's production data (down 29% in F3Q) imply that growth in Apple's sales in China will slow 21% in F2Q," wrote Nomura's Jeffery Kvaal.
The Upcoming Cycle
Often, the forecast for Apple's fourth fiscal quarter will include a few sales of the latest Apple phones, which are generally announced in September and went on sale shortly thereafter.
However, a week of sales is usually not enough to know if the new product cycle is going to be a success or not. This has not prevented analysts from speculating that if Apple 's advice is solid, it might suggest that the company is expecting a big iPhone launch.
"While all eyes are turned to Apple's advice on FQ4, we note that historically, revenue forecasts for the T4 exercise have * not * been * a useful predictor of the strength of the coming cycle, "writes Toni Sacconaghi.
Apple's Passion Projects
Apple is working on several new technologies that could unlock huge new markets: autonomous cars, augmented reality, health and medicine.
All these "special projects" and "technological investigations" are secret. But sometimes, Apple's officials at a revenue call provide comments that suggest that they see them as big plans and can guide expectations for increasing revenues at the same time. # 39; future.
"In our opinion, the contribution to revenue can be significant even without Apple's introducing dedicated AR hardware," writes Bank of America analyst Merrill Lynch, Wamsi Mohan, in a note. "Specifically, we estimate that RAs can add revenues of $ 1 billion by the end of the 2020 fiscal year from the only downloads of the App Store."
If Apple's data privacy policies appear on the bottom line
Apple has made data privacy a key priority of marketing and engineering for the company and has begun to pay earlier this year. like Cambridge Analytica to access people's data.
CEO Tim Cook has even taken some thinly veiled photos on Facebook.
So some analysts, like Davidston analyst DA Tom Forte, are looking for "management's comments on the importance of data privacy and its efforts to solve this problem in the versions released. day of its operating systems ".
The Commercial War
AP
Reuters reported earlier this month that Apple's Apple Watch could be affected by tariffs offered by the Trump administration.
This could lead to a rise in the price of the watch or a drop in Apple's margins.
Analysts will look to see if Apple's leadership is commenting on how the simmering trade war could affect all Apple products.
"If incremental tariffs were invoked, we believe that Apple would pass this cost on to consumers and we believe that any price increase would not be positive for the demand," wrote Citi's Suva.
"We also note that the iPhone is not in the tariff schedule of July 2018 for 818 goods," he continued.
How Siri Integrates into Society
Earlier this month, Apple announced that it had consolidated its Siri Department under one name: John Giannandrea, as the giant of the IPhone had withdrawn from Google earlier this year.
This could signal a greater focus on Siri and artificial intelligence in general to the company.
Comment from Cook or CFO Luca Maestri could clarify the reasoning and hopes for the change of staff.
"While we continue to see Apple playing with Alexa and Amazon's digital assistant, we are encouraged by the addition in April 2018 of John Giannandrea (the former head of Google's research and artificial intelligence) to strengthen Siri., wrote.
All people hang their iPhone longer
A bear case for Apple is that people replace their iPhone less often than technology becomes more mature.Most replacement rates are close to three years instead of two years, plus the record is solid.
"iPhone replacement rates have normalized to last years over a period of two and a half years, after 2.2 years on the cycle of the iPhone 6, "wrote Tim Long, an analyst at BMO Capital Markets." We believe that it could there is additional elongation if the new cycle of the product is not convincing. "
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