Why Apple could post all-time record earnings today and still crater

“When Apple reports its first-quarter results today after the market closes, it will likely report its highest ever quarterly sales (analysts are forecasting $76.6 billion) and profit (an expected $18 billion),” Dan Frommer writes for Quartz.

“Investors will immediately skip past these figures for a more important number: Apple’s revenue projection for the current March quarter,” Frommer writes. “After an amazing period of growth, Apple is now expected to forecast its first year-over-year sales decline in 13 years. Back then, in the March 2003 quarter, just as the iPod was starting to fuel the company’s incredible rise, Apple revenue fell 1% year over year to $1.5 billion. Now, Apple does roughly $1.5 billion in sales every two and a half days.”

“Wall Street has recently been tempering its expectations. Analysts now, on average, expect Apple to forecast $55.6 billion in second-quarter revenue, according to FactSet. That would represent a roughly 4% year-over-year decrease,” Frommer writes. “Modest growth is expected to return later in the year as the iPhone 7 launches. Overall, Wall Street is projecting $237 billion in revenue for Apple’s fiscal 2016, which ends in September. That would represent roughly 1% year-over-year growth for the full year, a sharp deceleration from 2015, when Apple’s sales grew 26%.”

Read more in the full article here.

MacDailyNews Take: With Wall Street, it isn’t “what have you done for me lately,” it’s “what are going to do for me next?

What the analysts expect from Apple’s Q116 earnings report today – January 26, 2016
What to look for in Apple’s earnings report tomorrow – January 25, 2016
Apple to release Q116 earnings, webcast live conference call on January 26th – January 22, 2016


  1. The problem isn’t that Wall St. is looking to the future – that’s their job -the problem is they’re ALWAYS wrong with Apple predictions!! The other problem is the crazy PE ratios they assign certain companies that don’t ever make money (Amazon i’m talking to you! 856 PE ratio – Apple’s ?? 10.8) Rationalize that difference!!!

    1. To be fair they were right that 2nd quarter guidance will be a drop but Apple is guiding even lower than expected.

      Expectations were a drop of 4% but Apple has guided to a much larger drop of 9%-14% ($50-$53B as apposed to ~$58B last year).

      The huge wave of pent up demand for large screens is abating a bit, so a slow down makes sense. Apple may indeed have flat growth for a year, but only because it hit the ball out of the park recently.

      In any long term scenario they have lots of room to grow. They still have low phone marketshare to grow, low Mac share to grow, they are steadily increasing their low share in the Enterprise, and in China, and India, ….

      Apple is nowhere near bumping into a ceiling yet. The largest companies rarely stop growing even when they screw up, they just slow down. Apple would have to screw up for 5-10 years to lose all its current momentum as a product company.

      My rating at the current valuation and PE: A “buy” for anyone planning on holding their shares for a couple years or more. If it dips in the meantime, buy more.

      Disclaimer: I am not an analyst and I am buying AAPL. lol.

  2. Next quarter is a none issue for an investor… What happens in the next few years is what matters. Like apple having a couple hundred billion more in the bank ….. Etc.

  3. This is pretty much par for the course as far as analysts are concerned. Record breaking profits in the first sentence followed by doom and gloom in the 2nd. These guys are either idiots or deliberately printing BS in order to drive down a stock so that those that have the money, especially those that specialize in short term investment gains, will receive a handsome take. AAPL has usually been good if you’re into options.

Reader Feedback

This site uses Akismet to reduce spam. Learn how your comment data is processed.