“The earnings report of Apple after the closing bell on Tuesday has taken on a significance beyond the usual quarterly update. It may prove to be a referendum on what kind of company shareholders want Apple to be — or, at least, what kind of investors hold Apple stock these days,” Tim Bradshaw reports for The Financial Times. “Will investors focus, as they have historically done, on iPhone sales? Or will they look past potential disappointment there to a massive return of capital?”
• iPhone sales: Most analysts are expecting Apple to say it sold about 52m to 53m iPhones in the quarter ended March 30, up 2 to 4 per cent year on year, bringing total revenues to roughly $61bn… Morgan Stanley pegs the analyst consensus at an ASP of $741 but believes that “could be aggressive” if iPhone X sales have indeed waned.
• Capital returns: Three months ago, Luca Maestri, Apple’s finance chief, said the company planned to run down its entire net cash balance of $163bn to zero, over time. That has many analysts expecting as much as $100bn will be returned to shareholders in the form of dividends and share repurchases — though a one-off special dividend is unlikely after Tim Cook, chief executive, said he was “not a fan” of them at Apple’s annual shareholder meeting.
• Services and other products: Morgan Stanley predicts services revenues grew 28 per cent year on year to $9bn in the quarter… Neil Cybart, analyst at Above Avalon, predicts $4.1bn in sales of “Other products,” up 43 per cent year on year.
• Outlook: Wall Street expects revenues of about $52bn for the current quarter that runs to June 30, based on roughly 42m iPhones sold. However, a growing number of analysts predict Apple could see a year-on-year drop from the same quarter last year, when it reported iPhone sales of 41m.
Read more in the full article here.
MacDailyNews Take: Hopefully, the analysts’ expectations are tempered to the point of achievability, but we expect Apple’s capital return program news will have significant impact beyond mere quarterly results and Q3 guidance.
On February 1, 2018, Apple provided the following guidance for Q218:
• revenue between $60 billion and $62 billion
• gross margin between 38 percent and 38.5 percent
• operating expenses between $7.6 billion and $7.7 billion
• other income/(expense) of $300 million
• tax rate of approximately 15 percent
As always, we’ll bring your the results as soon as they are available (simply check our home page at 4:30pm EDT today).
We plan to cover the conference call with live notes as usual. That link will appear on our home page around 4:45pm EDT today.
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Apple gains on expectations of record capital allocation program due to GOP tax overhaul – April 30, 2018
Analysts expect Apple’s results to show iPhone growth problem and Cook’s plan to fix it – April 30, 2018
Apple to release Q218 earnings, webcast live conference call on May 1st – April 3, 2018