“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 percentAs 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.
SEE ALSO:
Here’s what the analysts expect from Apple’s earnings report today – May 1, 2018
Investors are finding new reasons to love Apple now that the iPhone is fading – May 1, 2018
Analyst: Apple shares to rally more than 30% the next 12 months due to high margins, valuable brand – May 1, 2018
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
The stock peaked in Mid march, dropped back down to current levels, rallied until mid April, then back to 166 now.
Clearly money has moved out of Apple into Google et al. for the time being.
I think the market need to understand that there are now 2 high end iPhones – the 8 and the X. They should not expect the X to have the same volume as the 7 had.
I’m looking for just one number: how many Macs where sold. Maybe that number will be lower than 4 million and Apple will wake up. However, I think Cook will need to be kicked in the head by a mule before he’ll open his eyes. Trucks, dude, trucks. We want trucks.
==>sincerely “the real” rp
ps: I was in an Apple store last night: great customer service– and they had the real nice looking iPad Pro and that iMac Pro looked sweet but everything else needs an updating. LOTS of Apple employees standing around. The best part was some kids where playing with something and having a real good time. Like me, everyone for service was having battery problems — phones, iPads and laptops.
The FANG stocks pretty much own the stock market and Apple has become a minor investment for those wishing to make quick money. Wall Street is betting on Amazon to stomp all over Apple in market cap value. Amazon with a P/E of 255 is seen as a far better investment than Apple with a P/E of 17. Even Microsoft has a P/E of 76 and is said to have more growth potential than Apple.
Apple is seen as a dying company because iPhone sales aren’t meeting expectations. Any random negative supply chain rumor can tank Apple’s share price even if they can’t tie it precisely to the iPhone. The “iPhone Company” has become a reviled utterance to analysts.
Apple’s repatriated tax windfall means almost nothing to Wall Street despite what that cash could theoretically do for Apple. There’s simply nothing Apple is currently offering to really excite greedy investors looking for massive revenue growth.
Apple has become so lax in updating their computers it’s as though they’ve never built computers before. I’m hoping something special comes out of that mighty Apple Park headquarters but it’s difficult to know what’s going on behind those closed doors.
I think Apple will do OK on earnings today and as long as Apple marginally increases dividends, I’ll be satisfied.
• Capital returns:
Since Apple stopped needing investors long ago because it has become, you know, a super wealthy company a long time ago, it should not reward investors just for sucking Apple’s blood, being that they are fundamentally blood-suckers, Apple should return zero capital. Blood suckers need to be self-reliant instead of acting like entitled Socialists expecting a handout.
Investors do not “suck Apple’s blood.” Apple has no skin in the game. The outstanding shares of AAPL that are publicly traded and the stock price fluctuations have no effect whatsoever on the day-to-day operations of a corporation. Once those shares are issued to raise capital (and IPO, for example, or a stock offering to provide capital for expansion), their direct impact to the corporation is over. After that, the shares just represent units of ownership in the corporation.
If you sell me your shares of AAPL and I make a profit, no one loses. You just failed to realize a potential gain. If you sell me your shares and the price goes down, then I lose (at least on paper). In either case, there is no impact on AAPL.
There is a situation called corporate raiding in which a person or group of people can swoop in, gain a substantial or controlling interest, manipulate things to extract “unrealized” profit potential, and move on from the often barren wasteland that they created. But that is not the topic about which you were commenting.
I acknowledge that you and many others here know more about the workings of the stock market than I. I was addressing the idea that any super wealthy corporation has no longer any need for stock owned by outsiders because Apple no longer needs outside capital to finance its ops. And stock owners who are stock manipulators and indeed blood suckers in that they can determine Apple’s stock price, hence how the world sees it and judges it.
John has now established that capiltalists are socialists. It sounds absurd but is probably closer to reality than anyone wants to admit.
Capitalists invest their money in private enterprises to gain a return on their investment. Extreme capitalists care about nothing whatsoever besides personal wealth accumulation, to the point where they gerrymander law to benefit themselves. If Apple leaders choose to make Apple into an extreme capitalist, accumulating power and influence without checks or balances, that would completely invert the Big Brother image Apple parodied in 1984.
Socialists believe in the greater social good, following the teachings of christianity, whereupon the individual moderates his personal greed. Taxpayers allow their representative government to manage their state for the greatest return on investment for the long term health and well-being of the greatest number of citizens. These socialists believe not only in private enterprise, but also cooperative, nonprofit, and public/private partnerships too. Once upon a time, Apple cared much less about its cash position and focused its energy on building the best quality computers for everyone to enjoy.
Food for thought indeed.