Apple earnings: ‘The worst is yet to come’ – analyst

Everybody expects Apple earnings for fiscal Q220 to be less than stellar. Applel reports after market close next Thursday, but the quarter after that — Apple’s Q3 which ends in June — could be even worse, according to Bernstein analyst Toni Sacconaghi.

Eric J. Savitz for Barron’s:

Apple earnings. Image: Apple logoTwo months ago, the company withdrew its revenue guidance, citing both the supply and demand effects of the Covid-19 pandemic, in particular on the iPhone. The company previously had been projecting revenue in the $63 billion to $67 billion range, and Street consensus has fallen at least $10 billion below that level.

Bernstein analyst Toni Sacconaghi asserts in a research note Wednesday that the March quarter numbers basically don’t matter. He sees revenue of $57.9 billion and profits of $2.57 a share, which is above current consensus at $54.8 billion and $2.28 a share.

“It remains unclear what Apple will say for [the June quarter],” he writes. “Will they guide per usual, provide a wider-than-usual guidance range, or not guide altogether?” He adds: “We believe Apple won’t be facing the full brunt of coronavirus until [the June quarter], and yet consensus appears to be (bizarrely) modeling better-than-normal seasonality.”

Sacconaghi is modeling June quarter revenue of $40.9 billion, which is more than $10 billion below the Street consensus at $51.4 billion—that would be a year-over-year decline of 24%.

MacDailyNews Take: Of course, it’ll be rocky for Apple for the next few quarters thanks to COVID-19, but Apple’s Services may surprise while also continuing to bring in revenue regardless of whether retail stores are open or not. Work from home likely helps Apple’s online sales of Macs, iPads, iPhones, AirPods, etc. – things one needs to effectively work from home for weeks/months. Next Thursday’s Q220 earnings report will be interesting, and updates on the company’s capital return program (buybacks executed, repurchase plan, and dividend changes) will be a highlight, but Q320 guidance – or the lack thereof – will be the reveal much about Apple’s short-term outlook.

Apple is slated to release Q220 results after market close on Thursday, April 30, 2020. We’ll have them for you as always right around 1:30pm PDT / 4:30pm EDT. Apple’s conference call to discuss Q220 results is scheduled to start right after that at 2:00pm PDT / 5:00pm EDT. We’ll cover the conference call with live notes as usual, too. Just check our home page around 1:45pm PDT / 4:45pm EDT on Thursday, April 30, 2020 for that link.

19 Comments

  1. This quarter would be very challenging for 🍏. First stores in China closed following the Europe and USA. It’d be miracle for Apple to beat expectations for the next few quarters.

    1. Releasing the lowered price, but well spec’d iPhone and the cheaper 23” iMac, is very savvy of Apple…at this time of the V and $$ downturn. It’s a small hedge against drained revenues on higher priced items, but it’s a solid way to bring 1st-timers to the ecosystem.

      Related to the latest iPhone release, it’s not so cheap in India, where it initially seemed to be a good fit. The rupee is getting whacked vs the dollar and their cost is approx $550.

  2. It is tough to believe anything Tony S Says about Apple, he has a very negative relationship with Tim Cook and has always been way below final results. Gives the sense that he has a short position.

  3. Let’s keep the country on lockdown to further suppress Q320. Let up around November 4 to (hopefully) see Q420 improvement. If the country is totally destroyed by then, that’s ok. At least we’ll have a better chance of getting Trump out! Hmm… but, if we are still on lockdown, how can we get out to get out the vote to get him out? That’s a tough one – sort of a catch 22.

    1. I am not into politics, but you think Biden can deal with the evil CCP?. Previous presidents sold the US for China, and look at the US now. We’re depending on China from left to right due to outsourcing. Trump may have many flaws but at least let him fighting with the evil CCP. CCP is our real enemy here. Not Trump.

      1. I’m worried that Biden can’t even deal with CNN. And they spoon feed him! Poor guy! Why oh why did the Dems put him up for this? (Because he will gracefully resign in his second or third year making way for his VP… that’s their plan.)

        1. I thought it was the CIA and Dems in bed with China to get Trump out. China needs Trump out ASAP. They’re dying over there… literally!

          If you think Russia is in bed with Trump, that’s fine. But, remember it is DC. EVERYONE is in bed with someone.

          So, who are the dems in bed with and why? Everyone has an agenda and a scheme to make it happen. What is the Dem agenda? Hmmm… interesting question. I’ll ponder that while I enjoy another scoop of boutique pork ice cream from from Sub Z.

        2. Uhh… yes. The Dems already “proved” that during the impeachment of non-specific articles. Yes, you can see how “impeached” Trump really is. That means… he isn’t. We may find out soon that Hillary was in bed with Russia. That will be interesting!

    2. You mental midgets can’t stand the fact that President Donald J. Trump is, and will be the most successful President in U.S. history.🇺🇸
      Donald J. Trump, A True American Hero! 🇺🇸
      TRUMP/2020 🇺🇸 Don Jr. 2024 🇺🇸

      1. You obviously have not been paying attention to the daily debacle, poor decision making and press briefing Lie-a-thon that is Trump’s presidency. The man is a dimwit who couldn’t manage being dog catcher.

        I heartily recommend though you imbibe lots of disinfectant as our Quack-In-Chief currently recommends. All Trump Supporters need to drink this particular Trump Kool-Aid.

  4. Consumers can afford to buy $60,000 Tesla vehicles by the truck-load, but they can’t afford to buy iPhones or Apple services. That leaves me somewhat puzzled.

    Anyway, I expected this quarter to be sub-par just as much as any other company selling tech hardware. I’m not all that concerned and will be quite satisfied if Apple buys back more shares and raises the dividend. It doesn’t bother me if Apple is downgraded by analysts as long as big investors are still interested in buying Apple stock. Still, it’s a shame Apple had no business that was immune to the virus crisis like Amazon, Microsoft or even Facebook. What’s really strange is that NVidia seems to be doing very well recently, but who exactly is buying their products if PCs aren’t selling all that well. Apple seems to be sitting in its own little ditch where no other tech company is sitting.

  5. I‘ve sold 80% of my Apple shares. A dividend of 80 cents per share doesn’t really matter when the share price jumps up or down $10 in a day. Apple is a solid company but I don’t trust the market right now.

  6. Well, I sold them at a higher price and will buy them back at a lower. I didn’t sell in panic. I’m just securing my earnings. This is the smart thing to do. As I said before: It’s the market. But go ahead and watch your share price drop while you could have sold and bought them back at a cheaper price. But it’s important to have a good strategy. Mine is working for me. I’ve been with Apple for 16 years now. I’ve seen the share price drop 65%, 50%, 30%. I never acted in panic. Apple has always recovered. It will this time too. I’m just waiting for the right time. I may be out of my job in a few weeks or months. So this my backup.

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