Apple Inc. (NASDAQ:AAPL) is due to report its Q3 earnings this Tuesday. Ask any analyst worth their salt and you’ll be told to expect results on par with company projections. As reported before on LearnBonds, a good earnings report just won’t cut it. Yet investors always want to be blown away with companies like Apple.
Tim Cook’s corporation isn’t extremely likely to manage this, at least not this time around. Nothing to fear though. Apple Inc. has a trump card in its back pocket: the public’s curiosity over the iPhone 8. To save face from its mediocre Q3 results, market watchers can expect a little insight into the upcoming, special edition iPhone.
Of all the companies that have already shared their fiscal performances for March to June, 73 percent have posted pleasing results for the period. Yet mediocrity just won’t do this Tuesday, not for the world’s most successful corporation. Most companies, even those that shared decent results, are selling off a great deal. This is according to Ian Winer, Wedbush Securities’ equities division leader. “You really have to crush it,” he explains, and “earnings have been mostly priced in”.
The second quarter of 2017 had a new releases. HomePod for one, came as the company’s entry into the smart speaker market. However, other than that and the WWDC conference, which sees the release of the company’s next generation software, the period was rather unexciting for Apple. Analysts suspect the quarter’s results might be equally as mundane.
To recap, Apple Inc. (NASDAQ:AAPL) has these estimates set out for its financial Q3. Revenue for the quarter should be between $43.5 billion to $45.5 billion. Projections put gross margins for the quarter at around 37.5 to 38.5 percent. Operating expenses should be around 6.7 billion while $450 million is put aside for other income or expenses. The forecast puts the company’s overall tax rate at 25.5 percent.
Brain White is an analyst at Drexel Hamilton and believes Apple will have decent result to show for its Q3. He advises investors should not to prop themselves for anything mind-blowing though. According to White, Apple wants put its 3rd quarter behind it and focus on the what’s next. For any true fan of the company, that would be the incoming iPhone upgrades.
This makes sense too, especially since Apple places its earnings report a month ahead of its new and widely expected iPhones. “Apple is currently in the seasonal doldrums for the iPhone,” White wrote. “However the ramp quarter for the iPhone 8 will dictate if the September quarter could mark the trough this year.”
Delays indeed. Word on the web is that the high-end iPhone 8 will come a bit later than expected. This is mostly due to supply constraints, meaning the two vanilla upgrades should come along as expected. The top-tier, Apple Inc (NASDAQ:AAPL)special edition iPhone though? That isn’t likely to show for until the holiday quarter.
iPhone 8 is clearly the big fish for Apple Inc.
The late arrival of the iPhone 8 could make Apple’s regular sales spike quarter into dull point this year. This would be due to many iPhone fanatic holding off to get their hands on the special edition upgrade over the iPhones 7S and 7S Plus.
Royal Bank moved its sales estimates down by 5.5 million units for the current quarter. Those sales now feature on its projections for the Christmas quarter. The iPhone 8 delay will be frustrating, no doubt, but Royal bank believes that hunger for the gadget will not die down significantly.
Analysts at RBC Capital Market agree. “We think the flagship device may not see initial shipments until October, with volume shipments not occurring until November/December time frame.
So, Apple Inc. Q3 results promise to be a pleasing reveal, but not overly pleasing. The current quarter should be the company’s lowest point this year due to the iPhone delay. However, the Christmas period should see all the sales expected of the September quarter come through.
Shares began the week moving downhill, even a day ahead of its Q3 results. Apple Inc. (NASDAQ:AAPL) stock delved deeper into the red, down some 0.5 percent at market closing this Monday. Tuesday’s Pre-trade sees them gaining. No doubt earnings will inspire confidence among investors.