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All Eyes Are On Apple Earnings

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All Eyes Are On Apple Earnings

July 21 2015, 06.54am GMT

STOCK.com

With reports indicating that iPhone sales have rocketed in China, Apple Inc. will report on fiscal third quarter earnings after the closing bell on Tuesday.

The third quarter is traditionally the slowest period for iPhone sales, but analysts are speculating that a much bigger than expected demand for the smartphone has pushed sales in China to between 48 and 50 million units. This indicates an increase of between 36% and 42% year-on-year.

The revenue expectation on the back of the high iPhone sales in China are for a quarterly record of $29.9 billion dollars, an increase of a touch over 50% on iPhone revenue for the same period in 2014.

Meanwhile, Estimize, which is a fast growing platform that gathers  information on earnings estimates from hedge fund executives, brokers and analysts which it then correlates to provide consensus earnings estimates, forecasts earnings per share of $1.89 which is 49 cents up on the same period last year. Interestingly, Apple (AAPL, +2.41%) has beaten the Estimize computed estimate for each of the past three quarters.

Revenue expectations are for a leap of a touch over 30% to $49.2 billion, up from the $37.4 billion reported a year ago for the same period. The Estimize forecast is for $49.3 billion in revenue while in April, Apple forecast revenue of $46 to $48 billion for the quarter.

Apple shares have remained almost flat since the last quarterly report, but are still 40% higher than prices 12 months ago. According to FactSet, the majority of analysts are placing a twelve month price target of $147.62 on Apple shares, an increase of 14% on Apple’s closing price of $129.62 on Friday.

Revenue and performance at Apple are very much dependent on iPhone sales, making that the important number to watch for in the report. There are concerns that saturation of the Chinese smartphone market, together with the economic downturn, could have a depressing effect on iPhone sales going forward.

For the present, industry sales tracker IDC lowered its own prediction in May 2015, forecasting global smartphone growth of 11.3% for 2015, compared to the 28% growth in 2014. Sherri Scribner, Deutsche Bank analyst is predicting that iPhone sales will slow throughout the remainder of this year and would in fact underperform in the smartphone market in 2016.

The other sales figure to keep an eye on is for the Apple Watch with this quarter being the first one to include watch sales. Apple has been noticeably quiet on this category

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