Apple Third Quarter Earnings Preview

This Tuesday afternoon, the whole world will be watching Apple as they release their third quarter earnings report.  The June quarter has always been an awkward one for the Apple, as the majority of the company’s new product releases occur in the fall.  However, there are still certain expectations in place, especially when it comes to the number of iPhones sold.

Traditionally, the iPhone has had the largest impact on Apple’s results, accounting for roughly half of the company’s total revenue.  Thanks to the addition of new foreign carriers, such as China Mobile (CHL), Apple is expected to post decent year-over-year growth.  Analysts are currently forecasting approximately 35.88 million iPhones.  Looking back at Apple’s Q3 in 2013, the company reportedly sold 31.24 million iPhones.  If Apple is able to meet or beat analysts’ expectations, then they are looking at a year-over-year growth rate in the ball park of 15%.

Expectations are set fairly high due to last season’s earnings blow out, where Apple posted nearly 17% year-over-year growth.  However, it would not come as a surprise to anyone if average selling prices went down.  Sales figures typically start to decline before the release of new iPhone iterations.

Unfortunately for Applcooke, the iPad has been a clear disappointment, with sales falling  way short of estimates.  Apple CEO, Tim Cook, claimed demand was not the problem, but analysts are predicting a 1.3% drop in iPad’s sold in the past year.    Luckily for Apple, the iPad news is usually lost in midst of the iPhone hysteria.


Perhaps the most important part of the report will be the guidance for Quarter 4.    Apple has always been a company that’s thrived on its innovations and vision of the future.  With a new iPhone and iWatch on the horizon, investors are antsy to get  their hands on any new details or information.  Hopefully, Apple will announce an  official launch date for the iPhone, as well as hardware specifics.  Even if Apple hits  their numbers, Wall Street may still view it as a miss if they don’t agree with the  company’s sentiment looking into the future.  Nobody truly knows how Apple will  perform, but I will be back later this week to analyze the results..

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