Apple Results Preview
David Madden | Oct 31, 2017 12:59
Apple will announce its fourth-quarter results on Thursday, Nov. 2.
The consensus is for fourth-quarter adjusted earnings per share (EPS) of $1.87 and revenue of $50.74 billion. These forecasts would be an 11.8% and an 8.3% improvement on a year-over-year basis. According to Birinyi Associates, since 2009 Apple (NASDAQ:AAPL) has beaten its EPS estimates 88% of the time, and it has topped its revenue expectations 76% of the time.
In the latest quarter, Apple posted EPS of $1.67 and revenue of $45.4 billion, and those figures represented increases of 17.6% and 7.3%, respectively. Both the EPS and the revenue figure topped analysts’ estimates.
The Apple iPhone X will go on general sale on Friday, Nov. 3 – the day after the results are out. There are already concerns about the price of it is too high, and it is allegedly facing supply problems.
CEO Tim Cook said he feels ‘great’ about the company’s performance in China, even though the sales fell by 14% on a quarter-over-quarter basis, and dropped by 10% on a year-over-year basis. The figures would suggest that Apple is losing market share at a faster pace. The U.S. tech giant is facing tough competition from domestic brands in China. Cook should be concerned about this as the smart phone market in Western countries is heading towards saturation, while Far Eastern markets are still growing.
Apple’s cash pile reached $261.5 billion, and the tech giant is still waiting out for Donald Trump’s tax reforms to be introduced in order for the cash to be repatriated back to the U.S. The latest news on Trump’s tax reforms, is that it could be a staggered process, which is likely to benefit Apple in the long-run, but may have to wait a while before the company can fully reap the benefits.
Apple has achieved its target of growing the Services division into the size of a Fortune 100 company. In the latest quarter, Services took in revenue of $7.3 billion, while recently Amazon (NASDAQ:AMZN) Web Services and Netflix (NASDAQ:NFLX) brought in quarterly revenue of $4.58 billion and $2.98 billion, respectively.
Obviously, not all of the services are the same, but online TV is an area Apple is keen to expand on, and it plans to sink $1 billion into TV programming next year. Apple will seek to produce shows that are more mainstream and leave the edgy shows to the likes of Netflix. Given Apple’s bank balance, $1 billion is a relatively small amount, but they could easily afford to beef up its budget in years to come.
Apple’s other products, like Apple Watches or AirPods, were also in demand, and the iPad sales increased by 11.4% in the third-quarter.
Shares in Apple hit a new record-high today, so the sentiment is clearly bullish, and the market could target $170. Moves lower in the stock could find support at $149.24 or $142.20.
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