Apple Inc. (NASDAQ:AAPL) is expected to release its first quarter financial results today after market closing and plans to conduct a conference call to discuss financial performance on the same day at 2:00 p.m. PT / 5:00 p.m. ET.
Wall Street expect the iPhone maker to earn $14.09 a share, according to analysts polled by Thomson Reuters. The consensus estimate implies an increase of 2 percent from $13.81 a share earned in the same period last year. Apple's earnings have managed to top Wall Street's view in all of the past four quarters, with upside surprises ranging between 0.90 percent and 3.8 percent.
Analysts' have a bullish stance on Apple earnings as the consensus estimate has gone up by 23 cents in the past three months. In the last 30 days, three analysts raised their profit estimates while two have cut their outlooks.
Quarterly revenue is expected to rise 5.4 percent to $57.46 billion from $54.51 billion in the same quarter last year. The low and high end of the estimate came in at $55.93 billion and $59.88 billion, respectively. Apple forecasts first quarter revenue between $55 billion and $58 billion.
iPhones, iPads, and Macs shipments will be the key focus. UBS analyst Steven Milunovich expects unit shipments of 55 million iPhones, 25 million iPads, and 4.5 million Macs. Apple's December quarter, which features the key holiday season, has benefited from the fact that 5S has been far outselling the 5C so far, which helps revenue and profit dollars.
Apple went into the holidays with the new iPad mini with Retina Display; thin and light iPad Air, new MacBook Pros, the radical new Mac Pro, OS X Mavericks and the next generation iWork and iLife apps for OS X and iOS.
The iPad line needed a jolt after being stuck in the teens the last few quarters. In fact, despite the tablet becoming a large new category and upsetting the PC, Apple's iPad revenue rose just 3 percent last year as 22 percent unit growth was whittled down by the ASP decline.
Gross margin is another metric to watch given the 5S outpacing 5C. Apple expects gross margin for the first quarter between 36.5 percent and 37.5 percent. Gross margin for the fourth quarter was 37 percent compared to 40 percent in the year-ago quarter.
App Store sales, which topped $10 billion in 2013, should benefit margins. On the flip side, with the average selling price per handset to be 4 percent lower this quarter, analysts were concerned about margins.
Investors may want additional color on Apple's smartphone strategy, especially regarding a shift to the tablet segment and inputs over iPhone 6. Samsung's recent figures highlight the maturity of the high-end smartphone market. According to Gartner, Apple had about 10 percent unit growth in the US and Western Europe last year.
The Street will focus on the traction with new carriers. Apple has added the two leading carriers it was missing: NTT DoCoMo and China Mobile. DoCoMo is crucial since Japan is 7 percent of revenue and offers the best country operating margin at 50 percent.
However, China Mobile is getting more attention with the recent launch of Apple phones. A recent survey by YouGov does show an uptick in iPhone interest. Also, Apple enjoys a high retention rate in China as elsewhere.
In addition, it appears that China Mobile will gain share with about 25 percent of China Telecom and Unicom customers considering a carrier switch compared with just 12 percent of China Mobile users.
Tim Cook said the company had seen 1.2 million pre-orders at China Mobile ahead of the launch on Jan 17 and that Apple sold a record number of iPhones in China in the Dec quarter. While it is too early to gauge sell-through, Milunovich believes there are already over 50 million iPhones on China Mobile's network from box-broken devices.
Meanwhile, Carl Icahn could be a key focus on the call after he lashed out at Apple saying the company was doing shareholders a "great disservice" by failing to boost its share buyback program.
The billionaire investor bought $500 million more shares in the past two weeks, bringing his investment in Apple to over $3 billion. Apple's stock has surged 17 percent since Icahn first disclosed a significant stake in the company on Aug.13.
Apple, which has $147 billion cash, is in the midst of returning $100 billion to shareholders, including a total share repurchase program of $60 billion. Investors may hope that Apple may increase its share buy-back levels, which could boost share price.
Milunovich expects Apple to update investors on its capital return views in March/April. Despite Icahn's lobbying, he doubts Apple will do much more than a dividend increase for now. Of its $147 billion cash stash, only $35 billion and declining is in the US. Since the company has at least $20 billion more of debt capacity, further repurchases are likely a question of when rather than if.
For the fourth quarter, Cupertino, California-based Apple posted a net profit of $7.5 billion, or $8.26 a share, lower than the $8.2 billion, or $8.67 a share, reported last year. Quarterly revenue rose to $37.5 billion from $36 billion in the year-ago quarter.
Apple shares, which trade 11.5 times its forward earnings, have gained about 5 percent since its last quarterly report and were up 22 percent in the last one year.
source : istockanalyst
No comments:
Post a Comment