Apple Earnings: What To Expect From The iPhone Maker On Tuesday

apple earnings

Apple Inc (NASDAQ: AAPL)

Apple Inc. is expected to report its eagerly awaited fiscal first-quarter financial results after the closing bell on Tuesday, Jan. 29. Shares of the iPhone maker have gotten pounded over the last few months, cratering 10% on Jan. 4, – its worst daily performance in almost six years.

The selloff came a day after the company slashed its revenue forecast in a rare acknowledgement of slowing iPhone sales in Taiwan, China, and Hong Kong. In a letter addressed to Apple shareholders, Chief Executive Tim Cook warned that the sales slump in Greater China would surpass the $4.3 billion overall decline in revenue.

Apple now expects to report revenue of about $84 billion next week. That would be a nearly 5% drop from the same period last year. The Cupertino, CA-based company previously expected 1Q19 revenue to be in the range of $89 billion to $93 billion.

China accounts for about a third of smartphones sold worldwide, making it the biggest market in the world. Apple generated nearly $52 billion in sales (mostly from iPhone sales) from China in its most recent fiscal year.

But the company’s performance in the country is on the decline and it isn’t likely to offer investors a quick answer on how to improve sales of its high-end smartphones in the country on Tuesday. Consumer confidence is dwindling in China due to a slowing economy that has been triggered by the ongoing trade war with the U.S. Therefore, investors should expect iPhone sales in the Greater China units to drop by 15% on year-over-year basis, while worldwide iPhone sales are likely to fall by 23%.

Apple investors will also be watching keenly to see the kind of guidance the company will provide for its fiscal second-quarter. In addition, they will want to hear the sentiment the tech giant will have on the global economy. Wall Street also wants to know whether Mr. Cook and his team expect the soft demand for iPhones to continue beyond the holiday season.

Investors should brace for sluggish iPhones sales in the next few quarters, fueled by a potential slump in global economic activity as the effects of loose fiscal and monetary policy take their course. A period of late-stage maturity in the smartphone space is also likely to weigh on iPhone sales as 2019 unfolds.

But despite the slowing performance in iPhone sales, Apple will highly likely to post non-smartphone revenue growth of 19% in fiscal 1Q19, based on Cook’s letter to shareholders earlier this month. Apple revenues for the quarter are expected to slip 4.75% to $84.1 billion from the same three months ago a year earlier, based on figures compiled by current Zacks Investment Research.

On the other hand, Apple service revenues are expected to jump 27% to $10.819 billion from $8.471 billion in the same period last year. The company’s “other products” unit that includes Apple Watch, Beats products, and Apple TV, is projected to gain nearly 38% to $7.548 from $5.489 billion in the prior-year quarter.

Apple, Inc. Profile

Apple, Inc. engages in the design, manufacture, and marketing of mobile communication, media devices, personal computers, and portable digital music players. It operates through the following geographical segments: Americas, Europe, Greater China, Japan, and Rest of Asia Pacific. The Americas segment includes North and South America.

The Europe segment consists of European countries, as well as India, the Middle East, and Africa. The Greater China segment comprises of China, Hong Kong, and Taiwan. The Rest of Asia Pacific segment includes Australia and Asian countries. The company was founded by Steven Paul Jobs, Ronald Gerald Wayne, and Stephen G. Wozniak on April 1, 1976 and is headquartered in Cupertino, CA.- CNN Money