Why you shouldn't care about this quarter earnings.
Whatever Apple reports today is only going to relavant in the very short term, ie after hours and the days following. If they report weak, it's already expected and we will see a decline, but probably nothing dramatic, and investors will start buying back very soon after as Apple really gets into bargain territory. If they report strong, we will see a pop, probably a big one, but then selling in the near future and we will return back to where we are now.
This quarter is not very important. Apple has a pretty weak line up, they are behind in many ways and they have yet to show us how they are going to catch up or overtake the competition, which we won't see until this next quarter, and that's really all that matters, not the sales of a pretty irrelevant quarter based on dated products and marginal refreshes. The iPad mini will probably show huge sales, but be negated by the cannibalization of the regular iPad. The regular iPad will see a decline in sales due to people buying the iPad mini and also the dated design that hasn't been updated in years, especially compared to the iPad mini, which makes the regular iPad seem even more heavy and bulky than ever. I also don't believe we will see the true potential of the iPad mini until it gains a retina display, as many people are holding out for that. The iPad mini is an awesome product and will probably drive the iPad market moving forward. The refreshed Mac lineup probably didn't stimulate sales much, since not many people replace their computers that often anymore, so I believe that the new Macs at best maintained the sales from previous quarters, or helped slow down the bleeding. The iPhone 5 was really not a compelling upgrade for many. The market has become very saturated for Apple to gain huge growth off sales in the US, and they really have to rely on upgrades and growth in other countries to keep growing. Let's face it, the iPhone 5 was a pretty crummy phone. The screen size made no sense, it was waaaaay too delicate/scratch prone, the headphone jack was moved to an awkward place, and it didn't offer anything new other than LTE, which most people won't see much of a difference compared to 4G just yet. They didn't really get a dramatic number of iPhone 4 converters, not like past iPhone updates did, and many people are still buying the iPhone 4S, which in many ways is a better designed phone and still preferred by a lot of people, and lets not forget they are losing tons of users to Android.
This next quarter is the make or break one for Apple and the one investors should care about. Apple will undoubtedly release a refresh for the iPhone and iPad. It is almost certain that the new iPad will be identical to the iPad mini, which is a perfect design, and will help spark iPad sales again, but probably not significantly. The iPad mini should get a retina display, which I believe will really open the floodgates on sales. The big question mark is the iPhone. Will we see a marginal refresh in an iPhone 5S, or will we see a 5S & a 6 with a larger screen, and a lower cost iPhone for other countries. They will need a lower cost iPhone if they want to spark new growth, as the only way Apple is gong to grow sales is in other countries. The iPhone 5S will be able to meet the demand of new users who still prefer the smaller screen, and the lower cost. And the iPhone 6 with a larger screen is crucial in stopping the hoards of people leaving for Android. If anyone has used the new Galaxy or the HTC One, the iPhone 5 seems like a relic in comparison. The HTC One is really a thing of beauty, it beats the iPhone 5 in every possible way and is the phone I want. I'm giving Apple until WWDC to release a larger screen iPhone, or I'm getting one. With Google IO just weeks away, Google is sure to have a lot up their sleeves. This is the quarter we will see the masses flock to Android if Apple can't provide a large screen iPhone, in which case next quarter is sure to be a bloodbath and there will be little hope left for Apple to maintain their hold on the mobile market. If Apple waits a year to release a large screen iPhone, they are going to be in serious trouble and will be handing the mobile market over to Google on a silver platter.
My hope is that Apple's silence is a sign that they are working very hard and are going to assault the market with significant iPhone and iOS updates as well as new products like the iWatch and iTV in the next year. Because Apple got beat up so hard, there is huge potential to the upside is Apple delivers on these items, we could easily return back to the 700-800 range and above even if sales continue to remain sluggish in the next quarter. Apple can't grow at the rate they did when they delivered 2 brand new platforms to the market, those days are over for now, this correction is healthy and will allow investors to re-evaluate the stock based on the current market and the growth potential from products Apple will deliver coming up. This quarter is not the one we should care about or judge them on, next one is the one where they will sink or swim. Keeping my fingers crossed for them!