What to expect from Apple's Q4 2020 earnings report

Posted:
in General Discussion edited October 2020
Apple will announce the results of its fourth fiscal quarter, covering the period between June and September 2020, on Oct. 29. Here's what to expect.

Credit: AppleInsider
Credit: AppleInsider


As with its third fiscal quarter, Apple did not provide any earnings guidance for the fourth quarter because of the ongoing coronavirus pandemic. But Apple's performance in the previous quarter proved that the company can weather the global health crisis just fine.

As they do every quarter, stock analysts have tried to forecast how well Apple will do during the quarter. Current Wall Street consensus suggests that Apple will report earnings of about $64 billion in the September quarter.

That forecast would match Apple's actual fiscal performance in the fourth quarter of 2019, given that Apple reported revenue of $64 billion during that quarter. Although a similar performance in Q4 2020 wouldn't represent growth, it would show Apple's resilience during a global pandemic.

In terms of quarter-over-quarter performance, Apple reported revenue of $59.7 billion in the third quarter of 2020. Though that quarter is typically Apple's weakest, the Cupertino tech giant still managed to smash Wall Street expectations -- which was near-unanimously predicting a dismal performance.

By most indications, Mac and iPad tailwinds from the pandemic have continued to support sales of the devices throughout the quarter. Although it didn't launch new Macs during the quarter, Apple did announce new iPad models in September -- including the iPad Air 4 and a new 10.2-inch iPad update, but the iPad Air didn't ship until October.

Apple's wearable segment will also have seen a boost from the launch of the Apple Watch Series 6 and Apple Watch SE in September. While those watch models shipped late in September, quarterly earnings will be impacted from the debut -- albeit with less impact than an iPhone launch would have provided.

Some analysts have indicated that, although no new iPhones were launched during the September quarter, Apple's iPhone SE and iPhone 11 continued to perform exceptionally well.

The company continued to bolster its services throughout the year. And although no new services actually launched in the September quarter, many of its existing ones may have been bolstered by the pandemic.

Morgan Stanley

Although consensus suggests that Apple will report iPhone revenue of $28.5 billion on 40.4 million shipments. Morgan Stanley believes that the forecast is "too high." Analyst Katy Huberty suggests that Wall Street's current Apple forecast for the September quarter is too high, and based on overly aggressive iPhone expectations.

She does note that the most important factors in the Q4 2020 earnings results will include Apple's non-iPhone hardware performance; the growth of Services; and any potential guidance for the following quarter.

The analyst is forecasting revenue of $60 billion, down from Wall Street consensus of $64 billion.

Cowen

Krish Sankar of Cowen expects Apple to report quarterly earnings results that are largely in line with Wall Street expectations: revenue of $64.9 billion and an earnings per-share of $0.72.

Because of the lack of new iPhone models during the September quarter, Sankar believes that Apple's performance during the period will be driven by continued work-from-home and remote education tailwinds for the Mac and iPad lineups. He also expects Services to continue its growth momentum.

The analyst expects Apple to ship 40 million iPhone units in the September quarter, but indicates that demand for the iPhone 12 is looking up. He also doesn't expect Apple to issue formal guidance for the holiday quarter.

JP Morgan

Samik Chatterjee of JP Morgan expects Apple to modestly beat Wall Street expectations in the September quarter, but adds that the focus of the Oct. 29 earnings call will be on guidance for future fiscal periods.

Chatterjee expects Apple to report revenue of $64.7 billion and earnings-per-share of $0.73. That's is based on higher-than-consensus demand forecasts during the period, driven mostly by the iPhone SE and iPhone 11.

The launch of the Apple Watch SE and Apple Watch Series 6, though late in the quarter, could also help drive demand and revenue for Apple's wearables business, the analyst added.

Evercore

Evercore analyst Amit Daryanani says that iPhone sales during the September quarter will ultimately come in lower than expectations, but adds that gross margins during the December quarter could be a "wild card."

Daryanani forecasts Apple to report $62 billion in revenue and an earnings-per-share of $0.69 for the September quarter. That's lower than Wall Street consensus, and largely because of the lack of new iPhone models and a lower average selling price due to the strength of the low-cost iPhone SE.

However, the analyst believes that Mac and iPad will continue to be strong during the period. He also expects the iPhone 12 to drive higher handset demand over the next six months.

Comments

  • Reply 1 of 15
    Rayz2016Rayz2016 Posts: 6,957member
    I expect Horace Dediu and Neil Cybart to be right on the money, and everyone to be out by about ten billion (dollars, unit sales, whatever …)

    I also expect the usual suspects round here to break their fingernails while scratching around for proof that Apple is only ten years away from crashing and burning. 
    lkruppBeatswatto_cobra
  • Reply 2 of 15
    Hard day for investors . The whole market taking a big dive (allegedly) based on speculation “the Democratic candidate” (whoever that might be) could win. Personally, I don’t believe it but such are markets and rumors.
  • Reply 3 of 15
    fastasleepfastasleep Posts: 5,690member
    Hard day for investors . The whole market taking a big dive (allegedly) based on speculation “the Democratic candidate” (whoever that might be) could win. Personally, I don’t believe it but such are markets and rumors.
    LOL you're smoking crack. The polls have not changed in any meaningful way in quite some time now and it looks like Biden (that's who) will win in a blowout, so that's clearly baked into the markets right now. It's all about the *massive* spike in COVID-19 cases and speculation of further shutdowns and the Senate's failure to pass any sort of aid bill. 
    edited October 2020 avon b7CloudTalkinThinkmanDuvwatto_cobra
  • Reply 4 of 15
    Hard day for investors . The whole market taking a big dive (allegedly) based on speculation “the Democratic candidate” (whoever that might be) could win. Personally, I don’t believe it but such are markets and rumors.
    LOL you're smoking crack. The polls have not changed in any meaningful way in quite some time now and it looks like Biden (that's who) will win in a blowout, so that's clearly baked into the markets right now. It's all about the *massive* spike in COVID-19 cases and speculation of further shutdowns and the Senate's failure to pass any sort of aid bill. 
    You are forgetting the inevitable circus that will follow a Trump loss. Think of the contested election in Florida all those years ago. Multiply that by around 1,000,000 and that's what could happen. Trump could still be president on 20 Jan 2021 and would be sworn in for another 4 years. All he has to do is not concede citing the avalanche of lawsuits that are sitting on GOP lawyers desks ready to be filed at 09:00 on 4th November.
    Meanwhile, the rest of the world are looking on at the USA self destruct. All because of the vanity of one man.

    ThinkmanDuvwatto_cobrafastasleepmuthuk_vanalingam
  • Reply 5 of 15
    canukstormcanukstorm Posts: 2,533member
    Rayz2016 said:
    I expect Horace Dediu and Neil Cybart to be right on the money, and everyone to be out by about ten billion (dollars, unit sales, whatever …)

    I also expect the usual suspects round here to break their fingernails while scratching around for proof that Apple is only ten years away from crashing and burning. 
    I've been following and subscribing to Neil Cybart for a couple of years.  The financial guidance that he gives is, more often than not, scary close.  He puts all of the analysts listed in this article to shame.
    watto_cobra
  • Reply 6 of 15
    BeatsBeats Posts: 2,531member
    Hard day for investors . The whole market taking a big dive (allegedly) based on speculation “the Democratic candidate” (whoever that might be) could win. Personally, I don’t believe it but such are markets and rumors.
    LOL you're smoking crack. The polls have not changed in any meaningful way in quite some time now and it looks like Biden (that's who) will win in a blowout, so that's clearly baked into the markets right now. It's all about the *massive* spike in COVID-19 cases and speculation of further shutdowns and the Senate's failure to pass any sort of aid bill. 

    Trump tried to stop the virus but he was called "racist", now those same people are using this failure against him.

    I'd still rather have a racist president than a sexist one.
  • Reply 7 of 15
    Hard day for investors . The whole market taking a big dive (allegedly) based on speculation “the Democratic candidate” (whoever that might be) could win. Personally, I don’t believe it but such are markets and rumors.
    LOL you're smoking crack. The polls have not changed in any meaningful way in quite some time now and it looks like Biden (that's who) will win in a blowout, so that's clearly baked into the markets right now. It's all about the *massive* spike in COVID-19 cases and speculation of further shutdowns and the Senate's failure to pass any sort of aid bill. 
    You are forgetting the inevitable circus that will follow a Trump loss. Think of the contested election in Florida all those years ago. Multiply that by around 1,000,000 and that's what could happen. Trump could still be president on 20 Jan 2021 and would be sworn in for another 4 years. All he has to do is not concede citing the avalanche of lawsuits that are sitting on GOP lawyers desks ready to be filed at 09:00 on 4th November.
    Meanwhile, the rest of the world are looking on at the USA self destruct. All because of the vanity of one man.

    I understand policies and preferences of tech site to discourage or even outlaw political commentary, however, there's little doubt that the future of the market will be influenced in one way or another depending on the winners as well as the reaction from the losers which is speculated to be anywhere from nothing to all-out civil war! I'm eagerly awaiting the actual results to be announced by Apple, but I'm encouraged by where the market is trending at this time. Now back to politics. I quoted the above primarily for the astute observation, "All because of the vanity of one man." However, I'd amend it slightly to say, "……the insanity of one man". 
    watto_cobra
  • Reply 8 of 15
    Rayz2016 said:
    I expect Horace Dediu and Neil Cybart to be right on the money, and everyone to be out by about ten billion (dollars, unit sales, whatever …)

    I also expect the usual suspects round here to break their fingernails while scratching around for proof that Apple is only ten years away from crashing and burning. 

    Looks like he’s predicting just south of $69 billion. I hope that’s right!

    I’m going with $65.8 billion.
    watto_cobra
  • Reply 9 of 15
    MacProMacPro Posts: 19,380member
    Hard day for investors . The whole market taking a big dive (allegedly) based on speculation “the Democratic candidate” (whoever that might be) could win. Personally, I don’t believe it but such are markets and rumors.
    The market just hates uncertainty.  I read most of Wall Street is salivating about the now inevitable new Government.  I just read that history shows the USA economy has done very well under past Democratic leaderships, I'll have to read up more.  I've only been here for thirty years so insufficient personal knowledge.
    watto_cobra
  • Reply 10 of 15
    yojimbo007yojimbo007 Posts: 1,144member
    Hard day for investors . The whole market taking a big dive (allegedly) based on speculation “the Democratic candidate” (whoever that might be) could win. Personally, I don’t believe it but such are markets and rumors.
    market took a big dive today???😳
    watto_cobra
  • Reply 11 of 15
    melgrossmelgross Posts: 33,034member
    Apparently Chatterjee was spot on.
    watto_cobra
  • Reply 12 of 15
    melgrossmelgross Posts: 33,034member
    Hard day for investors . The whole market taking a big dive (allegedly) based on speculation “the Democratic candidate” (whoever that might be) could win. Personally, I don’t believe it but such are markets and rumors.
    Actually, the market did quite well today. In fact, the talk is that the market has been going up the last few weeks on the speculation that Biden WOULD win.
    watto_cobrafastasleep
  • Reply 13 of 15
    melgrossmelgross Posts: 33,034member

    Beats said:
    Hard day for investors . The whole market taking a big dive (allegedly) based on speculation “the Democratic candidate” (whoever that might be) could win. Personally, I don’t believe it but such are markets and rumors.
    LOL you're smoking crack. The polls have not changed in any meaningful way in quite some time now and it looks like Biden (that's who) will win in a blowout, so that's clearly baked into the markets right now. It's all about the *massive* spike in COVID-19 cases and speculation of further shutdowns and the Senate's failure to pass any sort of aid bill. 

    Trump tried to stop the virus but he was called "racist", now those same people are using this failure against him.

    I'd still rather have a racist president than a sexist one.
    Are you nuts? Trump denied the virus was even real. FAKE NEWS he wrote in his Twitter post, From the democrats and the media who are trying to ruin my reelection campaign.

    then once he could no longer deny it was real, he went on his boyfriend Hannity’s show and said that it was just a mild cold, and that if you had it, you should go into work. I heard that myself.

    and, yes, he is racist, he’s also corrupt, ignorant, and doesn’t dare about anyone else. And so you know, he’s sexist too.
    watto_cobrafastasleepmuthuk_vanalingam
  • Reply 14 of 15
    fastasleepfastasleep Posts: 5,690member
    Hard day for investors . The whole market taking a big dive (allegedly) based on speculation “the Democratic candidate” (whoever that might be) could win. Personally, I don’t believe it but such are markets and rumors.
    LOL you're smoking crack. The polls have not changed in any meaningful way in quite some time now and it looks like Biden (that's who) will win in a blowout, so that's clearly baked into the markets right now. It's all about the *massive* spike in COVID-19 cases and speculation of further shutdowns and the Senate's failure to pass any sort of aid bill. 
    You are forgetting the inevitable circus that will follow a Trump loss. Think of the contested election in Florida all those years ago. Multiply that by around 1,000,000 and that's what could happen. Trump could still be president on 20 Jan 2021 and would be sworn in for another 4 years. All he has to do is not concede citing the avalanche of lawsuits that are sitting on GOP lawyers desks ready to be filed at 09:00 on 4th November.
    Meanwhile, the rest of the world are looking on at the USA self destruct. All because of the vanity of one man.

    I'm aware of all of this. I'm just saying the current situation hasn't changed in a meaningful way in the past several weeks so there's no way you blame a one-day shift in the market to Biden winning as he suggested. That's all.
  • Reply 15 of 15
    fastasleepfastasleep Posts: 5,690member

    Beats said:
    Hard day for investors . The whole market taking a big dive (allegedly) based on speculation “the Democratic candidate” (whoever that might be) could win. Personally, I don’t believe it but such are markets and rumors.
    LOL you're smoking crack. The polls have not changed in any meaningful way in quite some time now and it looks like Biden (that's who) will win in a blowout, so that's clearly baked into the markets right now. It's all about the *massive* spike in COVID-19 cases and speculation of further shutdowns and the Senate's failure to pass any sort of aid bill. 

    Trump tried to stop the virus but he was called "racist", now those same people are using this failure against him.

    I'd still rather have a racist president than a sexist one.
    Cool story. Where did I say anything about Trump's failure to deal with Covid? And in what reality is Trump not both racist and sexist?
    edited October 2020 muthuk_vanalingam
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