Apple's Q2 2023 should meet expectations, but June quarter may be rough

AppleInsider

While Apple's second-quarter results are expected to meet Morgan Stanley's estimates, investors should look beyond a potentially poor June quarter result, and not panic.

An Apple Store logo

Apple will be releasing its Q2 2023 financial results on May 4, and Morgan Stanley doesn't think there will be too many surprises. In a note to investors seen by AppleInsider, the Q2 results will be "in-line" with its expectations.

Morgan Stanley believes Apple will post $91.9 billion in revenue and a $1.41 earnings per share, which the firm puts at one to two percentage points below the Consensus. In the quarter, Apple supply chain data points "remained soft overall but stable" for March quarter iPhone and iPad builds, "intensifying concerns about the impact of macro uncertainty and a more price sensitive consumer," the note reads.

The firm, therefore, revises its iPhone revenue expectations up by 2% to $50.3 billion, which is -1% year-on-year, with iPhone shipments increasing to 54.5 million units, down 3% year-on-year. The ASP forecast is increasing by 1% to $922 due to "strong high-end mix," which will help offset discounting in international markets.

The weaker shipment data resulted in changes to the Mac forecast from 4.8 million units to 4.3 million and a 10% cut in forecast revenue to $6.3B. This represents a 39% drop in projected Mac revenue year-on-year.

Apple's Services model has been updated to account for March App Store revenue, which declined 1.5% year-on-year, versus an estimated 1.5% YoY increase. Now, Morgan Stanley expects Services revenue to be 1% lower than previously thought, at $20.9 billion, up 5.7% year-on-year.

The analysts warn that an implied June quarter revenue will drop down to "at least $5B below Consensus." Morgan Stanley revised the June revenue to $80.3 billion, down 3% year-on-year, and well below Wall Street's $85.3 billion, a 2% year-on-year rise.

The disparity is taking into account "unchanged iPhone expectations" of 41M units at a $901 ASP, but lower Mac, iPad, and Services expectations. "We believe the Street's iPhone forecast appears aggressive," writes the analysts, with build strength in April and May trending weaker as the trough of the iPhone 14 cycle approaches.

However, Morgan Stanley cautions restraint, as "History would show that a March quarter beat and June quarter guide down doesn't necessarily drive a negative post-earning stock reaction, as investors look past the trough of the cycle to the upcoming iPhone launch."

Of note to investors is Morgan Stanley's expectations of a $90 billion incremental buyback authorization and a 5% year-on-year dividend increase during March's earnings. The buyback authorization would imply the $20 billion quarterly buyback run rate continues.

AppleInsider will be covering the financial results and the ensuing analyst conference call in detail, as it all rolls out.

Read on AppleInsider

ramanpfaff

A 5% yoy dividend increase? One penny per share would be a 4.3% increase. I really hope Apple either does a 1.5 or 2 cent increase. The latter of course is my preference. Was it three years ago after a split that they had a factional penny. I think I actually looked up what would happen if you had an odd number of shares. Luckily I had an even number. 😀

AppleZulu

As always, it’s insane that Apple’s (or any company’s) short-term stock value moves not based on its actual performance, but rather on its actual performance as compared to some analysts’ expectations. 

A well-run company files its quarterly reports because they are legally required, but maps out its business strategy over years, not weeks or months. Then they must do a performative dance with the self-appointed analysts to try to manage expectations in order to try to avoid loss of value because planned slow and steady profitability falls short of some analyst’s sensationalist predictions, based on their need to generate attention and clicks for themselves. 

The company’s desire is stability resulting from execution of a long-term plan. The analyst benefits from volatility caused by sensationalizing predicted expectations, followed by sensationalizing the company’s under- or over-performance as compared to those predictions. 

That’s a truly broken system. 

waveparticle

It is going to get rougher and rougher as Apple transition manufacturing from China to much less efficient countries. I know many AI readers do not bother pay higher prices as long as Apple products are made in USA. LOL But I see Apple is forced to do this transition due to political pressure. 

lkrupp

I guess I’ll never understand how financial types come up with a ‘consensus’ of how they think a company should perform. Then if the company fails to meet the ‘consensus” its stock is hammered. How does an outfit like Morgan Stanley come up with revenue/profit/sales ‘consensus’? Chicken bones and Voodoo chants? Do they send agents out to count the number people in the store and the numbers of boxes on the shelves? It seems way to vulnerable to manipulation and engineering of results.

lkrupp

waveparticle said:

It is going to get rougher and rougher as Apple transition manufacturing from China to much less efficient countries. I know many AI readers do not bother pay higher prices as long as Apple products are made in USA. LOL But I see Apple is forced to do this transition due to political pressure. 

India now has more people than China. India is just as capable of supporting tech manufacturing and supplying educated and trainable workers. The Chinese do not have a monopoly on capable workers. Factor in increasing automation and suddenly China is on the way out as its middle class demands more pay and better working conditions and manufacturing costs rise. For the same reason manufacturing left the West for China, Manufacturing will leave China for India, South America, Vietnam, and the like. LOL China, you will be a has-been soon.

Oh, and India is the world’s largest democracy, not a totalitarian dictatorship like China under Xi. 

waveparticle

lkrupp said:

waveparticle said:

It is going to get rougher and rougher as Apple transition manufacturing from China to much less efficient countries. I know many AI readers do not bother pay higher prices as long as Apple products are made in USA. LOL But I see Apple is forced to do this transition due to political pressure. 

India now has more people than China. India is just as capable of supporting tech manufacturing and supplying educated and trainable workers. The Chinese do not have a monopoly on capable workers. Factor in increasing automation and suddenly China is on the way out as its middle class demands more pay and better working conditions and manufacturing costs rise. For the same reason manufacturing left the West for China, Manufacturing will leave China for India, South America, Vietnam, and the like. LOL China, you will be a has-been soon.

LOL You live in a dream. You have never been to India or China. If India is as capable as China, why did Apple choose China first? 

jdw

Whenever I read articles like this and then review the comments, I always wonder just how many of the commenters hold AAPL.  But it's not just about whether you hold AAPL in your portfolio, but about how long you have held it, and what type of investor (short term or long) you are.  When you take the long term, like I do (my first AAPL purchase was back in 1999), none of this short term news matters.  What matters is what big investors like Warren Buffet do, in combination with Apple company performance.  Warren has been increasing his holdings of AAPL, and for good reason.

I learned a long time ago that when you have a passion for a particular American company's products, that love is often shared by many others.  That brings meaningful value to the company you love.  And while my being an Apple products fan is partly what drive me to buy AAPL back in 1999, I will admit that the return of Steve Jobs and the positive impact it had on the stock at the time was also what drove me to buy AAPL for the first time.  Even so, prior to that I had other investments, so it wasn't like I had not invested anything at all prior to my AAPL purchase.  

Too often, most people just buy the products of a company rather than parts of the company itself.  That may give you short term happiness, but overall, it's technically a financial loss to you insofar as the item you purchase will depreciate over time.  Certainly, you may reap some benefits from that item, especially if you are a business earning a profit from it.  But if you also invest long term in the company who makes that product, you potentially find yourself in a position where you reap far greater gains than you would simply from buying a product that helps your bottom line.

Because if this, it never ceases to amaze me how many Apple fans really aren't that big of a fan at all when we reflect on how few of them own AAPL, either directly or indirectly through some kind of fund.  I guess this describes the average American in general, as only 58% own stock of some sort and the mean bank account balance for the average American is less than $50k.  While there are risks to investing, a lot of risk comes from people selling more often than they should.  People who ignore the advice of financial "experts" and who keep holding stocks that many suggest to sell, typically find themselves coming out ahead over the course of many years.

In total, don't get caught up in the details presented by analysts and the tech news.  Just buy some AAPL (and other stocks of value) and hold that investment for decades.  Don't succumb to the temptation to sell. You will ultimate be glad you made that choice.

waveparticle

jdw said:

Whenever I read articles like this and then review the comments, I always wonder just how many of the commenters hold AAPL.  But it's not just about whether you hold AAPL in your portfolio, but about how long you have held it, and what type of investor (short term or long) you are.  When you take the long term, like I do (my first AAPL purchase was back in 1999), none of this short term news matters.  What matters is what big investors like Warren Buffet do, in combination with Apple company performance.  Warren has been increasing his holdings of AAPL, and for good reason.

I learned a long time ago that when you have a passion for a particular American company's products, that love is often shared by many others.  That brings meaningful value to the company you love.  And while my being an Apple products fan is partly what drive me to buy AAPL back in 1999, I will admit that the return of Steve Jobs and the positive impact it had on the stock at the time was also what drove me to buy AAPL for the first time.  Even so, prior to that I had other investments, so it wasn't like I had not invested anything at all prior to my AAPL purchase.  

Too often, most people just buy the products of a company rather than parts of the company itself.  That may give you short term happiness, but overall, it's technically a financial loss to you insofar as the item you purchase will depreciate over time.  Certainly, you may reap some benefits from that item, especially if you are a business earning a profit from it.  But if you also invest long term in the company who makes that product, you potentially find yourself in a position where you reap far greater gains than you would simply from buying a product that helps your bottom line.

Because if this, it never ceases to amaze me how many Apple fans really aren't that big of a fan at all when we reflect on how few of them own AAPL, either directly or indirectly through some kind of fund.  I guess this describes the average American in general, as only 58% own stock of some sort and the mean bank account balance for the average American is less than $50k.  While there are risks to investing, a lot of risk comes from people selling more often than they should.  People who ignore the advice of financial "experts" and who keep holding stocks that many suggest to sell, typically find themselves coming out ahead over the course of many years.

In total, don't get caught up in the details presented by analysts and the tech news.  Just buy some AAPL (and other stocks of value) and hold that investment for decades.  Don't succumb to the temptation to sell. You will ultimate be glad you made that choice.

LOL How many people will be able to live for decades after buying AAPL? 

danox

Long since 2005, the best decision I ever made was moving all the money from a company 401(k) plan (mutual fund) and moving it over to Sharebuilder so that I could buy as many Apple shares as I could buy at the time with $129,500 in 2010, that amount is now $2,414,000.00 @ the close of market today after 13 years. Apple, Google, Monster Drink, and Samuel Adams, have also been very good companies to have stock shares in even thru the 2008 housing collapse.

Over the years there have been several Apple sites (Appleinsider) that have been very good at giving a heads up on Apple, and those sites have been far superior to Seeking Alpha, and most of the other dedicated financial sites, all the shares mentioned above were very good through the 2008-2009 period despite what some of the financial sites were saying at the time, which is very similar to some of the things that have been said today, every 10 to 12 years there’s a slight downturn but usually everything comes back within a year and a half. I’m talking about Wall Street. In comparison in the last downturn in 2008 it took housing about 4-5 years to bounce back (west coast) USA. I can’t say enough about investing in blue-chip stocks, particularly on some of the blue chip companies that sell products, that people want to buy in good times and bad times. In short buy Apple.

davidw

ramanpfaff said:

A 5% yoy dividend increase? One penny per share would be a 4.3% increase. I really hope Apple either does a 1.5 or 2 cent increase. The latter of course is my preference. Was it three years ago after a split that they had a factional penny. I think I actually looked up what would happen if you had an odd number of shares. Luckily I had an even number. ߘবt;/div>

So far Apple seems to want to keep the monthly dividend payout at a whole penny. The only reason why there was a fraction of a penny for two quarters after the split was because at the time of the split, Apple Annual dividend was $3.28 ($.82 per quarter) per share. This had to be divided by 4 when AAPL split 4:1. Which resulted in a $.205 payout per quarter, for just two quarters. 

Apple dividend is actually an annual dividend, split into 4 quarterly payments. So far, Apple only announces a change in dividend payout once a year, during the 2nd quarter earning report. (Unlike my Wells Fargo dividend. Which can go up or down every quarter, depending on how WF performed for the quarter.) With AAPL, no matter how bad or good Apple perform in the quarter, the dividend will not change until declared on the next 2nd quarter earnings report. And so far, it has only increase every year.

I too would like to see an increase to $.25 quarterly dividend payout. That makes it an even $1.00 per share annual dividend. But that would be an 8.7% increase. Apple use to increase their dividend closer to 8% than the less than 5% increase we got last year. For sure I thought AAPL dividend would be at $.96 a year ($.24 per quarter) right now. That would have been a 9% increase from the $.88 the year before. But instead we got (what i think) is the lowest percent dividend increase so far. A measly 4.5% increase from $.88 to $.92 ($.23 per quarter) annual dividend per share. This after Apple became the first company to hit a market cap of $3T and AAPL hitting an all time high of $182 + change, in the beginning of last year (2022).

i know Apple is using money already allotted from their cash hoard, for buybacks and dividend. But I would like to see more of that cash spent for dividend. Then again, I can't blame Apple for wanting to buy back more shares now, while its still significantly lower than its all time high. But that's me. I'm retired and would rather see the extra income from the cash dividend, than any long term gain in my AAPL shares, from buybacks.

jdw

waveparticle said:

jdw said:

Whenever I read articles like this and then review the comments, I always wonder just how many of the commenters hold AAPL.  But it's not just about whether you hold AAPL in your portfolio, but about how long you have held it, and what type of investor (short term or long) you are.  When you take the long term, like I do (my first AAPL purchase was back in 1999), none of this short term news matters.  What matters is what big investors like Warren Buffet do, in combination with Apple company performance.  Warren has been increasing his holdings of AAPL, and for good reason.

I learned a long time ago that when you have a passion for a particular American company's products, that love is often shared by many others.  That brings meaningful value to the company you love.  And while my being an Apple products fan is partly what drive me to buy AAPL back in 1999, I will admit that the return of Steve Jobs and the positive impact it had on the stock at the time was also what drove me to buy AAPL for the first time.  Even so, prior to that I had other investments, so it wasn't like I had not invested anything at all prior to my AAPL purchase.  

Too often, most people just buy the products of a company rather than parts of the company itself.  That may give you short term happiness, but overall, it's technically a financial loss to you insofar as the item you purchase will depreciate over time.  Certainly, you may reap some benefits from that item, especially if you are a business earning a profit from it.  But if you also invest long term in the company who makes that product, you potentially find yourself in a position where you reap far greater gains than you would simply from buying a product that helps your bottom line.

Because if this, it never ceases to amaze me how many Apple fans really aren't that big of a fan at all when we reflect on how few of them own AAPL, either directly or indirectly through some kind of fund.  I guess this describes the average American in general, as only 58% own stock of some sort and the mean bank account balance for the average American is less than $50k.  While there are risks to investing, a lot of risk comes from people selling more often than they should.  People who ignore the advice of financial "experts" and who keep holding stocks that many suggest to sell, typically find themselves coming out ahead over the course of many years.

In total, don't get caught up in the details presented by analysts and the tech news.  Just buy some AAPL (and other stocks of value) and hold that investment for decades.  Don't succumb to the temptation to sell. You will ultimate be glad you made that choice.

LOL How many people will be able to live for decades after buying AAPL? 

Not sure what you are laughing about unless it is yourself.  You need to re-read your question in order to realize how ridiculous it is.  I just finished saying that I bought AAPL in 1999.  It's 2023 now.  The "s" at the end of the word "decades" indicates plural as defined by "two or more."  I am still alive more than 2 "decades" after buying AAPL, and I am still in my early 50's.  Even if I live only to be 72, that is still another TWO DECADES on top of the exist two. 

Am I alone?  Hardly.  

To suggest that "few people" in their 20's cannot or would not buy AAPL and then live for decades thereafter is insanity at its finest.

waveparticle

jdw said:

waveparticle said:

jdw said:

Whenever I read articles like this and then review the comments, I always wonder just how many of the commenters hold AAPL.  But it's not just about whether you hold AAPL in your portfolio, but about how long you have held it, and what type of investor (short term or long) you are.  When you take the long term, like I do (my first AAPL purchase was back in 1999), none of this short term news matters.  What matters is what big investors like Warren Buffet do, in combination with Apple company performance.  Warren has been increasing his holdings of AAPL, and for good reason.

I learned a long time ago that when you have a passion for a particular American company's products, that love is often shared by many others.  That brings meaningful value to the company you love.  And while my being an Apple products fan is partly what drive me to buy AAPL back in 1999, I will admit that the return of Steve Jobs and the positive impact it had on the stock at the time was also what drove me to buy AAPL for the first time.  Even so, prior to that I had other investments, so it wasn't like I had not invested anything at all prior to my AAPL purchase.  

Too often, most people just buy the products of a company rather than parts of the company itself.  That may give you short term happiness, but overall, it's technically a financial loss to you insofar as the item you purchase will depreciate over time.  Certainly, you may reap some benefits from that item, especially if you are a business earning a profit from it.  But if you also invest long term in the company who makes that product, you potentially find yourself in a position where you reap far greater gains than you would simply from buying a product that helps your bottom line.

Because if this, it never ceases to amaze me how many Apple fans really aren't that big of a fan at all when we reflect on how few of them own AAPL, either directly or indirectly through some kind of fund.  I guess this describes the average American in general, as only 58% own stock of some sort and the mean bank account balance for the average American is less than $50k.  While there are risks to investing, a lot of risk comes from people selling more often than they should.  People who ignore the advice of financial "experts" and who keep holding stocks that many suggest to sell, typically find themselves coming out ahead over the course of many years.

In total, don't get caught up in the details presented by analysts and the tech news.  Just buy some AAPL (and other stocks of value) and hold that investment for decades.  Don't succumb to the temptation to sell. You will ultimate be glad you made that choice.

LOL How many people will be able to live for decades after buying AAPL? 

Not sure what you are laughing about unless it is yourself.  You need to re-read your question in order to realize how ridiculous it is.  I just finished saying that I bought AAPL in 1999.  It's 2023 now.  The "s" at the end of the word "decades" indicates plural as defined by "two or more."  I am still alive more than 2 "decades" after buying AAPL, and I am still in my early 50's.  Even if I live only to be 72, that is still another TWO DECADES on top of the exist two. 

Am I alone?  Hardly.  

To suggest that "few people" in their 20's cannot or would not buy AAPL and then live for decades thereafter is insanity at its finest.

Allen was ranked as the 44th-wealthiest person in the world by Forbes in 2018, with an estimated net worth of $20.3 billion at the time of his death(65). He is not retired. 

slurpy

What the fuck does "rough" mean? It will still have a better quarter than 99.999% of companies on the planet. Not every SINGLE quarter needs to be record-breaking. Apple has not had a "rough" quarter in decades. 

Lots of entitlement and fucked up expectations by these analysts. 

jdw

waveparticle said:

jdw said:

waveparticle said:

jdw said:

Whenever I read articles like this and then review the comments, I always wonder just how many of the commenters hold AAPL.  But it's not just about whether you hold AAPL in your portfolio, but about how long you have held it, and what type of investor (short term or long) you are.  When you take the long term, like I do (my first AAPL purchase was back in 1999), none of this short term news matters.  What matters is what big investors like Warren Buffet do, in combination with Apple company performance.  Warren has been increasing his holdings of AAPL, and for good reason.

I learned a long time ago that when you have a passion for a particular American company's products, that love is often shared by many others.  That brings meaningful value to the company you love.  And while my being an Apple products fan is partly what drive me to buy AAPL back in 1999, I will admit that the return of Steve Jobs and the positive impact it had on the stock at the time was also what drove me to buy AAPL for the first time.  Even so, prior to that I had other investments, so it wasn't like I had not invested anything at all prior to my AAPL purchase.  

Too often, most people just buy the products of a company rather than parts of the company itself.  That may give you short term happiness, but overall, it's technically a financial loss to you insofar as the item you purchase will depreciate over time.  Certainly, you may reap some benefits from that item, especially if you are a business earning a profit from it.  But if you also invest long term in the company who makes that product, you potentially find yourself in a position where you reap far greater gains than you would simply from buying a product that helps your bottom line.

Because if this, it never ceases to amaze me how many Apple fans really aren't that big of a fan at all when we reflect on how few of them own AAPL, either directly or indirectly through some kind of fund.  I guess this describes the average American in general, as only 58% own stock of some sort and the mean bank account balance for the average American is less than $50k.  While there are risks to investing, a lot of risk comes from people selling more often than they should.  People who ignore the advice of financial "experts" and who keep holding stocks that many suggest to sell, typically find themselves coming out ahead over the course of many years.

In total, don't get caught up in the details presented by analysts and the tech news.  Just buy some AAPL (and other stocks of value) and hold that investment for decades.  Don't succumb to the temptation to sell. You will ultimate be glad you made that choice.

LOL How many people will be able to live for decades after buying AAPL? 

Not sure what you are laughing about unless it is yourself.  You need to re-read your question in order to realize how ridiculous it is.  I just finished saying that I bought AAPL in 1999.  It's 2023 now.  The "s" at the end of the word "decades" indicates plural as defined by "two or more."  I am still alive more than 2 "decades" after buying AAPL, and I am still in my early 50's.  Even if I live only to be 72, that is still another TWO DECADES on top of the exist two. 

Am I alone?  Hardly.  

To suggest that "few people" in their 20's cannot or would not buy AAPL and then live for decades thereafter is insanity at its finest.

Allen was ranked as the 44th-wealthiest person in the world by Forbes in 2018, with an estimated net worth of $20.3 billion at the time of his death(65). He is not retired. 

What in THE world does Paul Allen of Microsoft have to do with the discussion?

Answer: nothing

The discussion between you and I in this thread is hardly different than the following...

Me: The sky is blue.
You: No, it's green.
Me: It absolutely is not green.
You: It's 6:00am, so there!

Huh?

Really, your replies to what I wrote really are THAT crazy.  I strongly suggest you take a break from this forum until you can come back with intelligible dialog.  Might also do you well to contemplate buying some AAPL too. :-) 

avon b7

lkrupp said:

waveparticle said:

It is going to get rougher and rougher as Apple transition manufacturing from China to much less efficient countries. I know many AI readers do not bother pay higher prices as long as Apple products are made in USA. LOL But I see Apple is forced to do this transition due to political pressure. 

India now has more people than China. India is just as capable of supporting tech manufacturing and supplying educated and trainable workers. The Chinese do not have a monopoly on capable workers. Factor in increasing automation and suddenly China is on the way out as its middle class demands more pay and better working conditions and manufacturing costs rise. For the same reason manufacturing left the West for China, Manufacturing will leave China for India, South America, Vietnam, and the like. LOL China, you will be a has-been soon.

Oh, and India is the world’s largest democracy, not a totalitarian dictatorship like China under Xi. 

India might get there and no manufacturer should put all their eggs into one manufacturing basket but China is way out in front in so many areas that it will remain a force to be reckoned with. 

Firstly, Chinese 5G, industrial 5G and industrial IoT cannot currently be matched by anyone in the field on terms of mass production. Secondly, manufacturing requires close knit, local supply chain ecosystems tied together by all that 5G technology. Thirdly, finished products need to be shipped (literally!) out of the country to international markets and that takes massive and efficient infrastructure. China has all of that in place and once again is using 5G to transform the port and rail industries.

As an aside, it is getting more expensive to manufacture in China but at the same time China is growing its internal market as more people can afford to buy the products manufactured there.

lkrupp

waveparticle said:

lkrupp said:

waveparticle said:

It is going to get rougher and rougher as Apple transition manufacturing from China to much less efficient countries. I know many AI readers do not bother pay higher prices as long as Apple products are made in USA. LOL But I see Apple is forced to do this transition due to political pressure. 

India now has more people than China. India is just as capable of supporting tech manufacturing and supplying educated and trainable workers. The Chinese do not have a monopoly on capable workers. Factor in increasing automation and suddenly China is on the way out as its middle class demands more pay and better working conditions and manufacturing costs rise. For the same reason manufacturing left the West for China, Manufacturing will leave China for India, South America, Vietnam, and the like. LOL China, you will be a has-been soon.

LOL You live in a dream. You have never been to India or China. If India is as capable as China, why did Apple choose China first? 

You’re the one dreaming if your think China won’t lose most of its manufacturing with Xi in charge, especially when  he decides to invade Taiwan. China is on the way out because if its totalitarian dictatorship, keeping tis citizens oppressed, slaves to the state, and general stupidity of its leaders. Maybe China should try another Great Leap Forward like Mao did. Send the intellectuals to the collective farms and let uneducated farmers run the country instead. China is a cesspool of oppression, mindless stooges who have to follow the line or get executed. Where’s Xi’s Little Red Book by the way?