Earnings preview: Wall Street expects record $77.4B revenue in Apple's best quarter in his...

AppleInsider · January 31, 2017 4:00PM

After a period of declining sales, Apple is expected to have returned to growth in the holiday 2016 shopping season, riding high on the popularity of the new iPhone 7 series.

Apple will report the results of its December quarter later today after markets close. Market consensus calls for the company to report revenue of $77.4 billion, and $3.23 earnings per share.

Analyst Amit Daryanani of RBC Capital Markets is slightly below consensus, calling for $76.9 billion in revenue and $3.15 earnings per share. Though lower than market expectations, Daryanani's forecast would still best Apple's December 2015 quarter, when the company sold 74.8 million iPhones on its way to $75.9 billion in revenue.

Meanwhile Steven Milunovich of UBS expects Apple will slightly exceed expectations, calling for revenue of $77.8 billion and earnings per share of $3.24.

Wall Street generally believes Apple will report sales of 78 million iPhones for the three-month period, which would also represent the company's best-quarter ever for handset sales. Driven by adoption of the iPhone 7 Plus, the iPhone's average selling price is expected to grow to $685.

Looking forward to the March quarter, the market expects continued year-over-year growth. Consensus estimates are forecasting $53.8 billion in revenue and $2.09 earnings per share, with 53.5 million iPhone sales expected, besting the $50.6 billion in revenue and 51.2 million iPhones sold by the company in the March 2016 quarter.

Still, those numbers would remain lower than two years prior, when the blockbuster iPhone 6 led to 61 million iPhone sales and $58.01 billion in revenue.

Looking longer term, analysts remain bullish on shares of AAPL, and recommend that investors buy in. Timothy Arcuri of Cowen and Company has maintained an "outperform" rating with a $135 price target, while UBS has a price forecast of $127, and RBC's "outperform" rating comes with a $125 target.

The results of Apple's first quarter of fiscal 2017 will be announced after markets close at 4 p.m. Eastern, 1 p.m. Pacific this afternoon. A conference call with Chief Executive Tim Cook and Chief Financial Officer Luca Maestri will follow at 5 p.m. Eastern, 2 p.m. Pacific. AppleInsider will have full, live coverage.

igorsky · January 31, 2017 4:08PM

So, doomed? Not doomed? Make up your mind, Wall Street.

ceek74 · January 31, 2017 4:17PM

But but, the analysts said...

radarthekat · January 31, 2017 4:30PM

The extra week in the quarter should be a big help. That adds about 8% to the length of the quarter, which should translate to about 8% higher sales versus a normal 13-week holiday quarter. Last time was the Oct-Dec 2011 quarter (fiscal 2012 Q1). So this isn't a normal occurrence.

macxpress · January 31, 2017 4:34PM

Setting Apple up for disappointment I see...I hope they're right though. Maybe it will shut everyone up about the fall of Apple at least temporarily.

ibskier · January 31, 2017 4:56PM

2016 Q1 was only the usual 13 weeks but included an extraordinary $500 million payment from Samsung which impacts comparisons with last years earnings.

fotoformat · January 31, 2017 5:11PM

Without feeling smug, I'll certainly feel a slight sense of pride in having helped Apple to a record earnings quarter... because although it's taken me a long time - and I mean a long time, being an old-age pensioner (apparently) - a month ago I finally bought an iPhone for my pocket, instead of relying on that old-fashioned 'thing in a cradle with alpha-numerical push buttons' on my desktop, which always had so many missed calls in it's limited memory.

So yeh... although I started with a Mac IIVX back in the early '90s and only upgraded every half-decade or so, I suppose every bit helps... and, the iPhone is now giving me itchy feelings to go for an Apple Watch sooner rather than later! Like millions of others I feel, and benefit from, Apple's 'halo' effect... so fuck the anal-ists manipulative predictions!

brucemc · January 31, 2017 5:12PM

Record profits - whatever...

Behind in voice assistants, Microsoft eating their lunch in the high end PC market, Mac line is a disaster, nothing on the market for VR, Apple Watch is a failure or at best a "meh", and, lest we forget, "no innovation for years".

/s

(I think I hit most of the current trolling points).

SpamSandwich · January 31, 2017 5:16PM

radarthekat said:

The extra week in the quarter should be a big help. That adds about 8% to the length of the quarter, which should translate to about 8% higher sales versus a normal 13-week holiday quarter. Last time was the Oct-Dec 2011 quarter (fiscal 2012 Q1). So this isn't a normal occurrence.

Hey, you're a mod now? Congrats.

jungmark · January 31, 2017 5:29PM

Odd. Haven't these analyst been saying the new MacBook Pros are failures? The watch isn't a hit? iPhone orders are being cut left and right?

evilution · January 31, 2017 5:30PM

So, they bang on about how Apple are going to sell less phones but expect the highest quarter.

randominternetperson · January 31, 2017 5:31PM

radarthekat said:

The extra week in the quarter should be a big help. That adds about 8% to the length of the quarter, which should translate to about 8% higher sales versus a normal 13-week holiday quarter. Last time was the Oct-Dec 2011 quarter (fiscal 2012 Q1). So this isn't a normal occurrence.

Shhh. Don't give the analysts an excuse to discount the numbers by 8%!

mtbnut · January 31, 2017 5:31PM

jungmark said:

Odd. Haven't these analyst been saying the new MacBook Pros are failures? The watch isn't a hit? iPhone orders are being cut left and right?

They're right. One-hundred percent of this last quarter's revenue came from sales of AC adapters and wireless keyboards. They didn't sell a single MBP, Watch or iPhone.

randominternetperson · January 31, 2017 5:36PM

macxpress said:

Setting Apple up for disappointment I see...I hope they're right though. Maybe it will shut everyone up about the fall of Apple at least temporarily.

I won't be completely shocked if Apple has it's best quarter ever but misses the "consensus estimate" and the news is "Apple revenue below expectations."

Fingers crossed for this being on of those rare quarters when AAPL rallies after the bell instead. It could happen.

spliff monkey · January 31, 2017 5:42PM

As others have said this would be ironic in the face of... "iPhone 7 sales are flat" comments from analysts less than a month ago. Strange how someone chants "Apple is doomed", Apple sales figures proves them wrong (again), and some analyst or competitor resumes the "ring around" and starts chanting "Apple is doomed" again. I know it won't stop, and it doesn't really affect me, but it is good example of "observation bias" dominating our collective conciousness. If you want something to "be" not even the facts can change someone's opinion.

gatorguy · January 31, 2017 5:44PM

jungmark said:

Odd. Haven't these analyst been saying the new MacBook Pros are failures? The watch isn't a hit? iPhone orders are being cut left and right?

I think it's primarily just the few that get mentioned here because they're odd-out and "news-worthy" (!). Most analysts are reportedly expecting a return to growth. Relying on a few spotty articles as a judgment of Wall Street expectations isn't likely to give an accurate picture. For the most part Wall Street trusts what Apple says in forward-looking statements and a return to traditional growth is what Apple had said to expect this quarter.

thedba · January 31, 2017 6:03PM

brucemc said:

Record profits - whatever...

Behind in voice assistants, Microsoft eating their lunch in the high end PC market, Mac line is a disaster, nothing on the market for VR, Apple Watch is a failure or at best a "meh", and, lest we forget, "no innovation for years".

/s

(I think I hit most of the current trolling points).

You forgot the Apple car. How could you forget "they failed in delivering the car". /S

metrix · January 31, 2017 6:23PM

fotoformat said:

Without feeling smug, I'll certainly feel a slight sense of pride in having helped Apple to a record earnings quarter... because although it's taken me a long time - and I mean a long time, being an old-age pensioner (apparently) - a month ago I finally bought an iPhone for my pocket, instead of relying on that old-fashioned 'thing in a cradle with alpha-numerical push buttons' on my desktop, which always had so many missed calls in it's limited memory.

So yeh... although I started with a Mac IIVX back in the early '90s and only upgraded every half-decade or so, I suppose every bit helps... and, the iPhone is now giving me itchy feelings to go for an Apple Watch sooner rather than later! Like millions of others I feel, and benefit from, Apple's 'halo' effect... so fuck the anal-ists manipulative predictions!

Okay, you jumped on Apple before me but I got in at Centris 610 and didn't look back. I just purchase Apple Watch 2 about 2 months ago so I could play basketball with wireless headset but a bad heart valve stopped me from ever trying. Open heart surgery fixed my Mitral valve but following surgery my heart went into Aphib(racing heart beat) from 140-180bpm. I went to ER and found that the Apple Watch was within 1bpm of Hospital's device. The Aphib condition is quite normal for open heart surgeries but the Apple Watch became an awesome tool for checking to see if my heart was racing or not, just by asking SIRI to check my heart rate and it showing previous and real time rates.

melodyof1974 · January 31, 2017 6:37PM

brucemc said:

Record profits - whatever...

Behind in voice assistants, Microsoft eating their lunch in the high end PC market, Mac line is a disaster, nothing on the market for VR, Apple Watch is a failure or at best a "meh", and, lest we forget, "no innovation for years".

/s

(I think I hit most of the current trolling points).

Maybe something about AppleTV and AppleCar.....

fotoformat · January 31, 2017 6:39PM

metrix said:

fotoformat said:

Without feeling smug, I'll certainly feel a slight sense of pride in having helped Apple to a record earnings quarter... because although it's taken me a long time - and I mean a long time, being an old-age pensioner (apparently) - a month ago I finally bought an iPhone for my pocket, instead of relying on that old-fashioned 'thing in a cradle with alpha-numerical push buttons' on my desktop, which always had so many missed calls in it's limited memory.

So yeh... although I started with a Mac IIVX back in the early '90s and only upgraded every half-decade or so, I suppose every bit helps... and, the iPhone is now giving me itchy feelings to go for an Apple Watch sooner rather than later! Like millions of others I feel, and benefit from, Apple's 'halo' effect... so fuck the anal-ists manipulative predictions!

Okay, you jumped on Apple before me but I got in at Centris 610 and didn't look back. I just purchase Apple Watch 2 about 2 months ago so I could play basketball with wireless headset but a bad heart valve stopped me from ever trying. Open heart surgery fixed my Mitral valve but following surgery my heart went into Aphib(racing heart beat) from 140-180bpm. I went to ER and found that the Apple Watch was within 1bpm of Hospital's device. The Aphib condition is quite normal for open heart surgeries but the Apple Watch became an awesome tool for checking to see if my heart was racing or not, just by asking SIRI to check my heart rate and it showing previous and real time rates.

My main reason for purchasing an Apple Watch would also be because of a past heart problem... I had a major attack three years ago from stress after my wife and love for 35 years passed away. Although I have a defibrilator fitted I've never had any recurring problem with the ticker... but a Watch with clever software would sure be interesting to browse during my various exercises as I walk and ride a fixie bike every day... not having been a car owner for six years!

brucemc · January 31, 2017 6:58PM

gatorguy said:

jungmark said:

Odd. Haven't these analyst been saying the new MacBook Pros are failures? The watch isn't a hit? iPhone orders are being cut left and right?

I think it's primarily just the few that get mentioned here because they're odd-out and "news-worthy" (!). Most analysts are reportedly expecting a return to growth. Relying on a few spotty articles as a judgment of Wall Street expectations isn't likely to give an accurate picture. For the most part Wall Street trusts what Apple says in forward-looking statements and a return to traditional growth is what Apple had said to expect this quarter.

It is true that for the most part, most analysts are positive about Apple in their views regarding iPhone having growth remaining, revenue growing, etc. And Wall Street does have confidence in Apple's projections. It is the media - mostly tech media & bloggers, but more mainstream sources as well - that publish the "Apple is forever doomed" articles.

Wall Street gets the criticism regarding how they value Apple relative to almost every other company. Apple's PE ratio a short time ago was in the single digits ex-cash (it is probably about 10 now), whereas the S&P 500 average PE is about 17-18. Proctor and Gamble, the number one consumer staples company (a hot bed of innovation:) has a PE of 15-16. Walmart has a PE of 14-15. These companies sales growth rate over the last 5 years (or even last 2-3) have not been as high as Apple's, and yet they are valued much higher.

Given Apple's return of capital (buybacks and dividends), and a PE of 10 (ex-cash), Apple is being valued as though it will be gone in a little over decade. Not as though they are the premium consumer tech company which is growing sales, maintaining margins, building a product-attached-services business, and introducing new product categories which have some reasonable growth potential.

If Apple was valued like Walmart, they would be a trillion dollar company. Which, as per Horace Dediu, is about what iOS devices have generated as an ecosystem for Apple since the iPhone was introduced.

Earnings preview: Wall Street expects record $77.4B revenue in Apple's best quarter in his...

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