Drama in Apple's quarterly earnings expected from 'iPhone 8' launch guidance, not actual r...

AppleInsider · August 1, 2017 2:41PM

After the close of business on Tuesday, Apple will report the results for what is seasonally its slowest quarter of the year, with Apple and industry watchers predicting around $44 billion in revenue. But all eyes are on Apple's guidance for the fourth fiscal quarter, to see how confident the company is about the "iPhone 8" launch.

Wall Street as a whole is expecting Apple to report revenue at $44.9 billion for the quarter, with 40.8 million iPhones, 9.1 million iPads, and 4.3 million Macs sold, according to Wells Fargo. In the previous quarter, Apple declared that it was expecting revenue between $43.5 billion and $45.5 billion, with a gross margin of between 37.5 percent and 38.5 percent.

Rod Hall from J.P. Morgan believes Apple's revenue will reach $43.3 billion in the third quarter, with margin of 38.1 percent. Hall is expecting 40.6 million iPhones sold at an average selling price of $604, with iPads hitting 8.7 million sales, and Macs climbing to 4.4 million from the previous quarter's 4.2 million.

Analyst Amit Daryanani from RBC Capital Markets is shooting a bit higher, looking at $44.9 billion in revenue. RBC expects around 40 million iPhones sold on the quarter, but has not broken out average selling price, or expected sales of the iPad and Mac.

Wells Fargo's Maynard Um is expecting Apple to break through its upper guidance, hitting $45.6 billion in revenue on the strength of 43 million iPhone sales with a $630 average selling price. Apple's refreshed iPad lineup is expected to see 8.7 million units sold, with the new Kaby Lake-powered MacBook Pro and iMac lineups climbing Mac sales to 4.4 million.

Timothy Arcuri from Cowen and Co. is expecting $44.4 billion, and believes 42 million iPhones will be sold, at an average selling price of "$590 or higher" depending on product mix. No comment or estimate was provided for Mac or iPad sales.

Steve Milunovich from UBS is also very close to consensus, seeing $45.0 billion in revenue for the quarter -- but sees a strong upside to the company's next few quarters on the strength of the "super cycle." Milunovitch expects Apple to beat the consensus with 43 million iPhones sold at an average selling price of $630 per phone, with iPad sales growing to 8.7 million.

Overall, analysts are seeing Apple meeting its quarterly earnings target, but appear to be focused a great deal on the next quarter and its impact on the fiscal year overall. The main topic of discussion centers on the "iPhone 8" pricing range, and potential deferment of income to the next quarter and fiscal year 2018 if the device hits retail later than other fall launches.

What Apple announces for its expected revenue in the fourth fiscal quarter of 2017 that concludes in September, will say a lot about how confident it is in when it will ship the "iPhone 8" to consumers. At present, Wall Street is expecting a five percent year-over-year growth, with revenue for the September quarter hitting $49.2 billion.

Apple's guidance off of that mark signals Apple's thoughts on how many of the device it will have available in the quarter. But, even if Apple's predictions are lower than consensus because of uncertainties around "iPhone 8" delivery, the sales are not lost and just shoved to the already massive holiday quarter, and the following fiscal year.

In the year-ago quarter, Apple posted quarterly revenue of $42.4 billion and quarterly net income of $7.8 billion. Gross margin was 38 percent.

Apple stock prices started the month at $143.50, and hit a peak of $153.46 on July 26. At open of business on Tuesday, stock price was at $148.79.

avon b7 · August 1, 2017 2:54PM

I personally think there will be a supercycle but not solely attributable to the rumoured '8' model but the entire line.

The highest end phone will possibly be a niche product anyway, priced out of reach of many users who will likely move up to the 7s line. I'm not sure guidance will shed much light on anything unless Apple predicts (internally) product shortages across the entire phone range.

retrogusto · August 1, 2017 3:04PM

If any part of the rollout takes place a few days later than usual, that will have a big impact on the numbers for next quarter (but little or no impact on long-term sales or profits), so it's hard to really judge too much based on the forecast numbers this time unless they are really huge. They never ramp up fast enough to satisfy initial demand, so whatever they do forecast will probably be fairly accurate for the timeframe indicated, but we'd really need a forecast that goes past the end of September to fully understand their feelings about the potential for the new products.

larryjw · August 1, 2017 3:24PM

Apple has a difficult quarter coming up. Will the rumored iPhone 8 stall sales of iPhone 7S or whatever it is called?

Seems to me Apple will have to announce and launch both close to simultaneously. The guidance will indirectly tell us the timing of both.

I dont expect the iphone 8 to be priced in the stratosphere like some are predicting.

NY1822 · August 1, 2017 3:33PM

how many weeks of sales of the Iphone 8 will be in the 4th quarter? Kind of irrelevant bc they will be sold out anyway, so what's the suspense about? they can't model in 3-4 weeks of sold out Iphone 8's that the guidance is so important?

fallenjt · August 1, 2017 3:45PM

avon b7 said:

I personally think there will be a supercycle but not solely attributable to the rumoured '8' model but the entire line.

The highest end phone will possibly be a niche product anyway, priced out of reach of many users who will likely move up to the 7s line. I'm not sure guidance will shed much light on anything unless Apple predicts (internally) product shortages across the entire phone range.

You think? Is 7+ niche product with jet black? It started at $869 and couldn't even meet the demands. Now, let's say iPhone X is priced at $899/$999/$1099 for 64/256/512GB. You'll see the 256GB version is just within the 7+ 256GB last year. Many will go for $899 version.

Metriacanthosaurus · August 1, 2017 5:09PM

fallenjt said:

avon b7 said:

I personally think there will be a supercycle but not solely attributable to the rumoured '8' model but the entire line.

The highest end phone will possibly be a niche product anyway, priced out of reach of many users who will likely move up to the 7s line. I'm not sure guidance will shed much light on anything unless Apple predicts (internally) product shortages across the entire phone range.

You think? Is 7+ niche product with jet black? It started at $869 and couldn't even meet the demands. Now, let's say iPhone X is priced at $899/$999/$1099 for 64/256/512GB. You'll see the 256GB version is just within the 7+ 256GB last year. Many will go for $899 version.

$969/$1069/$1169 respectively, is what we should expect, for 128/256/512. There won't be a 64 GB version.

$100 premium over the 7 Plus. Nothing more complicated than that.

Soli · August 1, 2017 5:33PM

fallenjt said:

avon b7 said:

I personally think there will be a supercycle but not solely attributable to the rumoured '8' model but the entire line.

The highest end phone will possibly be a niche product anyway, priced out of reach of many users who will likely move up to the 7s line. I'm not sure guidance will shed much light on anything unless Apple predicts (internally) product shortages across the entire phone range.

You think? Is 7+ niche product with jet black? It started at $869 and couldn't even meet the demands. Now, let's say iPhone X is priced at $899/$999/$1099 for 64/256/512GB. You'll see the 256GB version is just within the 7+ 256GB last year. Many will go for $899 version.

Should we expect $100 to stay constant when doubling capacity leads to such huge gains? Note that the iPad Pro prices are $799, $899, and $1099 for 128GB, 256GB, and 512GB, respectively.

Metriacanthosaurus · August 1, 2017 5:42PM

Soli said:

fallenjt said:

avon b7 said:

I personally think there will be a supercycle but not solely attributable to the rumoured '8' model but the entire line.

The highest end phone will possibly be a niche product anyway, priced out of reach of many users who will likely move up to the 7s line. I'm not sure guidance will shed much light on anything unless Apple predicts (internally) product shortages across the entire phone range.

You think? Is 7+ niche product with jet black? It started at $869 and couldn't even meet the demands. Now, let's say iPhone X is priced at $899/$999/$1099 for 64/256/512GB. You'll see the 256GB version is just within the 7+ 256GB last year. Many will go for $899 version.

Should we expect $100 to stay constant when doubling capacity leads to such huge gains? Note that the iPad Pro prices are $799, $899, and $1099 for 128GB, 256GB, and 512GB, respectively.

That is a good point. I didn't even notice until now that the 512 model was a $200 premium. Obviously, those units are storage units are still ridiculously expensive.

In that case, I'm going to say iPhone 8 won't offer a 512 model.

128 GB - $969
256 GB - $1069

dick applebaum · August 1, 2017 6:29PM

What if... Just, what if...

...all these rumored new iPhone problems (software, hardware, component availability, manufacturing capacity, TouchID/FaceRecognition, OLED, etc.) -- are just that: rumors. A distraction -- a ruse, actually!

Three out of the five members of our household are running the latest iOS 11 developernbeta on their iPhones and iPads. It's pretty damn solid considering a committed fall (Sep 22) release -- so I don't think iOS 11 is an issue.

When you consider that Apple's CEO and COO have expertise and experience second to none in manufacturing at scale/on schedule...

And Apple's capability (and willingness) to infuse large amounts of cash when/where necessary to assure that the process goals are met.

What if... Just, what if... Apple gives guidance that they can deliver the new iPhone lineup at volume in early to mid September -- say, announce Tuesday, Sep 5 or Sep 12, and delivery the following Friday.

Wouldn't that blow everyone out of the water?

Drama in Apple's quarterly earnings expected from 'iPhone 8' launch guidance, not actual r...

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