Apple seen posting record $90 billion holiday quarter driven by Services & iPhone 11 deman...
Financial services firm Cowen has issued its latest guidance to investors about the state of Apple, and says that the company's offerings in total are setting up for a massive holiday quarter.
Strong demand for the iPhone 11 expected to mean Apple exceeds earnings forecasts
Ahead of Apple's next financial earnings call, a Cowen investor note seen by AppleInsider says the company will exceed expectations and earn $90 billion in the quarter spanning the holiday buying season.
That's around $3.1 billion more than previous estimates, and the company says this is predominantly due to increased demand for the iPhone plus growing Services.
"[Recent]... third party data suggests the recent price cut to the XR model and newly launched 11 are seeing healthy demand," says the investor note. "Continued expansion in the iPhone trade-in program and 0% financing options are also expected to play a part in improving affordability."
"We think gaming driven revenues in China are likely now normalized after the catchup in game approvals earlier in the year and could be seasonally up," it continues. "We expect AppleCare (correlated with new device units) to be seasonally up in the Sep Q, Apple Music to be up seasonally."
Cowen expects 69 million iPhones to be made in the fourth quarter, up slightly from its previous prediction of 63 million.
"The iPhone 11 product cycle... [is] off to a solid start," it reports, "and the upcoming TV+ service supports longer term Services growth."
Cowen says that the reception to the iPhone 11 has been clear to investors, but Apple TV+ has not.
"Services seems like a black box to many investors," it says, "but it appears that as long as the Services revenue grows and gross margins hold up, investors seem to be fine with it."
In the short to medium term, Cowen sees three "forthcoming catalysts" that could affect Apple's earnings. These are the launch of Apple TV+, and an update on US import tariffs on December 15.
There is also the potential launch of a low-cost "iPhone SE 2," which Cowen believes could see Intel remaining as a chip provider.
"We do also believe Intel could remain in the supply chain as a supplier of 4G modems for the potential low-cost iPhone SE2 model in [the first half of 2020]," it says.
Tim Cook will introduce Apple's next financial earnings call on October 30
Over the longer term, Cowen expects to see Apple profiting from the launch of 5G models in late 2020. Those models will use Qualcomm modems, and Cowen notes that this is part of a six-year deal between Qualcomm and Apple. However, it also sees Apple replacing Qualcomm with its own modem.
"We also estimate that an Apple developed discrete modem could find its way on the product roadmap by 2022," the investor note continues. "Having both apps processor and modem developed in house could allow Apple to potentially integrate both chips together for future products, and has positive gross margin implications."
Apple's next legally-required financial earnings call is due on October 30. Cowen recommends investors look out for the call to detail "iPhone demand trends in China/India" plus information about tariffs.
Strong demand for the iPhone 11 expected to mean Apple exceeds earnings forecasts
Ahead of Apple's next financial earnings call, a Cowen investor note seen by AppleInsider says the company will exceed expectations and earn $90 billion in the quarter spanning the holiday buying season.
That's around $3.1 billion more than previous estimates, and the company says this is predominantly due to increased demand for the iPhone plus growing Services.
"[Recent]... third party data suggests the recent price cut to the XR model and newly launched 11 are seeing healthy demand," says the investor note. "Continued expansion in the iPhone trade-in program and 0% financing options are also expected to play a part in improving affordability."
"We think gaming driven revenues in China are likely now normalized after the catchup in game approvals earlier in the year and could be seasonally up," it continues. "We expect AppleCare (correlated with new device units) to be seasonally up in the Sep Q, Apple Music to be up seasonally."
Cowen expects 69 million iPhones to be made in the fourth quarter, up slightly from its previous prediction of 63 million.
"The iPhone 11 product cycle... [is] off to a solid start," it reports, "and the upcoming TV+ service supports longer term Services growth."
Cowen says that the reception to the iPhone 11 has been clear to investors, but Apple TV+ has not.
"Services seems like a black box to many investors," it says, "but it appears that as long as the Services revenue grows and gross margins hold up, investors seem to be fine with it."
In the short to medium term, Cowen sees three "forthcoming catalysts" that could affect Apple's earnings. These are the launch of Apple TV+, and an update on US import tariffs on December 15.
There is also the potential launch of a low-cost "iPhone SE 2," which Cowen believes could see Intel remaining as a chip provider.
"We do also believe Intel could remain in the supply chain as a supplier of 4G modems for the potential low-cost iPhone SE2 model in [the first half of 2020]," it says.
Tim Cook will introduce Apple's next financial earnings call on October 30
Over the longer term, Cowen expects to see Apple profiting from the launch of 5G models in late 2020. Those models will use Qualcomm modems, and Cowen notes that this is part of a six-year deal between Qualcomm and Apple. However, it also sees Apple replacing Qualcomm with its own modem.
"We also estimate that an Apple developed discrete modem could find its way on the product roadmap by 2022," the investor note continues. "Having both apps processor and modem developed in house could allow Apple to potentially integrate both chips together for future products, and has positive gross margin implications."
Apple's next legally-required financial earnings call is due on October 30. Cowen recommends investors look out for the call to detail "iPhone demand trends in China/India" plus information about tariffs.
Comments
All speculation though.
Won’t affect me as I don’t own any Apple stock. But it will be hilarious seeing all the rage from the haters whose happiness depends on Apple failing.
Worth to note, many iPhone purchases may be held off for Nov to take advantage of the AppleTV+ deal when purchasing a device. I know I am holding off for a few weeks now that I am eligible for an upgrade.
Everyone knows the majority of worthless trolls online are of the anti-Apple, pro-Android variety.
I bought my first Apple shares about the time of the OS X Public Beta and stopped buying on the run up before the 7-1 split +/- low $300’s. Have not sold shares but have not added to the pile. Since then I have been diversifying. I have been pretty lucky on picks I made years ago and held like Apple and Amazon and had the good sense to get out of Tesla. Recently I have been putting most into cash/precious metals.
Bottom line is that I own Apple stock and follow it, but do not trade it anymore because it seems manipulated. Your mileage may vary.
Drive the price high by creating unrealistic expectations.
Borrow a load of shares and then sell them.
Then put out loads of bad news to crash the share price.
Buy back the shares at a lower price. Give back the shares to the mug who lent them to you.
Pocket the difference.
Can't remember the name for that. Anyone?
"Short selling" I think? I still don't understand why a mug would lend shares out. Seems risky to both parties especially considering you may not get them back if the price skyrockets. Maybe this has happened causing analysts to trash Apple?
It's MACRUMORS where idiots around the world bash anything Apple. Tim Cook could announce he's straight and they'd all turn gay and bash him anyway.
I believe AI disabled comments because people, myself included, don't like Tim injecting his personal politics into a tech company. I don't see homophobic comments on AI but lots of these.