Apple CEO Tim Cook revealed the new iPhone 12.
Apple is scheduled to announce its fourth-quarter earnings after the close on Thursday.
According to Refinitiv’s consensus estimate, this is what Wall Street expects:
- Earnings per share: $ 0.70
- income: 63.7 billion▲
- iPhone revenue: US$27.93 billion
- Service income: US$1
- Other product revenue: $7.4 billion
- Mac income: $7.93 billion
- iPad revenue: $6.12 billion
- Gross margin: 38.1%
Investors will look for whether Apple provides guidance or forecasts for the first quarter of fiscal 2021, which will end in December.
Since Apple’s fourth quarter ended in September, and the new phones only started sales this month, any forecast will become a strong hint to Apple’s expectations for iPhone 12 sales.
Due to the uncertainty caused by the Covid-19 pandemic, Apple suspended its traditional guidance in February and has not released forecasts for the next two quarters.
Deutsche Bank analyst Jeriel Ong said: “When the financial report was announced on October 29, there was only one week of new iPhone sales, so we are not sure whether APL will accept guidance.”
The ongoing pandemic has not prevented Apple from reporting a blowout for the quarter ended in June, which exceeded analysts’ expectations and included double-digit growth in the company’s product and service divisions.
In particular, sales of iPad and Mac are much higher than Wall Street’s expectations, which is attributed to Apple’s strong trend of working from home. Investors will look for data points from Apple CEO Tim Cook and Apple CFO Luca Maestri to understand whether Apple believes this trend will continue and whether Will promote recently announced products, such as the $599 iPad Air released this month.
JPM said: “Relative to the near future, we expect iPhone sales to have limited near-term upside, but we do not rule out the possibility that there will be room for upside in the next quarter due to the continued momentum of work from home/e-learning trends and wearable device sales.” Analyst Samik Chatterjee wrote last month.
Sales of Apple Watch Series 6 will also be included in Apple’s fourth-quarter earnings. Apple launched its new Apple Watch series in September.
Investors have been paying close attention to Apple’s service business. In 2017, Apple promised to double its annual service revenue by 2020, and said it achieved its goal at the beginning of this year.
Apple’s expanding service business is an important reason for the rise in Apple’s stock price this year, because it makes iPhone manufacturers look more like software companies, and their price-earnings ratios are usually higher than hardware manufacturers.
But in recent months, Apple’s services business has also been scrutinized by regulators, and investors are looking for signs that after years of strong growth, it will continue to grow. In July of this year, Cook testified before the House of Representatives Judiciary Subcommittee that his business practice revolved around 30% of the fees charged for applications and in-app purchases sold on the iPhone and iPhone App Store to conduct antitrust business.
Recently, the U.S. Department of Justice filed a lawsuit highlighting a commercial arrangement in which Apple sold to Google its privileges as the default search engine for the iPhone browser. It is estimated that this service is worth up to $12 billion a year. Apple calls it licensing revenue, and because attorneys general from all over the country say this arrangement is not good for competition, it is under threat.
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