Apple Q1 Earnings Preview: What to Expect
Six months ago, Apple’s chief financial officer Peter Oppenheimer promised that the company and its customers would be in for “a very busy fall.” Apple made good on that: two new iPhones, two new iPads, a new iMac and the new Mac Pro all went on sale in the three months between mid-September and mid-December. On Monday, we finally get hear some of the results for this deluge of new products.
Apple will report its first-quarter earnings for 2014 shortly after the market closes at 4 p.m. ET on Monday. Expectations are high. The consensus on Wall Street is that Apple will post earnings of $14.09 per share on revenue of $57.5 billion, according to analysts surveyed by Thomson Reuters. That would represent an increase of 2% and 5%, respectively.
Beyond that, the two key numbers to look for will be iPhone sales — by far Apple’s largest business — and iPad sales.
Most analysts expect that Apple will report sales of more than 50 million iPhones for the quarter, the company’s first time surpassing that milestone, thanks to its new iPhone 5S and 5C models. The consensus among analysts polled by Fortune is that Apple will report just over 55 million iPhones sold.
Impressive as a 50-plus million iPhone quarter would be, questions still linger about the success of the cheaper 5C model. Apple heavily marketed the device at first, and some analysts had expected it to be an attempt to reach a lower-end market, but recent reports suggest it is being far outsold by the more expensive 5S. On paper, it’s a good thing if more people flock to the more expensive model; but it’s likely that at least one analyst will ask Apple’s execs on the earnings call for more insight on whether the 5C was a flop, and whether there are plans to discontinue it.
On the iPad front, Apple is expected to sell around 24 million tablets, according to Fortune. But the real number to watch for may be the revenue figure — an average selling price — rather than units sold. iPad sales were essentially flat last quarter year-over-year, but iPad revenue declined 13%, as more customers flocked to the cheaper iPad Mini. However, in October, Apple raised the price of the new iPad Mini with Retina display to $329, which should improve the average selling price.
Apple beat Wall Street estimates in three of four quarters for the 2013 fiscal year, but that didn’t do much to boost the stock price. Apple stock opened 2013 at $553.82, dipped as low as $385.10 and ended the year a little less than $10 higher than it started. During that time, Apple was hit by concerns about profit declines, weaker demand for new products and growing competition from Google and Samsung.
The stock is still well below its high of $705 just before the iPhone 5 was released in September 2012, but it has gradually ticked up in recent months amid new product releases and the completion of a long-awaited deal to sell iPhones on China Mobile, the country’s largest mobile carrier.
The China Mobile deal went into effect after the most recent quarter ended, and won’t be represented in the results, but analysts will still be looking for hints about sales. Some have characterized early demand as weak.
Like clockwork, rumors are popping up about the next iPhone — or iPhones — having a larger screen, and whether the company is working on an iWatch, Apple TV gaming, mobile payments and more. It’s always possible that an analyst on the call may ask questions about one of these rumors, but don’t expect much of an answer from Apple execs.