Best of the Week
Most Popular
1. Five Charts That Show We Are on the Brink of an Unthinkable Financial Crisis- John_Mauldin
2.Bitcoin Parabolic Mania - Zeal_LLC
3.Bitcoin Doesn’t Exist – 2 - Raul_I_Meijer
4.Best Time / Month of Year to BUY a USED Car is DECEMBER, UK Analysis - Nadeem_Walayat
5.Labour Sheffield City Council Election Panic Could Prompt Suspension of Tree Felling's Private Security - N_Walayat
6.War on Gold Intensifies: It Betrays the Elitists’ Panic and Augurs Their Coming Defeat Part2 - Stewart_Dougherty
7.How High Will Gold Go? - Harry_Dent
8.Bitcoin Doesn’t Exist – Forks and Mad Max - Raul_I_Meijer
9.UK Stagflation Risk As Inflation Hits 3.1% and House Prices Fall - GoldCore
10.New EU Rules For Cross-Border Cash, Gold Bullion Movements - GoldCore
Last 7 days
Stock Index Trend Trade Setups for the SP500 & NASDAQ - 22nd Jan 18
Stock Market Deceleration / Distribution - 22nd Jan 18
US Markets vs Govt Shutdown: Stock Markets at all time highs - 22nd Jan 18
Land Rover Discovery Sport - 1 Month Driving Test Review - 22nd Jan 18
Why should you use high-quality YouTube to mp3 converter? - 22nd Jan 18
Silver As Strategic Metal: Why Its Price Will Soar - 21st Jan 18
Stocks, Gold and Interest Rates Three Amigos Ride On - 21st Jan 18
Why Sometimes, "Beating the S&P 500" Isn't Good Enough - 21st Jan 18
Bunnies and Geckos of Sheffield Street Tree Fellings Protests Explained - 21st Jan 18
Jim Rickards: Next Financial Panic Will Be the Biggest of All, with Only One Place to Turn… - 20th Jan 18
Macro Trend Changes for Gold in 2018 and Beyond - Empire Club of Canada - 20th Jan 18
Top 5 Trader Information Sources for Timely, Successful Investing - 20th Jan 18
Bond Market Bear Creating Gold Bull Market - 19th Jan 18
Gold Stocks GDX $25 Breakout on Earnings - 19th Jan 18
SPX is Higher But No Breakout - 19th Jan 18
Game Changer for Bitcoin - 19th Jan 18
Upside Risk for Gold in 2018 - 19th Jan 18
Money Minute - A 60-second snapshot of the UK Economy - 19th Jan 18
Discovery Sport Real MPG Fuel Economy Vs Land Rover 53.3 MPG Sales Pitch - 19th Jan 18
For Americans Buying Gold and Silver: Still a Big U.S. Pricing Advantage - 19th Jan 18
5 Maps And Charts That Predict Geopolitical Trends In 2018 - 19th Jan 18
North Korean Quagmire: Part 2. Bombing, Nuclear Threats, and Resolution - 19th Jan 18
Complete Guide On Forex Trading Market - 19th Jan 18
Bitcoin Crash Sees Flight To Physical Gold Coins and Bars - 18th Jan 18
The Interest Rates Are What Matter In This Market - 18th Jan 18
Crude Oil Sweat, Blood and Tears - 18th Jan 18
Land Rover Discovery Sport - Week 3 HSE Black Test Review - 18th Jan 18
The North Korea Quagmire: Part 1, A Contest of Colonialism and Communism - 18th Jan 18
Understand Currency Trade and Make Plenty of Money - 18th Jan 18
Bitcoin Price Crash Below $10,000. What's Next? We have answers… - 18th Jan 18
How to Trade Gold During Second Half of January, Daily Cycle Prediction - 18th Jan 18
More U.S. States Are Knocking Down Gold & Silver Barriers - 18th Jan 18
5 Economic Predictions for 2018 - 18th Jan 18
Land Rover Discovery Sport - What You Need to Know Before Buying - Owning Week 2 - 17th Jan 18
Bitcoin and Stock Prices, Both Symptoms of Speculative Extremes! - 17th Jan 18
So That’s What Stock Market Volatility Looks Like - 17th Jan 18
Tips On Choosing the Right Forex Dealer - 17th Jan 18
Crude Oil is Starting 2018 Strong but there's Undeniable Risk to the Downside - 16th Jan 18
SPX, NDX, INDU and RUT Stock Indices all at Resistance Levels - 16th Jan 18
Silver Prices To Surge – JP Morgan Has Acquired A “Massive Quantity of Physical Silver” - 16th Jan 18
Carillion Bankruptcy and the PFI Sector Spiraling Costs Crisis, Amey, G4S, Balfour Beatty, Serco.... - 16th Jan 18
Artificial Intelligence - Extermination of Humanity - 16th Jan 18
Carillion Goes Bust, as Government Refuses to Bailout PFI Contractors Debt and Pensions Liabilities - 15th Jan 18
What Really Happens in Iran?  - 15th Jan 18
Stock Market Near an Intermediate Top? - 15th Jan 18
The Key Economic Indicator You Should Watch in 2018 - 15th Jan 18
London Property Market Crash Looms As Prices Drop To 2 1/2 Year Low - 15th Jan 18
Some Fascinating Stock Market Fibonacci Relationships... - 15th Jan 18
How to Know If This Stock Market Rally Will Continue for Two More Months? - 14th Jan 18
Everything SMIGGLE from Pencil Cases to Water Bottles, Pens and Springs! - 14th Jan 18
Land Rover Discovery Sport Very Bad MPG Fuel Economy! Real Owner's Review - 14th Jan 18

Market Oracle FREE Newsletter

6 Critical Money Making Rules

Don't Be Surprised by Apple Q2 Earnings

Companies / Tech Stocks Apr 24, 2012 - 06:05 AM GMT

By: Money_Morning

Companies

Best Financial Markets Analysis ArticleDavid Zeiler writes: Following its extraordinary beat last quarter, expectations for Apple Inc.'s (NASDAQ: AAPL) earnings are even higher than usual.

With Apple having such an outsized influence on the markets, even investors who don't hold the stock will be watching for Apple's Q2 earnings report after the closing bell today (Tuesday).


Still, with its stock having tumbled 11% in the past two weeks, from its peak of $640 April 10, Apple needs to beat Wall Street expectations.

If Apple earnings disappoint -- as occurred in the September quarter last year -- the stock will get beaten down even further. Such negative news would push the stock toward $500.

The consensus estimates for Apple's Q2 earnings are $9.99 per share on revenue of $36.6 billion, which most analysts believe is achievable.

In fact, just in the past week several analysts, such as Shaw Wu of Sterne Agee and Bill Shope of Goldman Sachs, again raised their estimates for iPhone and iPad sales.

However, Money Morning Chief Investing Strategist Keith Fitz-Gerald isn't so sure.

"I think Apple is going to miss on key sales figures related to the iPad," Fitz-Gerald said. "If they do, it's likely to spark multiple downgrades in the weeks ahead, leading to a downside "snowball effect' as the stock corrects further."

Should Fitz-Gerald be proven right - and he did correctly predict Apple's swoon in a March 27 Money Morning article - investors shorting AAPL will profit and those waiting for a pullback will get a chance to jump in.

"If I get a sense that there's a point we can step into the fray, we'll be buying," Fitz-Gerald said. "Even as we speak, institutional traders are looking to short the stock and pound the price down even more."

Fitz-Gerald thinks Apple eventually will resume its climb toward $1,000 a share, and that much of the recent decline was bound to happen to a stock that had soared 75% in just five months.

iPhone Sales Critical to Apple Earnings
Whether Apple beats expectations or not will largely depend on how well the iPhone sold.

The iPhone accounts for more than half of Apple's revenue. It's also the product with the highest profit margins (over 70% for the iPhone 4s).

Many analysts see the iPhone making up an even bigger than usual share of Apple's Q2 revenue, which will boost margins.

Concern over iPhone margins is one of the reasons AAPL stock has swooned.

Earlier this month research firm BTIG forecast that the U.S. carriers such as Verizon Communications Inc. (NYSE: VZ) and AT&T (NYSE: T) are seeking to pay less to handset makers, including Apple.

As one of the most expensive smartphones on the market, it is also one of the most heavily subsidized, which has eaten into the profits of the carriers. BTIG predicted lower iPhone sales next quarter as the carriers increasingly push cheaper Android-powered smartphones.

In addition, Verizon reported lower-than-expected iPhone sales last week, but the impact of that should be offset by higher iPhone 4s sales elsewhere in the world. For example, the iPhone 4s launched in China in the March quarter.

The iPhone consensus, or "number to beat," is 30.5 million units.

iPad Is An Apple Earnings Wild Card
Predictions for sales of the iPad, Apple's second-most important product representing about 20% of sales in the December quarter, are all over the map.

The most pessimistic analysts are calling for sales of just 9 million; the most optimistic see sales of over 15 million. Consensus is for about 12 million, which would be a year-over-year increase of 155%.

Apple did announce that the third generation iPad, which went on sale March 7, sold 3.3 million units in its first three days. Demand was so great initially that customers who ordered on line were forced to wait two to three weeks as supplies ran short.

And the company was able to launch the new iPad in 35 counties within those two weeks, which should give sales of the third generation of Apple's tablet even more juice.

The big question is whether iPad 2 sales were hefty enough in the two months-plus leading up to the debut of the new iPad to push sales past analyst expectations.

"Feedback has clearly been positive, and we suspect that expanded global distribution of the new [iPad] model should help bolster sales rates while offering the iPad 2 at lower price points should contribute to the expansion of Apple's tablet franchise," Kevin Dede, an analyst at Auriga, told The Independent.

Beyond Apple's Q2 Earnings
Apple's other units, such as its Mac business and iTunes Store, account for far less of Apple's revenue and are not expected to have a major impact on Apple earnings, although both are expected to show solid year-over-year growth.

Still, an unusually high pop in either could get investors' attention.

Such is always the case with Apple earnings; even with dozens of people poring over its every move, you can never quite be sure what you're going to get.

And perhaps even more important than Apple's earnings numbers will be any guidance the company gives.

After all, it will be future growth in the iPad and iPhone, as well as any possible "Next Big Things" that will drive AAPL toward that magical $1,000 a share target.

"We are still looking forward to iPhone 5 later this year, China Mobile on the horizon and an Apple TV," Brian White, senior analysts at Topeka Capital Markets, said in an interview on Yahoo! Finance's Daily Ticker. "We talk about Apple fever rising to $1 trillion market cap. I think that's something we'll look back in three to five years and laugh about when it's a multi-trillion-dollar company."

Source :http://moneymorning.com/2012/04/24/dont-be-surprised-by-apple-inc-s-nasdaq-aapl-q2-earnings/

Money Morning/The Money Map Report

©2011 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email: customerservice@moneymorning.com

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2018 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules