From BMO Capital Markets analyst Tim Long in a note: "Management typically does not guide iPhone units. Based on our prior expectations for other segments, implied iPhone revenue guidance is $39.1 billion. This implies volume of 51-54 million, depending on ASP assumptions." Consensus is 59 million, per FactSet.

Apple earnings: iPhone expectations are down, but anxiety is still high

Apr 29, 2018

iPhone unit sales expectations have dropped 15% this year, but negative supply-chain data is still weighing on Apple stock

The iPhone X won’t usher in anything close to a “supercycle” of phone upgrades like the iPhone 6 did in 2015, as Apple investors had hoped, but that hasn’t stopped the hand-wringing about exactly how many iPhones Apple will sell this fiscal year.

Clearly iPhone X demand remains a focus for Wall Street heading into Apple’s fiscal second-quarter earnings report, due after the bell on Tuesday. Apple shares have been dinged in recent days by perceptions of weakness in the Apple supply chain, and iPhone unit-sales estimates have been crawling steadily lower since late last year.

“Investors are squarely focused on the health of the iPhone business, as supply chain data increasingly points to weakness,” wrote Bernstein analyst Toni Sacconaghi, who rates Apple shares at market perform with a $170 target price.

Among the data points causing concern for Apple’s iPhone sales is a weak June-quarter outlook from Taiwan Semiconductor Manufacturing Co. Ltd. Sacconaghi’s broader analysis of suppliers prompted him to lower his second-quarter estimate for iPhone unit sales to 51 million for the second quarter and 38.8 million for the third quarter, below consensus projections for 42 million.

Consensus estimates call for 53 million iPhones sold in the second quarter, per FactSet, down 15% from the 62 million analysts were projecting for the period when 2017 ended.

Apple is becoming gradually less dependent on iPhone sales for its results, however, and that has other analysts pointing out that Wall Street’s iPhone X obsession may be misguided.

“We think muted iPhone units are now well understood on the Street and baked into the stock price,” wrote RBC Capital Markets analyst Amit Daryanani, who rates the stock at outperform with a $203 target price. “The focus on Apple, going forward, should shift primarily to capital allocation and services. We think Apple has the potential to positively surprise on both fronts.”

Services revenue is a key reason why Apple managed to beat Wall Street’s earnings and revenue estimates last quarter despite a sizable miss on iPhone unit sales. Analysts expect 19% year-over-year growth for the segment this time around and will be looking for the company’s commentary on fast-growing areas like the App Store and Apple Music, as well as newer efforts to drum up services business. These include the planned purchase of music-recognition app Shazam, currently being examined by European regulators.

A bump in average selling prices also helped drive Apple’s strong results last quarter and will remain a key area to watch for the March period. Apple’s iPhone X might not be selling as well as initially expected, but its $1,000-plus price tag provides a nice boost to the top and bottom lines nonetheless. The iPhone 8 and 8 Plus, starting at $699 and $799, respectively, also give Apple a lift.

Of note will be whether customers are opting for these new models or choosing cheaper, older versions instead. Analysts tracked by FactSet expect that average selling prices grew 13% from a year earlier, to $742.

Earnings: Analysts surveyed by FactSet estimate that Apple earned $2.69 a share for the March quarter, up from $2.10 a year earlier. According to Estimize, the average projection calls for $2.73 in adjusted EPS. Apple has beaten EPS expectations in all but one quarter since the start of 2013.

Revenue: The average revenue estimate according to FactSet calls for $61 billion in sales, while the Estimize consensus projects $62 billion. The company generated revenue of $53 billion a year prior., and projected revenue of $60 billion to $62 billion

Analysts expect that Apple brought in $39 billion from iPhone sales and $8.3 billion from services sales, per FactSet, up from $33 billion and $7 billion for the March 2017 quarter.


What else to watch for: Apple’s March-quarter earnings will also bring an update on the company’s capital-return program, which has the potential to move its stoc k

Apple has vowed to become net-cash neutral “over time,” meaning the company has some $160 billion to spend. Despite some investors’ hopes of a big acquisition, Apple’s commentary and history indicate the company is likely to return most of that money to shareholders.

Last year Apple added $50 billion to its capital-return program, bringing the total to about $300 billion through March 2019. Expectations for this year, with all that overseas money coming back to the U.S., are much higher.

“We expect Apple to announce a $150 billion increase to its total capital return program,” Morgan Stanley’s Katy Huberty wrote of her predictions for the current update. That would bring the cumulative total to $450 billion through 2020. Huberty rates the stock overweight with a $200 target.

Apple will hopefully decode what “over time” actually means in terms of the company’s aim to become net-cash neutral over some still-unknown time period.

The company’s China business will also be in focus. Apple showed a bit of momentum in China during the last two quarters, but some analysts are skeptical that a recovery is under way.

“With Hong Kong shrunk and mainland China fairly flat, we no longer see China as a driver of significant iPhone growth,” wrote UBS analyst Steven Milunovich, who rates the stock a buy with a $190 target. “We now expect flat China units and little long-term growth.”

Apple’s Big Payday Will Only Go So Far

April 29, 2018

You can buy a whole country with $269 billion. But it might not be enough cash to buy Apple Inc. out of its current jam.

That jam is the company’s current iPhone cycle, which not as good as expected. The launch of three new iPhone models last year — including the redesigned iPhone X — seems to have cooled early. Several companies that supply components for the device have warned investors of weakening demand on their quarterly reports, though they remain careful not to mention the iPhone by name, per Apple’s strictures. Apple’s share price has slipped 9% over the last couple of weeks and is now down 4% since the start of the year.

These all may set up a potentially difficult report for the company’s fiscal second quarter, coming Tuesday afternoon. Several analysts have already been trimming their iPhone sales projections for the remainder of the year. And yet the targets may still be too high. Wall Street’s current consensus has iPhone revenue rising 13% year over year, to $39.2 billion, in the March quarter and up 18%, to $29.9 billion, for the June period. And since unit sales are projected to grow only in the low single digits for those periods, analysts still seem to be counting on a fairly rich dose of the highly priced iPhone X in the sales mix.

A downbeat report and forecast won’t do wonders for the stock. But offsetting it this time around could be a capital return bonanza. Apple has typically boosted its dividend and buyback during its springtime report, and this year’s will likely benefit from the $269 billion Apple has stashed overseas that was freed by last year’s tax overhaul. Toni Sacconaghi of Bernstein expects the company to spend about two-thirds of that amount on capital returns over the next 2½ years.

Given the unlikelihood that Apple will ever plow that money into a monster deal, the company is right to give back some of the largess. It would also be good to pay down some of the $122 billion in debt that has piled up over the last five years—largely to finance previous capital returns while its cash sat offshore. But Apple’s stock remains closely hinged to its product cycle, and that cycle remains dominated by the iPhone. Some things even a country’s worth of money can’t change.

Warren Buffett’s Berkshire Hathaway bought 75 million Apple shares in first quarter

May 4, 2018

Warren Buffett’s company loaded up on Apple Inc. stock in the first quarter, buying a whopping 75 million shares, CNBC reported Thursday night.

That’s in addition to the 165.3 million Apple shares that Berkshire Hathaway owned at the end of 2017 — about 3.3% of shares outstanding at the time. As of the end of last year, Apple was Berkshire’s second-largest holding, valued at about $28 billion, behind its stake in Wells Fargo & Co. valued at about $29 billion. The latest buying spree likely put Apple in first place.

“It is an unbelievable company,” Buffett told CNBC. “If you look at Apple, I think it earns almost twice as much as the second most profitable company in the United States.”

“Over the last year we’ve bought more Apple than anything else,” Buffett told CNBC in February.

Apple earnings: Most boring quarter of the year still holds some intrigue

July 30, 2018

Spring is typically the least exciting period for Apple since many people who would be interested in buying an iPhones have either gotten one already or are holding out for the new lineup, typically released in late September. The June quarter tends to be Apple’s smallest in terms of revenue and iPhone sales.

There are still a number of reasons to pay attention to what Apple executives say on Tuesday afternoon, after the company reports earnings for its fiscal third quarter. Investors mainly should watch for any commentary or indications about timing and pricing for the next iPhone release.

“FQ3...results are likely to mean little to investors barring a significant surprise to iPhone units, gross margins, or services trajectory,” Bernstein analyst Toni Sacconaghi wrote. “Investor focus has shifted to iPhone demand in FY19 with the next-generation iPhones.”

Apple’s quarterly outlook for the coming period will be a key indicator of Apple’s expectations for the next iPhone. There’s a tendency to parse that forecast for hints about what the company plans to do with its next batch of phones. A higher-than-expected outlook might give investors the sense that Apple plans to make its new phones available for purchase at some point in September, meaning they’d factor into fiscal fourth-quarter sales. In the current upgrade cycle, the iPhone X didn't come out until November, and it was in short supply early on.

When thinking about Apple’s forecast, however, Sacconaghi cautions against overexcitement.

“We note that historically, revenue guidance for FY Q4 has *not* been a helpful predictor of the strength of the forthcoming cycle, and FY Q4 gross margin guidance has only been helpful when Apple has guided meaningfully lower,” wrote Sacconaghi, who rates Apple’s stock at market perform with a $190 price target.

Earnings: Analysts surveyed by FactSet expect Apple to report earnings per share of $2.16, up from $1.67 a year earlier. According to Estimize, which crowdsources projections from hedge funds, academics, and others, the average estimate is $2.23. Apple has beaten earnings expectations in every quarter but one since March 2013.

Revenue: Apple’s management has forecast revenue of $51.5 billion to $53.5 billion for the June quarter, compared with $45.4 billion a year earlier. The FactSet consensus calls for $52.3 billion in quarterly revenue, while the Estimize consensus is for $52.8 billion.

Analysts surveyed by FactSet expect that Apple sold 42 million iPhones in the quarter and generated $29.2 billion in iPhone revenue.

Apple shares have fallen following five of the company’s last 10 earnings reports.

What else to watch for: Apple’s services segment has been a star in recent quarters, especially as iPhone unit-sales numbers have fallen short of expectations. It will be worth watching Apple’s services momentum again in the June-quarter numbers.

“Given iPhone results matter less late in a cycle and consensus expects flattish iPhone growth going forward as the market matures, we expect investors to focus increasingly on Services results as a sign of whether Apple’s installed-base monetization efforts can drive overall company growth despite declining services revenue,” Morgan Stanley’s Katy Huberty wrote.

Huberty projects $9.6 billion in services revenue for the spring quarter, above the FactSet consensus estimate of $9.2. She has an overweight rating on Apple’s stock and a $232 price target.

In conjunction with services, Apple might talk about its original-content aims, as well as any progress that’s been made there. The company is expected to eventually unveil a bundled services offering, which would combine music, video, news, and more. Perhaps management will be pressed on this during the earnings call.

Investors should also pay attention to data on the average selling price of iPhones, which has at times helped Apple beat revenue and earnings estimates even after posting lower-than-anticipated iPhone unit sales. Analysts surveyed by FactSet expect the company’s iPhone ASPs to come in at $693 for the recently ended period. That would mark an increase from $606 a year earlier.

Macs: 3.72 million vs estimate for 4 million (FactSet) . . . . sold 4.292 million a year ago

Revenue between $60 billion and $62 billion vs analyst estimate for revenue of $59.47 billion (FactSet)

Apple cancels production boost for iPhone XR: Nikkei

Published 4 Hours Ago

Apple has told its smartphone assemblers Foxconn and Pegatron to halt plans for additional production lines dedicated to the iPhone XR which hit shelves in October, the Nikkei reported on Monday.

Apple had also asked smaller iPhone assembler Wistron to stand by for rush orders, but the company will receive no orders for the iPhone XR this season, the report said, citing supply chain sources.

"For the Foxconn side, it first prepared nearly 60 assembly lines for Apple's XR model, but recently uses only around 45 production lines as its top customer said it does not need to manufacture that many by now," the Nikkei quoted a source as saying.

At its iPhone launch event in September, Apple introduced the lower-cost iPhone XR, made of aluminum, along with two other models, the XS and XS Max.

Five years ago, Apple cut production orders for its plastic-backed iPhone 5C a month after its launch, fueling speculation of weak demand for the model.

The Cupertino, California-based company warned last week that sales for the crucial holiday quarter would likely miss Wall Street expectations.

Joining a slew of reports from a wide variety of sources who claimed that iPhone X sales are in serious trouble, a new story says that Apple will manufacture just 8 million iPhone X units during the second quarter of the year.

The company is disappointed with sales, according to a source, and doubts have grown within the company that $1,000 phones aren’t a winning idea in the current smartphone market.

iPhone X -- which starts at $999, or $300 more than the iPhone 8 and $200 more than the iPhone 8 Plus -- was the top-selling Apple device every week of the quarter, according to CEO Tim Cook. The iPhone X is the most expensive phone Apple has ever made.



"We were surprised somewhat that through all of this period of time that the iPhone X winds up as the [best] selling, most popular [device] for every week ... since the launch" in November, Cook said

Why you didn’t see any iPhone X Black Friday deals today

November 24th, 2017

In case you haven’t noticed, today is Black Friday, and there’s a healthy number of deals on iPhones. Retailers like Best Buy are offering gift cards or discounts on iPhones, and T-Mobile is even offering a buy-one-get-one-free on the iPhone 8 and iPhone 7.

But one thing you’re not going to see today are any discounts on the iPhone X. One analyst dissecting the deal suggest that iPhone promotions in general are more “subdued” that normal, and a lack of consistent stock of the iPhone X means that you’re not going to see any discounts on Apple’s new flagship today.

“Promotions for the latest iPhones are more subdued compared to last year,” Cowen analyst Colby Synesael said in a note to investors seen by Fierce Wireless. “T-Mobile launched its ‘Magenta Friday’ early with a BOGO offer, but those signing up must include a new line. AT&T has a ‘buy the X get an 8 free’ but also requires a new line. Verizon and Sprint have $300-$350 in credits with trade-in. These offers are far more subdued compared to last year, when carriers offered a free iPhone and porting credit. It seems this year may remain subdued as carriers are focused more on free cash flow. Sprint has also been vocal about undercutting others, if necessary, as the ‘mutual assured destruction’ policy could keep the industry in check. It’s worth noting the iPhone supply constraints could drive the holiday competition to spill into 1Q18.”

The wireless carriers are generally expecting demand for the iPhone X to remain strong well into next year, which coupled with the lack of iPhone X stock, means that there’s no point in running any deals over Black Friday.

Not So Big in Japan: Apple Cuts Price of iPhone XR to Boost Sales

Nov. 22, 2018 9:23 a.m. ET

TOKYO—Less than a month after releasing the iPhone XR, Apple Inc. is moving to offer subsidies to mobile-network operators in Japan to shore up sales of its least-expensive new smartphone, people familiar with the matter said.

The de facto discount of the handset in Japan, coupled with deep cuts in global production plans for the XR, are a sign of limited enthusiasm among consumers for the model, which has fewer features than Apple’s other two new releases and costs more than still-popular older models like the iPhone 8.

Major wireless carriers in Japan plan to cut iPhone XR prices as early as next week, people with direct knowledge of the plan said, without giving details of the extent of the cut. Japan is one of the most lucrative markets for Apple, which showed a 46.7% share of the Japanese smartphone market in a survey conducted by MMD Labo from July 31 to Aug. 1.

It isn’t known whether the Cupertino, Calif., company plans to offer similar programs in other regions. Apple declined to comment.

Apple has used marketing dollars before to discount certain iPhone models and drive sales, viewing it as a lever to manage inventory, according to people familiar with its sales and production tactics. During the iPhone 6s cycle, Apple cut production on one model then offered carrier and retailer discounts to help reduce excess inventory, one of these people said.

The Wall Street Journal reported earlier this week that Apple has slowed production plans for all the three models released in recent months, with some drastic chops made on least-expensive XR models.

Though it has been done in the past, officials at Japanese carriers say it is rare for Apple to cut the price in their market on a recently launched handset.

“A price cut within a month of the release is rare not just for Apple but for smartphone makers in general,” said a senior official at a wireless operator, who monitors sales.

Apple suppliers have also recently resumed making the iPhone X, the 2017 model that Apple had stopped selling at its own stores, people familiar with the matter said.

In the past, Apple has produced legacy models for select markets where there is enough demand for those devices, the person familiar with Apple’s sales and production tactics said. The company views it as a way to fuel sales and boost margins, as the components often cost less and manufacturing equipment has depreciated, he said.

People involved in the supply chain said the resumption of the X is due in part to Apple’s contract with Samsung SDI Co. , a major provider of iPhone X’s organic-light emitting diode display, or OLED, panels. Apple needs to buy a certain amount of the panels from the South Korean maker, and given the cut in XS and XS Max, Apple is trying to fill the gap with the old device, they said.

Apple and Samsung SDI declined to comment.

Top analyst: Early Apple iPhone 6S sales are weak

17 Sept 2015

Early evidence is suggesting demand for the iPhone 6S may be meaningfully lower than last year's model, according to a top-ranked technology analyst.

Andy Hargreaves of Pacific Crest wrote a provocative note to clients on Wednesday evening showing Google search volume, device shipments availability, third-party surveys and a lack of quantitative statements from Apple and the wireless carriers all point to weak iPhone demand.

Hargreaves is one of the top analysts on Wall Street. His picks average a 33 percent one-year return with a 70 percent success rate and he is ranked in the top 1 percent of all analysts, according to TipRanks.com.

Apple Shares Sink After Report About iPhone Production Cuts

January 5, 2016

Weaker than expected demand for the latest iPhone models has prompted Apple to cut production 30%, a new report claims.

The article by Japanese news service Nikkei, which cited unnamed sources in Apple’s supply chain, spooked investors on Tuesday. The giant’s shares closed down 2.5% to $102.71.

The report said Apple has reduced its planned iPhone 6s and iPhone 6s Plus production for the quarter ending in March.

In the last six months, Apple’s shares are down 18.8% over concerns about slowing iPhone demand.

According to the Nikkei’s sources, Apple had anticipated higher demand for the iPhone 6s and iPhone 6s Plus. More specifically, the sources say that Apple’s iPhone supplies are mounting in key markets, including its two biggest, the U.S. and China.

Last month, several analysts, including those at Morgan Stanley, JP Morgan, and Barclays, said that Apple had reduced component orders on its latest handsets. That report came after analysts predicted a year-over-year iPhone shipment decline of 15% in the quarter ending in March. If the Nikkei report is true, it may be even worse.

Weak iPhone 6S Performance Forcing Apple Into Drastic Action

Jan 5, 2016

While the latest smartphones from Apple might have picked up critical acclaim after their launch in September, Apple is ready to cut the production on the iPhone 6S and iPhone 6S Plus lines by thirty percent, reports Nikkei.

Nikkei suggests that the drop in production follows slower sales in Q4 2015. Apple's production for the iPhone 6S family matched the production numbers for the iPhone 6 and iPhone 6S Plus. The lower sales of the newer handsets have led to more stock in the supply chain than Apple is apparently comfortable with, so the production will be slowed down for the next three months to reduce the backlog.

Although Apple posted record opening sales as the iPhone 6S and 6S Plus handsets were launched, Localytics picked up figures that indicated that the iPhone 6S adoption rate was down by around a third in the first few weeks of sales.