During tomorrow’s Apple earnings call, Tim Cook is likely to unload some bad news. Wall Street expects Apple to report its first annual revenue decline since 2001, snapping one of the most impressive streaks ever witnessed.
Slumping iPhone sales mean Apple’s annual revenue could drop to $215.67 billion for 2016. That would be a significant decline from the $233.72 billion in revenue Apple posted in 2015 — but there may be light at the end of the tunnel.
In fact, if Apple’s earnings call is as underwhelming as Wall Street predicts, it could hardly be more strategically timed. Apple is set to reveal an all-new Mac lineup Thursday. That hot hardware injection should cure ailing Mac sales, even as it takes the world’s mind off Apple’s less-than-spectacular fiscal results.
Well-played, Mr. Cook!
Here’s what to expect from Apple earnings call for Q4 2016, which takes place at 2 p.m. Pacific Tuesday.
Apple earnings call predictions Q4 2016
First look at iPhone 7 sales
The iPhone 7 might be doing slightly better than expected, but it won’t be enough to fix Apple’s faltering sales because it was only available during the last two weeks of the quarter.
This was the first year Apple didn’t report how many new iPhones it sold on launch weekend. The company said it didn’t release the numbers because of supply problems. Investors will get their first real glimpse at how well the new devices are doing during Tuesday’s call. Apple’s guidance for next quarter will reveal if Apple expects iPhone 7 sales to start booming during the holidays.
Analysts at Morgan Stanley estimate Apple shipped 44 million iPhones in Q4 2016, down from 48 million in Q4 2015.
Continued growth for Apple services?
While most of Apple’s product lines have stopped growing, services like iTunes, iCloud, the App Store and Apple Music are booming. The services category is now Apple’s second-largest business. If Apple is able to juice some more money out of its existing customers, it could be enough to prop up profits and keep Wall Street happy.
iPad and Mac sales
Because Apple hasn’t updated the Mac lineup in years, total units shipped are expected to drop 4.9 percent from last year. That’s still better than the 5.7 percent decline the entire industry experienced, though, and new Macs are coming Thursday.
Apple’s iPad shipments for Q4 could be a big shocker. Sales were pretty weak this time last year. Now that two new iPad Pros have been on the market for a while, though, shipments may actually have increased.
Revenue from iPads will likely be up, too, because the iPad Pro models cost significantly more than Apple’s previous generation of tablets.
Apple strategy for China and emerging markets
The struggling Chinese economy wrecked Apple’s growth in 2016. China is now Apple’s biggest market for apps, but iPhone sales aren’t nearly as high as the company would like. Last quarter, struggles in China accounted for about 60 percent of Apple’s overall revenue decline.
Expect Tim Cook to spend some time talking about the economic headwinds in China, as well as what the company plans to do in places like India to spark more growth. As usual, Cult of Mac will liveblog all the action of the Q4 2016 earnings call, offering instant insights into Apple’s financial results. So stay tuned …