What to expect from Apple's Q3 2017 earnings | Cult of Mac

What to expect from Apple’s Q3 2017 earnings

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Apple could be a $2 trillion company by end of 2021
Apple could be a $2 trillion company by end of 2021
Photo illustration: Ste Smith/Cult of Mac

Apple is set to unveil its latest earnings report on Tuesday, and Wall Street analysts predict it will probably be the most boring earnings call of 2017.

This will likely be Apple’s last public announcement before it unveils the next generation of iPhones. Apple CEO Tim Cook might drop some hints on what to expect, and when, as investors look forward to Apple’s next big blockbuster quarter. As usual, Cult of Mac will be here liveblogging the entire event with all the analysis and wit we can muster.

Watch for these five things during the call:

$43.5 billion in revenue, minimum

During its last earnings call, Apple told investors it expects to bring in between $43.5 billion and $45.5 billion of revenue this quarter, down from the $52.9 billion it brought in during Q2 2017. Analysts expect Apple to break $44 billion, but if the company tops $46 billion it will be a shocker.

iPhone sales

In May, Cook said iPhone sales have been on “pause” due to the astonishing number of rumors circulating about the company’s next device. While AAPL investors hope for a sales boom later this year, the current downswing could cause Apple’s stock price to slide.

Not all analysts think slow iPhone sales would be a bad thing, though. A drop in sales could indicate that customers are excited about the upcoming iPhone. That could trigger a supercycle of upgrades. If that’s the case, the biggest problem Apple might face is whether it can build enough units to satisfy demand.

Apple Q4 2017 guidance

The iPhone 8 has been plagued with rumors that it will be delayed due to manufacturing difficulties. This could force Apple to launch it later in the year, which would be a big bummer for Cupertino’s Q4 earnings.

Apple usually launches its new iPhones with a few weeks left during Q4. If Apple’s guidance at the end of the call is on the low end, don’t expect to see the new iPhone until October.

Growth in Apple services

While sales for a number of product lines are flatlining, Apple services continue to boom. iTunes, the App Store, Apple Pay, Apple Music and iCloud are becoming increasingly important to Cupertino’s bottom line.

Many analysts see services as one of Apple’s biggest upsides. As the install base continues to grow with the next iPhone launch, the services category will only pull in even more money. Cook said he expects Apple’s services business to be as big as a Fortune 100 company by the end of 2017. Investors will be hungry for details on how much Apple expects services revenue to grow over the next few quarters.

China

Apple revenues in China dipped during the last two quarters. The iPhone is only the fourth most popular smartphone brand in the country, as Apple has struggled to gain serious momentum over the last year. Growth in China will likely be down again this quarter, and investors will want answers from Cook on how Apple plans to compete in the country.

The success of the iPhone 8 may hinge on whether the device can dominate in China. Adding an exorbitant price tag to the premium handset might prevent some people in China from upgrading, though.