Is iPhone X really a flop? We’ll know for sure tomorrow

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Apple earnings
Investors are hoping for good news from Tim Cook.
Photo: Ste Smith/Cult of Mac

The second Apple earnings report of 2018 is set to come out on May 1 and Wall Street’s top analysts are worried that disappointing news is on the horizon.

Rumors have been circulating for months that iPhone X sales have been far weaker than Apple expected. The company’s stock price has been slipping in the last two weeks leading up to the Q2 2018 earnings report. Everyone’s waiting to see if Apple can pull out another surprise, but the signs don’t look too promising.

Per usual, Cult of Mac will be here to live blog all the action as it transpires on Tuesday, May 1, at 2 p.m. Pacific. Here’s what to watch for on the call:

Slumping iPhone sales

iPhone 8 red
The RED iPhone 8 won’t be a big enough boost for sales
Photo: Apple

Everyone knows iPhone sales will be lower this quarter compared to the last one, but the big question is, how much did they drop? Most analysts expect Apple to report iPhones sales of about 53 million units. Some iPhone parts suppliers have indicated that demand has dropped off. Foxconn saw its revenue fall 4.1 percent in February, which could mean the iPhone X is struggling.

Another number analysts will be looking for is Apple’s iPhone sales guidance for next quarter. Wall Street expects Apple to predict about 35-40 million sales for Q3 2018.

Growing Revenue

apple money

With iPhone sales supposedly slumping, Apple may have a hard time reaching its forecasted revenue target between $60 billion and $62 billion. If Apple hits that target it would represent 15% year-over-year revenue growth. That would be a huge success for Apple as the iPhone X starts to lose a bit of its shine.

Disappointment in China

Tim Cook meets with Apple Store employees in China.
Tim Cook meets with Apple Store employees in China.
Photo: Apple

China has become the second most important market for Apple, but a new report claims the company is getting devastated when it comes to growing its market share.

Morgan Stanley analyst Katy Huberty predicts “continued weakness in China” for Apple that will carry on through the coming quarter. Analysts estimate Apple has lost over a third of its market share. It currently has about 18% of the market. Both IBS and Nomura are also predicting “weak” performance reports from Apple in China this quarter.

Booming Services

Apple Music
There are now nearly 40 million paid Apple Music subscribers.
Photo: Apple

As iPhone sales start to plateau, Apple is becoming more reliant on its services and other products to help boost growth. The Service category is now Apple’s second biggest money maker, contributing 13% to the overall revenue, while the Mac lineup makes up 11% or revenue. Investors can expect to see more growth from services as Apple Music, iCloud, iTunes, the App Store continue to rake in money for Apple.