My colleague Buster Hein described tomorrow’s Apple earnings call as the company’s “most boring” earnings report of the year. And it seems like analysts aren’t rushing to disagree with him.
Looking at analyst expectations for Tuesday shows that, overall, people have pretty low expectations. And that’s all part of a “flattening out” of Apple earnings.
The big challenge for Apple is offsetting its iPhone sales with its services, says Synovus’s Daniel Morgan from CNBC.
iPhone sales down, Services up
Appearing on CNBC‘s “Squawk Box” Monday, Dan Morgan of Synovus Trust Company talked Apple’s current challenges. The main one of these is offsetting its falling iPhone sales with its growing Services division. Morgan thinks that Apple will report revenues of $26.2 billion from iPhones this quarter. That would mark a 10% drop from one year ago, and the third consecutive decline.
However, he also expects an 18-20% revenue increase from Services, bringing in approximately $11.8 billion for the quarter. While Morgan remains bullish on Apple stock, it’s hard to be too excited by his projections. Things aren’t likely to change, he suggests, until Apple unleashes a 5G iPhone next year.
How does this reflect Wall Street?
Dan Morgan’s predictions aren’t out of the ordinary. Technology writer and editor Philip Elmer-DeWitt recently pulled together a number of different analyst forecasts regarding Apple. These include Visible Alpha, gathered by a consortium of banks for their internal use and for selected clients; Estimize, a crowdsourced site which invites anonymous estimates; Thomson Reuters, which provides the average used by most public sites; and Elmer-DeWitt’s own formulation.
This latter forecast may be the most accurate of them all. Elmer-DeWitt’s mix of pro and independent analysts have outperformed Thomson Reuters for the past 10 quarters in a row.
The averages all fall in the vicinity of $52.5 billion to $54.5 billion for the quarter. The most interesting part of all of this is going to be Apple’s guidance for the next quarter. That’s because the calendar third quarter of each year is when Apple releases its new iPhones. Predictions for that quarter 2019 are grouped around $61 billion. If that’s accurate, it’s a shade under the $62.90 billion Apple managed in the same quarter last year.
What do you think it’s going to take to turbocharge Apple’s earnings again? Let us know in the comments below.
Source: CNBC
