The company will announce its second fiscal quarter earnings after the market closes on Thursday.
Investor anticipation is subdued, yet Apple has the potential to exceed these expectations, even in the face of sluggish sales growth. In February, Apple projected sales figures comparable to the previous year’s $94.84 billion for the same period, with iPhone sales remaining flat.
According to consensus estimates from LSEG analysts, here’s what they anticipate from Apple
- Earnings per share: $1.50
- Revenue: $90.01 billion
Here’s a projection by LSEG on the anticipated performance of Apple’s business segments in the March quarter.
- iPhone revenue: $46.00billion
- Mac revenue: $6.86 billion
- iPad revenue: $5.91 billion
- Wearables, home and accessories revenue: $8.08 billion
- Services revenue: $23.27 billion
Analysts anticipate Apple to project sales of approximately $83.23 billion for the current quarter, marking a 1.8% annual growth. Despite this, Apple’s shares have dipped around 10% this year, lagging behind its counterparts and the overall market. Concerns arise regarding the potential weak demand for the 2023 iPhone 15.
However, the primary focus for investors lies in Apple’s performance in its third-largest market: China. In the last quarter, sales in Greater China, including Hong Kong and Taiwan, plummeted by 13%. Analysts surveyed by FactSet predict a $15.25 billion decline in China regional sales, indicating a 14% year-over-year drop.
The decline in China’s market could signify deteriorating conditions, compounded by reports of Chinese government agencies discouraging the use of “foreign” devices, notably iPhones. This suggests a lack of support from Chinese national leadership, further exacerbated by heightened competition from local rivals like Huawei, which recently introduced a 5G smartphone despite U.S. export restrictions.
Bernstein analyst Toni Sacconaghi notes that Apple’s China business struggles may be more cyclical than structural, citing historical volatility in the region. Despite recent declines, Sacconaghi suggests that strong iPhone cycles typically witness rapid growth in Chinese revenues followed by subsequent weaker periods.
Third-party data, however, presents mixed signals. Counterpoint Research indicates Huawei’s substantial annual surge in March, contrasting with Apple’s decline. Yet, UBS’ David Vogt suggests potential signs of iPhone demand improvement beyond initial expectations.
State statistics reveal a consecutive 33% drop in iPhone sales in February, according to Wells Fargo analyst Aaron Rakers, who predicts a 20% annual decrease in iPhone sales for the quarter.
Amidst subdued expectations for the quarter, Apple’s outlook for the current quarter is deemed more critical than its March quarter results. Morgan Stanley’s Erik Woodring emphasizes the significance of Apple’s June quarter revenue and gross margin guidance. Woodring also anticipates updates on Apple’s share buyback plans during the second-quarter earnings report.
Despite not offering guidance since 2020, Apple executives provide insights enabling analysts to project sales. Woodring notes the expectation for Apple to adhere closely to its recent capital return plans, citing the authorization of an additional $90 billion in repurchases announced in May 2023.
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