On The Fly: What to watch in Apple earnings report
Apple (AAPL) is scheduled to report results for the company's fourth quarter of fiscal year 2016 after the market close on Tuesday, October 25, with a conference call scheduled for 5:00 pm ET. What to watch for: 1. AS EXPECTATIONS RISE, INTEREST IN REPORT SLIDES: The consensus expectation is for Apple to report iPhone shipments of about 45M, which would be down from 48M units in the same quarter of last year and up from iPhone units of about 40.4M last quarter. Based primarily on sales of its flagship smartphones, analysts estimate that Apple will post revenue of $46.9B this quarter. That consensus forecast is up from the $45.7B consensus view analysts held prior to the company's last report, along with which Apple guided to Q4 revenue in a range of $45.5B to $47.5B. Meanwhile, earnings forecasts have also risen, though by a smaller percentage. Analysts, on average, now expect Apple to report $1.65 per share in earnings, which is up from the $1.63 per share projected 90 days ago, according to First Call. However, according to data from Google Trends, interest in Apple's earnings has declined in every quarter since the middle of last year, UBS noted in sales commentary prior to the company's report. Piper Jaffray analyst Gene Munster said he expects Apple's September quarter report to be a "largely neutral" event for the stock. Munster sees in-line results and believes the takeaway should be that iPhone 7 is off to a good start, but with continued constrained supply. 2. PIPER GUIDANCE PREDICTION: Piper's Munster expects Apple's guidance to be "slightly more optimistic" than its typical slight guide down. He predicted that Apple would guide toward fiscal first quarter revenue, or revenue for the December quarter, of $74B to $76B, which would imply around 75-77 million iPhones in the quarter that ends in September. 3. SAMSUNG STUMBLES, GOOGLE UNVEILS PIXEL: On September 2, Samsung (SSNLF) confirmed a battery cell issue was found with its Galaxy Note 7 phones, causing a number of the devices to overheat or explode, and stopped sales of the flagship phone model that competes with Apple's iPhone. On October 4, Google (GOOG) introduced Pixel, a high-end smartphone which is the first with Google Assistant built in, features an industry-leading camera -- which Google said has been rated above that of the iPhone 7 -- and is "made for mobile virtual reality," the company said. 4. MEDIA M&A: Apple may not answer, but is certain to be asked, about its interest in potential acquisitions in the media sector. This weekend, AT&T (T) announced a definitive agreement to acquire Time Warner (TWX) in a stock-and-cash transaction valued at nearly $109B, including Time Warner's net debt. The Wall Street Journal has claimed that Time Warner was approached by Apple a few months ago, though Time Warner CEO Jeffery Bewkes said during an interview on CNBC following the deal announcement that it was "overstated" to say that Apple had "kicked the tires" on a possible takeover of the owner of HBO and Warner Bros. Netflix (NFLX) has also been speculated often as a possible takeover target for Apple, though Deutsche Bank analyst Bryan Kraft and Bernstein analyst Toni Sacconaghi are among those on Wall Street who have pushed back against that scenario, which they see as unlikely.