Technology
Thursday, May 2nd, 2024 4:06 pm EDT
Key Points
- Apple reports earnings for the second fiscal quarter, with low investor expectations, possibly exceeding them despite potential weak sales growth.
- Analysts anticipate earnings per share of $1.50 and revenue of $90.04 billion, with varying estimates across different business units such as iPhone, Mac, iPad, Wearables, Home, and Accessories, as well as Services.
- The focus is on Apple’s performance in China, its third-largest market, where sales dropped 13% in the previous quarter. Concerns arise over deteriorating conditions and increased competition from local companies like Huawei. Analysts debate the cyclical versus structural nature of Apple’s challenges in China, with conflicting third-party data indicating both declining iPhone sales and signs of demand improvement. The company’s guidance for the current quarter and updates on capital return plans are anticipated to be crucial.
Apple reported its earnings for the second fiscal quarter after the markets closed, maintaining investor expectations low despite concerns about potential weak sales growth. In February, the company forecasted sales similar to the previous year’s $94.84 billion, along with flat iPhone sales. Analysts anticipated earnings per share of $1.50 and revenue of $90.04 billion, with varying estimates across different business units such as iPhone, Mac, iPad, Wearables, Home, and Accessories, as well as Services. A forecast for the current quarter of approximately $83.23 billion in sales was expected, representing 1.8% annual growth. Apple’s shares had declined by about 10% for the year, with some apprehension regarding the demand for the 2023 iPhone 15 and concerns about the company’s performance in China. The decline in sales in Greater China, including Hong Kong and Taiwan, raised concerns about deteriorating conditions in a critical market where Apple manufactures most of its products. Increased competition from local companies like Huawei, along with reported restrictions on the use of foreign devices by Chinese government agencies, added to the challenges. Analysts noted the historical volatility of Apple’s performance in China, suggesting that the current weak cycle might be more cyclical than structural. Third-party data indicated a surge in Huawei’s sales and a decline in iPhone shipments, although there were preliminary signs of improvement in iPhone demand. Apple’s guidance for the current quarter and updates on capital return plans, including share buybacks, were anticipated to be critical factors in assessing the company’s performance and outlook. Despite the muted expectations, analysts cautioned against underestimating the potential impact of Apple’s earnings report and guidance on market sentiment, highlighting the possibility of a relief rally based on better-than-expected results.
For the full original article on CNBC, please click here: https://www.cnbc.com/2024/05/02/apple-aapl-earnings-report-q2-2024.html
