Apple Earnings

Apple will unwrap its outlook for the holiday shopping season on Tuesday, and analysts expect growth—just nothing on par with last year's bonanza.

The holiday quarter is projected to bring Apple sales of $77 billion and profit of $18.1 billion, or $3.22 a share, according to data compiled by Bloomberg. That would work out to sales growth of 3.4 percent, which is a far cry from the 30 percent Apple put up last holiday season.

During the critical October to December period, Apple generates more sales and profit than any other time of the year. The upcoming forecast will be closely watched because Apple is facing questions about whether the latest iPhones can match the record-setting pace of last year’s models, which included the long-overdue addition of bigger screens. Investors’ doubts about growth have sent the stock down 12 percent since the last earnings report.

The company calibrates its product-release schedule to take full advantage of the year-end holiday rush. This year’s refreshed lineup includes the new iPhone 6S and 6S Plus with 3D Touch screens, remodeled Apple TV set-top boxes that went on sale Monday for more than twice as much as their predecessor, and updated iMac computers with sharper displays.

But Apple’s business is increasingly tied to one product: the iPhone. Sales of the iPad have slowed, and newer products such as the Apple Watch haven’t become mainstream hits yet. Dialog Semiconductor, an Apple supplier, reported lackluster earnings and gave a disappointing fourth-quarter forecast on Monday, which RBC analyst Amit Daryanani said has a “negative implication” for iPhone sales. Apple’s stock fell 3.3 percent in New York. Gene Munster, an analyst with Piper Jaffray, wrote in a research note last week that iPhone sales for the holiday quarter are the “biggest investor concern” facing Apple.

The new handsets, released Sept. 25 in a dozen markets, led to opening-weekend sales of 13 million units, topping last year’s record of 10 million. Sales were boosted by availability in China, which wasn’t in last year’s debut. Apple Chief Executive Officer Tim Cook is banking on the world’s most populous country to help make up for slowing sales in other regions.

Visiting the country last week, Cook posed for pictures on the Great Wall and attended the opening of a new retail store in the port city of Dalian. Greater China, which also includes Hong Kong and Taiwan, accounted for 27 percent of Apple’s revenue in the quarter that ended in June, more than all of Europe. Cook has said the region will eventually be Apple’s biggest market.

For the fiscal fourth-quarter results coming on Tuesday, analysts on average expect Apple to report net income of $10.8 billion, or $1.88 per share, and sales of $51 billion, an estimated increase of 21 percent.

Source: Bloomberg