Apple (AAPL) is set to report fiscal earnings in the fourth quarter after the market closed Thursday. However, those results are expected to be overshadowed by the tech giant’s prospects for the current quarter and next year following the company’s highly anticipated 5G-enabled smartphone unveiling earlier this month.
Here are the key results expected from Apple’s report, based on consensus estimates compiled by Bloomberg:
Revenue from Apple’s service offerings such as Apple News, Apple TV + and iCloud has accounted for a growing share of the company’s total sales and is expected to have risen again in the fourth quarter. Consensus analysts are looking for service revenues to rise to 1
Mac computer and wearables revenue is also likely to grow in the last quarter and 2019, given the increase in demand for these products during the pandemic. The company also launched new versions of the iPad and Apple Watch in September before the end of the fourth quarter.
However, revenue from the iPhone was likely to fall lower in the fourth quarter of this year than in the same period in 2019, when customers were waiting for the next generation of iPhone devices to be released. Apple unveiled the iPhone 12 and iPhone 12 Pro – the first package of 5G-enabled handsets from the company so far – at an event earlier in October or approx. a month later than it typically releases its new phones every year due to pandemic disruptions.
“For investors, the September quarter takes the back seat to the main event, which is about measuring the demand growth path for the iPhone 12 in the holiday quarter and the rest of 2021,” wrote WedBush Securities analyst Dan Ives, who rates Apple’s stock as Outperform, wrote in a note. “We expect some directional comment from Cook regarding pre-order demand from the iPhone 12, which, based on our analysis so far, tracks more than 2x its predecessor the iPhone 11, a bullish sign out of the gates.”
Ives added that he believes that around 350 million of the estimated 950 million iPhones installed worldwide are currently in the “window for an upgrade option”, leading to what may be an “unprecedented” round of iPhones -purchase this year for the technology company.
Promotional activity has also been more aggressive around the iPhone 12 than in previous cycles, probably as an attempt to increase sales during the pandemic. Airlines including AT&T, T-Mobile and Verizon (the parent company of Yahoo Finance) have each offered a number of trade credits to encourage customers to switch to the new handset.
In terms of Apple’s inventory, Wall Street may be able to stay on the sidelines to measure the success of the iPhone 12 launch until early next year, when more data will be available at its debut. It could serve as a short-term move on stock valuation, according to at least one analyst.
“Along with an elevated rating, we estimate equities are likely to remain in range until investors are clear about the initial success of the iPhone 12 launch,” UBS analyst David Vogt, who rates Apple shares as Neutral, said in a note Tuesday. “Although incremental data points are expected by the end of 2020, we believe investors typically reserve the judgment on success until the company reports December results in late January / early February 2021.”
Apple shares have risen 53% from year to date, surpassing the S&P 500s’ only 1.8% gain.
This post will be updated with Apple’s fourth quarter fiscal results after the market closed on Thursday.
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
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