Apple Inc. is scheduled to report results for its fiscal first quarter ended Dec. 27 after the market closes on Tuesday. Here’s what you need to know.
EARNINGS FORECAST: Net income of $2.60 a share is the consensus of analysts surveyed by Thomson Reuters, compared with a split-adjusted $2.07 from a year earlier. Apple performed a 7-for-1 stock split in June. The company hasn’t provided earnings guidance for the quarter but in October said it expects gross margin to range between 37.5% and 38.5%.
REVENUE FORECAST: Revenue of $67.7 billion is forecast, compared with $57.6 billion reported a year earlier. In October, Apple had forecast a revenue range between $63.5 billion and $66.5 billion.
WHAT TO WATCH:
–RECORD IPHONE SALES: Historically, Apple’s fiscal first quarter is a big one for the iPhone. It coincides with the holiday shopping season and usually follows a new iPhone release. Even by those standards, Apple is expected to report a blow-out quarter for the iPhone, spurred by its pair of new, bigger-display models: the iPhone 6 and iPhone 6 Plus. The new phones went on sale in September, triggering supply shortages at mobile carriers and Apple’s own retail outlets. Analysts polled by Fortune Magazine are forecasting sales of 66.5 million iPhones, an increase of 30% from a year earlier. That would mark record iPhone sales and close the gap between Apple and Samsung Electronics Co., the world’s biggest manufacturer of smartphones by units.
–APPLE PAY: Apple introduced Apple Pay three months ago and the early signs suggest that the service is gaining traction. Apple Pay won’t impact financial results much, but its progress is being closely watched as a potential harbinger of a trend to paying for items using mobile devices. Apple already has said it doesn’t plan to break out Apple Pay within its earnings announcements, but the company will probably shed some light on how the new service is doing. In October, Apple Chief Executive Tim Cook said more than one million credit cards were activated on Apple Pay within 72 hours of its debut.
–APPLE WATCH: In September, Apple teased that the Apple Watch will arrive in “early 2015.” It hasn’t provided an update since, but the company’s earnings guidance for the current quarter could tip its hand on when it plans to release the device. Mr. Cook and Apple CFO Luca Maestri will probably face questions from analysts about the revenue and profit margin impact from the company’s first all-new product since the iPad. Those are just two of the many unanswered questions about the Apple Watch.
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