In its previous earnings call, Apple gave an unusually wide guidance range for its Q1 revenue. The company has generally narrowed it to a range of $2B, but uncertainty over iPhone X sales is the the likely explanation for the $3B span this time around …
The WSJ has put together a comprehensive look at analyst expectations for the quarter, and the headline number is that they are expecting Apple to hit the top-end of its $84-87B range – marginally over, in fact, at a consensus figure of $87.06B. This would be more than $8.5B up on last year’s $78.4B.
Earnings per share are also expected to be significantly up, at $3.86 against $3.36 a year ago.
There has been much speculation about how well the iPhone X has been selling, but analyst numbers suggest they believe it has been a financial success.
Apple raised prices last year in a move that has the potential to boost overall revenue even as the number of iPhones it sells stagnates. Analysts believe the strategy paid off in December. Apple is projected to report a 1.5% increase in iPhone shipments, according to analysts surveyed by FactSet, but the $1,000 iPhone X, released on Nov. 3, is expected to lift the average selling price of the device 9% to $755. Those higher prices are expected to lift iPhone revenue 10% to $60 billion in the period.
Turning a 1.5% increase in sales into a 10% revenue lift would be an impressive trick.
The report echoes recent ones on Q2 concerns. Q2 revenue had been projected to be around $66B, but some analysts have downgraded that estimate to $60B on the back of recent supply-chain reports of halved iPhone X orders.
The other big question that will be raised during today’s earnings call will be Apple’s plans for the overseas cash it is expected to repatriate.
Apple in mid-January announced it would pay $38 billion in taxes on the $252 billion it holds overseas, but it hasn’t said how much of that money it will bring back to the U.S. or outlined what will be returned to shareholders through buybacks or dividends. The company typically announces capital return plans in April or May and may hold off discussing it until then. But expect analysts to ask for more clarity on Apple’s plans now that it no longer needs to hold cash overseas to avoid paying higher U.S. taxes.
The earnings call takes place today at 2pm PT/5pm ET. You can listen to the audio stream here, and we’ll of course be bringing you all the numbers as soon as they are announced, together with a live-blog of the call.