Apple Gets Polished Ahead of Results -- Ahead of the Tape
October 24 2016 - 2:47PM
Dow Jones News
By Steven Russolillo
A key streak for Apple Inc. is coming to an end.
When the technology stalwart unveils its fiscal fourth-quarter
results on Tuesday, its annual revenue and net income are expected
to log a drop for the first time since 2001. Innovations such as
the iPod, iPhone and iPad have led Apple's revenue to surge more
than 40 times over that 14-year period, catapulting Apple to the
world's biggest company by market value.
Apple is expected to record $215.6 billion in revenue for its
fiscal year ending Sept. 24. That is more than Greece's entire
gross domestic product. But it would also be down about $18
billion, or 8%, from a year ago. That decline, alone, would be
about triple Apple's total revenue in 2001.
That hasn't stopped investor sentiment from improving in recent
months. And just like in July, when Apple's results exceeded Wall
Street's diminished expectations, the company's coming results have
another low bar to clear.
Analysts polled by FactSet estimate earnings of $1.66 a share
for the fiscal fourth quarter. That forecast was $2.11 at the
beginning of the year, but has fallen ever since. The consensus
forecast from Estimize, which crowdsources earnings estimates from
buy-side analysts, hedge-fund managers and others, is slightly
higher at $1.71 a share.
Sales of the iPhone, which make up roughly two-thirds of overall
revenue, are the key figures to watch. Results will include the new
iPhone 7 and 7 Plus, which were released with two weeks left in
Apple's quarter. Apple didn't provide early sales figures, but
evidence points to decent demand. It could get an additional boost
following Samsung Electronics Co.'s exploding smartphone devices
and ensuing product recall.
Apple investors shouldn't expect a repeat of this year's
fortuitous events. The next iPhone is expected to debut in fall
2017, marking the 10th anniversary of the device. Expectations are
high that the new phone will be a game changer. Analysts are
modeling Apple's overall revenue will regain steam in 2017, growing
5% from a year earlier.
Apple shares have risen more than 25% since the July earnings
report. Solid sales numbers for the iPhone could boost them
further. Fetching 13 times projected earnings projected over the
next 12 months, Apple's multiple remains far cheaper than those of
Alphabet Inc., Microsoft Corp., Amazon.com Inc. or Facebook Inc.,
which round out the top five biggest S&P 500 companies by
market value.
The good times may last a while, but Apple will face higher and
harder-to-beat expectations in the coming quarters.
(END) Dow Jones Newswires
October 24, 2016 14:32 ET (18:32 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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