Jan 27 2014, 1:20pm CST | by Forbes
Today is the day we see if it really was an “iPad Christmas” for Apple.
CEO Tim Cook said in October that Apple expects demand for the new iPads introduced in October — the ultra-thin iPad Air and iPad mini with a high-definition Retina Display — to be the big winners in the holiday shopping season, which ended in December. Apple reports earnings for that quarter after the market closes today, and analysts are expecting sales of $57.4 billion, up from $54.5 billion a year ago, and profit of $14.09 a share.
They are also looking for gross margin, a key measure of profitability, of 37.3 percent.
Apple’s guidance calls for sales between $55 billion and $58 billion and gross margin between 36.5 percent and 37.5 percent.
As usual, most of today’s numbers won’t matter to investors as much as the forecast Apple gives for the quarter ending in March, will include iPhone sales from China Mobile, the world’s largest mobile carrier, and any commentary Cook might offer on new category-defining products the company plans to release in 2014.
But first, today’s earnings news. Analysts are hoping Cook’s prediction that it was an iPad Christmas comes true, and are projecting sales of 24 to 26 million iPads for the December quarter.
Apple needs an iPad Christmas since demand for tablet was muted last year as customers waited for new models to arrive, and competitors including Google, Samsung and Amazon introduced lower-priced, Android-based tablets. Sales of the iPad, which accounts for about 17 percent of Apple’s revenue, slipped 13 percent in the quarter ended in September year over year, with shipment growth relatively flat at 14.1 million units.
Of course, it’s not just the iPad that is expected to drive a holiday sales gain. Apple also added two new models of the iPhone in September — the iPhone 5s and iPhone 5c — and started offering them in more countries after the launch than it typically does. It also added new carrier partners, including NTT Docomo in Japan.
Analysts on average are looking for iPhone sales of 55 million — especially after Cook, visiting China for the opening of sales at China Mobile stores, said earlier this month that December iPhone sales had reached a record. Any upside to those numbers would be welcome, though some analysts are already optimistic: Gene Munster of Piper Jaffray expects December iPhone sales of 56 to 57 million, while Toni Sacconaghi of Sanford C. Bernstein is hoping for iPhone units sales of 57.5 million.
Together, the iPhone and iPad contribute nearly 70 percent to the sales coffer. The Macintosh computer and iPod media player, along with sales of apps and accessories, make up the rest. For the record, Munster is looking for Mac sales of 4.6 million. Apple hasn’t updated the iPod since September 2012, so unit sales declines may be likely given that more users now use their smartphones and tablets to play media.
Looking ahead, investors and analysts will be waiting to see what Chief Financial Officer Peter Oppenheimer offers in the way of a forecast for the quarter ending in March. Since China Mobile started selling the iPhone in stores in mid-January (after taking pre-orders in December), Apple should enjoy another healthy quarter of iPhone sales — both Munster and Sacconaghi anticipate iPhone shipments of around 44 million units.
On average, analysts are hoping for Apple’s sales guidance to be about $46.1 billion in the March quarter.
Even so, Sacconaghi said he wouldn’t be surprised if Apple’s forecast was slightly below street estimates. “We believe Apple will continue providing realistic yet somewhat conservative guidance,” Sacconaghi said, offering his guess that Apple will guide sales to $44.5 billion for the quarter. “The biggest factor is how much iPhone demand China Mobile will drive.”
Apple will host an earnings call at 2 p.m. California time. Check back here for my live play-by-play.
Source: Forbes Apple
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