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Apple (AAPL) will report its first quarter earnings after the bell on Thursday, as investors seek more insight into the company’s iPhone sales performance, particularly in China. Barclays, Piper Sandler, and Redburn Atlantic downgraded Apple’s stock in early January on fears that the iPhone 15 is underperforming in China.
That, coupled with TF International Securities analyst Ming-Chi Kuo predicting a 15% decline in iPhone shipments, has inflicted pain on Apple’s stock price, with shares falling 3.5% over the last month.
A strong performance in the quarter and an upbeat outlook for iPhone sales, however, could begin to turn around the company’s stock performance.
For the quarter, Wall Street is expecting Apple to report earnings per share of $2.11 on revenue of $117.9 billion, according to estimates compiled by Bloomberg. That would mark an increase from last year when Apple reported EPS of $1.88 on revenue of $117.2 billion.
But overall revenue in Greater China, Apple’s third-largest sales region behind North America and Europe, is expected to fall from $23.9 billion to $23.5 billion. Analysts say a resurgent Huawei, which is selling high-end smartphones that rival Apple’s, and China’s faltering economic recovery are cutting into Apple’s sales in the region.
The company’s iPhone revenue is expected to come in at $68.6 billion, which would be a step up from the same period last year when Apple reported iPhone revenue of $65.78 billion. Apple’s Mac revenue also appears set for a slight recovery, with analysts anticipating sales of $7.9 billion in the quarter versus $7.7 billion in the same quarter last year.
But iPad revenue is expected to drop more than $2 billion to $7.06 billion compared to $9.4 billion last year. According to Bloomberg’s Mark Gurman, Apple will introduce refreshed iPads and Macs in March, which could help goose sales numbers for both business segments in the year ahead.
Wearables, home, and accessories should generate revenue of $12 billion in the quarter, down from $13.5 billion in Q1 last year. Apple has been contending with an ongoing patent battle with medical device maker Masimo, which forced the company to temporarily take the device off of store shelves.
It has since removed the blood oxygen sensor component that triggered the dispute from its Series 9 and Ultra 2 watches, but it’s unclear how much of an impact that has had on sales.
Apple’s Services segment, meanwhile, is expected to see sales of $23.4 billion, up from $20.8 billion.
Apple’s earnings come as the company prepares to launch its Vision Pro AR/VR headset. The device, which Apple calls a spatial computer, goes on sale Feb. 2 for $3,499. And while it’s certainly an impressive product, its price tag will likely limit sales among most consumers.
While Apple doesn’t release exact device sales figures, it will be interesting to see what kind of commentary CEO Tim Cook has to offer around the initial uptake in Vision Pro preorders and how the developer community is responding. After all, if the Vision Pro is to be a success, it’ll need developers to build apps for it.
Daniel Howley is the tech editor at Yahoo Finance. He’s been covering the tech industry since 2011. You can follow him on Twitter @DanielHowley.
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