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Will the iPhone X mark the spot for Apple?

Apple will announce their fourth-quarter results on Thursday 2nd November.

The consensus is for fourth-quarter adjusted earnings per share (EPS) of $1.87 and revenue of $50.74 billion. These forecasts would be an 11.8% and an 8.3% improvement on a year-on-year basis.  According to Birinyi Associates, since 2009 Apple have beaten their EPS estimates 88% of the time, and they have topped their revenue expectations 76% of the time.

In the latest-quarter, Apple posted EPS of $1.67 and revenue of $45.4 billion, and those figures represented increases of 17.6% and 7.3% respectively. Both the EPS and the revenue figure topped analysts’ estimates.

The Apple X iPhone will go on general sale on Friday 3rd November – the day after the results are out. There are already concerns about the price of it is too high, and it is allegedly facing supply problems.

CEO Tim Cook said he feels ‘great’ about the company’s performance in China, even though the sales fell by 14% on a quarter-on-quarter basis, and dropped by 10% on a year-on year basis. The figures would suggest that Apple is losing market share at a faster pace. The US tech giant is facing tough competition from domestic brands in China. Mr Cook should be concerned about this as the smart phone market in Western countries is heading towards saturation, while Far Eastern markets are still growing.   

Apple’s cash pile reached $261.5 billion, and the tech giant is still waiting out for Donald Trump’s tax reforms to be introduced in order for the cash to be repatriated back to the US. The latest news on Trump’s tax reforms, is that it could be a staggered process, which is likely to benefit Apple in the long-run, but may have to wait a while before the company can fully reap the benefits.

Apple have achieved their target of growing the Services division into the size of a Fortune 100 company. In the latest quarter, Services took in revenue of $7.3 billion, while recently Amazon Web Services and Netflix brought in quarterly revenue of $4.58 billion and $2.98 billion respectively.

Obviously, not all of the services are the same, but online TV is an area Apple are keen to expand on, and they plan to sink $1 billion into TV programming next year. Apple will seek to produce shows that are more mainstream and leave the edgy shows to the likes of Netflix. Given Apple’s bank balance, $1 billion is a relatively small amount, but they could easily afford to beef up their budget in years to come.

Apple’s other products, like Apple Watch’s or AirPods were also in demand, and the iPad sales increased by 11.4% in the third-quarter.

Shares in Apple hit a new record-high today, so the sentiment is clearly bullish, and the market could target $170.  Moves lower in the stock could find support at $149.24 or $142.20.

CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.



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