Apple could release a weak report on Thursday but investors might celebrate anyway

This Thursday around 5pm EST Apple plans to announce results for the first quarter of 2023. A report from Apple may be out of place given that China’s largest iPhone production facility had to halt production of the iPhone 14 Pro series during the quarter due to China’s COVID crackdown. I can’t. As such, Apple’s most expensive iPhone 14 model wasn’t easily spotted at several points during the three-month period, wiping out some of its sales and earnings for the October-December period. I was.

Shortage of iPhone 14 Pro series surfaced in the year-end sales season

The scarcity began to appear in November, which unfortunately coincided with the start of the holiday season. Apple warned consumers that month that “iPhone 14 Pro and iPhone 14 Pro Max shipments will be lower than previously expected, and customers will have to wait longer to receive their new products.”

UBS analyst David Vogt wrote in a note to clients earlier this month: The 14 Pro and 14 Pro Max got him 34 days, while the wait time in high-end China he got 36 days. So what does all of this mean for Apple and its investors?

according to CNBC shows that when Apple reports its first quarter results for its fiscal year on Groundhog Day (February 2), it will see quarterly earnings decline year-over-year for the first time since 2019. The first quarter of 2023 sees him down 2.3% year-over-year from his $123.9 billion in revenue Apple generated in the same quarter of 2022.

What Wall Street Consensus Expects Apple to Report Thursday

Issues at Foxconn’s Zhengzhou facility primarily affected Apple, although some of the revenue decline was due to an overall weaker environment for technology products in general. Smartphone shipments fell 18% in the fourth calendar quarter (the same period as Apple’s first quarter of fiscal 2023). This was the worst quarter ever in the smartphone industry. Apple also had to deal with his weak quarter of PC sales, according to IDC. Shipments of these devices were down 28% during the fourth calendar quarter.

Apple has outperformed its competitors in both markets, but economic weakness will still affect Apple’s first quarter financial results. In a note to clients earlier this month, Morgan Stanley analyst Eric Woodring said, “While the state of consumer demand remains an immediate concern, the underlying driving force behind Apple’s model is: We believe it’s a growing installed base and increasing spend per user.The strength/stability of Apple’s ecosystem remains underestimated.”

Here’s the Wall Street consensus (according to a Refinitiv analyst poll) for Apple’s first quarter fiscal year 2023:

  • Revenue: $121.19 billion.
  • Earnings per share: $1.94 per share.
  • iPhone revenue: $68.29 billion
  • iPad revenue: $7.76 billion
  • Mac revenue: $9.63 billion
  • Other product revenue: $15.26 billion
  • Service revenue: $20.67 billion

Analysts expect revenue to increase slightly to $98 billion on an annualized basis for the second quarter of the fiscal year, which ends in March. Morgan Stanley’s Woodring said, “We fully understand that the push for iPhone demand from the December quarter to the March quarter will cause Apple’s March quarter sales to decline at a less than seasonal rate. However, the backdrop for consumer electronics spending remains challenging. Tablets, PCs and more discretionary products (such as wearables) all face continued demand headwinds. ”

Woodring’s comments reflect what most analysts expect to happen this quarter. All the unsatisfied iPhone demand in the first quarter, when the supply of the iPhone 14 Pro series was sluggish, will come out in the second quarter. And Wall Street likes to be forward-looking, so even if Apple released a soft report on Thursday, a quarter in which investors and consumers dealt with iPhone shortages would now be on the wane. Stocks may rise if they realize that

Apple shares today closed at $143, down $2.93 or 2.01% in regular NASDAQ trading. The stock has a 52-week high of $179.61 and a 52-week low of $124.17.

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