Apple earnings advance: Zeroing in on the iPhone, Watch

Apple on Tuesday is set to report earnings for the third quarter, which has traditionally seen slow iPhone sales because would-be phone buyers are usually waiting for the next model to come out in the fall. But analysts are bullish on the quarter, especially because of stronger-than-expected demand for the iPhone 6 in China.

How bullish are they? They think Apple sold 49.4 million iPhones in the quarter ended in June, compared with the 35.2 million iPhones it sold in the same period a year ago, according to Fortune.

Reports like this one also contribute to the bullishness: The iPhone maker scoops up nearly all of the smartphone industry’s profits, according to a Los Angeles Times report citing an analysis by Canaccord Genuity analysts. Even though Samsung sold more 30 percent more smartphones than Apple from January to March, Apple accounted for $15.3 billion of the $16.7 billion operating profit of smartphone makers, Canaccord said.

And in a sign of what else is to come, Apple is ordering record numbers of its next iPhone models, the Wall Street Journal reported earlier this month. (Still, there are possible wrinkles ahead, including China’s economic slowdown — which has weighed on Apple’s stock recently.)

OK, so people like the iPhone. What about the company’s newest gadget, the Apple Watch?

The company hasn’t said much about how the watch is selling since its launch in April, and it has said it would lump in watch sales with other products so we’re not likely going to get exact numbers. But investors and analysts will be looking to the company for clues Tuesday afternoon. Signs point to lackluster demand.

Research firm Slice Intelligence reportedly said this month that Apple Watch sales have plummeted 90 percent since the opening week of sales: less than 20,000 watches a day as opposed to about 200,000 a day during the launch week in April.

And in a sort of chicken-and-the-egg problem, the New York Times notes that some of the most popular apps makers, such as Facebook, don’t support an app for the watch yet because they’re waiting to see who’s buying.

Analysts expect Apple to post profit of $1.89 per share on revenue of $49.2 billion, compared with $1.40 a share on $37.4 billion in revenue in the year-ago quarter.


Photo from Associated Press archives


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