John Paczkowski

Recent Posts by John Paczkowski

Apple’s Fourth Quarter: Dueling iPhones and the China Question

Daffy_Apple_EyesThis afternoon, Apple will report earnings for a quarter unlike any before — the first in which the company sold two new iPhones instead of one.

While this quarter includes just eight days of iPhone sales, expectations for it are high, and for good reason. Apple sold a record nine million new iPhones over the weekend that it debuted the iPhone 5s and 5c. Touting that milestone in a Sep. 23 announcement and an SEC filing, Apple said it expected revenue and gross margins for the period to fall “near” the high end of the range it provided when it last reported financials, $34 billion to $37 billion, and 36 percent to 37 percent.

Given that, investors are looking for some pretty big numbers for Apple’s fourth quarter, which marks the end of the company’s fiscal year. Consensus calls for earnings of $7.92 per share on sales of $36.82 billion, with first-quarter guidance of $13.86 per share on revenue of $55.65 billion, according to estimates compiled by Fortune’s Apple 2.0. Estimates for shipments of key Apple products vary a bit, but here are the averages of calls made by a collection of 48 professional and independent analysts — again, helpfully compiled by Apple 2.0:

  • iPhones: 33.4 million
  • iPads: 13.9 million
  • Macs: 4.2 million

These numbers, and Apple’s financials, are only part of the story. There are a lot of questions to be answered with this particular earnings report — more so than usual. That should make for a noteworthy call with the company’s management. Look for some clarity — or lack of it — around the following:

  • New iPhones
    Commentary on iPhone 5c pricing and demand, and color around new iPhone sales in general. How much better is the flagship iPhone 5s selling than the 5c? Is there any truth to supply-chain chatter claiming that Apple has dialed back production of the 5c?
  • Retina iPad mini
    When will the new iPad mini with Retina display ship? When Apple unveiled the device last week at a special event in San Francisco, it didn’t provide a specific launch date, just a ballpark window of availability “later in November.”
  • iPads
    Apple’s iPad business contracted a bit last quarter. Was that an anomaly, the beginning of a trend, or a cyclical and expected decline driven by consumers postponing their iPad purchases until Apple’s latest models debut?
  • China
    How’s business in China? In Apple’s third quarter, revenue from Greater China — which includes Hong Kong and Taiwan — slipped 14 percent year over year, to $4.6 billion. That was a 43 percent decline from the previous quarter. And sell-through in Hong Kong fell by about 20 percent. The reason? During its last earnings call, Apple didn’t have a firm explanation. “It’s not totally clear exactly what occurred,” CEO Tim Cook said at the time. Perhaps the company has a better idea now.
  • Carl Icahn
    What does Apple think of the activist investor’s call for it to immediately repurchase $150 billion worth of its own stock?

Apple reports earnings after market close today. Join us here for coverage.


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Another gadget you don’t really need. Will not work once you get it home. New model out in 4 weeks. Battery life is too short to be of any use.

— From the fact sheet for a fake product entitled Useless Plasticbox 1.2 (an actual empty plastic box) placed in L.A.-area Best Buy stores by an artist called Plastic Jesus