Investor Alert

Earnings Outlook Archives | Email alerts

Jan. 25, 2021, 12:45 p.m. EST

Get ready for Apple’s first $100 billion quarter in history

Watchlist Relevance

Want to see how this story relates to your watchlist?

Just add items to create a watchlist now:

  • X
    Apple Inc. (AAPL)
  • X
    Dow Jones Industrial Average (DJIA)

or Cancel Already have a watchlist? Log In

By Emily Bary

Even a pandemic can’t stop Apple Inc. from hitting new records.

The smartphone giant is expected to post its first-ever quarter with more than $100 billion in revenue Wednesday, driven by a strong early performance for its new iPhone 12 line as well as continued demand for Macs and iPads for remote work and school needs.

Apple’s /zigman2/quotes/202934861/composite AAPL -2.45% fiscal first-quarter results will be the first to include sales from the iPhone 12 family of devices, which began to roll out in October . Though Apple faced supply constraints on some models, the debut of Apple’s first 5G-enabled phones has arguably been the company’s most successful product launch in five years , in the view of Morgan Stanley analyst Katy Huberty.

Customers seem to be increasingly opting for higher-priced iPhone models and more expensive storage configurations, which would boost the average selling price of devices and help the company’s profit margin. Apple no longer provides unit-sales metrics that shed light on its average selling prices, but the company usually offers some qualitative comments about which devices are performing best.

Apple has also seen strong sales of Macs and iPads amid the pandemic, with more people working and studying from home, and that momentum is expected to have continued into the fiscal first quarter. The company launched new iPads late last year as well as its first computers to feature the company’s own custom chip .

Analysts expect record performance for the company’s services category as well, though one area may not hold up as well. Apple has done a good job of transitioning sales to its online store given the COVID-19 crisis, but it’s “overly reliant on in-store customer purchases” to drive sales of its AppleCare insurance product, Huberty wrote.

Earnings: Analysts tracked by FactSet expect that Apple earned $1.41 a share in the December quarter, up from $1.25 a year earlier. On Estimize, which crowdsources estimates from hedge funds, academics and others, the average projection calls for $1.45 a share.

Revenue: The FactSet consensus models a record $103.0 billion in revenue for Apple’s fiscal first quarter, up from $91.82 billion a year prior. The Estimize consensus is for $103.76 billion.

Analysts tracked by FactSet model $59.58 billion in iPhone revenue for Apple, up from $55.96 billion a year earlier. Apple declined to give formal guidance for the quarter on the last earnings call, but Chief Financial Officer Luca Maestri said at the time to expect growth in iPhone revenue even though devices would begin shipping later in the quarter than they did a year prior.

The FactSet consensus calls for $7.38 billion in Pad revenue, up from $5.98 billion; $8.63 billion in Mac revenue, up from $7.16 billion; $15.17 billion in services revenue, up from $12.72 billion; and $11.49 billion in revenue for the wearables, home, and accessories category, up from $10.01 billion.

Stock movement: Apple shares have gained following three of the past five earnings reports, and the shares are up 75% over the past year as the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA -0.39% , which counts Apple as a component, has gained 7%.

Of the 41 analysts tracked by FactSet who cover Apple’s stock, 28 have buy ratings, 10 have hold ratings and three have sell ratings, with an average price target of $132.71.

Apple has declined to give a quantitative financial forecast in each of its last three earnings reports because of uncertainty related to the COVID-19 pandemic, and the trend will likely continue this quarter.

“Given lingering uncertainty, we expect Apple is more likely to provide ‘guidelines’ rather than ‘guidance’ for Q2,” Bernstein analyst Toni Sacconaghi wrote in a note to clients. In addition to the many unknowns around the pandemic, Apple’s late launch timing of the latest batch of iPhones means that the March quarter could be stronger than usual, since there were fewer iPhone 12 “selling days” leading up to it.

Sacconaghi will also be watching for commentary on Apple’s ongoing dispute with app developers led by Epic Games, which sued Apple and claimed that the company’s App Store rules around in-app purchases are monopolistic. Apple lowered commission rates for smaller developers that make up the bulk of those on the App Store, even as these developers don’t contribute too much to Apple’s overall revenue from the platform.

More on Apple and Epic: ‘Fortnite’ dispute might open floodgates to serious scrutiny of Apple

“We believe that Apple’s decision to lower commissions was politically astute, allowing the company to portray itself as a promoter of small business, while also superficially addressing the complaint that its high app store fees are stifling competition and innovation,” wrote Sacconaghi, who has a market perform rating and $120 price target on the stock. “It remains to be seen if Apple will provide further commentary on this issue; that said, we continue to believe that the legal risk to App Store revenue is low.”

US : U.S.: Nasdaq
$ 122.06
-3.06 -2.45%
Volume: 112.97M
March 3, 2021 4:00p
P/E Ratio
Dividend Yield
Market Cap
$2100.53 billion
Rev. per Employee
US : Dow Jones Global
-121.43 -0.39%
Volume: 411.61M
March 3, 2021 5:03p
1 2
This Story has 0 Comments
Be the first to comment
More News In

Story Conversation

Commenting FAQs »

Partner Center

Link to MarketWatch's Slice.