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Apple (AAPL) earnings preview

  • Q4 adjusted EPS: $1.87 expected by a Thomson Reuters consensus estimate
  • Q4 revenue: $50.7 billion expected by a Thomson Reuters consensus estimate
  • Q4 iPhone unit sales: 46 million expected by a FactSet consensus estimate
  • Q1 revenue forecast: $84.9 billion expected by a Thomson Reuters consensus estimate
  • Q1 margin forecast: 38.6 percent expected by a StreetAccount estimate

It’s an especially unusual earnings report for the world’s most valuable public company.

In the past, Apple has debuted new products in September and released them soon after. As a result, analysts get a glimmering of how new iPhones are selling by October or November, ahead of January’s big holiday-season debrief.

But this year, Apple’s flagship product, the iPhone X, hasn’t even hit stores. That means a lot is riding on Apple’s forward guidance. Ancillary products, like HomePod, are also in the pipeline.

The iPhone X is special in more ways than one. The $999 starting price has some analysts worried about sticker shock, and reports have raised concerns that Apple might be running low on supply on the difficult-to-manufacture phones.

Thus, the questions on investors’ minds are: How many of these products does Apple expect to sell for the holidays — and can the company deliver them before January? Apple does have a ticking clock — it often launches new products in the spring, as well, and some consumers start to wait for next September’s releases, beginning as early as June, according to Mizuho Securities analyst Abhey Lamba.

“We expect demand to outstrip supply for iPhone X over the next two quarters but demand could potentially slow down starting in the June 2018 quarter due to the anticipation of new devices later in the year,” Lamba wrote in an Oct. 17 research note.

The whispers of delays also mean that investors’ reactions to September results could go either way. On one hand, Wall Street is typically happy when a company reports better-than-expected sales or profits. But on the other hand, it would boost Apple’s long-term business if consumers are holding off on purchases now, to buy the more-expensive iPhone X later, according to Piper Jaffray analyst Michael Olson.

“We believe it is likely that initial demand for iPhone 8 is being negatively impacted by customers waiting for iPhone X; we have factored this concern into our model by pushing more iPhone units out of the Sep/Dec quarters and into Mar/Jun,” Olson wrote in an Oct. 31 research note.

This all comes as Apple flirts with a trillion-dollar valuation. Apple shares have risen nearly 50 percent over the past year, with a market capitalization of over $850 billion as of Thursday morning.

Part of that valuation likely comes from investors’ future expectations of the company— and executives’ Thursday-night commentary on the year ahead will be crucial. Apple executives have expressed high hopes for investment in software and services, in the booming middle classes in China and India, and the tantalizing prospect of tax reform.

Apple typically reports services revenue and revenue in greater China, and a third-party report has already hinted at growth in the region. Apple also forecasts profit margins and tax rates for the quarter ahead, which could foreshadow the year ahead for the iPhone maker.

Finally, October marks the end of the fiscal year for Apple — so there’s always a chance that Apple will signal changes to its reporting style in the year ahead. Of particular interest are sales of the new Apple Watch. Apple has never disclosed specific numbers on the wearables — but at least one analyst estimates that the product has gained major momentum this year.

“While Apple Watch sales still represents low to mid-single digits of overall revenue, this wearables category is an important product for Apple to further penetrate its massive consumer installed base and lay the groundwork for new product lines/technologies (e.g. AR glasses) over the coming years to complement its ‘bread and butter’ iPhone franchise growth,” Daniel Ives, head of technology research at GBH Insights, wrote on Oct. 18.

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