When Apple reports earnings after the close today, all eyes will be on its revenue, specifically how many fewer iPhones it sold in the quarter (consensus expects a drop of 22%), and more importantly profits for one reason: over the past several years Apple has been the single biggest contributor to S&P profitabillity. In 2015, Apple’s profit rose 21% and it made more money than any other company in the S&P500 – at $53.7 billion in net income it accounted for 7% of the S&P’s bottom line.
However, that ended promptly in the first quarter when APPL posted a substantial drop in both EPS and iPhone sales. It is about to get worse: according to Drexel Hamilton’s Brian White, “the company is heading for its biggest iPhone decline ever.”
As such, AAPL is truly in a class of its own, details of which are revealed courtesy of FactSet’s John Butters who writes that for the calendar second quarter (fiscal third quarter for Apple), the current mean EPS estimate is $1.40, compared to year-ago actual EPS of $1.85, a 24.5% decline on the back of a 22% drop in iPhone sales. If Apple reports a year-over-year decline in EPS for Q2 2016, it will mark the second straight quarter that the company has reported a year-over-year decline in EPS. The last time Apple reported two consecutive quarters of annual earnings declines was Q2 2013 through Q3 2013 (fiscal Q3 2013 through Q4 2013 for Apple).
This post was published at Zero Hedge on Jul 26, 2016.
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