1 More Sign Apple Could Smash Records With Its Upcoming Earnings Report

With its long-overdue deal with China Mobile finally going live this weekend, it's been hard for tech investors to avoid talk of Apple (NASDAQ: AAPL  ) in recent days.

True, the China Mobile deal certainly adds some welcome high-profile panache to the Apple investment thesis as it tries to put a 2013 campaign that saw its share of challenges for the world's largest technology company.

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However, thankfully for Apple and its investors, all signs point to renewed confidence as Apple's final quarterly report of the calendar year 2013 draws nearer. 

Apple eyes another record quarter
Since the most first weekend debut of its most recent line of iPhones, analysts have speculated that Apple will likely report its most prolific quarterly report in its history when it reports earnings on January 27. 

Recently, one analyst offered his take on Apple's coming quarterly release, claiming that Apple will report sales of more than 80 million iOS-powered devices during the holiday season. More specifically, the analyst also claims that Apple sold 54 million iPhones and 25 million iPads, both of which would set records for their respective product lines as well.

In the video below, tech and telecom analyst Andrew Tonner looks at the report in greater detail and discusses Apple's coming earnings report.

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  • Report this Comment On January 19, 2014, at 3:44 AM, Johnsoftie10 wrote:

    you have got to be an idiot...this stock is going down to $460.

  • Report this Comment On January 19, 2014, at 4:21 AM, jsolorio wrote:

    If you enter the China Mobile Website you will see that all 3 versions of the Iphone have sold out. In just 1 day the phones were out of stock. Considering that there are 3,000 China Mobile stores I wouldn't be surprised if there were an additional 1.5 million phones sold by next weekend. Apple will smash earnings and guidance.

  • Report this Comment On January 19, 2014, at 4:34 AM, partinobodycular wrote:

    While Apple may indeed have sold a lot of iOS devices in the 4th qtr, they're going to be pushed to the limit to beat current analyst estimates. Apple gave estimates of $55B - $58B in revenue at the last earnings release, with a gr. margin of 36.5% - 37.5%. If we use those numbers, and even allow for a bit of a beat on the upside, then Apple's earnings should come in somewhere around in-line.

    Revenue: 60 Billion (above estimate)

    Gr. Margin: 37.5% (Top of estimate)

    Net Margin: 20.5% (up from 20% last qtr.)

    Shares Outstanding: 875 Million (Assuming that they've bought back 34 million shares or so during the Qtr)

    That gives us around $14.06 per share in earnings. Current analyst estimates are about $14.07. So even if Apple hits on all numbers, they're likely to come in around current estimates. Not bad, but not likely to spur a move to the upside either.

    It all depends on the guidance. They've got to show confidence that the CHL deal is going to add to the bottom line. Any guidance suggesting less than $11 in earnings for the 1st qtr, are not going to instill much confidence going forward. CHL was supposed to be the catalyst to get earnings growing again, if that doesn't appear to be happening, then investors are likely to pull out.

    The only other catalyst available, would be a new product line, and an iWatch just doesn't seem to offer the earnings potential necessary to move the needle. Without something to get earnings growing again, Apple may turn into another Intel or Microsoft. Once great growth stocks, stuck going nowhere.

    A lot of the current share price was based on the idea that the CHL deal would significantly increase earnings. CHL's sales numbers, and Apple's guidance, will determine if the CHL premium was justified.

    Be aware though, channel fill may deceptively inflate the initial CHL sales numbers. The next couple of weeks will be very telling as to the future of Apple's stock.

  • Report this Comment On January 19, 2014, at 7:33 AM, Ostrowsr wrote:

    Low PE, dividend, Billions in the bank, expanding the workforce, new development center. All point to new growth coming soon. But agree that it's all about management and research. Anyone know how many shares Apple has bought back at these low prices?

  • Report this Comment On January 19, 2014, at 11:35 AM, partinobodycular wrote:

    jsolorio, actually Foxconn had reportedly shipped about 1.4 million iPhones to China Mobile recently. Interestingly, that was the same amount of phones that were supposedly pre-ordered since China Mobile began taking pre-orders back on Dec. 25th. So that initial shipment was accounted for even before they hit the stores. Which means that it likely took 3 weeks to sell those 1.4 million phones, not one day. We can also assume that not all of the pre-orders turned into actual sales, there's always some that never get picked up. So some of those phones will become available for instore purchase at some point, but we have no idea how many of those pre-sold phones will be released for general sale, or when.

    So in truth, we have no idea how many iPhones were sold on the first day. We just know that they took 1.4 million pre-orders in 3 weeks. It could turn out that a lot of those phones never get picked up, and get returned to stock. We just don't know at this point. But the fact that the website lists them as out of stock, tells us almost nothing.

    Difficult to speculate at this point, we'll have to wait for actual numbers. One thing that's almost certain to happen is a rapid drop in demand. As with any new launch there is bound to be an initial demand, but it will be at the earnings release when we get some idea of how Apple thinks CHL will effect sales going forward. Will demand continue? The guidance will give us an answer to that question. So we may have to wait one more week.

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Andrew Tonner

Andrew Tonner is a tech specialist for The Motley Fool. He is a graduate of The University of Arizona with a degree in Finance.

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