Earnings season begins this month. For tech investors, the three big names to watch will be Apple (AAPL -1.22%), Facebook (META -4.13%), and Microsoft (MSFT -1.27%). Here's what investors need to know.
Apple
Apple reports its second-quarter earnings on April 23, after market close. Most analysts, including myself, are expecting Apple to report results at the high end of its guidance. Unlike the unpredictable guessing game investors played a few years ago for Apple earnings, more realistic guidance has made predicting results much easier. Apple guided for second-quarter revenue and gross margin of $42 to $44 billion and 37%-38%, respectively.
Beyond the quarter's key metrics, investors should look to Apple's guidance for Q3 to see whether or not the company may be planning to unveil a new product during the quarter. Even more, bullish guidance for Q3 could signal Apple is starting to see traction with China Mobile as the world's largest carrier rolls out its 4G network across China. But investors shouldn't get their hopes up for bullish third-quarter guidance. Typically, Apple launches products toward the end of its fiscal fourth quarter or the beginning of the first. And favorable comparisons from China Mobile will likely be nominal.
The most important item for long-term buy-and-hold investors to watch will be potential comments from CEO Tim Cook on the timing of the new product categories he has promised.
Facebook
Facebook reports fiscal first-quarter results after market close on April 23, too.
Mark Zuckerberg's social network has stunned the Street since it went public. Not only has the company managed to successfully monetize mobile, but it has also been able to dramatically grow its top line. In fact, Facebook's year-over-year ad revenue growth has actually accelerated in recent quarters.
For three quarters in a row, Facebook's ad revenue growth has accelerated. Data for chart is retrieved from SEC filings.
With ad revenue growth reaching an impressive 76% in Q4, the Street will be watching the metric on April 23 to see whether Facebook's growth can continue to accelerate any longer. While investors shouldn't expect these levels of growth to be sustainable much longer, the launch of premium video advertising aimed to attract TV marketing budgets may have helped Facebook land enough big, new marketing deals to sustain ad revenue growth during the quarter.
Analysts expect Q1 revenue of $2.34 billion and earnings of $0.24 per share.
Microsoft Word for iPad. Source: Microsoft.
Microsoft
The Street's software giant reports fiscal earnings on April 24, after market close. While typical metrics like revenue and earnings will certainly be closely watched by investors when the company reports fiscal 2014 third-quarter results, analysts will also be looking for some sort of update on the success of the recently launched Office for iPad.
Analysts expect revenue and EPS of $20.38 billion and $0.63, respectively. Notably, both metrics would be down slightly from figures in the year-ago quarter. This downward trend highlights just how important it is for recently appointed CEO Satya Nadella to make the right strategic moves.
Guidance will be a key factor for investors to watch. Investors should hope that new strategies under Nadella's leadership begin to pay off in year-over-year gains in both revenue and earnings, going forward. In other words, investors should hope for fiscal 2014 fourth-quarter guidance that exceeds revenue and EPS in the year-ago quarter.
