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Why Is Apple Inc. Reporting Its Fourth-Quarter Results So Late?

By Ashraf Eassa - Oct 8, 2017 at 4:01PM

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Apple needs a little more time to be able to give useful financial forecasts to its stockholders.

Apple (AAPL 1.62%) recently announced that it plans to report its financial results for the fourth quarter of its fiscal year 2017 on Nov. 2. This, as some have pointed out, is late compared to when Apple has reported fourth-quarter results in previous fiscal years.

During fiscal year 2016, Apple reported its fourth-quarter results on Oct. 25. In the year prior to that, it reported fourth-quarter results on Oct. 27. And the year before that, the company reported its results on Oct. 20.

Apple's iPhone X

Image source: Apple.

A report on Nov. 2 isn't much later than it was, say, last year -- it's just six days', or less than a week's, difference. But I do think that the slightly later-than-usual fourth-quarter earnings announcement is deliberate. Here's why.

It's not about the fourth-quarter results

Each quarter, Apple reports its financial results for the most recent quarter, and then proceeds to provide guidance for the following quarter. That guidance usually includes ranges for revenue, gross profit margin, and operating expenses, as well as both an estimate for what Apple refers to as "other income" and a tax-rate estimate.

Coming up with those numbers, even in a normal year, isn't easy; it takes a substantial amount of work by Apple's finance department to provide ranges that are likely to be accurate while at the same time being useful (ranges that prove correct by being very wide aren't useful).

Those estimates don't come out of thin air, either. Apple, like any company, bases estimates in part on the sales momentum that the company has seen in the quarter so far.

This year is an unusual one for Apple. Although the iPhone 8 and iPhone 8 Plus have been shipping to customers since late September, they aren't the only new iPhones in 2017. Apple is expected to begin taking preorders for its true flagship device, the (unfashionably late) iPhone X, on Oct. 27, with deliveries beginning on Nov. 3.

For the company to provide investors with a useful financial forecast for the first quarter of fiscal-year 2018, it really needs to have some insight into the customer interest in iPhone X, the degree to which iPhone X shipments will cannibalize iPhone 8 and iPhone 8 Plus shipments, and more. By putting off the fourth-quarter report -- and, by extension, the publication of a financial forecast for the following quarter -- to Nov. 2, Apple should have a reasonable amount of data with which to furnish a forecast.

Additionally, Apple should have plenty of insights to offer analysts during the question-and-answer session of the earnings call. That will, no doubt, focus greatly on the initial response to the iPhone X, Apple's expected product mix during the quarter (as well as possibly throughout the entire iPhone cycle), and much more.

In short: Apple investors need to wait a little longer due to the unusual nature of this year's iPhone rollout. Fortunately, the wait isn't all that long, and the data that Apple provides will be far more useful to shareholders as a result of that wait.

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