After market close today, Apple (NASDAQ:AAPL) will report its fiscal third-quarter numbers. With the stock up 24% in the past three months, investors are hoping Apple can beat the Street's expectations again. But whether or not Apple posts solid numbers, there are other factors beyond the usual Apple metrics (iPhone sales, revenue, guidance, EPC, etc.) that could influence investor sentiment toward Apple stock. Here are some of the questions Apple CEO Tim Cook may have to answer in the company's earnings call at 5:00 p.m. ET.
1. Are new product categories coming this year?
Apple CEO Tim Cook has on several occasions promised products in entirely new categories. More importantly, Apple has hinted that they are coming soon.
The day when Apple launches products in new categories is "closer than it's ever been," Cook told The Wall Street Journal in an April interview.
As fall approaches, when Apple typically begins to introduce new products, investors want to know whether Apple's new products are ready to go. While the company looks poised to continue increasing EPS meaningfully on iPhone sales and continued share repurchases, an entirely new category is another way Apple could likely lock in more earnings growth -- especially if history is any indication of the future.
2. Is there meaningful growth potential for new categories?
If Cook decides to answer this question, it may be the most insightful comment we get in the entire earnings call.
The question could come in many forms:
- Will new categories have a cannibalization effect?
- Or will they be wholly accretive to earnings?
- Does management have big expectations for these new products?
- How is Apple modeling the incremental growth potential earnings for these new products?
- Are new product launches in new categories factored into your guidance for the fiscal fourth quarter?
3. Will there be supply constraints for this year's iPhone launch?
Initially, there are always supply constraints for Apple's iPhones. While last year's iPhone 5c may have been the first model to be available in excess in many markets, the iPhone 5s was highly constrained. Investors should expect some constraints in the first month, but anything beyond that could suggest supply bottlenecks for the iPhone 6 lineup.
As the annual fall iPhone launch approaches, and production for the 4.7-inch version of the iPhone 6 is reportedly beginning this month, Apple may have some vision into potential bottlenecks.
Given the increasingly competitive environment for smartphones, minimizing supply bottlenecks for the iPhone launch is more important than ever. Having plenty of supply will help Apple take advantage of as much initial demand as possible, and minimize risk to losing potential iPhone buyers because of long wait times.
These three questions summarize the two main topics investors will be interested in when Apple reports earnings and during the conference call: new product categories and the iPhone 6 lineup. While it would be nice to get answers to these questions, Apple usually offers very little insight into future product plans -- so don't expect much.
For a look at some of the important financial metrics to watch, check out this earnings preview.