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01-14-2014, 10:21 AM #1
Investors to Likely Focus on China Mobile Guidance in Apple's Next Earnings Report
With Apple set to report its holiday 2013 earnings in a few weeks, investors are likely to be focused on Apple’s future. Analyst Gene Munster of Piper Jaffray believes the upcoming launch of the iPhone on China Mobile is set to take the center stage. He predicted in a note to investors recently that Apple’s guidance for the upcoming March 2014 quarter should benefit from the sale of roughly 3 million additional iPhones through China Mobile, which is the world’s largest wireless provider. He expects the addition of China Mobile will be the “biggest focus” for investors intently listening to the company’s scheduled conference call on January 27.
Overall, Munster expects that March 2014 guidance will be about 2% ahead of Wall Street expectations, which would be the same level the company exceeded market predictions for its guidance for the December 2013 quarter.
As of right now, sales of the iPhone 5S and iPhone 5C are set to begin at China Mobile on January 17. The latest reports suggest that manufacturer Foxconn has shipped nearly 1.5 million iPhone 5S units to China Mobile for the upcoming launch. Some analysts expect that the addition of China Mobile will net Apple an incremental 17 million iPhone sales calendar in 2014. The results of the survey published last month by Morgan Stanley research suggested the carrier will add at least 12 million iPhone sales for Apple in 2014.
Munster doesn’t believe that the Wall Street consensus numbers for the current March quarter accommodate for the China Mobile launch. Existing projections call for Apple to sell around 42 million units in the March quarter, which would represent 12% year-over-year growth. As for the just concluded December quarter, Munster went on to note that Apple has reported revenue near or slightly above the high end of its guidance in each of the last three quarter, since it changed its guidance policy to reflect more realistic expectations. This would suggest that the company will report revenue of around $58 billion, $14.35 earnings per share and sales of as many as 57 million iPhone units.
The analyst’s summary of 20 buy-side investor expectations also sees Apple as having sold as many as 25 million iPads and shipped roughly 4.6 million Macs. Estimated gross margins for the quarter have been pegged at 37.5%
We will have to wait and see if the analysts’ predictions are correct.
Source: Piper Jaffray via AppleInsider