Although Apple’s stock has dropped 15% in the past two months, many investors believe that Apple will actually surprise us today with a profit. This is according to the website Estimate that used over 15,000 responses to reach that consensus.
Regardless of today’s earnings figures, there is no denying that iPhone sales are slowing. Over the past few months, we’ve seen the headlines about how declining iPhone sales can create opportunities and problems for Apple’s supply chain partners. Foxconn, one of Apple’s largest suppliers, was recently in the news after trying to buy Sharp Electronics from Japan. Foxconn is trying to diversify its profits as Apple’s volume slows.
Apple’s strategy to keep earnings growth could be based on new product announcements in 2016. Even though the news surrounding the Apple Car project has not been the brightest recently when the senior engineer left the company, the areas that will become more tangible in the short term depend on new iPhones, the release of which is aimed at new iMacs and one in 2016 new watch.
With Samsung brings Apple Pay with its will be interesting to see how Apple can differentiate in this area and set impulses. At this time, Apple is still struggling to get Apple Pay up and running in many countries, as banks and other retailers are concerned about Apple’s move.
Clearly there are some emerging positions for applets apart from the new product announcements. One of these bright spots is the targeted expansion in India. This week there was news about Apple’s plans to open new Apple stores in India. Sales of iPhones rose after the price cuts announced in the Indian market last month. With the new Apple Stores, the company will be able to benefit from the emerging medium-sized market in Tier 1 cities.
It’s important to remember the basics of iTunes Store and app purchase earnings. Although iPhone sales in China are cooling, the increase in revenue from Apple’s App Store can be clearly seen in this market. This also applies if the Indian market achieves the results of the new initiatives.
In summary, we think earnings figures will exceed analysts’ expectations today, but the good news could be dampened due to the predictive outlook for new iPhone sales and the general weakness of the global economy. However, it is too early to write off Apple as a value stock versus a growth stock.