Apple Q3 Earnings Preview: What to Expect

What's This?

By Seth Fiegerman2013-07-23 14:16:03 UTC

Don't expect too much.

Those four words summarize the sentiment surrounding Apple's upcoming third-quarter earnings report and arguably the company as a whole, at least in the short term.

Apple didn't release any major new products in the June quarter — no new iPhone or iPad — nor did it do so the quarter before that. In fact, Apple is expected to go nearly a full year without a major product launch.

The median estimate from analysts polled by Fortune is that Apple will report sales of 27 million iPhones for the quarter and 18 million iPads. If so, that would represent just a million more device sales in each category than it reported the same quarter a year ago.

Apple's overall revenue is expected to stay relatively stagnant as well. The most recent consensus estimate among analysts polled by Thomson Reuters is that Apple will report revenue of $35.01 billion for the quarter, essentially unchanged from the same quarter a year ago.

Perhaps more troubling to investors is the fact that the company's earnings are expected to decline to $7.32 per share down from $9.32 the previous quarter. This would be the second quarter in a row where profits decline year-over-year.

All of this is a marked shift for a company that used to report double digit percentage point increases in revenue and profits year-over-year, but this is a different period for Apple. Wall Street's expectations appear to be more tempered now than this time a year ago.

Apple's stock peaked at more than $700 a share in late September following the release of the iPhone 5. Baked into that price was the expectation that the latest iPhone would be a blockbuster hit and that Apple had other breakthrough products up its sleeve. Since then, however, the stock has declined to the low $400 range as the company's product rollout has dried up while the competition has grown stronger.

In the three months since the last earnings call, Apple's stock price has held relatively steady in the $400-$450 range in recent months, suggesting that investors have given up any massive expectations for the company, but also, importantly, moved past the doomsayers.