For months, Apple's (AAPL) stock price has been tumbling. The world's most valuable public company has hemorrhaged $200 billion since September. Bloggers and "informed sources" warn of sagging demand for its revenue-generating iPhone. And some analysts have become downright gloomy about the company's fate.
Now it's Apple's turn to tell us how bad -- or surprise us with how good -- things really are.
In one of the most highly anticipated earnings reports in recent memory, Apple on Wednesday will announce results of its fiscal first quarter. And judging by how divided analysts are about Apple right now, you'll be able to hear a pin drop all over Silicon Valley when CEO Tim Cook addresses them on the conference call.
"This is by far the widest distribution of estimates we've ever seen," said Leigh Drogen, co-founder and CEO of forecasting site Estimize. "It's really amazing because there's simply no consensus there about Apple; the analysts are all over the map."
While the consensus view expects a 3 percent year-over-year decline in earnings, the polled analysts' estimates run the gamut from a nearly 14 percent decline to a 12 percent increase, according to Thomson Reuters. And if Apple does show a drop in profit, it'll be the first such decline in nine years.
Apple watchers will be looking for several key numbers to see if Apple's stock slide reflects either an overreaction by investors worried about increasing competition among smartphone makers or real-deal troubles that now threaten the Cupertino tech giant from all sides.
"The first thing I'll want to know is what the iPhone shipping number was for the quarter," said Amit Daryanani with RBC Capital Markets, who's forecasting sales of 46 million iPhone units. "There's been a lot of concern over the parts production being severely cut. But what drove that? Was it really weakened demand for the iPhone or was it supply-chain issues?"
Analysts on average expect the company to show sales of 48 million iPhones, a big jump from the 37 million it sold in the same period a year ago. If Apple falls short of that number, it would reinforce some analysts' gloomy outlook. Complicating things is that Apple doesn't break out how many iPhones it sells of each type.
Daryanani is also keen to know if Apple can drive revenue higher while maintaining gross margins, and he wants to see if strong sales of the new iPad Mini are the result of "cannibalization of the 10-inch iPads versus organic demand" from new tablet buyers.
The pressure is on for Cook, who took over the helm 16 months ago from co-founder Steve Jobs. Cook has yet to persuade investors that all is well within the Apple kingdom, despite the much-heralded launch of the iPhone 5 and iPad Mini under his watch.
When it reported its previous quarterly earnings in October, Apple forecast $52 billion in revenue and earnings of $11.75 a share. Wall Street's expecting the company to top that at $54.69 billion and earnings per share of $13.41, based on a poll of 47 analysts by Thomson First Call. That per-share number is down from the $13.87 analysts were expecting ahead of last quarter's forecast.
One other factor adding to the big unknown: Apple finished off its calendar year in a big way, upgrading nearly its entire line of computers and launching brand-new versions of the iPhone, iPod and iPad. And while that may mean a huge holiday quarter for sales, it also raises a question: Does Apple, which has a long history of staggered product releases, have enough up its sleeve to sustain its momentum in 2013?
We'll all be a lot better equipped to answer that question Wednesday afternoon.
Contact Patrick May at 408-920-5689; follow him at Twitter.com/patmaymerc.
1. While their consensus view expects a 3 percent year-over-year decline in earnings, analysts' estimates run the gamut from a nearly 14 percent decline to a 12 percent increase, according to Thomson Reuters. If Apple does show a drop in profit, it'll be the first such decline in nine years.
2. As Apple's main moneymaker, the iPhone must show strong sales numbers. Analysts on average expect the company to report sales of 48 million iPhones, a big jump from the 37 million it sold in the same period a year ago.
3. With the new iPad Mini selling like hot cakes, is Apple cannibalizing sales of its larger-screen iPad, or are the Minis being scooped up by new tablet buyers coming into the Apple fold?
Source: Mercury News reporting