Here’s a Preview of Apple’s December Quarter Results

Apple campusApple (NASDAQ:AAPL) is scheduled to announce its earnings results for the first fiscal quarter of 2014 after the markets close on Monday, January 27. Apple’s guidance suggested that its December quarter revenue would be between $55 billion and $58 billion with a gross margin between 36.5 percent and 37.5 percent. The majority of analysts are expecting results closer to the high end of Apple’s guidance. According to Yahoo Finance, the consensus revenue estimate for Apple’s December quarter is $57.46 billion and consensus EPS is $14.09.

Although Apple typically underestimated its earnings guidance under Steve Jobs, the company has been providing fairly accurate earnings guidance since Tim Cook took over as CEO. The lowest of the forty-one analyst revenue estimates compiled by Yahoo Finance is $55.93 billion and the highest is $59.88 billion. A year ago Apple posted $54.51 billion in first-quarter revenue and EPS of $13.81.

Fortune’s Philip Elmer-DeWitt recently compiled his own set of revenue and earnings estimates from a group of forty-nine analysts that included thirty-one professionals and eighteen amateurs. The average December quarter revenue estimate from Fortune’s group of analysts is $57.91 billion and the average EPS estimate is $14.32 – both higher than the consensus forecasts provided by Yahoo Finance.

However, as noted by Elmer-DeWitt, the independent analysts were more bullish than the professional analysts, with an average revenue estimate of $59.05 billion. Independent Braeburn Group analyst Faizal Kara gave the highest revenue estimate among Fortune’s group at $60.37 billion. In contrast, the average revenue estimate from the professional analysts was $57.27 billion.

Although most analysts believe that this December quarter will be one of Apple’s most successful holiday shopping seasons, some investors are still concerned over the company’s long-term prospects. “Beyond fiscal 2014, it is not a slam dunk that Apple’s net income will be higher in three to five years,” Bernstein Research analyst Toni Sacconaghi told Reuters. “Without new product categories, we see Apple’s end markets as increasingly mature and competitive, which could pressure or limit revenue growth and gross margins.”

According to data from market research firm Gartner, Apple’s share of the worldwide smartphone market fell to 12.1 percent in the third quarter of 2013 from 14.3 percent in the year-ago quarter. Meanwhile, rival Samsung (SSNLF.PK) maintained its No. 1 ranking in the global smartphone market with the same 32.1 percent share that it held last year.

Analysts are also already looking ahead to Apple’s March quarter, when the impact of the company’s distribution deal with China Mobile (NYSE:CHL) will be more clearly seen. Analysts have estimated that Apple’s partnership with China Mobile could add between 15 million and 24 million iPhone sales in 2014 and between 4 million and 5 million in the second fiscal quarter. According to data compiled by Yahoo Finance, the consensus revenue estimate for Apple’s March quarter is $46.05 billion and the consensus EPS is $10.93.

Here’s how Apple traded on Friday.


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