Apple earnings may be hung up by iPhone -- again - CNET

But the markets for wearables and the like aren't as large as smartphones -- about 335 million phones were sold around the world in the first quarter, according to data tracker IDC. That compares with fewer than 20 million wearables shipped in the same March period, the firm said. IDC estimated Apple Watch sales for the most recent quarter likely dropped 55 percent. Apple doesn't share sales data on its watch.

"All indications are they'll be down in every category," Tim Bajarin, a longtime Apple analyst and head of Creative Strategies said. "This quarter, the big question is -- is this the new normal?"

Apple's third quarter, which ended in June, is typically its weakest sales period of the year. Its latest iPhones -- the 6S and 6S Plus -- were introduced last September, and rumors about new devices coming this September, as usual, prompt many people to hold off on buying a new iPhone until the next one is out.

But this year's third quarter might be even worse than usual, analysts say, with iPhone sales expected to fall to about 40 million units from 47.5 million last year. In the same period last year, iPhone sales were lower than analysts expected, but the number of devices sold still jumped 35 percent.

Apple didn't have a comment ahead of its eaings report.

Smartphone woes

Customers' reluctance to trade up their old phones for newer models has hurt nearly every phone maker in the industry. Apple's archrival Samsung saw its smartphone sales and market share fall for two years, though the South Korean electronics maker seems to finally be showing some signs of life.

Earlier this month, Samsung said it expects to report its best quarterly results in two years, boosted by strong sales of its Galaxy S7. The company released its flagship smartphone a month earlier than normal -- March instead of April -- and retued many beloved features, like water resistance and expandable flash memory, to the device. That was enough to get consumers buying again.

It's unlikely Apple experienced the same resurgence last quarter, analysts say. Along with a decline in iPhone sales, iPad sales likely dropped for the 10th straight quarter as people have tued more and more to their larger screen phones for the tablet experience. Macs and Apple Watch sales probably also suffered.

Overall, Wall Street expects Apple to report eaings of $1.38 a share on sales of $42.1 billion. Apple told them to expect third-quarter sales of $41 billion to $43 billion in revenue.

"Expectations remain very low," Wells Fargo analyst Maynard Um noted.

But that means anything positive could boost Apple shares. The stock is down 6.3 percent so far this year, closing Friday at $98.66.

Looking to Q4

What Wall Street is really looking for Tuesday is what Apple expects in the back-to-school shopping season, which ends in September. That's the period typically gets a boost from the first days of new iPhone sales. It's also a signal of how well Apple thinks its new phone will do.

Right now, analysts polled by Thomson Reuters expect Apple's fourth-quarter revenue to total $45.8 billion, down about 11 percent from same quarter last year.

Apple has gotten into a pretty steady cycle with its devices since the first iPhone went on sale. Every other year, it makes big design changes to its smartphone. The off year is the "S" cycle, with most of the changes in those in-between models coming under the hood, like a better camera or faster processor.

Apple hopes new iPad Pro means less is more...

1 - 5 of 15

Next Prev