World Economy

Apple Grappling With Oversaturated Markets

Apple Grappling With Oversaturated Markets Apple Grappling With Oversaturated Markets

 Apple Inc. is expected to report earnings at the high end of fourth-quarter guidance after the market closes Tuesday, buoyed by the iPhone 7 launch and a flurry of new customers switching from Android in the aftermath of Samsung Electronics’ exploding Note 7 saga.

But analysts are projecting the third-straight quarterly decline in iPhone unit sales, as the company grapples with oversaturated developed markets and lower-priced competition in emerging markets, Market Watch  reports.

Apple  has shifted the tone of its earnings calls this fiscal year to focus on software and services in addition to its flagship hardware. Apple CEO Tim Cook has referred to services as a “large and important source of recurring revenues” for the company. Analysts believe revenue from services will grow as the company’s installed base expands, and that their lower overhead will drive improvements in profit margins.

While the iPhone remains Apple’s biggest top-line contributor by far, services, such as Apple Care and Apple Music, surpassed the Mac earlier this year, and are expected to surpass $6 billion in revenue for the first time this quarter.

Analysts expect Apple to report earnings per share of $1.66, down from $1.96 in the year-earlier period, according to FactSet. Estimize, a software platform that uses crowdsourcing from hedge-fund executives, brokerages and buy-side analysts to predict earnings, has Apple earning $1.71 a share. Apple beat both consensus numbers last quarter but fell short of both in the quarter prior. It has a long history of topping the FactSet guidance, beating it 11 quarters in a row from June 2013 to December 2015, but has a mixed history with the Estimize consensus.

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