Apple could be down by as much as $8bn in upcoming earnings call

On July 28th Apple will reveal its earnings for what is known as the June quarter – it’s third financial quarter of the year, which (confusingly) corresponds to the second quarter of the calendar year.

It’s a regularly endured, financial markets technicality for the stock market-listed, hardware/sorftware/services giant, granting financial experts and analysts an unusual ‘peek under the hood’ at what makes the notoriously secretive company tick.

The announcement comes in the form of the official release from the company on the day and then a short ‘informal’ announcement ‘chat’ with analysts from CEO Tim Cook and CFO Luca Maestri, the content of which is then pored over word by word after which the free market gets its teeth into the company’s share price…

The tone is always (predictably) upbeat but – by law – entirely factual with words very carefully chosen and announced without the avenue for debate, with literally millions of dollars hanging on every syllable and pause in delivery.

So what can we expect?

In short, it’s not great news, with the global pandemic impacting on the company’s supply chain, given its heavy reliance on manufacturing in the far east then delivering the goods to the US and Europe. The company has already politely warned of an ‘up to $8bn impact’ on this to-be-announced quarter’s results when they made their previous earnings call in April 2022. 

In THAT earnings call, results were surprisingly upbeat considering the potential panic that the pandemic could have produced with earnings propped up by the arrival of the smash-hit third-gen AirPods, the Apple Silicon Macbooks, the fifth iPad Air, third iPhone SE and new Mac Studio. Oh, and let’s not forget their insanely expensive Studio Display and all essential £19 Apple Polishing Cloth…

As a result Apple reported $97.28 billion in revenue for their quarter ending March 2022 which was up year on year from the $89 billion they reported in Q2 2021. That’s a lot of cloths…

However, this time around investors are expecting the awaited dip that Apple magically evaded last time – a dip similar to the $6bn down they suffered in the last quarter of 2021 as the pandemic really bit. Zero tolerance policies within China in 2022 – as the country worked hard to limit a second wave – meant the complete closure of some of Apple’s manufacturing lines producing the shortage of products that their supply chain geniuses had previously pretty much dodged.

M2 Mac sales have been strong, but is it too early to factor them into the new quarter’s revenue? Time will tell. And how big will the drop be? The difference between being $4bn and $8bn down is enormous. And the fact that earnings are down at all is – in a word – very ‘un-Apple’ given their past rep.

What does this mean for investors? 

So one would assume that huge Apple stock holders such as Warren Buffet would be sweating round about now, but the investment stalwart has remained calm, increasing his holdings across the pandemic and publicly stating that Apple is and will remain strong thanks to their abillity to simply increase prices in order to make up for any kind of shortfall from sales without impacting on demand.

In other words Apple is – by now – so trusted and loved (and necessary) for so many people that if the next phone or Mac was increased in price by $100 or so (and that’s exactly what’s been happening across the last few years with the last few product iterations) that the public would continue to hoover up their latest without protestation.

Of course, we’d all prefer a price cut and a cheaper, more affordable iPhone etc… But with little genuine need for that, there’s very little incentive for Apple to do us all a favour.

The latest numbers will be revealed next week on the 29th with every tech investor watching and ready to wade in. What will that mean for the price of your iPhone 14? You’ll find out in September.