Apple (AAPL) Q4 Earnings Preview: iPhone Sales And Revenue Expected To Decline Year-On-Year, Again

Apple Inc. will report its fourth-quarter earnings after markets close Tuesday. Analysts estimate that the company, struggling to ramp up the sales of its iPhones, will report earnings of $1.65 a share on revenue of $46.89 billion for the quarter, down from $1.96 per share in earnings on revenue of $51.5 billion in the same quarter last year.

If this happens, it would mark Apple’s third consecutive quarter of year-on-year decline in earnings and revenue.

The company, which derives approximately 60 percent of its revenue from iPhone sales, is also expected to post its first year-on-year decline in annual revenue in 15 years — a drop driven primarily by the underwhelming sales of its flagship smartphones in the last two quarters. Analysts forecast that the company’s annual revenue for the fiscal year 2016 would come in at roughly $215 billion — an 8 percent drop over the $233.72 billion it reported in the previous fiscal year.

The impact the sales of iPhone 7 and 7 Plus — both released last month — would have on the company’s top- and bottom-line is still unclear, as Apple is yet to release data on how well these phones have done. Although some reports suggest that the demand for the latest iPhones may have been stronger than anticipated — driven, at least in part, by its largest rival Samsung’s Galaxy Note 7 disaster — these sales are highly unlikely to have significantly boosted its fourth-quarter figures.

“Especially in light of the Note 7 fiasco, I think there is a lot of focus to see what types of market share gains Apple has, with iPhone 7 now in their back pocket,” Dan Ives, senior vice president of finance and corporate development at the mobile cloud services company Synchronoss Technologies, told CNBC. “In the last 18 months Samsung had a strong momentum. The question is, does iPhone 7, as well as the Note 7, change the dynamics between Apple and Samsung?”

When the company reports its earnings Tuesday, investors and traders would also look for growth in revenue from its services division, which includes Apple iCloud and Apple Music subscriptions, and now makes up Apple’s second-largest business segment.

On Monday, Apple’s Nasdaq-listed shares closed up 0.9 percent. Year-to-date, the company’s stock has outperformed the broader index, rising over 9.6 percent.