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Analysts look to hints of iPhone 12 delays in Apple’s Q3 2020 earnings report

Apple (AAPL) is set to announce its fiscal Q3 2020 earnings after the bell on Thursday, just a day after CEO Tim Cook’s scheduled appearance before the House Judiciary Committee to discuss antitrust allegations against the tech giant.

Much of the earnings focus, however, will be on whether Cook and company will provide guidance for fiscal Q4, which could offer a hint about any potential delays to the launch of the firm’s upcoming iPhone 12.

Here’s what analysts are expecting out of Q3, as compiled by Bloomberg, versus how Apple performed in the same quarter last year.

Revenue: $52.2 billion expected versus $53.8 billion in Q3 2019.

Earnings per share: $2.06 expected versus $2.18 in Q3 2019.

There has been a good deal of speculation surrounding the launch of Apple’s next iPhone since the coronavirus pandemic began roiling global supply chains earlier this year. Apple’s devices are largely assembled in China, which initially had to close its factories as the virus spread in the country.

The ongoing pandemic, and the surge in cases in the U.S., led to fears that Apple would hold off on launching its next iPhone due to the optics of pushing out a new product while thousands of Americans were falling ill.

But companies have continued on with business as usual, and that’s unlikely to change with the iPhone 12. It’s more likely that production slowdowns will impact the phone’s launch.

“Given the upcoming product launch around 5G, we do not expect the quarter to matter as much, but we do expect a solid beat relative to consensus,” BofA Securities analyst Wamsi Mohan wrote in his research note.

“In our view, Apple is less likely to provide Sep qtr guidance given continued uncertainty around COVID-19 and our checks suggesting the delayed launch of the mmWave iPhone (likely in Nov.),” he added.

Deutsche Bank Research’s Jeriel Ong offered a similar sentiment, saying that the firm now has high confidence that Apple will delay the launch of its next phone into November or December.

As a result, Ong says that the usual bump Apple sees in sales at the end of its September quarter due to the launch of its new devices will be pushed out to the company’s fiscal Q1 2021.

“As a result, we model 60m iPhone units in Dec-20 followed by 59m iPhone units in Mar-21,”
Ong wrote. “If new iPhones were delayed to late in the Dec-20 quarter (say midway through December or even early December), that would be incremental downside to our Dec-qtr estimates and incremental upside to our Mar-21 estimates.”

Photo by: STRF/STAR MAX/IPx 2020 7/20/20 Customers queue up at The Apple Store during the phase 4 reopening in Manhattan.
Photo by: STRF/STAR MAX/IPx 2020 7/20/20 Customers queue up at The Apple Store during the phase 4 reopening in Manhattan.

Sales supercycle

Not every analyst believes Apple will delay its iPhone launch, though. Wedbush analyst Dan Ives predicts that the launch is still on track for mid to late September but admits that Apple could launch in October to handle lingering supply chain issues.

Rod Hall of Goldman Sachs Equity Research, which current downgraded Apple’s stock to Sell on fears that the average selling price of iPhones would fall due to the economic damage caused by the coronavirus, also believes Apple will ship its handset on time.

“We continue to assume that Apple will deliver the iPhone on time in late September,” Hall wrote in his analyst note. “We are well aware of both supply and press speculation to the contrary but our experience and Apple’s strong supply chain presence suggest it is more likely to surprise on the upside in terms of execution.”

The next generation iPhone is expected to set off a sales supercycle, a period of increased purchasing from consumers who want the latest and greatest iPhone model. 5G cellular technology is said to be the catalyst for the iPhone 12’s uptick in sales compared to prior generations.

5G is the next-generation of wireless communications and promises faster speeds and less lag than 4G LTE. While device makers like Samsung already offer 5G, it’s the inclusion of the technology in the iPhone that many see as the technology’s true introduction to the general public.

Got a tip? Email Daniel Howley at dhowley@yahoofinance.com over via encrypted mail at danielphowley@protonmail.com, and follow him on Twitter at @DanielHowley.

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