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Apple earnings: What investors should be watching

Yahoo Finance Live anchors discuss the expectations for Apple earnings.

Video Transcript


JULIE HYMAN: Lastly, the third thing to know this morning, the tech earning Super Bowl, Meta is just the beginning. Apple is of the names headlining today's reports after the close of trading. Let's take a dive into what you should be watching for from the tech giant today.

And let's start with services revenue. That's one of the things I'm watching. We'll get to product in just a moment. But services has definitely been comprising a higher amount of the overall numbers from Apple. And that's something I know that analysts are gonna be watching for, as well.

$20.47 billion is the estimate for services. And that's something that the company is also guided to, right? And emphasized that it wants people to really be watching. So that's the number that I'm gonna be watching from Apple.

BRIAN SOZZI: No, Julie, that's a good call out, too, because as the economy has slowed-- and now, it is generally universally seen that these services sales from Apple are recurring revenue stream and they will be recurring no matter what the economy is. So I think that's a very important thing to be watching to see if consumers are cutting back on some of those Apple services.

BRAD SMITH: Sozz, one thing that I'm gonna be watching and we're going to be discussing this later but iPhone revenue here. IPhone revenue is expected to come in about $68.3 billion. And there's kind of three ways that I would look at this. And one of them is how their shipments are really lining up.

Of course, that's not have figured that Apple themselves, that they put out there. But it is one that is largely monitored. And where those global shipments are going, you can monitor this through IDC. They have a good kind of shipment tracker on Apple iPhone shipments. And then, as well, just where regionally they're seeing pickup. Because if we think about 2023 and the outlook that the IMF put out there, and where the biggest growth on the GDP basis might come forward, it is India and it is China.

And for China, that's a big part of Apple's business. In fact, they're expected to bring in about 23-- my figure is on a different piece of paper. But about a little more than $20 billion in this quarter. So that is something to also keep an eye on there.

JULIE HYMAN: $21.8--

BRAD SMITH: $21.8.

JULIE HYMAN: --is what I see. Yes.

BRAD SMITH: Yes, perfect. So $21.8 billion in China, greater China. And then just the demand cycle is what I'm hoping to hear a little bit more on from Apple, where we fall within this kind of range of super cycles that they've touted in the past.

BRIAN SOZZI: As for me guys, Meta's new $40 billion stock repurchase program they uncorked last night, that brings their total authorization to $50 billion. That inspired me for Apple here. I'm watching Apple's cash levels. Now, the prior quarter that Apple reported, they exited that quarter, let's say, with about $50 billion in cash.

And cash is very important overall for any company. But as it pertains to Apple, I want to know the levels they ended this quarter with because for that April quarter is when Apple usually comes out and lifts its dividend and it uncorks a giant share repurchase program of its own. Keep in mind, last April, Apple came out with a $90 billion stock buyback plan. So I'm curious on what these cash levels are because I think it will offer a great indication on how much stock Apple might be buying back or might tease they might buy back come April.

BRAD SMITH: Yeah, this also kind of brings the mind back to, what, late 2018, the final quarter of 2018 when you saw some of the tech companies and their share prices declining so rapidly. What did many of them do? They had this kind of buyback backstop, if you will, where they were looking at their share prices and saying, OK, this is an attractive level for us to buy in. Shareholders' praising that. Perhaps booing them just a little bit going into the next year.

JULIE HYMAN: Yeah, I wonder politically like how-- for Apple, which kind of stands alone, that's one thing. But I do wonder-- yes, Meta did it, too. But I do wonder how widespread that's gonna be when they're slashing costs, right, on the flip side if they're buying back stock. We'll see what happens with that.