Apple could provide a robust outlook in its fiscal Q4 earnings

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Oct. 16 2014, Published 10:01 a.m. ET

iPhone 6 and iPhone 6 Plus sales won’t have a material impact on Apple’s fiscal 4Q14 earnings

Apple (AAPL) is expected to announce its fiscal 4Q14 earnings on October 20. It’s a well-known fact that Apple depends heavily on iPhone sales. Apple derives more than 50% of its revenues from the iPhone and an even higher proportion of its margins. So it will be interesting to see how many iPhone 6 and iPhone 6 Plus units Apple sold last quarter.

But the point you need to note here is that Apple started shipping iPhone 6 and iPhone 6 Plus devices in the latter part of September, so its sales won’t have a material impact on the last quarter. The more important takeaway from Apple’s earnings should be its outlook for fiscal 1Q15.

Apple revenues

Apple could announce a robust fiscal 1Q15 outlook

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Apple’s fiscal 3Q14 results were a mixed bag. Although Apple’s profits were better than expected, its revenue growth was less than spectacular. As the chart above shows, Apple’s revenues have been declining sequentially for the last few quarters. But this trend could break. Apple expects its mid-point revenues to be $38.5 billion in fiscal Q4, as per the outlook that the company gave last quarter.

As we discussed above, the outlook for the iPhone 6 and iPhone 6 Plus in fiscal 1Q15 will be crucial. It could decide which way Apple’s stock moves. The initial signs suggests that the iPhone 6 and iPhone 6 Plus are receiving huge demand and this demand has exceeded supply.

According to a store survey conducted by Canaccord Genuity, the iPhone 6 was the bestselling smartphone at all major U.S. carriers in September and the early days of October. These carriers include AT&T (T), Verizon (VZ), Sprint (S), and T-Mobile (TMUS).

According to a recent report from Tencent News, Chinese carriers such as China Mobile (CHL) received 1 million pre-orders for the iPhone 6 and iPhone 6 Plus within the first six hours of the products’ availability.

A few weeks back, Apple itself announced that it sold 10 million iPhone 6s and iPhone 6 Pluses in the first three days of their launch on September 19.

All these factors indicate that Apple could come up with a robust outlook for fiscal 1Q15.

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