Apple‘s second quarter earnings will be posted today, and investors on Wall Street are preparing for the worst. Back in September, Apple was the most valuable company in the world. But since then, the company has lost over $280 million in market capitalization and has been on a steady decline. Here’s what we can expect from today’s earnings report.
1. Apple’s Revenue Went Up…Again
Most analysts are predicting that Apple will report an increase in revenue for like the 100th quarter in a row. According to this Mashable article, Apple could be reporting a revenue of $42.6 billion. This would be a record for sales in the second quarter for the company. But, this might the only piece of good news in the earnings report.
2. Margins are Rising
While Apple may be setting records in sales, their profit margins continue to increase. That means, that while the prices for Apple devices like a Macbook or iPhone remain the same, Apple is spending more and more to produce those products. So, the company isn’t making as much money as it used to off of popular products. The reason Apple is so appealing to investors is because they’re able to have huge, cushy, margins that ensure that the company will be making money. However, since margins have slipped from 47.4% last year to 38.6% last quarter, investors are becoming more and more worried about the tech behemoth.
3. Apple Will Be Announcing a Drop in Earnings
For the first time in a decade, Apple will announce a drop in earnings, according to previous reports. Here’s what we wrote in our other post:
However, Apple will apparently be reporting a drop in the stock’s earning per share (EPS), which calculates the earnings per each individual share of Apple’s stock. In Q2 2012, Apple’s EPS was $12.30. Most analysts are anticipating that, a year later, Apple’s EPS will fall to $9.85.
4. Apple May Address Supply Issues
We should also find out more about these supply issues we’ve heard about recently during Apple’s earnings call with CEO Tim Cook. Yesterday, there were rumors that Apple rejected 5 to 8 million iPhones produced at Foxconn, the manufacturing plant in China. It should be noted that Foxconn, not Apple, would be paying for the device, which could cost a few billion dollars for Foxconn.
5. Wall Street Will Over-react, but It May Be The Time to Buy APPL
Undoubtably, Wall Streeters will overreact to the news about Apple’s earnings, and start changing their outlook on the company. For months, most analysts have been encouraging investors to buy Apple as the stock went up, but, they’ll likely change their tune after today. However, now might be the best time to buy Apple. The stock price is incredibly low, and with potential devices like the iPhone 5S, iPhone 6, iPad 5, and iPad Mini 2 due out in 2013, Apple’s stock price should be on its way up.