Apple Earnings Day Is Here. The Dollar and Inflation Could Bite.

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Apple

will report June quarter earnings late Thursday, and CEO Tim Cook dinner will face questions on every thing from forex headwinds to slowing Mac gross sales.

The corporate faces appreciable crosswinds. For starters, with a better reliance on shopper gross sales than different expertise {hardware} corporations, Apple (ticker: AAPL) can’t totally escape the affect of a slowdown in shopper spending. Current reviews from each the reminiscence chip firm Micron Applied sciences (MU) and market analysis corporations IDG and

Gartner

recommend there was a pointy slowdown in each smartphone and private laptop gross sales. However there have additionally been reviews of robust iPhone demand in China, and the supply-chain points the corporate has endured in current quarters look like easing. 

In reporting March quarter outcomes, Apple CFO Luca Maestri advised buyers to count on a $4 billion to $8 billion drag on gross sales from provide constraints within the June quarter, however the present considering on the Road is that the precise affect might be at or under the underside finish of that vary. 

Then again, Apple had projected unfavorable forex alternate charges would cut back gross sales by practically 3 share factors, however the precise determine is more likely to be a few factors greater than that. Maestri mentioned that companies income within the quarter could be up double digits, however at a slower charge than within the March quarter, and he notes that the corporate’s exit from Russia would cut back gross sales by about 1.5 share factors within the quarter.

Present Road consensus estimates name for June quarter gross sales of $82.7 billion, with earnings of $1.16 a share. The Road sees iPhone income of $38.9 billion, down about 2% from a yr in the past, with Mac gross sales of $8.6 billion, up 5%; iPad gross sales of $6.8 billion, down 7%; gross sales from the “wearables, residence and equipment” section of $8.5 billion, down 3%; and companies income of $19.6 billion, up 12%.

The Road sees September quarter gross sales of $89.7 billion, together with $42.6 billion of iPhone gross sales, with companies anticipated to succeed in $20.7 billion. Consensus estimates name for sequential gross sales enhancements in Macs, iPads and wearables.

However in a analysis notice on Tuesday, BofA International Analysis analyst Wamsi Mohan wrote that he sees probably “massive headwinds” within the September quarter from inflation, overseas alternate charges and deceleration of the corporate’s companies enterprise. He thinks the corporate will beat Road estimates for the June quarter, however provides that September quarter consensus estimates appear too excessive—he’s modeling income of $85 billion, practically $5 billion under the Road. Mohan retains a Purchase score on the inventory, however cuts his goal to $185, from $200.

Apple inventory has been buying and selling these days round $150 a share. It’s down about 14% for the yr.

UBS

analyst David Vogt lately raised his June quarter monetary forecast to mirror milder-than-expected supply-chain points. He contends that “iPhone and Mac unit demand is notably stronger than beforehand anticipated,” however with some offset from the robust greenback.

From right here, Apple buyers flip their consideration to the anticipated September launch of iPhone 14-and the eventual arrival of mixed-reality glasses, doubtless early in 2023.

Write to Eric J. Savitz at eric.savitz@barrons.com