Apple, will report Earnings after Tuesday's close.

  • Investors are anxious to see what type of sell-through Apple has achieved with its new iPhone 7 and what the company says about demand expectations for the fiscal first quarter, which will encompass the holiday selling period
  • Shares of AAPL have surged 21% since the company's better-than-feared fiscal third quarter report in July.  Investors will have higher expectations from AAPL's earnings which provides guidance. Failure on either front could lead to some material downside for the stock, which would act as a major drag on the broader market.
 

Expectations have ratcheted up in recent weeks on the back of Samsung's disclosure that it has stopped production, and sales, of its Galaxy Note 7

 
  • International sales accounted for approximately 60% of revenues in fiscal 2015, so investors will be looking for remarks on global demand trends and the impact of foreign exchange
  • Apple is the most heavily-weighted stock in the market-cap weighted S&P 500, the most heavily-weighted stock in the market-cap weighted Nasdaq 100, and the seventh highest-priced stock in the price-weighted Dow Jones Industrial Average, so it clearly has market-moving capability
  • With a huge installed base of Apple products around the globe (iPhone, iPad, Mac, iTunes, iPod, and Apple Watch), the company's performance is watched closely as a gauge of consumer spending activity
     

Key Earnings Items

  • Any color on the iPhone 7 release as a demand driver
  • Average selling price and gross margin trends
  • Apple's ability to monetize its installed base (viewed through revenue growth in the services businesses)
  • The performance of its "Other Products" (Apple Watch, iPod, and Apple Pay)
  • The performance, and outlook, for its three largest geographic regions
    • Americas segment accounted for 40.2% of net revenue last year
    • Greater China accounted for 25.1% of net revenue last year (China is seen as company's most important growth market)
    • Europe accounted for 21.5% of net revenue last year
       

Stocks Affected
 

Smartphones

  • Samsung (SSNLF)
  • Blackberry (BBRY)
     

Component suppliers

  • Broadcom (AVGO; Apple more than 20% of fiscal 2015 net sales)
  • Cirrus Logic (CRUS; Apple was 72% of fiscal 2015 sales)
  • InvenSense (INVN; Apple 30% of fiscal 2015 net sales) 
  • Qualcomm (QCOM) 
  • NXP Semiconductors (NXPI)
  • Micron Technology (MU)
  • Analog Devices (ADI)
  • Skyworks Solutions (SWKS)
  • On Semiconductor (ON)
  • Western Digital (WDC)
  • Seagate Technology (STX)
     

Wearables 

  • Fitbit (FIT)
  • Garmin (GRMN)

Wireless carriers 

  • AT&T (T)
  • Verizon (VZ)
  • T-Mobile (TMUS)
  • Sprint (S)
  • China Mobile (CHL)
     

Related ETFs

  • PowerShares QQQ ETF (QQQ)
    • AAPL is top-weighted holding at 10.77% of assets
  • SPDR S&P 500 ETF (SPY)
    • AAPL is top-weighted holding at 3.24% of assets
  • SPDR Dow Jones Industrial Average ETF (DIA)
    • AAPL is tenth-weighted holding at 4.22% of assets
  • Technology Select Sector SPDR ETF (XLK)
    • AAPL is top-weighted holding at 13.56% of assets