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Take A Byte (Quick In Depth Look at $AAPL)

Wolf

Comps are an issue as they are tough and investors are worried they wont be able to match previous growth

Apple's revenue guidance for the period implies it will post its first year-over-year decline in quarterly revenue since 2003

Apple sold 61.17 million iPhones in the second quarter a year ago

International sales accounted for 69% of revenues in the second quarter a year ago, 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 tenth highest-priced stock in the price-weighted Dow Jones Industrial Average, so all eyes will be on the report tomorrow. Conversely with expectations so low, the stock falling nearly 6% in a little over a week and an iPhone refresh cycle coming up, it will be "tough" for the stock to really fall apart unless something "historic" happens (big miss).
    • 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 ER ITEMS

SALES

  • Any color on the iPhone 7 release as a demand driver
  • Average selling price and gross margin trends (This number is known as "ASP's")
  • 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) -- AAPL doesn't give specifics about their watches so a read through will be necessary.

The performance of its three largest geographic regions

  • Americas segment accounted for 37% of second quarter net revenue last year

Greater China accounted for 29% of second quarter net revenue last year (China is seen as company's most important growth market)

  • Europe accounted for 21% of second quarter net revenue last year

  • Apple's fiscal second quarter guidance following its first quarter report in January

    • Revenues of $50.0 - $53.0 billion (versus $58.0 billion last year)
    • Gross margins of 39.0% to 39.5% (versus 40.8% 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) 
    • SanDisk (SNDK; Apple 14% of fiscal 2015 revenue) 
    • Qualcomm (QCOM) 
    • NXP Semiconductors (NXPI)
    • Analog Devices (ADI)
    • Skyworks Solutions (SWKS)
    • On Semiconductor (ON)
    • Western Digital (WDC)
    • Segate Technology (STX)
       

  • Other Companies

    • TTM Technologies (TTMI; Apple 20% of fiscal 2015 net sales)
    • Jabil Circuit (JBL; Apple 24% of fiscal 2015 net sales)
    • Electro Scientific Industries (ESIO; Apple 9% of fiscal 2015 net sales)
    • Flextronics (FLEX)
       

  • Wearables

    • Fitbit (FIT)
    • Garmin (GRMN)
    • Fossil (FOSL)
    • Movado (MOV)
       

  • Computer hardware

    • HP, Inc. (HPQ)
       

  • Consumer electronics retailers

    • Best Buy (BBY)
    • hhgregg (HGG)
    • Conns (CONN)
       

  • Wireless carriers

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

AAPL UNITS