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On Apple’s Earnings Day, Wall Street Expects Both Pain and a Plan

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On Apple's Earnings Day, Wall Street Expects Both Pain and a Plan

Investors are bracing themselves for the results that Apple’s Chief Executive Officer Tim Cook warned about. A bombshell dropped when he downgraded the company’s prediction, projecting lackluster earnings for the first quarter. 

Wall Street is expecting Apple to report revenue of $84 billion, down from the forecasted $89 billion to $93 billion advice issued in the company’s last earnings call. In a Jan. two letters to investors, Cook said unexpected slowing sales in emerging markets was partly the reason behind its decrease. However, Apple is also very likely to cite trade tensions with China, according to analysts. 

“I am expecting Apple to give finer granularity on its warning against the first week of January,” said Patrick Moorhead, principal analyst at Moor Insights & Strategy. “The company will set most of the blame on the China economy and will play up its success in North America and Western Europe.” Daniel Ives, managing director at Wedbush Securities, said he expects earnings per share to hit at $4.17. 

Ives said China has stayed “the albatross around tech’s neck” as businesses work out how to enter and make a footprint on the marketplace. Apple, in particular, is “captured in the eye of this storm,” he explained since it competes with homegrown opponents, for example, Huawei. This earnings call will be different, because Apple will no longer disclose the number of units it has sold of each of its products, including the iPhone. At the U.S., data in the previous 3 years shows that iPhone earnings have been mostly level as more people continue to their telephones, especially after carriers started charging retail cost for the phones. 

Apple has also faced criticism for crossing within the $ 1,000 threshold releasing premium smartphone versions and pricing people who might be on the market for a brand-new iPhone out but may afford one. Moorhead said he’s searching to give advice about its plans for the next generation of iPhones, which are declared. 

“I’m optimistic [Apple] provides some indication of whether it might consider a second lower-priced handset like the SE,” he said. Apple was riding this past year and also in August became the first company to reach a $1 trillion valuation. However, Apple lost that crown in its valuation and November has taken a tumble to about $730 billion. 

Microsoft, with a reputation as Apple’s fashionable sibling, is the world’s most precious publicly traded company, using a valuation of $805 billion, thanks to the strength of its cloud business. “Apple needs to turn this dark chapter around and it starts with earnings on Tuesday, as the Street will be listening to every word from Cook,” said Ives.

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