Apple Set to Report Q3 Earnings: What to Expect from the Tech Giant

Apple AAPL is set to report its third quarter earnings on July 30th after the closing bell. The company has been facing uncertainties from the trade war that escalated in early May, and this has investors wondering how drastic the repercussions would be on AAPL. Additionally, Apple is also under federal investigation for possible antitrust violations, which has warranted further questions about what could be in store for the tech giant. Not only is the company facing litigation on the home front but it is also under investigation by the European Union as well. While AAPL is in the midst of surrounding uncertainties, let’s take a further look into the company and how they might report their Q3 performance.

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Federal regulators have been putting the heat on Big Tech as the U.S. Department of Justice is running the investigation of Apple and Alphabet GOOGL while the Federal Trade Commission will have lead oversight of Amazon AMZN and Facebook FB.

Last Tuesday, the U.S. Department of Justice announced an investigation into the practices of market-leading online platforms. The DOJ is reviewing whether these companies are engaging in practices that reduced competition, stifled innovation, or otherwise harmed consumers. Wedbush Securities analyst Daniel Ives commented that the objective standard for the investigation is whether a company engages in anticompetitive behavior, thereby driving up prices for consumers. The objective standard differs in Europe as it is more focused on the impact of monopolies on smaller competitors with dominant market positions being frowned upon as a result.

In the second quarter of fiscal 2019, Apple released an iPad air and an updated iPad mini with Apple Pencil capabilities. The company also updated the iMac and the Air Pods with the option of a wireless charging case.

The company also announced its emergence in the subscription service realm. Apple announced that they would be releasing the subscription-based Apple News+, Apple Arcade, and Apple TV+, amongst other services and products. This attempt to enter the subscription-based services market could bode well for the company in the long run if they can learn to compete with the industry’s top players. Apple has been able to put together a solid year thus far; the tech giant is currently up 31.5% and has significantly outpaced the S&P 500. The company’s continued focus on boosting its services business has been a key catalyst in driving the company’s growth.

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Apple was able to bring in a quarterly revenue of $58 billion and reported earnings of $2.46, which were down 5% and 10% respectively from Q2 2018. Despite the year over year falloff, the company was able to beat our Consensus Earnings Estimate by 3.8% and revenue estimate by 0.8%. The tech giant’s profits also took a year over year hit, generating $11.6 billion and dropping 16.3%. iPhone sales were down 17.3% to $31 billion while Mac and iPad products brought in $5.51 billion and $4.87 billion, respectively. Apple’s services sector jumped 16.2% by bringing in $11.45 billion in Q2 2019. Furthermore, the wearables, home, and accessories segment increased 30% with revenue of $5.13 billion. Weak iPhone demand in China continued to plague the company in Q2, as net sales in Greater China fell 21.5% with $10.2 billion. 

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